Question: How certain are you that there will be a lockout?
I think the general concern is the league is working hard to come to an agreement with the players union. I think no one wants there to be any type of work stoppage because it will result in some type of financial loss. No matter how short or how long it is, obviously the fear is long term is a significant dollar amount, especially if you get to the point where you're having to cancel the season.
I don't think it will get to that point, both sides are committed to some sort of agreement I just think it's the minutiae of all of it that's really holding everyone back, and there's the fact that there's the reluctance on the owners part to release financial information and that is cause for concern among the players union because they're saying…the owners are coming out and saying we're losing money but they're not willing to show that they're losing money or that they're actually losing money which would be the case if they open their books.
I think the way that sports have been developing over the past decade or two decades you can say, you know there's obviously higher costs, whether that's the cost of building a now billion dollar stadium or whether that's trying to find new, in stadium experiences for the fans to get them to come to games or trying to attract sponsors to sign deals with you. There's obviously increasing costs and the owners are having to pay more. At the same time you look at salaries, and salaries are increasing they're not decreasing so the owners are having to spend more money when they're already spending a lot of their own money to help out the team and they're not getting the type of return on their investment that they would like. That's one of the major issues. But I think, like I said neither side really wants something to happen.
There's the fact of will there be one won't there be one but it's, the bigger question is how will it affect the season because the general gist is if there's no agreement between the NFL players union and the owners by March 4th, March 5th is technically the beginning of a lockout, But if an agreement were to be signed by April 1st let's say, you technically had a 3 week lockout, but that doesn't really have an affect per-se on training camps and mini camps and contract negotiations necessarily.
I personally don't think there will be an agreement by March 4th.
Question: What about the draft?
You run into an issue where the Carolina Panthers have the number one pick, whether they take Nick Fairley whether they take the guy from Clemson or all these different things they can't negotiate with that first pick because they're not allowed to talk to them because those players now that they've declared, as long as they don't decide to return they become a member of the players union and the players union won't allow their players to talk to the teams.
Then you run into that issue, where you have teams drafting players potentially not being allowed to negotiate contracts with them. There will be a draft, that's a definite that's considered a calendar event for us that will happen. It won't be cancelled by any means if a work stoppage occurs starting on March 5th. There will be draft April 28th-30th in New York.
Question: Let's Nick Fairley is taken round one, top pick by the Panthers. They can't talk to him, they can't pay him what happens to these guys coming out of school right now?
They'll be able, I believe, they're allowed to sign sponsorship deals. He can sign a contract with Nike, Nike can pay him money, or Under Armour can pay him money, but he can't be in the new commercial wearing a Panthers jersey if that's who he gets drafted by. He's not allowed to show any team affiliation though his rights will be owned by the Carolina panthers. Similar to when European players are taken by the NBA, their rights are owned that's the only team they're allowed to be with. It's not like he can be taken by the Panthers and then suddenly the 49ers come in and say listen we're going to give you $40 million once the agreement comes down. He's obligated to go to that team, but they're not allowed to pay him because there's no scale for a rookie contract, there's no terms, there's a huge part of a players' contract that is basically a copy and paste of parts of the collective bargaining agreement, it's lawyer language and players don't really understand it that's what their agents and lawyers are for to kind of go through those details and things like that. They're not getting paid by the team that drafted them.
Question: Let's say it's somebody taken, an ACC player, that may not be round one, he's taken round three. He's not going to get the kind of Under Armour, Nike, Pepsi, Coke sponsorship deals Cam Newton might get. So what is the general consensus on that?
College coaches have been doing their best to explain this to players who are able to declare because it is a concern. Urban Meyer came out and said too, I think you had Janoris Jenkins their cornerback decided to go back to school, not necessarily the reason he wanted to return to Florida. Before Urban Meyer decided to leave Florida he said to his players, listen you need to be aware. I'm not saying this because I don't want you to get millions of dollars, I'm saying this because you need to be aware of the threat, because you can declare and be all giddy that you're going to the NFL and if they cancel the season you get zero and now you're high and dry. Maybe you could go to the UFL or the Arena football league, I'm guessing, I don't know how that affects players' rights. You run the risk that there could be a work stoppage and no money is given to you because you're not allowed to be paid, so you need to think about that. Yah you're not going to earn millions but you're still going to play football another year for your school.
Question: What are the NFL executives telling you as employees, how to prepare for all of this?
They've been pretty open in turns of their feeling of how things are, the negotiations, as general employees they can't reveal an abundance of information because they do fear that information can be leaked, we're not privy to financial terms of various sorts. But they've basically said that it is a possibility it's something that you have to be aware of and concerned about. They try to provide us with information.
They've developed a contingency plan that could occur in the event of a work stoppage, what happens if a couple months go by and there's still a work stoppage? What happens when you start getting into July and you start getting into August and September, week one week two week three, at what point do you cancel the season? And if the season's cancelled what does that mean for employees. As I said before if it lasts two months they're not going to reduce the workforce for such a short term the work stoppage. But they definitely are letting us know certain things.
Senior executives are going to take a pay cut if it goes to this point without an agreement and then there is talk of whether or not we would have a two week furlough forced upon us….but then there's the fact of what happens when it gets into August and September, and whether that means salary cuts, whether that means actual staff reductions. The one good thing about the NFL, is it's a top notch organization they have been looking for well over a year at a variety of contingency plans, what the best way to approach a situation like this it because it is a very delicate situation and you don't want to act prematurely and release your staff and then find out an agreement comes about because you're screwing the hires because the moment that an agreement is signed you have to hit the ground running to prepare because if you lose weeks of the off-season now you're scurrying to prepare for kickoff wherever that will be, you're preparing for week one. There're all these things that are behind on the schedule just on the premise that you were unable to do anything about it because we can't do certain things if there's no agreement. So the league is doing their best.
The biggest example that they can cite is at least what happened with the NHL, when they went on their work stoppage which was well over a calendar year and at one owners meeting I know NHL commissioner Garry Bettmen came in and talked to the owners to kind of go through and explain their process with their work stoppage and how that went about. Obviously they reduced their workforce significantly because there was no product and they can't staff dozens and dozens of people to, you know, sit. I know the NFL has worked up contingency plans but they've mocked up basically, I think it's basically the bare essentials of staff in each department, who they could cut and the department could still function during a potential labor stoppage, and then who would also be able to hit the ground running while they slowly look to recoup their workforce. They've worked those plans up, it's tough to say who's on it who's not. They've done something to have some sort of staff on hand so that there's not an office that's basically the commissioner and the legal department.
Question: When do you scrap the entire season? If there's still a lockout come September when do you say, "we're not going to have a season?"
They way that the NFL season has been created there is some room for flexibility. Hypothetically you could cancel, you could lose week one because of an agreement and if one is agreed upon let's say during what would be week one what you could do then is basically, push everything back. There's a week between the AFC/NFC championships and the Super Bowl, you could work on eliminating that week you could potentially eliminate the bye week.
You could potentially miss week two and you would basically have to eliminate the bye week AND the week between the championship games and the Super Bowl. Week three is where you really begin to have some problems. There would be no postponing the Super Bowl, that's definite. That has been agreed upon there have been contracts signed for it to be held that day or not at all. And I believe if you get into week four you basically looking at a loss of games, and I believe if you get anywhere beyond week five you have to cancel the season. Obviously no one wants a shortened season, we want to provide a product to our fans. That obviously affects how much money the owners take in and how much players can get paid. You can't be paid for a 17 game contract if you're only playing 14 games, that can't happen. So that's something that has been discussed.
Question: A lot of the arguments have been that the owners want a bigger cut of the "All Revenue" before it goes into the split of the "Total Revenue". If the owners are saying hey players don't live on as much, could you argue that since the owners aren't showing their books, the attendance has not gone down based on the numbers, the NFL is getting paid the $1 million from DirectTV regardless. Most of this is saying that the owners are greedy.
I've heard those arguments and things like that. The owners are hesitant to release their books because they don't feel that they should have to. They're the ones that are paying the players and they know what the money situation of their teams are. I don't think they want to come out, if the team is losing money and let people know that they're losing money and they don't feel they should have the right to.
No one disagrees that there's money to be made. But these guys are spending millions and millions of dollars a year for their teams and if the team is successful they're not seeing any return, and that's not fair. They should get something but everything should be in proportion and the proportion is favoring the players, It's favoring them and the ownership is saying, we're not saying that you shouldn't get less money per-se we're just saying the proportion, the split needs to be reassessed.
You're still getting the same percentage of what you get but the amount is less, because whether you're getting paid over more games, over less games. They're trying to basically say things need to be averaged out more and they're not.
Question: But the players association has come out and put plans on the table. And the owners have rejected those plans, so what does NFL Corporate think of it? It seems like the players are trying to bargain, they're trying to budge on certain things, but no plans have been put forth by the owners. What does Corporate think of that one-sidedness?
There're obviously things that go on that I'm no privy to and the public isn't privy to. It's not for public knowledge. The players are obviously going to make proposals and their obviously going to favor the players union. As they believe, it's the owners that opted out of the agreement, they're saying why would the owners have agreed upon a deal like this years ago if it's not a fair deal, it's because at the time it was a good deal but things have changed in the past few years with the financials of football and the business side and sponsorship deals and a variety of different factors have changed the dynamic for money and that's cause for concern amongst the owners because they don't feel they're getting what's an equal share or a more equal share.
Question: Let's say we get to week five, there is no NFL season. There's no Super Bowl. We know that the draft is the end of a season, so if there's no season is there a 2012 draft?
My guess is, I don't know for certain, my guess would be that would depend on an agreement. If an agreement were to come about in a lockout or a work stoppage, they would have to have the draft because there would be talent…there are players in school right now, there still is that need to get that talent out, but obviously there are issues, how do you determine a draft order, what happens to the people who are rookies right now? I don't think it's going to get to that point because I don't think it's something that either side is really willing to let happen because I think what's going to happen, March 5th a work stoppage will start, people will really start getting pressure. Whether that's from the media or the teams, or the players, from the fans, whatever it's going to be there's going to be an abundance of pressure that's focused on getting an agreement signed.
Question: is the NFL going to feel that pressure considering they're still getting paid for their TV deals? If there is a stoppage they don't have to pay health insurance, they don't have to pay into the 401ks they don't have to pay players. They're actually saving money?
They're saving money but losing face because now their players are going to suffer. NFL players union will face the issues of cobras and stuff like that. But, they're [the NFL] not going to come out well. It's not going to look good for them. I don't think they want that.
To talk about TV contracts, the way that the deals are, even though there could not be a season it's not like it's a five year deal for $2 billion a year, so it comes out to $10 billion. If there's no product then obviously there'll still be committed to pay a certain number of dollars but the following year they're not going to be forced to pay another $2 billion because they basically paid for a product that didn't exist.
So basically what happens is the contract gets I believe, they still pay a certain amount over the life of the contract but the following year they don't have to pay the full amount because they basically have a credit that the NFL has given them towards coverage. It's not a free year, but you don't have to pay the same amount you should have paid us in the beginning. Cause that would be unfair, cause then the players would come out and say the owners are still making money. Yah there's still some money to be made, but at the end of the day they're not going to keep that money to pocket it. They're going to have to turn around and put that money and invest that money in things for the NFL.
Question: So what now?
It's a really tough position and they're obviously trying because they don't want to suffer a fate like Major League Baseball which lost a ton of fans and the trust of fans following their strike in '94 they cancelled half of an entire season, they're still trying to recoup from that they're still trying to get fans back and say listen we're still here.….hockey lost, you know hockey has never been a top three sport in this country ever but they definitely fell. As one person who I work with put it, who has worked with the NHL before he said, hockey is number five is a four sport country. It is and it's a distant five. It really didn't matter to a lot of people when hockey went away.
Question: The NFL is the NFL. Some of the top 25 TV viewing have been the NFL this year. So if there's no season, how do you make up for that? How do you make it up to the fans and not be the bad guy?