The NFLPA has been notified that all 32 team owners have voted unanimously to opt out of the current Collective Bargaining Agreement. This could lead to an uncapped year in 2010 — seemingly a financial free-for-all — and a potential lockout in 2011. The salary cap will be in place for the 2008 and 2009 seasons. The current CBA was extended in March, 2006, with an opt-out clause for November of 2008, which was taken early.
“A collective bargaining agreement has to work for both sides,” the NFL said Tuesday morning. “If the agreement provides inadequate incentives to invest in the future, it will not work for management or labor. And, in the context of a professional sports league, if the agreement does not afford all clubs an opportunity to be competitive, the league can lose its appeal.”
From the owners’ perspective, rising player costs have been a real sticking point in the current CBA. The required percentage allotted to players has risen to about 60 percent for the 2008 season. Stadium costs and other financial obligations have also factored in.
NFLPA president Gene Upshaw was not at all surprised by the termination, and the NFL has viewed to try to find a long-term solution. The league managed to do so last time, but it will be a tougher sell in the future.
posted
5-20-2008 at 10:27 AM by
Doug Farrar
||
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Well, this should be fun. Florio makes a good point (I’m shocked too) that most of the owners can’t afford a long work stoppage because they’ve got mountains of debt. The players could just decide to squeeze.
On another note, maybe it’s time for consolidation. If a team can’t make money, or enough money, why should it exist?
:: Harris — 5/20/2008 @ 10:44 am
switching to an NBA-style rookie salary structure would go a long way toward decreased labor costs. and re: #1… good point. if franchises in cities like jacksonville and buffalo can’t make enough money to be competitive, it’s time to sort some things out. and not having a franchise in LA defies common sense.
:: eric — 5/20/2008 @ 11:00 am
Is it me or did the NFL owners just opt out of the most owner friendly deal in sports. Well I guess hubris can get the best of anyone.
:: ea — 5/20/2008 @ 11:00 am
I wonder how this looks like from the TV contract point of view. Will networks have to pay for scab games? Could be quite a windfall if they do.
:: Kneel Before Zod! — 5/20/2008 @ 11:01 am
I’m with #3 on this one… ridiculous.
And changing rookie salaries wouldn’t affect overall costs - there’s a salary floor as well as a salary cap.
:: Aaron — 5/20/2008 @ 11:07 am
Awesome. The players threaten to ask for more than 60% of gross revenue of all 32 teams combine, while a minority of teams create a majority of the (non-TV) gross revenue.
If the owner’s can’t work together and come up with some sort of revenue sharing, I really hope they don’t give into the players union. Let’s scrap the draft, salary cap, congressional oversight, and move to a free-market league.
It would be interesting to see actual prices (salaries) rise/fall without the artificial market constraints mandated by the CBA.
Consolidation may or may not follow. I mean, who wouldn’t want a 12 team league in the 10 largest markets?
:: bowman — 5/20/2008 @ 11:07 am
I guess it depends on how much you would miss teams like the Bills, Jags and Bengals. Personally some of my first footballing memories are of watching the K-Gun, so I would not want to see the Bills go, but I can’t say I would be all that bothered if the Jags moved (sorry Jags fans) and the sooner someone takes the Bengals off Mike Brown’s hands the better.
I know the Packers are a small market team, but they seem to be able to survive (maybe that is because no one is trying to treat it like a profit making exercise). It might also be interesting to watch and see how their financial fortunes fare following the retirement of one of the all time great players, I would imagine he has kept Packer jersey sales pretty high over the last fifteen years or so. Even this Bears fan would hate to see an NFL without the Packers.
The fact is that the last CBA was negotiated at at time whe everyone (or almost everyone) expected credit to be cheap and available in perpetuity. This sea change in the financial markets needs to be adressed or it will be impossible to find an agreement all sides can live with. This applies both to the dipute between the high revenue teams (who suddenly have seriously expensive debts from facility investment) and the low revenue teams and to the dipute with the players. The players need to acknowledge that the investment required from ownership (to increase the size of the pie for everyone) has recently become a lot more difficult to afford.
:: Jimmy — 5/20/2008 @ 11:09 am
2. Without the CBA, Jacksonville and Buffalo (aka small-market teams) may have more opportunity for profits - the salary cap minimum goes away.
Obviously, they would have to get non-traditional players to be competitive, but don’t assume that no CBA = less profit.
:: bowman — 5/20/2008 @ 11:10 am
Re: 8
I wonder if the brutal nature of football might make a policy of competing with young, cheap players more effective than in baseball.
I would prefer the current system for competitive balance but the alternative may not entirely horrible.
:: Kneel Before Zod! — 5/20/2008 @ 11:16 am
they would have to get non-traditional players to be competitive
Homosexuals?
:: Richie — 5/20/2008 @ 11:24 am
Re: #3
Suppose it’s easy to say that if you don’t do your homework.
NFL: min 59% revenue to players
NBA: min 57% revenue to players
NHL: max 54% revenue to players
MLB: As far as I can see, no tax, no floor.
So NFL is forced to pay the most per dollar to their players.
:: Ryan — 5/20/2008 @ 11:54 am
I really don’t want to see the NFL become uncapped like the MLB.
:: Dave — 5/20/2008 @ 11:58 am
#10 - Jerry Jones has been putting them to use for years. Who do you think has been under center?
:: Joe T. — 5/20/2008 @ 12:00 pm
And so it begins…
Re 3 and 11:
You’re both right and you’re both wrong. The NFL has to pay out the most of its revenue to its players, but players can receive at most a smaller portion of the revenue than in other sports. It’s lowest risk and lowest reward.
Out of curiosity, anyone know WHY the NFL owners thought the deal was too player-friendly? Specific reasons? The article is rather vague. Was it just that the percentage was too large? The fact that the vote was unanimous implies that it wasn’t a squabble over included versus excluded revenue, like last time…
:: MJK — 5/20/2008 @ 12:02 pm
The owners voted unanimously? When have the owners ever been unanimous about anything? I think there’s a whole angle to this story than nobody is talking about.
:: The McNabb Bowl Game Anomaly (aka SJM) — 5/20/2008 @ 12:04 pm
Who wouldn’t love to see a MLB version of the NFL. We can all get to watch the Giants, Jets and Patriots compete every year, while the rest of the teams can hope to make the play-offs occasionally.
I guess Chicago would have a chance if they got rid of their ownership.
I would love to pay #100+ for a seat at a Colts game watching a AA Colts level squad get beat on by the Patriots. With no cap or franchise designations is there any way that Peyton Manning is still in Indy after his first contract?
Sounds like a good recipe for continued success and growth for the league.
:: Frick — 5/20/2008 @ 12:04 pm
#10 I believe the proper nomenclature is “poofs.”
:: Harris — 5/20/2008 @ 12:06 pm
#9:
The salary cap ALREADY makes teams who can find cheap talent better. Sometimes its young guys, sometimes its older undervalued guys. For a variety of reasons, the same sort of player valuation revolution in baseball won’t happen in the NFL.
There certainly can be some improvement in valuation of players with advanced statistics, but not of the revolutionary nature that happened in baseball (fat slow guys are never going to be good WR’s or RBs)
:: Scott C. — 5/20/2008 @ 12:18 pm
why do people buy a sports franchise to make money? You should only buy one to gratify your massive ego and one-up your fellow billionaires. If you want to make money buy a chain of dry-cleaners. I also love to hear owners complain about increased stadium costs when the construction costs are paid by taxpayers.
:: Eli — 5/20/2008 @ 12:19 pm
Wow, the NFL’s seizing this golden opportunity to destroy the most stable, functional system in sports, and embrace the mistakes made by all the other leagues, and half you guys are cheering them on.
Who needs the Bills, Browns and Packers? Remember when the NHL took teams away from small Canadian cities full of rabid hockey fans, and sent them all to southern cities that had never seen ice and didn’t know what the fuck hockey was? Remember how well that worked out?
Say what you will about the size of the market, the Bills have been one of the worst teams in football these past 10 years, and they still sell out most of their home games. People in that town live and die by their team, and you can’t tell me they’d be better off playing to a half-empty stadium in Toronto, or a 3-4ths-empty stadium in L.A.
And screw the salary cap - why should we have a league where every team is competitive, when we could be like baseball, and keep the same 6 big-market teams in contention every year, while teams like the Pirates are forced to sell off their good players and spend every season pinning their hopes to second-last place instead of last place. That’d be awesome!
:: Gringo Staff — 5/20/2008 @ 12:29 pm
The owners voted unanimously? When have the owners ever been unanimous about anything? I think there’s a whole angle to this story than nobody is talking about.
The angle is the credit crunch, sports franchises, which are notoriously debt heavy due to the high expected future returns, cannot get new money to use at terms that they see as acceptable.
:: Becephalus — 5/20/2008 @ 12:35 pm
15, 20. Also, some teams are operating as if there is no future cap (OAK, WAS), and some teams believe player costs will eventually exceed revenue under the current system, especially with the 2 new stadia coming on-line.
It’s not merely 1 issue.
:: bowman — 5/20/2008 @ 12:40 pm
Straight up players vs owners negotiations are difficult enough, but when it’s Large Market Owners vs Small Market Owners vs The Players…hoo boy. This could turn into Baseball 1994.
I wonder, if this turns into a huge fight, if the same people that scream about the players being GREEEDY GREEDY GREEDY will say the same about the owners. I doubt they will.
:: Kevin11 — 5/20/2008 @ 12:40 pm
#11 - There is a luxury tax in MLB (at least there was). I just don’t know what the threshold is.
#19 - I think there is a period of years (5? 7?) where an owner/ownership group reaps HUGE tax advantages for owning a team. I’m not sure where to find this, but I’ve seen many times where an owner will sell a team not long after a seven year period (Red McCombs is a great example). If they can get the public to pony up for a stadium as well, they can use the team as a tax write-off, get a huge mark-up in value, then sell. So yes, there can be a lot of money in owning a team - however, owning a team “permanently” may not be as lucrative - unless you are in one of the big markets. (My apologies if you were being sarcastic!)
:: M — 5/20/2008 @ 12:44 pm
#16 - I’m not going to say that MLB has perfect parity, or even parity on par with the NFL, but you can’t argue that the two NY clubs and the Bosox dominate the league. The Yankees dominated in the 90s like they used to in the first half of the 20th century, but they routinely have the highest payroll in the league and haven’t been back to the WS since ‘01. Last year’s WS loser was one of the less financially well-endowed organizations.
You would think that as individualistic a sport as baseball is, i.e. a player’s performance is dependent largely on his talent and skill and less so on his surrounding players, that Steinbrenner would just buy the best at every position and win all the time. But in reality it doesn’t work like that. If a Steinbrenner can’t buy a championship in baseball, he certainly couldn’t do it in football. I don’t see why everyone is so down on a free market approach (with labor protections in store).
:: Joe T. — 5/20/2008 @ 12:54 pm
Once it became obvious that the required nines votes to opt out were available, it becomes rational for any owners who were inclined to keep the current cba to covert to the opt out position, in order to bein the strongest, most united-appearing negotitating stance with the NFLPA.
I believe this vote also means that one or two extra years of service are required to be an unrestricted free agent, so there are players as well who feel a significant bite come 2010.
:: Will Allen — 5/20/2008 @ 12:55 pm
Joe, MLB siginificantly lost part of it’s free market model with the last labor contract, which imposed a large luxury tax for the first time. This has greatly aided some of the smaller market teams. Of course, given the upward pressure that salary arbitration puts on contracts, the “free market” has always been a relative term in baseball.
Oh, if the owners, lo those many decades ago, had only taken Charlie Finley’s suggestion, and agreed to the player’s demand for free agency, while demanding in return that contracts could only be one year in length. The players may have had to accept such an offer, and a baseball franchise would be enormously more profitable today.
:: Will Allen — 5/20/2008 @ 1:04 pm
“Who wouldn’t love to see a MLB version of the NFL.”
This point gets made all the time and yet…
In the last seven Super Bowls, 11 different teams have competed for the championship.
In the last seven World Series, 11 different teams have competed for the championship.
:: Mikey — 5/20/2008 @ 1:06 pm
Personally, I would prefer that ticket prices dropped and the only way that is likely to happen is if Players’ salaries (especially rookies) drop. There are a number of other things that could help, such as not costantly building bigger stadiums with so much Luxury seating.
I understand that the owners often consider this to at least partly be an investment. If you invested $550 million dollars I am guessing that you would want a decent return. However, some of the owners saw less return on this investmant than the top level players get ($10+ million per year). I know that I would expect a better ROI than 10/550 = 1.8%.
:: Pete — 5/20/2008 @ 1:27 pm
14:
It’s not lowest risk for the clubs. Nor is it lowest risk for the players.
You are making a valid point, that contracts aren’t guaranteed in the NFL, so it has been reasonable for the union to ask for more to compensate for that.
But it’s not relevant in comparing the players’ share of total revenue between leagues. The teams still have to pay 60% on player salaries. It s relevant when the clubs say the rising cost of players has been a sticking point. but only relative to the other sports, and as we all know, there are several major differences to consider when evaluating that.
Essentially, no, it’s not even close to the most owner-friendly deal in sports.
And given the enormous jump in players’ share of revenue with this CBA, I think there’s credence to their concerns with it. The rookie scale, too. Rising costs of construction is not relevant, to me, though. That complaint falls on deaf ears, to me.
There is credence to the clubs’ side, but it’s not like they’re totally being taken for a ride. A small tweak to the numbers, an adjustment to the rookie scale, and I think it could work out just fine for both sides. The players definitely got a friggin gold mine with this newest CBA. Average guards were getting $50M deals! Their demands weren’t terribly unreasonable, aside from Upshaw saying the discussion had to start with a “six” (60%). To me, that’s the ceiling. Apparently the clubs thought the same.
I really don’t know what will happen. but I would understand the clubs demanding a drop to 58%, or 59% and some adjustments to the rookie scale, and the way contracts are written. If they can’t get money back from Michael Vick, then the contracts are definitely worded in a way that strongly favors the player in arbitration. Just a few adjustments, and I think it would make a big difference, and that’s what I would support, but I really don’t know what will happen.
:: Jacob Stevens — 5/20/2008 @ 1:29 pm
#27: Both the NFL and MLB have relatively short playoffs. Random stuff happens because you don’t play enough games for the better teams to come out. Otherwise they wouldn’t be exciting enough.
If you look at aggregate team record over the past 10 years for baseball and football, and correlate that with total team value, there’s a huge correlation in baseball, and a near-nonexistent one in football.
You see brief flickers of glory from small-market teams, but you never see sustained success from them.
:: Pat — 5/20/2008 @ 1:42 pm
I guess it depends on how much you would miss teams like the Bills, Jags and Bengals.
I actually think the large-market teams are in more danger than small-market teams. Small-market teams already work on relatively small margins. They’re also not consuming a huge amount of the discretionary income in their area, so it’s unlikely in an economic downturn will hurt that bad.
I don’t think that’s necessarily true for the larger-market teams.
:: Pat — 5/20/2008 @ 1:49 pm
Re #28:
Pete, you’re forgetting the capital investment though. The average NFL franchise has appreciated 211% over the last eight years. A $450 million dollar franchise in 2000 is now worth nearly $950 million. So, quick math:
$500,000,000/8= 62,500,000
PLUS 10,000,000 revenue (for a bad team) =
72.5 MILLION per year.
That’s a 13.18% ROI.
:: masocc — 5/20/2008 @ 1:58 pm
Sorry, that’s actually a 16.11% ROI based on a $450 million investment (which I believe was roughly the average franchise value in 2000). The previous ROI calculation used the $550 million investment figure.
:: masocc — 5/20/2008 @ 2:06 pm
Oh, and FYI, the Bills and Jags rank as the 7th and 13th highest teams in terms of Operating Income with 34.6 and 22.1 million respectively. Cincinnati comes in at #20 with 11.7 million.
Don’t drink the owners’ Kool-Aid.
:: masocc — 5/20/2008 @ 2:14 pm
#30 Exactly.
Don’t cherry pick stats, this site is based on finding the underlying truth. In the last 15 years, which teams have had continued success? The teams from the large markets that have huge payrolls. Yes, spending wisely plays a part (I hang my head as a Cubs fan in that regard).
But having more money to spend allows large market teams a huge advantage. I could be wrong, but I don’t think it is wrong that part of the success of the NFL is the parity, and changes in teams records year after year. Are there exceptions yes, but if the A’s or Twins had double the salary would they be drastically different teams?
:: Frick — 5/20/2008 @ 2:24 pm
And another measure of parity, how often do baseball teams go from worst to first in their division? It seems like it happens at least once a year in the NFL.
When is the last time the Yankees had a losing record? Every team in the NFL has had a losing record in the past 8 years. The two teams that have gone longest since their last losing season, have done it because they are well run, not because they are rich (The Colts and Patriots).
:: Tom — 5/20/2008 @ 2:29 pm
RE: #30 (Pat), #35 (Frick)
Yeah, I’ll second this. It’s really about competing consistently at a high level. Many fewer MLB teams can do this than NFL teams. Heck, I’m a Red Sox fan and even I don’t like the fact that only a handful of teams can compete for the pricy free agents. I think it’s sad that it was a foregone conclusion that the Twins couldn’t afford to keep Johan Santana, for instance.
:: CaffeineMan — 5/20/2008 @ 2:50 pm
Re 37: Or the A’s to keep TimHudsonMarkMulderBarryZitoDannyHarenJasonGiambiJonnyDamonBobbyCrosby…
:: MJK — 5/20/2008 @ 3:30 pm
yeah it really sucks for twins and as fans watching them run their teams 10X better than the yankees and red sox and get nothing for it other than not losing the franchise.
Minneapolis is like the 11th biggest market fr christ sake!
:: Becephalus — 5/20/2008 @ 3:34 pm
#30: It’s possible that winning is driving team value in baseball more so than football (rather than team value driving winning, which seems to be your implication).
Using total team value now and comparing it to win totals from 10 years ago seems porblematic if winning contributes more to franchise value in baseball than it does in football. Revenue and cost in football is much more independet of actual performance in football than it is in baseball. For some that might be a feature, but for others it is a bug.
There are alot of reasons it is easier to sustain success in baseball, and the stronger free market dynamic is only one of them.
:: Nick — 5/20/2008 @ 3:40 pm
Re: 36’s first question on when was the last baseball worst-to-first:
Chicago Cubs, 2006: last in the NL Central
Chicago Cubs, 2007: first in the Central (a six team division, so they improved better than five other teams)
The AL Central had almost the same thing happen: Cleveland was the second to last team in 2006, and won the division in 2007. (In a five team division, this means that they went from fourth in their division to first- exactly as Tampa Bay did that same year.)
The 2005 NYM were the second to last team in their division, finishing two games ahead of the last place Washington Nationals. They won their division in 2006. (Again, a five team division, so they passed as many teams as New Orleans did that same year.)
So there is a fair amount of mobility in Major league baseball (given that I’ve only looked at two years and found three examples of worst or second worst to first). You just don’t notice is because the Yankees and the Red Sox get so much attention from ESPN.
:: C — 5/20/2008 @ 3:40 pm
Ugh. Parity so ridiculously overrated. How is it “sad” that the Twins can’t keep the best pitcher in baseball? If you want to kee the best players, get more fans!
I’m a communist in everything but sports. Let the teams with the biggest fan bases benefit from that. Why should Dallas Cowboys fans be subsidizing the Jaguars? The league would be a million times more interesting if they got rid of the draft, salary cap, etc. People forget how much fun it is to hate rich teams like the Yankees, Red Sox, Chelsea, etc.
:: joel in atlanta — 5/20/2008 @ 3:47 pm
No surprise it’s unanimous, as noted above. There were going to be fewer than 24 votes to continue, and everybody knew it.
Somebody needs to do a really good piece on the credit crunch and how it is and will continue to affect professional sports. The hardest part will be coming up with all the financial numbers you need (another possible explanation for why sports teams love publicly-financed stadiums).
Gross speculation alert: I wonder if Tags could have kept the owners together enough to continue the CBA. Had it just been the same Small v. Large Revenue teams, I really think so, especially with Upshaw on board. With the general credit crunch, though, I doubt it. These are going to be some fun negotiations, I do believe. MLB, here we come!
:: NewsToTom — 5/20/2008 @ 3:52 pm
Personally, I would prefer that ticket prices dropped and the only way that is likely to happen is if Players’ salaries (especially rookies) drop.
nahh…there may be a few owners who’d drop prices if their expenses dropped, but most would continue to sell them for the highest price they can charge and still sell out the stadium.
There is one sure way for ticket prices to drop: fans stop buying tickets at current prices. The owners would drop prices until fans start buying again.
:: mm — 5/20/2008 @ 4:12 pm
“Pete, you’re forgetting the capital investment though. The average NFL franchise has appreciated 211% over the last eight years. A $450 million dollar franchise in 2000 is now worth nearly $950 million. So, quick math:
$500,000,000/8= 62,500,000
PLUS 10,000,000 revenue (for a bad team) =
72.5 MILLION per year.
That’s a 13.18% ROI.”
…except that those are unrealized gains. Just like if you bought a house a few years ago and average values doubled - but then the bottom fell out of the market.
It’s easy to tell houses aren’t worth what they are used to, because people sell houses all the time. However, with only 32 NFL franchises, no one has attempted to sell one since the credit crunch. Basing the current value of a franchise on the selling price of the last one only makes sense if market conditions are similar.
I suspect that, with the cost of credit rising, and the economy slumping, that if an owner tried to sell an NFL team now, the transaction price could very well be below the last sale price of a franchise.
:: KillerB — 5/20/2008 @ 4:15 pm
Re 41:
That’s interesting, it seems to me that there are few rich teams that can always afford to be good, and few poor teams that can only get good with some luck, and can never maintain it. Which is actually similar to the NFL, just for reasons other than money (Peyton Manning and Matt Millen mostly).
:: Tom — 5/20/2008 @ 4:16 pm
Well just some numbers, no idea how reliable they are but I just read a bunch of sports business articles.
1: Supposedly every team is losing money this year.
2: It is highly unclear whether the increasing values of the franchises offset this.
(e.g. Miami’s owner spent 168m to purchase the team in 1993 and has spent another 17.5m a year on improvements. Which works out to say a 1993 investment o5 275m.)
Now this year he sold HALF the team for 550m.
So he quadrupled his money in 15 years, which on an investment that size makes a short term operating shortfall maybe not so important.
Then again if he expected continued growth at that rate why on earth would he sell half the team?
Anyway I need to run maybe I’ll share more later.
:: Becephalus — 5/20/2008 @ 4:24 pm
#30 Pat writes “If you look at aggregate team record over the past 10 years for baseball and football, and correlate that with total team value, there’s a huge correlation in baseball, and a near-nonexistent one in football.”
I only went back to 2001, but I did add up total team wins from 2001-2007 and compare them to Forbes team valuations.
The ten winningest MLB teams since 2001, in order of wins: NYY, OAK, BOS, STL, ATL, LAA, MIN, SEA, HOU, PHL.
Those teams range from the most valuable in baseball (NYY) to the 29th most valuable (MIN). The average rank of those ten teams would rank #12 among all 30 teams.
The ten winningest NFL teams since 2001, in order of wins: NE, IND, PIT, PHL, GB, SEA, DVR, SD, BAL, CHI.
Those teams range from the 3rd most valuable in the NFL (NE) to the 26th most valuable (SD). The average rank of those ten teams would rank #13 among all 32 NFL teams.
What about if we look at the least successful teams? Looking at the ten losingest teams in MLB since 2001, their average value would rank #21 among all 30 teams.
The average value of the ten losingest NFL teams would rank #20 among the 32 teams.
I continue to believe that many fans overestimate the correlation between money and winning in baseball. I don’t see it as being all that much stronger as the correlation in the NFL.
Frick (#35), I hope I’m not cherry-picking stats. I see you have a strong interest in finding the underlying truth. So if you have figures that point to a stronger correlation between money and winning in baseball, by all means post them.
:: Mikey — 5/20/2008 @ 4:28 pm
OK, so who has ideas on compromises? I think we need 2 main things:
1) a bit more revenue sharing from the owners
2) give the players a larger share of a modified revenue sum that subtracts certain expenses. The players and owners will both benefit when costs go down, and both suffer when costs go up.
While I know the NFL has said repeatedly it has no plans to expand, I think an offer to expand could help get a deal with the players (they get more jobs), while focusing on expanding outside of the US could increase tv revenues (which are shared by all teams). In the short term, the expansion fees the new owners pay would also help get over any temporary bumps.
The NFL could expand by 4 teams in North America in the next 10 years (say, LA, Monterrey, Mexico City and Toronto) and start preliminary discussions to put 4 teams in Europe in the decade that follows.
The problem with expanding inside the US is that it won’t increase shared revenue much, so it would make local revenue more important (and thus hurt small market teams). Expanding outside the US has the potential to raise shared revenues (especially foreign tv revenues), so it could make local revenue a bit less important.
One of the reasons baseball and basketball are doing so well is because of surging foreign revenues (and basketball is now looking to expand in Europe). Because American Football is less well known abroad, the NFL has to invest more money now to see it grow in the future. Unfortunately, the owners are looking to cut costs right now, and not investing. Whatever they agree to, it should include a shared commitment to grow overseas (whether or not that includes foreign teams).
:: mm — 5/20/2008 @ 4:36 pm
37 & 38 -
I think you’re conflating ability to compete for expensive free agents with ability to compete for a pennant.
What’s unclear is that there’s a strong correlation between spending all that money and actually winning games.
What if the A’s HAD been able to sign Hudson, Mulder, Zito, Giambi, Haren, Damon, and Crosby? Only one of those guys is currently playing at a level that would justify what it would have taken at the time to keep him in Oakland.
:: Mikey — 5/20/2008 @ 4:48 pm
I’m trying to work up some care for multimillionaires (billionaires) who get tax payer financed stadiums and use of public airwaves to make huge profits on if they can scrap a percentage point or two off the players who often destroy their body in the process of playing… nope can’t do it.
:: johonny — 5/20/2008 @ 4:49 pm
Re #45:
But from an investment standpoint, nearly EVERYTHING is an unrealized gain.
Oversimplified: I could buy 1 million shares of WidgetCo at $100 a share… eight years later, my WCO shares are at $211. But I can’t unload 1 million shares at $211, so I end up selling for $175 a share.
There is absolutely NO way a franchise will sell for less than what the last team sold for…
Miami sold HALF of their franchise for $550 million this year, which is OVER what the team was valued at in 2000.
But you keep drinking their Kool-Aid, Killer.
:: masocc — 5/20/2008 @ 5:01 pm
Mikey #27 and Pat #30:
In the last seven Super Bowls, 11 different teams have competed for the championship.
In the last seven World Series, 11 different teams have competed for the championship.
If you look at aggregate team record over the past 10 years for baseball and football, and correlate that with total team value, there’s a huge correlation in baseball, and a near-nonexistent one in football.
Why limit it to 7 years? Lets look from 1995 on - post 1994 strike and post free agency.
Football:
Patriots - 5 appearances
Giants, Packers, Broncos, Rams, Steelers - 2 appearances each
11 other teams, 1 appearance
17 of 32 teams have made the Super Bowl in 13 opportunities with 26 slots.
Baseball
Yankees - 5 appearances
Braves - 3 apperances
Red Sox, Indians, Marlins, Cardinals - 2 appearances
9 other teams - 1 appearance
15 of 30 teams have made the World Series in 13 opportunities with 26 slots.
I’m not sure the football Cardinals, Saints, and Lions are really that much worse off than the baseball Royals, Expos and Pirates. Plenty of unexpected teams from both leagues got 1 appearance in 13 years. And of course teams that have lengthy histories of being bad were still bad in both leagues.
:: Andrew — 5/20/2008 @ 5:07 pm
Correct me if I’m wrong, but if this goes all the way (ucapped, strike, lock-out, decertification, and I don’t believe for a second that will happen), but doesn’t the draft disappear as well?
As for a free-market, welcome to English football, where the most successful 4 teams are (drum-roll please), the 4 wealthiest, Man Unt, Chelsea, Aresnal, Liverpool) 3 of whom are bankrolled by hugely wealthy individuals. And the gap gets bigger each year.
:: James, London — 5/20/2008 @ 5:10 pm
RE: #49
1. Rookie salary cap - take the negotiation out of the equation and set the pay for an initial 4 year contract per draft slot on day one, and everyone on day two gets paid the same.
2. Get rid of the transition tag, double the franchise tag.
3. No more restricted free agency - except for franchise tagged players, at the end of that initial 4 year contract, the player is an unrestricted free agent and can walk to any team.
4. Salary cap is a function of the revenue of the 14th - 28th most revenue generating teams and is reassessed every two years.
5. extend the trading deadline until midnight the day of the last game of week 16.
6. cut the pre-season to two games per team.
7. play an unbalanced schedule in 2011 and 2012 (17 games)
8. add two franchises in 2013 and add aonther week to the season (18 games)
9. add two franchises in 2015
10. expand rosters to 64 and eliminate the game-day inactive status.
:: Ian — 5/20/2008 @ 5:29 pm
“Chicago Cubs, 2006: last in the NL Central
Chicago Cubs, 2007: ”
Buying $300 million worth of free agents had a lot to do with it. And I’m a Cubs fan.
:: Scott de B. — 5/20/2008 @ 9:10 pm
Does this tie GMs’ hands, or am I missing something? Without knowing what the cap will be, or if there will be a cap at all, it must be ridiculously hard to plan long-term.
:: Jake Schumaker — 5/20/2008 @ 10:34 pm
#46: However, with only 32 NFL franchises, no one has attempted to sell one since the credit crunch.
That is wrong.
Wayne Huizenga sold 50% of the Miami Dolphins on Feb. 22, 2008.
That sale placed a valuation of $1.1bn on the franchise.
Forbes estimated the value of the franchise as $765 million in 2004 and $912 million in 2006.
I’ve added a link (click my name) to the most recent Forbes article I was able to dig up on the matter. Helpfully, it also includes the amount of debt.
The Miami Dolphins actually had the seventh highest debt in relation to the franchise value (27%).
It stands to reason that the “credit crunch” hasn’t done too much to franchise values, although outliers like the Falcons (37%), Lions (42%) and Vikings (44%) might suffer disproportionately.
:: fyo — 5/21/2008 @ 4:19 am
#49: I don’t think you’re cherry picking stats, I just don’t think you’re doing a great analysis on it. Sorry - baseball team values aren’t distributed evenly, so you can’t just average.
I’ve got a correlation somewhere that I did two years ago, I think, on this exact topic. I might have time to find it.
But you can pretty much do the same thing if you just plot average franchise value over those 10 years versus record, and do a simple correlation.
There’s some random subtlety that I can’t remember offhand in the analysis due to the fact that baseball season records have much more parity innate to the sport than football does, but if memory serves even if you just did a raw correlation it pops straight out. (The poor distribution of team values in baseball does make you wonder if it’s just an effect of a few outliers with a lot of lever arm on the value distribution - the Yankees, namely).
Did you use Forbes valuations from one year, or averaged over the full timespan of interest? That also had an effect, if memory serves.
:: Pat — 5/21/2008 @ 4:40 am
#41: Using total team value now and comparing it to win totals from 10 years ago seems porblematic if winning contributes more to franchise value in baseball than it does in football.
I didn’t mean to suggest that. I was suggesting correlating it to average team value, not current.
I agree regarding the correlation/causation possibility, too. With a time-series analysis you might be able to look for a phase lag to determine it, but I haven’t done something like that. And I don’t know if there’s enough data, either.
Anecdotally, there’s evidence of a team going out and spending a ton, becoming good, and then dropping a bunch of players and becoming bad again. But that’s not exactly a well-controlled study.
:: Pat — 5/21/2008 @ 4:48 am
I don’t necessarily think that Franchise Value is the best thing to use for a correlation against record. Look at the size of the cities that host the teams. (from Wikipedia)
#1 New York - 8.2M
#2 Los Angeles - 3.8M
#3 Chicago - 2.8M
#12 Jacksonville - 795k
#13 Indianapolis - 785k
#23 Boston - 590k
But that isn’t reality since it only the actual city, not the surrounding communities. So change to the Metropolitan Area populations
#1 New York - 18.8M
#2 Los Angeles - 12.8M
#3 Chicago - 9.5M
#10 Boston - 4.4M
#33 Indianapolis - 1.7M
#40 Jacksonville - 1.3M
And those numbers need to be refined. Boston has 3 distinct Metro areas, so the population is closer to 7M. Indianapolis pulls from surrounding communities so their population should be higher, but not not that much.
Can small communities compete, yes. Look at Green Bay, tiny community that is in the top 1/3 of teams in terms of revenue. They also have the advantage of a long history of winning teams and pull fans from 6+ hours away.
Is Green Bay a normal franchise or an outlier?
:: Frick — 5/21/2008 @ 8:24 am
Pat - I only used the Forbes valuations for the most recent year.
I took an average of the rank of the top teams just for the sake of getting something posted quickly. There is certainly a big difference in value distribution among the teams. The gap between the value of the #1 and #2 MLB teams is about as great as the gap between #2 and #30.
If you’re able to find your earlier analysis, of course I’d be interested to read it.
:: Mikey — 5/21/2008 @ 8:47 am
#33-34 - What you’re describing is a bubble, where value is determined not by fundamentals, but what the next dumb rich egotist is willing to pay for the prestige of owning a team. Fundamentals are still going to be based on actual revenues and costs, because eventually, you run out of dumb rich egotists, and the last one is left holding the bag).
Austan Goolsbee wrote about this a while ago.
:: Independent George — 5/21/2008 @ 1:57 pm
I think some of you are missing an important larger point:
Even if teams WOULD be equally capable of winning in an uncapped league, I don’t think there’s much debate that we’d probably see at least some movement towards baseball in the sense that some teams would spend more money on player acquisition than others. Even if that doesn’t necessarily translate directly to wins, isn’t it more fun to root for a team when you have hope of keeping a star player around for more than a year or two? Fans of small-market baseball teams have FAR fewer opportunities to root for a big-name player for a significant amount of time … and in my opinion, that makes the experience of a fan worse, even if the game stays equally competitive.
:: dmb — 5/21/2008 @ 2:14 pm
“You see brief flickers of glory from small-market teams, but you never see sustained success from them.”
The Cardinals? A’s? Atlanta is a big market?
Minus the Yankees (a big exception, of course), their really isn’t a lot of financial imbalance in baseball.
Someone mentioned the Pirates selling off all of their good players; which good players have they exactly sold off? Their problem is they don’t develop any good players in the first place.
:: Conor — 5/21/2008 @ 2:15 pm
“#
Re 37: Or the A’s to keep TimHudsonMarkMulderBarryZitoDannyHarenJasonGiambiJonnyDamonBobbyCrosby…”
For starters, the A’s still do have Bobby Crosby.
I don’t know if you noticed, but Zito and Mulder haven’t done so hot since leaving Oakland. Damon wasn’t a homegrown player, they had him for a year and let him walk.
They only reason they got Haren in the first place was because they traded Mulder for him.
And the A’s could certainly have afforded to keep Haren; when they traded him, he still had 3 years left on his contract at a total of 10 million and an option for a 4th year at 6.75 million which they would certainly pick up if he was any good.
And they got a great haul back for him; 2 starters (Eveland and Smith) who have combined to give them over 100 IP and a 3.20 ERA and a very good OF prospect in Carlos Gonzalez.
Sorry for the baseball talk, but I think some of this stuff is way overblown.
:: Conor — 5/21/2008 @ 2:20 pm
Re #64: If by ‘wrote about this’ you mean, “mentioned briefly for a sentence or two as a portion of an article” then yes, he did.
Goolsbee appears to be saying something along the lines of what I said… you have to at least consider capital gains when trying to estimate earnings.
We could argue with each other until we’re blue in the fingers about whether or not a ‘bubble’ exists. I don’t have the time or inclination to crunch the hardcore numbers that would be involved, if it’s even possible.
But the rich ARE getting richer. There’s plenty of billionaires left to buy up a team that’s for sale, and I’ve certainly seen absolutely NO signs of that trend stopping. Even sports teams that have shown year after year losses, with less than ideal lease/stadium situations continue to sell for significant capital gains.
There aren’t very many ‘toys’ a billionaire can buy that will actually provide a RETURN for their money.
:: masocc — 5/21/2008 @ 5:13 pm
66: Players that the Pirates have traded or allowed to walk during or immediately preceding their primes:
Barry Bonds
Tony Womack
Denny Neagle
Tim Wakefield
Jon Lieber
Esteban Loaiza
Jason Schmidt
Jose Guillen
Aramis Ramirez
Kris Benson
Brian Giles
Kip Wells
Bronson Arroyo
Oliver Perez
Mike Gonzalez
:: dmb — 5/21/2008 @ 6:10 pm
re: 69.
Ok you are going pretty far back there with some of those guys. I mean, Bonds left 16 years ago. (And the Pirates essentially decided they would rather have Van Slyke than Bonds.)
Counting Giles and Perez is unfair; the only reason they got Perez was because they traded Giles. And furthermore, they didn’t trade Perez because they couldn’t afford him. And they got Jason Bay for Giles, who has been as good as Giles has.
Really, Arroyo wasn’t let go because they couldn’t afford him. He wasn’t even arbitration eligible yet. They just didn’t think he was any good.
If anything, that list would show how bad the Pirates are at identifying talent. Very few of those were let go for financial reasons. Wakefield was cut before he was arbitration eligible. It wasn’t because they couldn;t afford him, they didn’t think he was any good. I mean, Kip Wells turned into a pumpkin as soon as the Pirates handed him 5 million dollars a year. They got their starting first basemen in exchange for Mike Gonzalez; that was so salary dump.
Guillen wasn’t let go because they couldn’t afford him. Schmidt and Ramirez are the two obvious ones, and they were 7 and 5 years ago, respectively.
Anyway, I don’t know if that was just a list or you were trying to say the Pirates let all of these guys go because they couldn’t afford them. If it was the second, it wasn’t true.
:: Conor — 5/22/2008 @ 11:33 am
Schmidt wasn’t any good until he left the Pirates.
:: zenbitz — 5/22/2008 @ 12:19 pm
70: It was just a list; I don’t follow baseball closely enough to know the context under which every one of those players left.
I did go back a long way, but that was intentional; I included players going back to the last time the team was relevant. The “Van Slyke over Bonds” decision is pretty well known, but the point is that if they spent as much on player salaries as a lot of larger teams, the team might not have needed to make that decision in the first place.
You’re right about Wakefield, Arroyo, and Guillen — I didn’t know under what circumstances they left the team. But I don’t understand why you don’t think Perez should be counted; was it because he didn’t make his big league debut with them? I’d also argue that the fact that they got Perez and Bay in a salary dump indicates that they CAN find talent, even if they haven’t been able to develop or keep it.
71: He was good enough to sign a reasonably hefty deal only a few months after he was traded…
:: dmb — 5/22/2008 @ 4:16 pm
72: I’d also argue that the fact that they got Perez and Bay in a salary dump indicates that they CAN find talent, even if they haven’t been able to develop or keep it.
Blind squirrels. They also traded for Matt Morris last year, not only giving up actual prospects but agreeing to pay virtually all of Morris’s salary. That was the last straw that finally got the GM fired. The fact that they just cut Morris is at least some indication that things may get better for them.
:: Jim — 5/23/2008 @ 3:48 pm
I don’t think Perez should be counted because he was horrible at the time he was traded. He had a season and a half with an ERA over 6, and he was 2 and a half years away from free agency; they didn’t deal him because they couldn’t afford him, they dealt him because he had sucked for a year and a half. And they got their starting RF for him.
And yeah, blind squirrel and all that; they have let a lot more talent out of the system than they have let in.
:: Conor — 5/23/2008 @ 7:17 pm
Re #14: “Out of curiosity, anyone know WHY the NFL owners thought the deal was too player-friendly? Specific reasons?”
I believe it has to do with stadium financing. #52 mentioned the public financing of stadiums. That was the case, but fewer cities are putting $$’s out there. This means the teams have to provide their own financing. This is a basic change in the cost structure of the business. If salaries are fixed at 60% of the top line, only 40% of any increase in revenue is available to pay off debt (there are also some recently sold clubs who are paying off purchase related debt.)
:: JMM — 5/24/2008 @ 7:45 am
http://www.blogmaverick.com/2008/05/25/understanding-salary-caps-and-why-the-nfl-opted-out/
That’s the best explanation of the situation I’ve read.
:: John — 5/28/2008 @ 11:29 pm