Millionaires Fighting Billionaires

Nobody feels bad for National Football League owners. Generally wealthy businessmen, NFL owners spend their fall Sunday afternoons in their own suites, watching their subordinates risk their physical and mental health for 60 minutes. According to Forbes, 16 of these 31 owners are billionaires. It’s a tough life.

On the other side sits the players ¬¬— athletic freaks of nature who devote countless hours a year to studying game tape, rehearsing plays and conditioning their bodies in preparation of battle on the gridiron. But, in the end, most earn millions of dollars to play a game for a living, culminating a childhood dream.

So, during a time of economic uncertainty for millions of Americans, millionaires are fighting billionaires on how to split the NFL’s $9 billion revenue pie, putting the 2011 season of America’s most popular professional sport in dire jeopardy.

In 2008, NFL owners set the stage for the contemporary labor dispute, voting unanimously to opt out of the 2006 collective bargaining agreement. Like other Americans, owners felt the economic crunch, or so they say. A tumultuous economy renders higher ticket prices largely unfeasible, and many local governments are unwilling to devote millions of taxpayer dollars to subsidizing new stadiums. Owners want to make up their losses, and players represent their biggest expense, making them an easy target.

Fast forward almost three years, and the NFL is in lockout mode, with players and teams unable to communicate with one another. After the two sides failed to come to an agreement on a new CBA despite 17 days of negotiations with a federal mediator, the NFL Players Association decertified. The move stripped them of their collective bargaining rights but allowed individual players to file antitrust lawsuits against the NFL. The immediate future of the league now lies in the country’s judicial system ¬— the home turf of DeMaurice Smith, the “former” NFLPA executive director and Washington attorney.

So who’s to blame for the league’s uncertainty? And will the two sides eventually reach a common ground?

These questions appear simple on the surface, but this is a remarkably complex scenario. The owners usually take the first billion off the league’s $9 billion revenue pie, and then the remaining $8 billion or so is split 60/40 with the players and owners, respectively. Given ominous economic times, the owners are seeking a larger initial piece of the pie, asking the players to surrender 18 percent of net revenue to tackle team costs.

There are several other bargaining chips on the table, such as a rookie wage scale, a proposed 18-game schedule and medical benefits for players and retirees. Though these are important elements, it ultimately comes down to money. This is, after all, a business negotiation.

The players want the owners to open their financial books to see if they’re really struggling, yet this is not even a remote possibility. This transparency would give far too much leverage to the players, who are working diligently to paint the owners as a money-hungry group of billionaire suits interfering with the players’ desire to, well, play. Books of audited financial data would probably reinforce this impression.

As for a solution, it’s more of a question of when. Conventional wisdom tells me there’s too much money to be made to miss regular season games. The lockout may drag on throughout the summer and negate offseason team activities and training camp, but the assumption is the NFL is a far too lucrative business. It doesn’t take an MBA to understand the league earns far too much money in television licensing fees, ticket sales and other sources of revenue to mess with the possibility of actually missing parts of the 2011 season. As cliché as it may sound, it really is a matter of coming together and reaching a compromise.

With that said, it’s only going to get muddier. As the league and players head to court, the attacks will only continue. As players seek an injunction to prevent the owners from continuing the lockout, both sides will also battle in the court of public opinion. But will either side succeed? It is, of course, a case of millionaires fighting billionaires ¬¬¬¬¬— not something the average American can relate to.