By now you know the NFL owners want to exclude an additional $1 billion a year from compensation as part of a new collective bargaining agreement.
The league’s current CBA is set to expire on March 3 and if a new agreement isn’t reached, the owners have indicated they will lock out the players.
Primary among the issues facing the owners and players is a $9 billion pie that has to be divided into shares both sides can live with.
In the current CBA deal, the owners are given a $1 billion credit to cover operating expenses. The union’s share is roughly 60 percent of $8 billion, once the $1 billion credit is subtracted.
The team owners have asked for an additional $1 billion credit – or $2 billion in total – before it splits total revenue with players.
According to Forbes, the NFL’s 32 teams had a combined operating margin of 13 percent in 2009. As of August 2010, 16 of the league’s 32 teams were valued at more than $1 billion and every team in the NFL had revenues of at least $210 million.
Only two teams – the Miami Dolphins and Detroit Lions – had operating income losses. The other 30 teams had operating income gains of nearly $36 million on average.
For the sake of argument, let’s assume the new CBA will be for at least five years.
Based on current revenue and operating income levels, if the owners get the players to agree to the additional $1 billion credit, the dollar value over the life of the deal would equal roughly $900 million annually.
That $900 million would increase the NFL’s value by $3.6 billion, therefore the NFL would generate additional revenues that would amount to well over $9 billion annually.
Breaking those numbers down even further, the players would only receive a percentage of $7 billion after the $2 billion credit is factored.
Depending upon the percentages the two sides agree upon, the players could lose more than $100 million annually over the life of the CBA if they agree to the additional credit.
Chances are the players will never agree to the additional $1 billion credit and as a result, a new CBA won’t be in place for a while.
The players are generally in a no-win situation regardless of what happens, but agreeing to the additional credit would cost them a lot more.
Considering the NFLPA has offered a 50-50 split on the total current revenue figure of $9 billion, they’ve already shown a willingness to take a $300 million cut in compensation.
But it’s very unlikely they’d be willing to take more than that to get a deal done.
