Although his Park Avenue office is as quiet as an empty stadium, NFL Commissioner Roger Goodell sits atop a seething volcano of fans who will erupt if training camps do not open in July. Fans care nothing about the details of the labor dispute that threatens to keep stadiums empty into September and perhaps beyond: There have been no serious negotiations since March; the court hearing last Friday might -- weeks from now -- result in a decision that will restart negotiations. Even if, however, you think football is a dispensable frill, the NFL's agony is a fascinating illustration of how things can spin out of control.
Explaining why the NFL -- a hugely popular $9.3 billion enterprise -- needs fixing, Goodell sounds paradoxical: Costs are growing faster than revenues, stadiums are the biggest costs, and they must be made better because most fans never enter them. Most NFL fans have never been to a game; more than 90 percent never or rarely go. They watch at home on wide-screen televisions, with super-slow-motion replays and close-ups of linebackers' collisions and cheerleaders' cleavages. The television experience will be diminished, Goodell says, if the stadiums are not full. And the parlous condition of state and municipal budgets means that taxpayers are resisting building them.
Under the previous agreement, owners took $1.3 billion of league revenues off the top before players got about 65 percent of the remainder. This time, owners began by demanding that another $1 billion of revenues -- subsequently reduced to less than $400 million -- be set aside for stadiums and other investments, before the players get their portion. But players, whose careers average about six years, according to the league, resist sacrificing earnings so the league can make long-term investments that might benefit players now in high school. Furthermore, because fans -- especially season ticket holders -- resent having to buy tickets for two home preseason games, the owners want to reduce those games from four to two, and lengthen the regular season from 16 to 18. Players say this means more work and risk of injury for less pay. Owners say players would get a smaller slice but of a bigger pie.
Because 43 percent of NFL revenue comes from national television contracts shared equally among the 32 teams, and almost 80 percent of all NFL revenues are shared in some way, teams in smaller markets can prosper: The teams in the last two Super Bowls were from Pittsburgh, Green Bay, New Orleans and Indianapolis. The combination of revenue sharing and the salary cap means it takes a perverse genius for a team to lose money.
Currently, the owners propose a salary cap of $141 million per team, meaning $4.51 billion in league-wide compensation. The players want $151 million, meaning $4.83 billion. It is ludicrous to risk even part of a season over so little, and both sides probably would, if they could, erase the last three months of staking out improvident positions and agree to extend the current system.
Any labor dispute is a test of the two sides' pain thresholds. The owners think the players' serious pain will begin when they miss the first of their 17 paychecks. The owners may, however, be forgetting a pertinent fact: NFL players -- pain is part of the job description -- are NFL players because they are intensely competitive and hate to lose at anything. After decades in which the steel and automotive industries were laid low by mismanaged labor relations, and as the role and rights of organized labor are being hotly debated, the NFL's current crack-up suggests that both sides are slow learners.