Vast gap in how NFL, players see revenue (AP)

Figures obtained by The Associated Press underscore the substantial divide
between the NFL and the locked-out players on a core issue: What portion of
additional revenue goes to players.

Players’ share of incremental increases to all revenues under the NFL’s
expired contract was about 53 percent from 2006-09, according to calculations by
the accounting firm that audited the collective bargaining agreement for both
sides.

The NFL has repeatedly said that 70 percent of extra revenue went to
players, a main justification for changing the sport’s economic system. The
league’s numbers remove the portion of revenues—about $1 billion a year—
taken off the top for owners to spend on expenses.

Data prepared in 2010 by PricewaterhouseCoopers and obtained Monday by the
AP show that about $3.8 billion of the $7.2 billion in incremental revenue over
those four years—52.9 percent—went toward players’ salaries and benefits.

The league and players agree on the $3.8 billion; they disagree on how to
look at revenues. Setting aside the off-the-top expense credits—for things
such as stadium improvements or NFL Network—makes the players’ take a higher
percentage.

The figures from PricewaterhouseCoopers—calculated last year at the
request of the NFL Players Association—include that upfront money, because it
is part of the league’s gross revenue.

“The NFL wants to artificially inflate the percentage of incremental
revenue going to players by excluding revenues that never go to players,” NFLPA
spokesman George Atallah said. “League officials … have been selling a
lockout to owners based on misleading and incomplete financial information. They
excluded the cost credits to be able to tell owners that player costs are rising
faster than all revenues. This is not true.”

NFL spokesman Greg Aiello wrote in an e-mail to AP: “Expense credits were
used in the last agreements by agreement with the union to cover certain
expenses needed to put on the games. The NFL did not exclude anything
unilaterally.”

Owners locked out the players more than a week ago, creating the NFL’s first
work stoppage since 1987. That came hours after the NFLPA renounced its status
as a union, allowing players to file a class-action antitrust lawsuit in federal
court.

The main sticking point throughout CBA negotiations was how to divide the
NFL’s more than $9 billion in annual revenues. All along, the league has said it
needed to rework the CBA because too large a portion of new revenues have been
devoted to players’ salaries and benefits.

Just before last month’s Super Bowl, NFL general counsel Jeff Pash—the
league’s lead labor negotiator—said: “The players have gotten 70 percent of
the incremental revenue that the NFL clubs have generated since 2006. They know
that’s not a sustainable model.”

A year earlier, Commissioner Roger Goodell made a similar point during his
annual Super Bowl news conference.

That 70 percent figure not only made an impression on owners—it also made
players wonder whether there was, indeed, an adjustment that needed to be made.

“One of the owners’ big problems with the deal, as they reported from 2006
forward, is they had the argument that player cost was north of 70 percent, say.
When that number was first presented, it caused everyone on our side of the
table to sit down. It caught our attention: ‘If it is 70 percent, we need to
address it,”’ said former player Pete Kendall(notes), who has been advising the NFLPA
during negotiations.

“It also spurred some discussion and research, and we had
PricewaterhouseCoopers look at the numbers,” Kendall said last week while at
the players’ meetings at Marco Island, Fla. “And what they came back with is,
the only way the NFL could arrive at that was if they excluded the deductions
they take (at the outset). But that is money that came into the league.”

According to the figures obtained by the AP:

— In 2005, player costs were $3.32 billion, and all revenue was $6.49
billion;

— In 2006, the first year under the just-expired CBA, player costs rose to
$4.1 billion, an increase of $780 million, which is 61 percent of that year’s
$1.28 billion increase in all revenue to $7.77 billion;

— By 2009, player costs were $4.5 billion, while all revenues were $8.88
billion.