Moral Capitalism in the NFL lockout When it comes to fights over money, neither pro-football players nor owners are easy to root for. The owners are rich enough to begin with, and the players, though they take part in a violent game that risks their long-term health, are compensated handsomely. To further complicate the legal struggles of billionaires vs. millionaires; both players and owners are competing for human capital by trying to capture the loyalty of the fans. They do this fully aware that the $9 billion dollars they are wrangling over comes from the fans. The same Fans who attend games, buy jerseys, and sit-through television ads. Do this with the expectation that everyone plays by the same rules, and that the game they love, will be back next year.
“For many years, the collectively bargained system—which has given the players union enhanced free agency and capped the amount that owners spend on salaries—has worked enormously well for the NFL, for NFL players, and for NFL fans.”
Goodell’s first argument is clear, that the status quo has worked out “enormously well” for every party involved. Unfortunately this argument is problematic, given that it was actually the NFL whom decided to opt out of the collective bargaining agreement (CBA). In 2008 the Owners voted unanimously to exit the CBA after the 2010 season, even though the 2006 extension would have been valid through the 2012 season. The Owners shortened the deal by two years because they believed the players were receiving too much of the NFL’s adjusted gross revenues. From the beginning of his Op-ed article, Goodell’s begins to imply that it was the NFL Players Association (NFLPA) that walked out of the existing agreement when in actuality, the NFLPA offered to continue to operate under the CBA until a new agreement could be negotiated; the Owners refused and instituted a lockout, everything since has been wrangling for positioning at the negotiating table, including trying to win over the public. Goodell is trying to frame this as a union initiated strike; rather than what is really is, an Owner instituted lockout. This is an attempt to sway the public and win points at the negotiating table.
Goodell pushes this motif of lambasting the NFLPA by writing: “the union-financed lawsuit attacks virtually every aspect of the current system including the draft, the salary cap and free-agency rules, which collectively have been responsible for the quality and popularity of the game for nearly two decades.” Again, Goodell is trying to paint the picture that the NFLPA is undermining the current system.
This worst part about this deceptive approach to winning popular support is that it is completely unnecessary. There is nothing wrong with seeking market profit; indeed the reason the NFL came into being was to ensure sustainable profits for the team owners, as well as the players. The NFL had every right to exit the CBA, but they also had a responsibility to deal honestly and fairly with the public by not attempting to “spin” whose responsibility the lock-out is; instead they should have argued their reasoning for entering the lockout. The NFL had legitimate reasons for leaving the CBA, reasons that Goodell does not bring up in his op-ed piece. When the CBA was first developed in 1993, it dealt with many issues that Goodell mentioned in his op-ed article; namely a salary cap, free agency, and benefits for retired/injured players. However in the 15 years between its enactment and the NFL’s decision to leave it; many macroeconomic factors changed. In 1993, stadiums were primarily financed by the public, now owners can be called on to pay 40% or more of stadium costs . Both Owners and players recognize the iniquity of paying an untested number one draft pick (Sam Bradford) a guaranteed $50 Million, more guaranteed money than a proven quarterback like Tom Brady .
Goodell alludes to this shocking increase by writing: “For players, the system allowed player compensation to skyrocket—pay and benefits doubled in the last 10 years alone.” But again, chooses to frame it like the players opted out of the CBA and that they should have been happy with the increase in pay and benefits. Instead he should have argued that the current system leads to a disproportionate amount of a team’s salary cap going to an unproven rookie, which is not a sustainable practice.
Goodell also argues that the current system affords “each team a genuine opportunity to compete for the Super Bowl, great cost certainty, and incentives to invest in the game. These incentives translated into two dozen new and renovated stadiums and technological innovations such as the NFL Network and nfl.com”. The first part of this argument, that every team has a chance at winning a Super Bowl, is a moral one in that it takes into account the needs and concerns of everyone involved: Owners, players, and fans.
The salary cap that limits the amount that teams can spend on salaries, coupled with teams being able to draft based on the inverse of how they finished the season, provides a state of equity unseen in the other professional sports leagues. Players that are well coached have a chance to win any given Super Bowl; despite the size of the market they are drafted into. Indeed in the past two years, neither the Green Bay Packers (2010 Champions) or the New Orleans Saints (2009 Champions) were in the top half of teams in terms of revenue and market valuation . Compare this to the game of baseball, wherein there is no salary cap, and the team with the largest payroll (New York Yankees) continues to lead the league in both revenue, team salary, and league championships. Indeed can fans or players tied to the Kansas City Royals, who spent $35 million on payroll, have a reasonable chance at a championship compared to the New York Yankees who spend $200 million?
This is echoed later on by Goodell who argues that the failure to reach a new CBA will result in a salary, in what is likely a reference to the MLB says that “some teams could have $200 million payrolls while others spend $50 million or less.” The previous CBA also awarded compensation to teams that lose star players to free agency by awarding bonus draft picks. Without a new CBA, Paul Allen who owns the Seattle Seahawks and is worth $13.5 billion could offer Ben Roethlisberger $50 million to leave the Steelers, because their owner, Dan Rooney, is only worth $150 million. It is unlikely the owners would effectively police themselves and the NFL would have the same level of top player poaching that is seen in the MLB. Again, this argument is moral as the salary cap benefits the majority of fans and players who do not live or play for one of the top teams. The “two dozen new and renovated stadiums” Goodell refers to is somewhat misleading. While fans do benefit from having a nicer stadium in which to watch the game, it should be kept in mind that the public generally pays half to two-thirds of the cost of stadiums, and new stadiums allow owners to increase the cost of tickets. Indeed, one example of this can be seen in New Meadowlands Stadium, which opened in New Jersey in 2010. This $1.6 billion which hosts the New York Jets and the New York Giants saw increases in ticket prices of 38.1% and 26.0% respectively. Goodell also makes the argument that “many players could earn substantially less than today's minimums”. In making this argument, Goodell is acting as the fiduciary he is. Goodell is putting the interests of those who stand to benefit from the new CBA ahead of any the NFL might have. It is actually in the NFL’s benefit to not have a league minimum; for non-skill positions, e.g. Centers, there is often a surplus of talent and players compared to skill positions, e.g. quarterbacks. NFL owners could pay these players a pittance, vs. the $325,000 minimum (for players with no experience) and pass the salary cap savings onto skilled positions or to the team’s bottom line. Goodell’s genuine concern for the needs, interests, and values of many of the league’s rookie and non-skill players, over the prospect of short-term profits, makes it a moral one. The earlier CBA benefits fans as well as fans of small market teams e.g. Jacksonville Jaguars, who because of the salary floor can field competitive teams, and have an equal chance at a Super bowl compared to large market/revenue teams like the Dallas Cowboys or New York Giants.
This prophecy is again echoed with Goodell’s prediction that the NFLPA’s failure to negotiate will lead to an end of free agency. Goodell is correct, that without some type of restriction on when players are eligible for free agency, or whether teams are compensated when they lose players to free agencies, it will change the competitive structure of the NFL outlined above. Without restrictions players and agents could create super-teams now with free agents. Small market teams would in effect turn into talent farms for wealthy teams with high revenues like the Dallas Cowboys. Much like the NBA where individual star players eventually migrate to top teams filled with other stars e.g. the LeBron, Wade, and Bosh trio. While this system would benefit the fans and players in the Dallas area; it would leave the majority of fans stuck with second-tier players and non-competitive teams. Goodell prophesizes that unless players come back to the table, that there will be no draft. If there's no CBA, and no union, then every player would be able to enter the league as a free agent, free to contract his services to any team of his choosing. Any league wide ruling or attempt to restrain players from freely contracting services would, in theory, be subject to challenges of collusion or antitrust in court. If the league holds the draft, any drafted player can argue his movement has been restrained. The NFL is different than any other private company. Players are employees of the individual’s teams which collectively make up the NFL. Traditionally if an employee is not happier with his salary or thinks his bosses are hoarding too much cash, the free market lets him go work at another firm. In football, there's simply no other league where players can be similarly compensated for their specialized skills, in this instance, the NFL’s monopoly on professional football puts players at an unfair advantage. In regards as to whether the NFL’s monopoly benefits the public or the Owners within, it is fair to look at the individual ramifications of a lockout. For the players, a protracted lockout means no paycheck, and a loss of earning power during their athletic prime. For the NFL, no football means no revenues from ticket sale, concessions, or memorabilia; but no hefty salaries to pay for star players as well as reduced overhead for the many various day-to-day employees it takes to run the NFL. The NFL also signed numerous favorable TV deals that give them money regardless of whether or not games are played, giving them a financial cushion. This deal is another area where the NFL crosses a fine line. As part of the agreement, the NFL agreed to accept less overall money, in exchange for a guarantee that the networks would continue to pay in the event of a lockout (the money would be credited towards future games). By doing this the NFL failed its fiduciary duty to the players. The NFL had a fiduciary duty to the players to maximize revenue. Because the NFL and the NFLPA had an agreement to split by a set percentage, the NFL as a fiduciary had the duty to maximize revenue for all parties. The agreement that promised Owners money in the event of a lockout only benefited the Owners, and broke trust with the NFLPA. Overall the NFL and the NFLPA both failed to take the approach of moral capitalists. The NFL broke trust with both the fans and the NFLPA by portraying the players as the one who ended talks; not taking into account that the Owners were the ones who decided to opt out of the original CBA two years early. Also, the NFL failed in their role as a fiduciary by not maximizing overall revenue; instead focusing on the short-term gains possible by leaving the CBA two years early. These two additional years could have been used to negotiate on the common ground of a mutual acceptance that the rookie pay system is unsustainable, as well as, a shift away from public financing of stadiums; eventually both parties could have focused on finding a mutually beneficial agreement. The NFLPA also failed in their roles as fiduciaries; their trust was not to maximize revenue, but to play the game for the benefit of the fans. The NFLPA could have gained quite a bit of human capital by taking the approach that they were more concerned with the future of the league, and not with short-term gains. If the players had truly given the impression that they are more concerned with the purity of the game, that playing football every day truly energizes them and makes them feel like they are part of something bigger than themselves; they would have gained the loyalty of fans and not had to resort to various legal maneuvers to confront the owners. The NFL and the NFLPA will eventually come to some new agreement. Beyond the $9 billion at stake, both the NFL and the NFLPA get greater economic benefits from a collective agreement that exempts the NFL from certain anti-trust provisions, as well as ensures a salary cap and a truly competitive playing environment. One can only hope that this next agreement ensures sustainable profits for both the NFL and NFLPA while taking into the account the needs and concerns of the fans.

NFL Official Press Release: http://www.nfl.com/news/story?id=09000d5d80868b78&template=without-video&confirm=true

Vikings told to pay 40% http://www.startribune.com/politics/statelocal/121423789.html

http://blogs.payscale.com/salary_report_kris_cowan/2010/09/nfl-player-salaries-tom-brady.html

http://www.forbes.com/lists/2008/30/sportsmoney_nfl08_NFL-Team-Valuations_Value.html