NFL pools $900M for labor fight
By DANIEL KAPLAN
Staff writer
Published November 01, 2010 : Page 01
The NFL is building a nearly $900 million lockout pool financed from the savings the league reaped by not paying non-health care benefits to players this year as well as from revenue the league is holding back from the teams, financial and football sources said last week.
The money, $28 million from each of the 32 clubs, is in addition to reserves the league has saved that are sufficient to pay for two years of interest on roughly $1 billion of stadium debt that flows through the league, the sources said.
The NFLs TV contracts also require payments to the league even if there are no games played next year. The union is contesting that move, though an independent mediator delayed his decision from this month to January. The league ultimately would pay back, with interest, the money to the media companies.
The collective-bargaining agreement expires March 3, and a potential lockout at that point could stretch into next season.
One banking source who attended the leagues annual bank meeting in Dallas last week, where the league briefed its lenders on the financial contingency planning, said the NFL was flexing its financial muscle, though not as overtly as when the NHL several years ago outwardly required $10 million letters of credit from each of its teams as labor talks intensified with the NHL Players Association. In the NFLs case, the league is in part holding back money due the clubs, rather than, as the NHL did, require teams to actively dip into their own pockets.
We are not going to comment on specifics of what we discuss with our bankers, NFL spokesman Greg Aiello wrote in an e-mail. But if the question is whether we have planned for all financial contingencies, the answer is that of course we have, as we have stated many times. Our goal and No. 1 priority, however, remain the same: Reaching an agreement as soon as possible that is fair to the players, clubs and fans.
The NFL recently told owners that they could lose $1 billion by next September because companies and fans would be unwilling to invest in the league because of the labor uncertainty. That figure doesnt account for cost savings the league would enjoy from not paying players, or reflect money saved this year without a salary cap or floor.
The nearly $900 million the NFL is planning for is spread between two pools of money. The first is the $10 million each of the 32 clubs saved in March when the teams did not have to pay non-health care benefits, such as life insurance or pension-plan payments. Under terms of the CBA, the teams obligations to pay these benefits ceased with the expiration of the salary cap in March. The league instructed the teams to hold onto that money and not spend it, the sources said, though its unclear if the money is held together in one account or individually at the 32 clubs.
The league also is in the process of holding back $18 million per club from pooled revenue that otherwise would have been paid out to them. This $576 million total, plus the $320 million, will serve as the main lockout funding for the league.
The NFL also has built interest reserves, the sources said, sufficient to pay two years of debt from the G3 program, the NFL financing program that granted money to stadium construction.
Part of the leagues point in putting together such substantial lockout funds is to send a message to the players union, said Bill Gould, the former chairman of the National Labor Relations Board and a Stanford University professor. Because NFL players have such short careers, players could be nervous if the league appeared to be preparing for a long work stoppage.
They want to put the fear of god in the union, Gould said.
The NFL Players Association is building its own war chest, an amount thats now in excess of $200 million. Total assets for the union, which includes the value of the groups building, stood at $311 million as of March 31, according to the NFLPAs annual report.
The union is also advising players to save part of their salaries.
We have been attempting to tell players and other business partners that the league has been preparing for a lockout for a long time now, so it is no surprise they are doing this, said George Atallah, NFLPA assistant executive director of external affairs, of the NFLs lockout funds. It is disingenuous for them to be preparing for a lockout on one hand and to blame the lockout for any financial woes on the other hand.
Several NFL owners and executives last month expressed hope that the collective-bargaining agreement could be renewed before expiring in March, though privately, most labor and league sources do not share that sentiment. As of late last week, no new collective-bargaining sessions were scheduled, with the two sides seemingly far apart.
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