The recently resolved showdown between NFL team owners and the players over a long-term contract hardly had the stakes of the debt ceiling crisis. But there were some similarities.
In both, the parties played to public sympathies. In both, resolution was always easily within reach, especially since the opposing sides wanted differing, but not mutually exclusive outcomes. In the capital, it was cuts and taxes; in the NFL, it was revenue sharing and working conditions.
But the biggest difference is that once resolved, the NFL owners and players don’t care who is perceived as the winner and loser.
The National Football League is the most financially successful sports organization in the country. Players are hardly starving or struggling to pay their rent, and we are, after all talking about something as inconsequential as sports. But the league grappled with some of the same issues that businesses, large and small, face in these post-recessionary times, so the solutions reached are interesting.
The NFL — and National Basketball Association, whose players still are in lock-out mode over their expired agreement — suffered losses because of the recession. As is the case with all businesses, negotiating with the employees — the players — to determine who shoulders what part of the pain of those losses is a delicate matter.
Understanding that even in this slowly recovering economy, there is a lot of money that would be forfeited without an agreement, the owners and players cut a deal.
Under the previous agreement, owners and players split revenue — from ticket sales, product endorsements and the most lucrative component, TV and radio deals — through a 50-50 deal. The new collective bargaining agreement tilts more revenue toward the owners, 53 percent to 47 percent. The owners also got a salary cap that remains essentially flat; teams can pay no more than $120 million each year on player salaries.
The players won what can best be described as better working conditions. Practices at which players hit and tackle each other will be limited, a result of the mounting and alarming evidence of the long-term health problems that come with getting banged around.
In a related move, the owners also ditched their bid for an 18-game regular season schedule, up from the current 16-game schedule, though that issue may be revisited in a few years. And retired players, many suffering the effects of those hits to the head, got better pension deals.
NFL players are the only in pro sports who do not have guaranteed contracts; that is, if a player is hurt badly enough to end his career, the paychecks stop, even in a multiyear contract. This remains under the deal, but now they can receive up to $1 million during the year of the career-ending injury, and up to $500,000 the following year.
Lingering issues, yet to be resolved include workers’ compensation, disability benefits, a personal conduct policy and drug testing.
The NFL is unique in that profits, at least for the league, are almost guaranteed. But every business that is adjusting to lower revenues could learn something from the resolution.