Thursday, February 10, 2011

Care for a Slice?

As I am sure most of you have heard in the news lately, the NFL players and owners are in a bitter dispute that threatens America’s most popular sport. I am sure that the record 111 million viewers of last week’s Super Bowl will join me in being none too pleased if Scott Hanson (the brilliant host of NFL Red Zone) is looking for work next fall instead of reminding us that, “We don’t do commercials here on NFL Red Zone.”




There are a multitude of issues, interested parties, and most importantly in terms of resolving the matter, money, involved with the negotiations. Essentially what the argument comes down to is what percentage of annual revenue gets doled out to all the players and what goes to the owners. I’ll forgo an in depth description of the situation and instead,argue that we should all be siding with the players in their quest of looking for a bigger piece of the pie.




Football is a rough sport. Whenever you get guys like Ray Lewis and T Sizzle running at full speed into other people, someone is bound to get hurt once in a while. Fans love to see bone-crushing hits and broken noses (especially Big Ben’s), but no one wants to see a player get dealt a season or career ending injury when on the field. The average playing life of an NFL player, according to the NFL Players Association, stands at 3.5 seasons. I don’t care how much the NFL stresses player safety over the coming years (assuming there is an NFL in the coming years), football is always going to be a rough game and injuries are going to occur. We are beginning to see the long-term effects of what a few years in the NFL does on the human body years after the damage is done. Just take a look at the titles of a few of these recent studies and articles: Retired NFL players have high rate of brain damage; Heavy NFL players twice as likely to die before 50; Retired NFL Players Misuse Painkillers More Than General Population. NFL players deserve to be fairly compensated for essentially destroying their bodies for our enjoyment.

The NFL is a human capital-based organization. Like consulting and information technology firms, each NFL team's most important asset is their people. I am pretty sure that 70,000 fans are not going to file into M&T Bank Stadium each Sunday to watch my friends and I hum the seed, even though on a basic level, the fans would be consuming the same exact product: watching people play a game. In order for NFL teams to be successful, they need to hire the best talent they can and hiring the best talent costs money. For example, Towers Watson, a leading global professional services company, in their 2nd quarter earnings statement, reported that, as a percentage of revenue, salaries and employee benefits were 64% for the first six months of fiscal year 2011.

I recently reviewed the MLB, NBA, NFL and NHL team payrolls from the USATODAY Salaries Databases and Forbe's most recent estimations of franchise values and financial statements to see how the Big 4 professional sports leagues stack up in terms of compensation. As a percentage of revenue, salaries for the MLB, NBA, NFL and NHL were 46.1%, 60.4%, 42.6% and 53.0%, respectively. In addition, a review of median per player salaries for the leagues also puts the NFL at the bottom, at just north of $800,000. The same figure for the MLB, NBA and NHL are $1.3 million, $2.1 million and $1.4 million, respectively.

I hardly find it appropriate that NFL players are compensated least when compared to their baseball, basketball and hockey counterparts. NFL franchises were valued at a combined $32 billion in 2010. Compare this to the MLB’s $14.7 billion, the NBA’s $11.0 billion and the NHL’s $6.8 billion. Not only are NFL players helping to make the NFL the most popular organization outside the Great American Fierce Beard Organization, but they are also generating the most revenue and capital appreciation out of the Big 4 leagues. Add to that that they also play the sport that does the most long-term damage to their body and I think you’ll agree that the NFL players deserve their fair slice.

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