NFL's Business Is Solid, So Why the Looming Labor Dispute?


The National Football League may not be recession proof, but it has done fairly well during the economic downturn. Nonetheless, as training camps get underway, owners and players are worried about being blind sided by a possible work stoppage in 2011.

At issue is the owners' desire to control skyrocketing player salaries, particularly the huge signing bonuses awarded to rookies, many of whom ultimately don't pan out.

As NBC Sports noted last year: "Players now receive 59.5% of all money generated by the league. The salary cap for each team is now at $127 million, up from $85.5 million in 2006. Owners say they're getting soaked." The owners want more money available under the salary cap to go to veterans and two additional regular season games added to the schedule. Officials from the NFL Players Association (NFLPA) are angry at the owners for refusing to provide sufficient information to back up these claims. The collective bargaining agreement was signed in 2006 and due to expire in 2013; the owners exercised their option to terminate in 2008. The deadline to reach an agreement is next March.

"Hard to Believe That These Are Adults"

Speaking in Green Bay recently, NFL Commissioner Roger Goodell struck an optimistic tone about the ongoing negotiations over the collective bargaining agreement: "We have a lot of work to do, but we have a lot of time to do it. We need to use that time in a responsible fashion." When asked for a response by DailyFinance, Carl Francis, an NFLPA spokesman said in an email that his group is "hopeful." He refused to elaborate. The sides have been echanging verbal jabs with one another for months and at least one sports business expert suggests that both sides are behaving like children.

"You would find it hard to believe that these are adults," says Craig Depken, an associate professor of economics in the Belk College of Business at UNC Charlotte, adding that a strike would be the "worst thing possible" for players and owners because attendance and TV viewership dropped after similar strikes in baseball and hockey.

Indeed, money may motivate the sides to come together. The 32 teams in the NFL generate roughly $4 billion in revenue annually. Pro football TV ratings also soared last season, and last year's Super Bowl attracted the second largest audience of all time. Only two teams, the dreadful Oakland Raiders and the Seattle Seahawks, posted negative operating income last year, according to Forbes. Earnings for the small market Green Bay Packers, which is the league's only public company, rose to $5.2 million in 2009.

Ticket Prices Going Up, Up, Up

And the financial future looks bright. Consider that 26 out of the 32 NFL teams sold out more than 90% of their stadium capacity last season, (though attendance overall dipped about 8%.) Thirteen of them attracted crowds of greater than 99%. This year, about 18 teams raised ticket prices, the league said.

According to FanSnap, a search engine for after-market ticket sales, the average ticket price for an NFL home game last season was $252, up 64% from the same period the previous year. The site claims that this is a sign of the rebound in the economy. (This is a notion some investors may find dubious. Those NFL fans who can afford to attend the games are probably in much better financial shape than the millions of NFL fans who watch their favorite teams in the comfort -- and warmth -- of their own homes.)

"Simply, our nation is in better economic shape now than it was a year ago -- at least in the minds of fans," company spokesman Christian Anderson said in a press release. "And, with this improvement, NFL fans are more capable of purchasing tickets and attending games. That is to say, demand for NFL tickets has increased, and with that demand comes a higher price for your average ticket."

Not surprisingly, the Super Bowl champion New Orleans Saints posted the biggest increase of any NFL team. Fans are paying as much as $404 for tickets, up 264% from a year earlier. The New York Giants have the highest average ticket price of $468, followed by the Saints, the Pittsburgh Steelers at $390, and the New York Jets at $378. The New York Jets! If ever there was a poignant example of the league's robust financial condition, Jet ticket prices must surely be it.