GO
Loading...

Time For The NFL To Open The Books

I'm not sure why they've been so scared, but if the owners want to do a deal with the players, who clearly have the leverage now, they have to show them the books.

They have to prove to the players union that the idea of sharing with them based on gross revenue isn't the best formula because gross revenue doesn't take into account the expenses and debt that the team incurs.

You aren't going to get the players to agree to give you another $1 billion expense credit on top of the $1 billion that is already carved out of the deal for the owners without showing them why you need it.

(Even though the owners got the first $1 billion credit without showing the union their numbers.)

As long as the owners refuse to open their books, the public perception is going to be that the fat cats just want to get fatter.

That's not necessarily true.

The gross revenue split doesn't work because the costs, which the owners can say are essential to compete have risen. While the players can argue that those expenses aren't necessary, the owners have a fair argument in that in order to maximize revenue you have to spend more money.

And it's not just on player costs. It's the roughly $1 billion in debt owners owe on their new stadiums.

The Green Bay Packers are the only team that publicly reports its financials, and they don't have a debt issue with Lambeau Field. But just looking at the numbers (and who is ever to know how much fuzzy math goes on), it gives you a good picture of why the owners want what they want.

The Green Bay Packers might be worth $1 billion, according to Forbes, but they only made $5.2 million in fiscal 2010, according to their latest financial statements. The team said that it was the third straight year of profit declines because of an increase in player costs. When gross revenue rises, the salary cap increases, thus the teams have to pay more to their players to compete.

It's not like the Packers argued in response to the financial release that they weren't making money. They did say that in the four-year period since 2006, they generated $132 million in incremental revenue, but that 94 percent of that went to the players.

So here is what needs to be done. The owners and the players need to come up with some sort of formula that will account for reasonable costs and won't just be the ridiculous additional $1 billion expense credit that the owners have proposed.

The players don't trust that the owners aren't just try to make more money, so the formula has to have some control, a fixed amount of allowable expenses with max limits. Say it's something like this: The players get 60 percent of 80 percent of the gross revenues and 35 percent of the final 20 percent of gross revenues. That help accounts for the costs.

Figure this formula out and we have a labor deal sooner rather than later.

Questions? Comments? SportsBiz@cnbc.com

Featured