NFL girds for showdown over players’ pay

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Soccer Extreme : Anthony Noto, the National Football League’s chief financial officer hired from Goldman Sachs Group Inc. last year, dons a hard hat for a tour of what will be the most expensive U.S. sports stadium ever built. On this sunny day in mid-2008 in East Rutherford, N.J., workers pour concrete and weld steel girders for the unnamed $1.6 billion (U.S.) venue where both the New York Giants and the New York Jets will play their home games next year. The stadium epitomizes the NFL’s costly building spree during the past 15 years. Many owners used cheap credit to build and renovate 24 of the league’s 31 venues, more than quadrupling debt held by teams and the league to about $9 billion this year from 1996. With debt service headed for a 45 per cent jump in 2009 from three years earlier and revenue growth slowing during the recession, owners’ profits are falling. So now they are pushing for a new labour agreement with the NFL Players Association that may take stadium and other costs into account, reducing the total amount of money going to players, at least in the short term, says Michael Cramer, a former president of baseball’s Texas Rangers who teaches sports management at New York University. “The problem is, you had all this money floating around, making it easy for owners to build stadiums,” says Brian Billick, the Baltimore Ravens head coach when they won the Super Bowl in 2001 and author of More Than a Game: The Glorious Present and Uncertain Future of the NFL (Scribner, 2009).

“A lot of things like stadium debt conspired to draw down that money, and owners said, ‘We got a problem; the good life is about to end.’ That’s when they fired the first shot, opting out of the labour deal.”

In May 2008, with Noto’s encouragement, the 32 owners voted to exercise their right to end the labour contract, which was set to expire in 2013, two years early. The agreement awards salaries that devour about 60 per cent of the league’s revenue. The move was decried by the union, which said last year it cannot convince players to make less so owners can make more, and set the stage for a possible lockout or strike that could derail the 2011 season.

Noto, who has helped the league refinance about $2 billion of its debt and develop a five-year growth strategy, is now helping NFL team owners take on the 1,800-strong players association. Noto says the current deal impedes the league’s ability to invest in projects such as international expansion and that’ll hurt both owners and players.

“The issue is that the labour agreement and the increased cost of running a team are meaningfully reducing our ability to invest and reach more fans,” Noto says. “This is not good for the league, which in turn is not good for the players.”

The labour dispute has quickly escalated into a war of words. DeMaurice Smith, executive director of the union, told players in August to prepare for a lockout by owners. NFL Commissioner Roger Goodell shot back in September, saying owners are seeking an agreement through negotiations, not a lockout.

Off the field, owners are watching their revenue take a hit. Last year, the NFL brought in almost $8 billion — the most of any sports league in the world. With the average price of a premium football ticket at about $226, fans filled NFL stadiums to about 96 per cent capacity during the 16-week regular season.

This year, owners have been scrambling to sell tickets and find corporate sponsors amid a recession that’s dragged on for at least six quarters. Jerry Jones, owner of the Dallas Cowboys, is still searching for a company to buy the rights to put its name on his $1.15 billion stadium, which opened in June.

The Giants had 400 tickets left unsold as of mid-September for the new stadium’s Coaches Club, a 1,860-square-metre field-level bar and outdoor patio only 4.6 metres behind the players’ bench. Each ticket requires a $20,000 licence fee and costs $700 a game.

As of mid-September, 12 teams had unsold seats, making television blackouts likely.

“There are tickets available, and our clubs are working extremely hard to address those issues,” Goodell, who took a pay cut of at least 20 per cent from about $11 million for 2008, said in September.

“Some people are having a difficult time, whether they’ve lost their job or they’re not willing to make that expenditure going forward.” (pressdisplay)