The dollar signs continue to get bigger in our league since we all played our last games. That is not a bulletin.
However, when a veteran free-agent center (a CENTER!) signed a reported record-setting $81 million contract with the Raiders last week, that got our attention.
Player compensation is a function of league revenues, which keep growing. A larger amount of dollars for total player costs basically is split among the same number of players. This growing dollar amount divided by the same number of players means more per player each year.
The new league economic picture certainly has the attention of Packers CEO Ed Policy, who earlier in the month spoke about the ability of his publicly-owned franchise to compete with the other 31 teams. He saw that the Dolphins’ majority owner Stephen Ross sold one percent (ONE percent) of his franchise this month for a reported $125 million.
“The other teams have deep pocketed owners,” Policy told the Sports Business Journal, “and they can sell less than 10% of their teams, give up no controlling interest, and raise a heckuva lot of revenue. We’re the only team that plays in a stadium without a naming rights deal. That’s a threshold we’re not looking to cross anytime soon. However, we might need to be a little more aggressive selling rights to some of our other inventory like our training camp facility and our Titletown campus across from the stadium. We have not taken advantage of those (naming) rights in the past but that may need to change to continue to excel.”
Yes, the league has extensive revenue-sharing and an annual fluctuating salary cap that limits the amount of money that can be spent on player salaries. However, items such as coaching/ front office salaries and the cost of training facilities have no economic ceiling. If a club is able to offer a head coaching candidate twice as much financial compensation as a division rival, that can affect the competitive balance in the league.
There is an NFL rule that money needs to be set aside when large guaranteed contracts are given to players. Some clubs can handle that out of cash flow; others may have to borrow cash to set aside that guaranteed amount.
NFL revenues continue to grow as the league becomes more successful than most people thought could ever happen. Unfortunately, it does not impact our current monthly pension payments. The hope is that the owners and players union leaders will remember us and increase our pensions during the next go-round of collective bargaining discussions which could begin later this year.
