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Thursday, February 17, 2011
Lockout'11: Are all books like the Packers'?

By Kevin Seifert

The NFL's collective bargaining agreement (CBA) is scheduled to expire in exactly two weeks. A lockout could begin immediately thereafter, hurtling the league into a state it hasn't experienced in a generation.

I realize you come to the NFC North blog for news and analysis about our four teams, and so we'll continue focusing on those teams and traditional news items as much as possible. With that said, there will occasionally be times when I think a lockout issue will have some interest in our division.

When relevant, I'll present a talking point, along with both sides of the argument and a potential solution just for kicks. Then, it will be your turn to address it in the comments section.

Tops on our list is a central question of the current dispute.

NFL owners say their business has taken a significant downturn. The NFL Players Association has asked for proof, in the form of opening their financial books. Currently, the only NFL team with open books are the publicly-owned Green Bay Packers, who claimed a $9.8 million operating profit in the most recent fiscal year. (That figure was down from $20.1 million the previous year.)

Are the Packers representative of the rest of the league? Are some teams making significantly more money? Are others losing money? These are the questions the union wants answered before accepting a smaller share of total revenue, spokesman George Atallah wrote recently in a guest commentary on ESPN.com.
Atallah: "The players maintain that one fundamental question needs to be answered in earnest if there is to be an agreement before a lockout: Why is the current deal so bad? If owners had decided to make this a direct business transaction between partners, the players are confident a deal would've been struck a long time ago. Business partners get together, sign confidentiality agreements, exchange financials and negotiate. Our repeated requests for detailed financial information that would help us answer the quintessential question have been denied."

NFL commissioner Roger Goodell called that request a "negotiating ploy" during a Feb. 4 news conference. Goodell added: "The players have more than sufficient information to understand why the economics of this deal do not work."

How so? Through the Packers' financials, according to an essay written last summer by NFL executive vice president Jeff Pash.
Pash: "We have shown the union how and why the current system does not work. The Green Bay Packers' recent financial statement illustrates the point -- operating profits declining every year since 2006 while player costs continue to rise. ...

"Our Collective Bargaining Agreement gives the union extensive audit rights and access to an enormous amount of financial data on each club. This includes total revenue, total player compensation and many stadium and other costs. We have provided substantial additional information on expenses we are asking to be recognized in a new CBA.

"Companies 'open their books' when they say they are losing money. But fans should know that opening the books doesn't lead to agreements."

I understand why the NFL wouldn't want to open its books. There is the unsavory potential for a "gotcha" moment that could be embarrassing to a specific owner and, worse, irrelevant to the larger debate. And as with any other negotiation, it's always favorable to hold back as many cards as possible.

So is there a way for both sides to compromise on this issue? This isn't my idea, but it's one I've heard discussed and think it's worth considering. Couldn't the NFL and NFLPA hire a third party to examine the books under a pre-determined set of ground rules that would keep private everything but the bottom lines necessary to determine the extent to which the NFL's business has suffered?

Trust is important in any negotiation, and at this point it doesn't appear the players trust the information they've been given. Owners don't trust the players' motives for asking to see the books. So why not let an established accounting firm settle this debate once and for all? With that information in hand, wouldn't we be a lot closer to reasonable parameters of a deal? What do you think?