Looks like it was the flip side of this. NFLPA comes in with a highball offer and ownership bounces.
http://sports.espn.go.com/nfl/news/story?id=6107737
NFL owners walked away from the negotiating table Wednesday when the NFL Players Association proposed to take an average of 50 percent of all revenue generated by the league, according to player sources.
NFLPA executive director DeMaurice Smith briefed club player representatives in a conference call on Wednesday night, detailing his version of the abbreviated session that fell far short of the seven hours that was scheduled between the two sides in an effort to reached a new collective bargaining agreement before it expires at midnight March 4.
Consequently, a five-hour second negotiating session scheduled for Thursday was canceled and no further meetings have been proposed.
Wednesday's meeting in Washington started off badly, one source said, when the owners' negotiating team interpreted the union's proposal of a 49-to-51 percent take as "total revenue" instead of the union's intended percentage take of "all revenue."
At the current revenue levels, "total revenue" has been defined as an estimated $9 billion gross, minus a $1 billion credit in the owners' favor. In the current CBA deal about to expire, the union's share has been estimated around 60 percent of $8 billion, once the $1 billion credit was subtracted.
Owners have asked for an additional $1 billion credit -- or $2 billion in total -- before it splits "total revenue" with players.
Smith has stated that the union would need to examine all of the owners' financial books before it would accept a substantial reduction in allowing the additional $1 billion in credits.
To simplify talks, a player source said the union told the owners' negotiating team that it will forgo its request to examine the league's financial books by simply taking the flat 50 percent cut of "all revenue," which would eliminate $1 billion-to-$2-billion credits off the top and erase the definition of "total revenue."
A union source said that if the NFLPA accepted the owners' current proposal, it would receive a little more than 40 percent all revenue.
Smith said in an interview with ESPN last week that a 40-to-42 percent share of all revenue would represent the smallest percentage of players' share by any professional sports union.
In addition to the flat 50 percent share of all revenue, players are willing to grant additional credits to any franchise that reinvests in stadium improvement, a mechanism to incentivize clubs to grow revenues, a players source said.
The union believes by taking a flat 50 percent share, it would eliminate the need to audit every expense clubs invest in order to offset credits built into the current CBA and the model proposed by owners going forward.
NFLPA assistant executive director George Atallah would not elaborate Thursday, except to say: "This didn't just start yesterday."
NFL spokesman Greg Aiello said the league will not confirm, deny or comment on any specifics relating to negotiations.
Chris Mortensen is ESPN's senior NFL analyst.
So to break this down --In 2010, the NFL made ~ $9B total. The "players get 60% of 'total revenue', which is all revenue minus $1B" is not entirely accurate. The salary cap for the 2009 season was set at 58% of "projected total revenue", and that $1B is a very rounded number. The actual total amount of credits the NFL owners exempted themselves from including in total revenue exceeded $1B by a few hundred thousand.
After all of the receipts were tabulated by the accountants, the players received 57.1% of 2009's Total Revenue and 50.6% of All Revenue.
The NFL is projected to make $9.7B in 2011. If the old CBA was renewed and the percentages stayed the same, the players would receive $4.90 Billion, and the Owners would receive $4.80 Billion.
The Union just offered to lower that figure to $4.85B, i.e. a $50 Million paycut, with some leeway to take even less.
The Owners want a 50/50 split after a much larger deduction for "revenue enhancing investments" to the tune of $2.4B.
Under their offer, the players would receive $3.65B in the 2011 season, i.e. an $850 Million paycut, while the owners would receive $6.05B.
In other words, the two sides are $800 Million apart, per season.
Assuming this is a 6-year deal and revenues will (conservatively) grow at 5%/year, then the two sides are between 7 and
8 BILLION DOLLARS apart.
Bottom line, it's lost money. And a lot of it. The owners don't want any part of that.
There are two issues here:1) The owners stand to lose billions, even if they keep the $4.5 billion "loan" from TV revenues, so I agree they have an incentive. There's another $5 BILLION that they would leave on the table2) But the $4.5 billion "lockout insurance" we're talking about is different. Think of it like a time shift in payments. Whereas without the lockout the owners would be receiving X amount per year for THAT year. Now they would be receiving X amount per year a year in ADVANCE.For those who don't think there's any difference owing money immediately and owing it years down the road, just think where you would be without your mortgage, or your ability to make car payments over 5 years, or your ability to go to college with today's tuition, or a company's ability to build a new building, etc..Either way though, I agree that the owners don't want to leave ANY money on the table if it can be avoided. I just think they understood from jump street that they wanted big changes and put themselves into the position to force the players to acquiesce.
