Sunday, March 13, 2011

Anti-trust me on this one

Ok, so we've now entered that bizzaro hybrid land of part lock out, part work stoppage, part nothing has happened. The players Union has shut itself down. The League is calling that a sham, saying that the Union never intended to bargain in good faith (which to be fair, they probably didn't). Thus they're trying to impose a lock out, even though there is nobody to lock out anymore (you can only legally lock out a Union. Well, at least as I understand it. I could be wrong). Among the legal boredom it's been pointed out that one of the lawyers for the Players used to work as a clerk for the very same Judge who is likely to hear the coming anti-trust case. But anyway, that's not what I'm interested in today. I want to look instead at the situation that the players are hoping will happen. The likely hood is that by going for an anti-trust case, they will push the league back to the negotiating table in a position that significantly favours the players, just like they did the last time around. Looking ahead though, further into the horizon, what happens if the owners just say "screw it, let's see how the case pans out"? Of course by 'owners', I actually mean enough guys like Jerry Jones, Robert Kraft, Dan Snyder and those with relatively large pockets, refusing to agree to any new CBA deal, deciding that they'd rather see out the litigation over the next few years. That will either end in: a) A ruling that the league doesn't violate anti-trust laws. The players are screwed. Big time. or b) The league does violate the laws. Now the players (and Jerry Jones, Dan Snyder etc) get their holy grail; complete freedom of trade in the NFL. What would this result in? How would the league shape up? Well as it happens we have a perfect example of what will happen. It's right here in my backyard (not literally). The English soccer "Premier League". Founded in the early 1990's, the Premier league consists of 20 teams, operating in an almost completely free market fashion. Apart from certain restrictions on when trades can take place (called "Transfers" over here), each of the teams is a completely independent business and is free to conduct that business in whatever manner it sees fit. So, put your soccer scarf on, grab a pie and a pint, and let's go! The Draft: Simply put, there isn't one. Young players can be signed to a contract at any time, by any team. Most Premier League teams operate a youth team at the very minimum, and many teams have so-called "academies". Talent scouts for the teams scour the world looking for young players who can be brought to the academy for training. Eventually the best of these young players will find their way through to the full team, while many of the others are "Loaned" to teams in the lower divisions, essentially a temporary trade that allows the player to gain some experience. Imagine the Patriots for example loaning out a young QB to the Seahawks. Both teams benefit. The trouble with this system is that naturally young players are enticed more by a big team with a history of success and big pockets. Eventually the less talented young academy players of the big teams grow older and are discarded, often finding other homes at teams around the country. Free Agency: Free agency in English soccer is absolute. When your contract is up, off you go. No exclusive rights. No restricted rights. No transition tags. No franchise tags. If you sign into the league as a young player on a one year deal then that's that. When your contract is over you're free to sign with whomever you choose, for however much they're willing to pay you. Naturally this would seem to favour the big teams with the big pockets. But it's actually relatively rare for a major player to be let go in this way. Sure some players hit the open market. Either because their talent is under rated or because they are simply just a good player playing for a team full of world class players, the odd gem will find it's way out onto the open market. But for the most part the top players don't come for free. With no tags to guarantee that they can hold onto a top player, teams are more inclined to do deals at an earlier stage, avoiding the risk of losing a player on the open market. With no salary cap or roster size concerns, there is no reason not to hold onto as many players as they wish. When it is clear a player has no intention of signing a new contract or their demands are simply beyond the capacity of his current team, they will shop him around in the transfer market and just take the best deal that they can. Which brings me onto.... Trades: In the NFL it's picks and players. I give you a third round pick and a backup tackle who I have no intention of ever using, you give me your second string running back. Simple. In English soccer there are no draft picks. Some times players are thrown into the deal, but in 99% of the cases it is purely money that changes hands. I give you $10 million, you give me that goalkeeper I want. It's here that things start to get a little ridiculous and really start to favour the big teams. The record transfer fee (the name for trades over here) for an English team was set in January of this year, when Chelsea FC purchased a player from Liverpool FC. The players name was Fernando Torres (Spanish) and although the exact fee was never officially announced, it was basically in the region of £40 million. Depending on the exchange rate that's somewhere between $60-64 million. And this is before we take into account any salary. That's just the expense of moving the player from one team to another. Naturally then this favours teams like the Cowboys, Redskins and Patriots etc, who have deeper pockets than most. Of course, the fact that Torres has so far been utter shit for Chelsea highlights the fact that simply throwing money at a problem isn't always the best solution. But then Dan Snyder should already know that. And speaking of throwing money at something.... Salary: Simply put, there is no cap and no floor. You can pay a player £100 or £10,000 per week. It's entirely down to you. There is no obligation to pay anyone a minimum % of total revenue, providing you at least meet a wage that equates to the legally defined national minimum of £5.97 per hour (a problem not present in the US to my knowledge). So those practice squad players can kiss their $88,000 guaranteed annual checks good bye. The earnings of a Long Snapper will probably amount to about $30,000 per year if they're lucky. And there will be no guaranteed wage increases each year to account for a players veteran status. On the top end of the scale, wages for top soccer players in England now routinely exceed £100,000 per week, which is around $150,000-$160,000 per week. So as you've probably guessed, the removal of the salary cap and the salary floor has the effect of making guys like Tom Brady and Peyton Manning much richer, while making the guys at the bottom of the pile (who really need it) much poorer. I wonder how many players have had this explained to them? Oh, and say bye, bye to all that mandatory money and health care that is channelled to veteran players in their retirement. Team Income: In the NFL there is extensive revenue sharing. Everything from TV money to ticket prices gets counted up and divided between the teams. Expect this to continue to a degree. In England, the Premier League executives bargain for TV deals on behalf of the teams and then share the cash around. Everyone gets their slice of the biggest pie. As for individual teams? They make some of their money out of ticket sales and boxes. All revenue is kept by the teams. They also have concessions naturally, and do all the usual outside football stuff like hosting weddings for crazy fans, renting out function rooms and doing stadium tours. But the big earner aside from TV money is merchandise and sponsorship, which is partly one and the same. Teams are independent businesses in the Premier League. While they collectively bargain for things like TV deals and deals with people like EA sports for video games, each team runs it's own merchandising. Shirts, cups, scarfs, air fresheners for cars, fucking doormats. You name it - no matter how tacky - and there will be a Premier League team that sells it. And all that money goes into the team that sells it. That means teams sign their own apparel deals with whomever they choose, allowing them all to sell to their own highest bidder. The same with sponsorship deals. Be it boards and hoardings around the ground, stadium naming rights, or the big money spinner - shirt sponsors - each team is free to milk it's brand for every last penny that it can. Competition: So, compared to the NFL and it's planned parity, how balanced is the level of competition in the English Premier League? The answer is not very. Since the league formed in 1992, there have only been four different winners; Arsenal, Chelsea, Blackburn Rovers and Manchester United. Of those, Manchester United have won by far the most titles (11) and have never finished lower than 3rd (remember it's one big division with no knockout stage). Apart from the blip that was Blackburns win in '94-'95, the top four spots in the league have largely been dominated by Arsenal, Chelsea, Manchester United and Liverpool. Hold your horses though. I know you're already thinking that this would be terrible for the NFL, but we have to put this into context. There are two mitigating factors that have driven the large unbalance in English soccer, which wouldn't exist in the NFL. Relegation: Every year the bottom three teams are relegated from the Premier league to Division One and three teams are promoted from Division One to the Premier league. Saddled by huge wage bills and suddenly cut off from the lucrative TV deals, the relegated teams often struggle. The newly promoted teams have a different problem. Given the much lower income they received in Division One, they're team is full of players who otherwise couldn't cut it in the Premier League. The gulf in class is often painfully obvious. This often prevents the lower teams from building themselves up over the course of time and becoming competitive. They are often seen as easy pickings for the big four. Naturally the NFL wouldn't suffer from such a problem UEFA Champions League: If you're wondering what UEFA is, no, it's not a form of waffle. It's an acronym for "Union of European Football Associations", which is the governing body of soccer in Europe and it helps us to explain why there is a "Big Four" in the English Premier League. Every year the top four teams in the Premier League qualify for the next seasons UEFA Champions League tournament, played on weekday nights concurrently with the Premier League season. The added TV revenue from this is immense (often four times the value of Premier League TV money) and with every successive year that an English team plays in it, the money just mounts up, widening the gulf significantly from the rest of the teams in the Premier League. So you see, there are certain factors that are unique to the Premier League which the NFL would not have to contend with. There are also some other factors that should be borne in mind when we compare a potentially fully open and competitive future NFL to the Premier League. -- Premier League teams often spend millions buying players in from European clubs. This would not occur in the NFL because their simply is no other source of high quality football players outside the US. That means that over time, if teams like Washington and Dallas splash the money all around the league to essentially try and "buy championships", they will end up funding everyone else's programs. -- The lack of parity in the Premier League is not helped by the one division system, which sees every team play all the other 19 teams twice, home and away, with points awarded for wins and draws. Over time it reduces the effect of shock losses by better teams to the lesser clubs. It also means that clubs with lots of money can build "strength in depth", rotating high quality players in and out during the 38 game season. For example, if all 32 NFL Teams had to play each other twice, it would have reduced the impact of San Diego's losses due to special teams mishaps in the early season, and likely would have crushed any hope the Seahawks had of making the playoffs. -- With the salary floor removed and no draft, the worst teams in the league wouldn't get themselves into such a financial pickle on such a regular basis. No longer would teams have to bank $50 million on a QB who has never taken a snap, just purely because they had to take him first overall in the draft. Teams would find themselves much better able to cope with disappointing performances from young prospects, without hamstringing their future due to cap restraints. -- With no limit on the number of players that a team could have on it's books (even if they're not permitted on a roster for the season), teams would be able to hold onto a number of young players who they could develop over time. Teams in poor markets like Green Bay and Pittsburgh would thrive in much the same manner that they do now; by playing the long game with quality coaching of a multitude of young prospects. Except now they'd have an even bigger cushion for error. Then when those players were still good but just nearing the point of ultimate decline, they could sell them to Dan Snyder for a big wad of cash while they bring in the next young gun. This is essentially the preferred approach of Arsenal manager Arsene Wenger, who has a masters degree in Economics and who has over seen three Premier League titles for Arsenal, arguably building some of the greatest club soccer teams along the way (including the '03-'04 team that still holds the record for most consecutive games unbeaten). -- Some people fear that the big teams would simply hoard all the talent. But that is highly unlikely. I can't see Michael Vick and Phillip Rivers being happy to jeopardise their future careers (and thus earnings) by sitting behind Peyton Manning on the hope that he gets injured. Even in the Premier League where teams regularly rotate players in and out of the starting line up, the top paid players get bored and frustrated when they can't get on the field, often taking pay cuts to move elsewhere where they can be guaranteed "first team football". Conclusions: All in all, if we did away with the draft and free agency as it currently stands, it might make the NFL a little less competitive, but given the reigns that some teams have had in the league (70's Steelers, 80's 49ers etc) there is a case to be argued that there isn't as much parity currently as some commentators would believe there to be. What we should also recognise is that the Players are the stupidest fucking people in the world right now. They have a situation so well balanced in their favour, it's almost inconceivable that they would be considering litigation to bring it down. If the NFL sees this thing out, or just openly preempts it by switching to a completely free and competitive business model, the owners would stand - I think - to make a heck of a lot more money than they do right now. Even the poorest teams would be able to dump all the dead weight sagging down on their books and potentially teams like Buffalo and Green Bay could end up cashing in by trading desirable young players to the richer teams for cold, hard cash instead of empty draft picks. The big losers of course would be the lower value players. Johnny Long Snapper would kiss goodbye to his $88,000 per year guaranteed check just for being able to accurately snap the ball a few more yards than the regular center. Kickers and punters would likely be in the same boat, along with a raft of other players. The big winners would be the top tier players like the Quarterbacks, as well as the left tackles and shutdown corners. But then they already cash in big time anyway. Again, I just hope that the situation has been fully outlined to the bottom tier guys. And if I was an owner, I'd be more than happy to ride this one out. If the league becomes open then you win. If the lower tier players realise what the full implications of a successful anti-trust suit would mean for them, then they're bound to turn on the high earners and come back to the negotiating table begging the league to give them a deal, any deal, so long as it protects the salary floor. Another win. On that note, it's time for me to head off to sleep I think. As usual, if you like the blog then do me the honour of sharing it about. 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