NFL Lockout and Media Rights

Last year the NFL earned over $9 billion in revenue, half of witch was from television rights. Prior to this month, the NFL was set to receive their share of television revenue next season, even if there was no football season. Because of the way the contracts were structured, networks such as CBS, FOX, NBC and ESPN were still going to have to shell out over $4 billion combined, without receiving a football season in return to broadcast. However, this past month judge David Doty ruled in court that the terms of the television contract violated rules of the CBA between the NFL and NFL Player's Union. The ruling said an agreement for networks to pay the NFL in the case of a lockout violated the CBA agreement to negotiate broadcasting terms "in good faith." The television networks will not have to pay the NFL if the lockout continues and games are lost.

This dilemma raises other questions. How will this affect the television networks as well as advertisers? For most of the television networks that air football, it is their biggest draw for both ratings and advertising dollars. Most networks already have advertising campaigns in place, so it will be interesting to see how already agreed to commercial deals play out in the event of no football season. Being that sports themselves bring in some of the biggest television revenue, stations such as FOX and ESPN who have a number of other sports should be able to weather the storm. NBC, however, could take a larger hit. Their Sunday Night Football received tremendous ratings, but was also one of the very few large draws for the network.

Another question that is being raised is the possibility of replacement players. Although a little early for serious speculation, the NFL did have three weeks of replacement player games in 1987. This would give the networks football to show, however I am not sure the revenue would be the same for a sub par product.

For the businesses who have media and advertising rights with the NFL, their advertising campaigns are typically the most well funded and most integral to their overall marketing strategy. Advertisers are also set to take a major hit if there is no football. Just as the television networks are trying to figure out what to air incase of no football, businesses are also trying to find other outlets to invest in for their advertising campaigns.

If the lockout goes into next football season, many more than just the NFL teams and its fans are affected. All of the networks, advertisers, and those who have bought into the NFL in some form of media rights will have to look elsewhere. Currently, it is a waiting game for everyone.

Sources

NFL Lockout Hits Media Giants
http://www.cnbc.com/id/42074000/

What Will the Networks Show if Their is No Football
http://www.dailyfinance.com/story/media/what-will-the-networks-show-if-theres-no-football/19880281/

Networks, Advertisers Call New Plays Amid NFL Strife
http://online.wsj.com/article/SB10001424052748703576204576226562745064154.html

NFL Wars

With the NFL at the peak of its popularity, the current NFL lockout is quickly becoming one of the most famous sports law and labor related issues. Collective Bargaining Agreements, more commonly known as a CBA, are what govern the relationship between athletes and the sport they play. Just as employees of another job may have a union, NFL players have the NFL Players Association, also known as the NFLPA or Player’s Union. The NFLPA acts as the representing body for the players in negotiations with the League, which consists of all team owners and the NFL Commissioner. The CBA is the agreement between the two parties on topics of wages and structure, such as games and practices.
Just like any contract, the CBA between the Player’s Union and the League has a set duration. The current agreement was set to last through the 2011-12 season, but the owners decided to opt out of the final year per an opt out clause in the agreement. With no new agreement in place, the NFL and its players are on the verge of not having a 2011 football season, also known as a lockout. For the NFL to go on, the two sides must come to an agreement on such issues as how much revenue goes to player salaries, which is currently around 50% (“NFLPA Lockout,” 2011). The main issues include revenue and salaries, a potential 18-game season (currently 16), a rookie wage scale, and pensions for former players (“NFLPA Files,” 2011).
Still nowhere close to a deal, the NFLPA has decertified and NFL players are preparing to sue to the NFL for antitrust violations. The player’s are hoping a federal ruling could force a 2011 season, but even if so what would happen after that time? What about a CBA past 2012?
The players seem to be most frustrated with the NFL for wanting to change anything when the sports seems to be doing so well; “The players haven’t asked for anything more and literally don’t want anything more. They have asked simply to play under the existing agreement,” said NFLPA Spokesmen Gorge Atallah (2011). One thing is for sure, this topic is only getting hotter as star NFL players are about to sue their bosses!

Resources

Atallah, George. (2011). Players Case For Football in 2011. ESPN. Retrieved from sports.espn.go.com/espn/commentary/news/story?id=5995362

“NFLPA Files Collusion Claim.” (2011, January 18). Associated Press. Retrieved from sports.espn.go.com/nfl/news/story?id=6033492

“NFLPA Lockout Central.” (2011). NFL Players Association. Retrieved from www.nflplayers.com/about-us/2011-Lockout-Central/

No CBA Could Change NFL Endorsement Landscape

For Athletes and their agents the most important form of intellectual property is the athlete. His or her name, likeness and brand is extremely valuable. Publicity and performance for athletes results in endorsement opportunities. From pitching a product in a television commercial or endorsing an event by being present, athletes allow companies to use their name and likeness in advertising. The NFL in particular negotiates league wide deals with sponsors such as Verizon and Pepsi. These deals offer both exclusivity and the ability to use NFL players in advertising campaigns.

While these deals are negotiated between businesses and the NFL, the NFLPA is the representing body of NFL players. If the current NFL collective bargaining agreement (CBA) expires, so will the current endorsement deals agreed to by the NFL and its corporate sponsors. No relationship between the NFL and NFLPA means no relationship between the NFL’s sponsors and NFL players, at least not within the current agreements.

“In the absence of a CBA, players will have total freedom to endorse any company or product” (Carpenter, 2010). For example, the NFL has an exclusive deal with Pepsi, but with no collective bargaining agreement, a player could do a commercial ad for Coca-Cola if he wanted too. Also, if Pepsi wants to continue using NFL players outside of a CBA, it will have to negotiate a new and separate deal with the players themselves.

According to AOL News, the NFLPA has attempted to reach an agreement with the NFL that would extend the current sponsorship agreement outside of a CBA (2011). So far they have been denied. For NFL sponsors this whole process is coming as unwelcome news. Many sponsors have current deals with the NFL that go up until 2014, such as Proctor & Gamble, whom witch uses the NFL and its players to help pitch as many as 13 of its own products (Business Courrier). Some have already paid the NFL for these rights, and will be understandably upset if they do not receive their return in the form of NFL and player advertising.

In terms of intellectual property, what this boils down to is that with no agreement between the NFL and NFLPA, the player’s have complete freedom to do what they choose with their name and likeness. Many players could take advantage of this opportunity to create income in the case of a lockout and no football season.

AOL News, 2011 - http://www.aolnews.com/2011/02/16/nflpa-could-deal-directly-with-sponsors-in-event-of-lockout

Business Courrier - http://www.bizjournals.com/cincinnati/stories/2009/08/03/daily27.html

Carpenter, 2010 - http://www.examiner.com/human-resources-in-jackson/the-upcoming-labor-dispute-the-nfl

Fantasy Football & Sports Biz

Fantasy Football has arguably been the most significant sports business development over the past decade.  At the end of the day, there is not sports business without the fans.  The fans attend the games, watch on television, and buy merchandise.  The fans are the reason companies place advertisements in stadiums or have players pitch their products in commercials.  Without the fans there are no profits, and without profits there is no business.

Fantasy Football has gotten more fans involved at a deeper level than ever before.  There are now 30 million fantasy players in the United States and Canada alone, a 54% increases over the past two years (Spitznagel, 2010).  More fantasy owners means more people intensely watching games.  As stated in the video below, “Fantasy Football is the reason a fan watches a meaningless game on DirecTV.” DirecTV recently renewed their contract with the NFL to pay $1 Billion annually through the 2014 season (NFLplayers.com, 2011).  In terms of television ratings, the 2010 season was the most watched in NFL history (2011). Before fantasy football, the only interest most fans had was in how their own team performed, but now a fantasy owner has more reason to be interested in all games each Sunday. 

It is not just about the TV ratings, it is also about the affinity created between the fans and players.  Not only do fans now have a reason to watch other teams and players, but also they have more reason to like other players (for helping win their fantasy league).  Apparel companies and other third party sponsors are interested in how far a player’s brand and reach will extend.  With more notoriety for players, business opportunities can also increase.  The average American fantasy owner makes $92,750 (Spitznagel, 2010). This is a decent salary, in which disposable income can be spent on merchandise and products endorsed by players.  Is it really a stretch to imagine a fantasy owner buying the jersey of the player who helped him win his league, or that a player’s face is that much more recognizable in a TV ad because of his fantasy presence? I don’t think so!

Fantasy football has not only created a deeper interest in the game overall, but has also raised player affinity amongst fans.  Both have had a tremendous impact on the business of the game, unsurpassed by any other story from the past decade. 

NFLpalyers.com. (2011). The State of the Game: A Current Look at the Success of the League. NFL Players Association. Retrieved from http://www.nflplayers.com/Articles/CBA-News/The-State-of-the-Game-A-Current-Look-at-the-Success-of-the-League

Spitznagel, Eric. (2010). Fantasy Football: The New Internet Porn. Businessweek. Retrieved from   http://www.businessweek.com/magazine/content/10_38/b4195081511463.htm

Negotiation Strategy

I recently talked with NFL sports agent Jonathan Kline about negotiating contracts.  Jonathan is the head agent of Sports Capital Group, and has been a lawyer-agent for almost a decade.

Most of Jonathan’s experience is in negotiating rookie contracts.  Objective criteria is very important in this type of negotiating. Jonathan says that the agent has to look at other rookies contract’s from previous years, analyzing player’s drafted in the same spot or playing the same position as your client. “What did they get paid? How many players were drafted ahead of them at their position?” These are some of the questions that help an agent come up with realistic requests to propose to a team’s general manager.

Another agent, Jack Bechta, who writes for the National Football Post says that some of the most important things in negotiation are “leverage” and “mutual respect,” or mutual benefit (2010).  These are things that also came up during my time with Jonathan. In addition to using past deals for leverage, Jonathan touched on the option of waiting on other rookie deals from the current draft.  He explained that one of the games agents play is trying to wait on other agents to complete their deals first. Depending on the deal, this can create leverage between the agent and general manager.  For example, if the player drafted after your client has already signed his deal, it is easy to request a higher contract because your client was drafted higher.

As for mutual benefit, Jonathan reminded me that you will most likely deal with the same general manager and/or team more than once in negotiation.  Bad deals can create strife between agents and teams that could harm future deals with that agent’s clients.

Another side of negotiation in the business is simply trying to secure clients themselves.  Before an agent can negotiate a player’s contract with a team, he has to get that player to agree to a representation agreement.  Both Jonathan Kline and Jack Bectha believe this is where the most dirty tricks and tactics come into play.  Jonathan mentioned a few times in our conversations that agents will do whatever is needed to secure a player, including paying them while they are still in college (which is illegal). In one of Bechta’s articles he recounts how an agent told a player that he could get him drafted by his hometown team (no agent has that power), and that agents will tell a player “anything to get the deal done” (2010).

Overall, it is a tough and competitive industry.  Always being on your tows and conducting extensive research will be crucial to successful negotiating.

2010-Interview-Jonathan Kline-Sports Captial Group

2010-Jack Bechta-www.nationalfootballpost.com/Leverage-respect-and-style.html

2010-Jack Bechta-www.nationalfootballpost.com/Let-the-agent-wars-begin.html

The NFLPA and Agents

The NFL Players Association (NFLPA) is the most important professional association for NFL agents.  Not only does the NFLPA share the common interest of representing players, but they also participate in the regulation of agents.

The NFLPA is the labor union for NFL players, and spends most of its time representing players as a whole unit; negotiating and managing the collective bargaining agreement with the NFL owners, and licensing rights to players names with third parties.

Technically speaking, the NFLPA holds the right to represent individual players in terms of contract negotiations and other services, but chooses to allow agents to do so.  They do, however, administer agent licensing and regulations.

For an agent to represent an NFL athlete, he or she must be certified by the NFLPA. This process includes a requirement of a post-graduate degree, application and insurance fees, both which are upwards of $2000, and a $1200 annual fee.  Applying agents also have to pass an examination.  The combination of fees, education, and in-depth testing produce agents who are knowledgable and serious about their industry.  Not anyone can simply become an NFL agent.

The process is beneficial to both the agent and players.  Certified Contract Advisors, as agents are called by the NFLPA, are well versed on all areas of the collective bargaining agreement pertaining to player contracts, benefits, salary cap and other relevant topics.

The NFLPA also acts as one of the regulating bodies to NFL agents.  While states and the NCAA have some influence within their jurisdiction, the NFLPA has the most power over agents.  In addition to requirements for maintaining certification, such as negotiating one new player contract every three years, they also hold the right to suspend or terminate an agent's certification as a disciplinary action.  At the end of the day, the NFLPA is looking out for the best interest of the player, not the agent.  Of course, personally I do not think this should be a problem as the agent should have the same interest.

The NFLPA also regulates an agent's commission off of a player's contract.  Currently, it is the lowest it has ever been at 3%.

Overall, the NFLPA is the most important professional association for an NFL agent, and has produced both positives and negatives for those in the industry.  A competitive certification process has weeded out competition, creating more opportunity for those who are licensed.  At the same time, the NFLPA has chosen to go the opposite direction of other player's associations, and regulate commissions.  The MLBPA for example, does not regulate the agent's commission, creating a free market for agents to set fees.

Aside from regulations it is important for agents to be in tune with the NFLPA because of their common ground, the player.  The goal of the NFLPA is to represent and work for its players, the same as an agent.  Keeping up communication as well a a pulse on NFLPA happenings is a smart move for any agent.

Source: NFLplayers.com (NFLPA website)

Inspiration from John Wooden

I recently listened to a talk given by former UCLA Basketball Coach John Wooden, who passed away last year.  His accomplishments on the court are still unparalleled. His teams have won more games and championships than any other. After listening to him speak, I got the feeling he does not see his basketball accomplishments as his greatest success, but rather the impact he had on his players and the way he did things.

Early in the talk, in which I watched from TED.com, Wooden notes on how he defines success through giving your best effort.  He says that he grew up learning not to compare yourself to others, because you can only control yourself.  I hope my clients will understand this. If they don't, I want to help them.  All you can do is give your best everyday.  If the player in front of you at your position is an all-star, you cannot do anything about that.  What you can do is play and practice to the best of your ability, because that is the kind of person you want to be.

In his day, Wooden told his players "Education first, basketball second."  He says he takes great pride in seeing who they have become; doctors, attorneys, teachers.  Wooden viewed himself as a teacher. This is an attitude I want to take into being an agent.  Granted, so much is different in professional sports.  You are not in school anymore, and your sport is your career.  My philosophy is life first, sports second.  It is important for me to communicate here that I want to see my athletes succeed on the field, and I want to help them in every way possible, but not at the expense of certain things.  Even football coaching great Vince Lombardi said, "Faith, Family, and Football."  He said that was to be the order of priorities for his players.  I heard he said that his first year as coach of the Green Bay Packers, they won the Super Bowl that year.

Although Wooden's position was as a coach, and mine an agent, our situations are similar in that we have an opportunity to extend the realm of our position to have a greater impact.  That is exactly what I want to encourage my clients to do, see the opportunity for impact.  It is everywhere; teammates, family, community and even the world.

Wooden talked about our desire to see progress, but noted "There is no progress without change."  I want to encourage athletes to be agents of change, both in their private life, but also in community and world needs.

Wooden had the trust of the room the moment he stepped in to give this speech.  His career success commands such trust, but he didn't talk much about basketball.  He inspired and captured the audience with philosophy and insight on life.  Something everyone understands. He sat, with no dominating presence or tone, rather as an old man, calmly delivering wisdom from a long life.

Like Wooden, I hope my success is defined by much more than my career accomplishments. I want to help my clients do the same. If anyone questions whether or not this falls in the scope of my profession or if I should only worry about my client's sports career, then I would have asked you to tell John Wooden the same in his day.  He had an impact.  He was successful in life.  Oh, and his career turned out pretty alright too!
885 Wins, 10 National Championships
(UCLABruins.com)