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Rapid growth reason for NFL labor war
The $7.1 million signing bonus that the top overall draft pick received?
The $171 million estimated value of the franchise that paid him?
And the $330 million-plus price tag to build the team a new stadium?
At least when all those figures are compared with the cost of doing business in today’s NFL.
For comparison sake, the 1995 Cincinnati Bengals not only exemplify how much the league has grown but why the NFL and its players are in a labor impasse.
The revenue pie has grown so quickly that both sides have spent months trying to secure their share in a new collective bargaining agreement even though the respective slices would have spilled over the plate 16 years ago.
Barring a work stoppage that extends into the regular season, the NFL is projected to generate at least $10 billion in revenue for the 2011 campaign. The revenue in 1995: $2.14 billion.
The salary cap that year was set at $36.5 million — a figure that skyrocketed to $128 million for the NFL’s last capped season in 2009.
Cincinnati gave rookie running back Ki-Jana Carter a record-setting $7.1 million in guaranteed money as part of a six-year, $20 million contract. To put this in perspective, Carter’s signing bonus was less than one-seventh of what St. Louis Rams quarterback Sam Bradford received in guarantees as last year’s top draft pick.
The Bengals then made Jeff Blake the highest-paid quarterback in franchise history when signing him to a four-year, $12.4 million midseason contract extension. That entire package is almost equal to the $11.5 million Carson Palmer is scheduled to earn in 2011 alone as part of the six-year, $119 million extension he signed in 2005. The fact Palmer has earned so much of that contract already also explains why he feels financially secure enough to threaten retirement if not traded by the Bengals when the lockout is lifted.
The Bengals aren’t hurting for cash, either. The franchise was valued at $171 million in 1995 by the now-defunct Financial World magazine. That translates to $250 million in today’s market based upon the annual rate of inflation (2.41 percent) over the past 16 years.
However, the Bengals are now valued at $905 million, according to Forbes Magazine. The average team value in 1995 was $174 million. It now stands at $1.02 billion. The Dallas Cowboys lead the Forbes list at $1.81 billion, followed by Washington ($1.56 billion) and New England ($1.37 billion).
The overall escalation stems from the NFL entrenching itself as the leader in the lucrative U.S. sports landscape. There was a 400 percent boom in television rights fees since 1995. The league stands to pocket $4 billion from its broadcast partners for the 2011 season.
The Bengals also are reaping the benefits of a stadium lease that most NFL cities — including Cincinnati — would probably never approve again. Voters in Hamilton (Ohio) County approved a 1996 amendment that raised the sales tax by a half-cent to build new facilities for the Bengals and Cincinnati Reds.
The final cost of Paul Brown Stadium is estimated between $330 million and $450 million by various sources (the Bengals contributed $50 million). But that half-cent tax increase is failing to cover the stadium debts and upkeep promised in the team’s lease, creating a major rift between the Bengals and local politicians.
Even with all these headaches, Paul Brown Stadium should be considered a bargain compared with the price of newer venues. Dallas Cowboys Stadium cost $1.2 billion to construct. The New Meadowlands Stadium carried a $1.6 billion price tag for the New York Jets and Giants. A proposed new stadium in Los Angeles may exceed that if an NFL franchise can be lured into moving.
The league and NFL Players Association share blame for the three-month (and counting) work stoppage. They should have started serious negotiations long before the previous CBA that has brought such prosperity expired in mid-March.
But as both sides take steps toward a new labor pact with ramped-up talks, a look at the past is a reminder of why this has gotten so messy. If the league has grown at the same rate by 2027 as it has since 1995, the revenue-sharing battle being waged in 2011 can be justified by the NFL and its players.
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