Is the Super Bowl 2011's Last NFL Game?

By Derek Thompson

What you need to know about the labor dispute that could kill the 2011 season

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The Super Bowl on Sunday could be the last football game you see this year.

Players and owners are clashing over a new labor agreement that could result in a lockout for the 2011 season, dealing a devastating blow to the NFL's $8 billion business. If you know anything about the labor dispute that could sack America's most popular sport, you might know that owners want to "grow the pie" and give players a bigger slice. But what's this fight really about? The Atlantic is here to walk you through football's nightmare:

What's happening, in one sentence? NFL owners want more money than their contract with the players affords, and they're willing to cancel next year's season to force a new deal, or a "collective bargaining agreement."

How did we get here? In 2006, owners voted almost unanimously on a new labor agreement that raised the salary cap (the money teams can spend on player's paychecks), set aside 60 percent of the league's total revenues for player salaries, and created a revenue-sharing plan where the top-earning teams subsidize the lowest-earning teams.

But in 2008, the NFL team owners changed their mind, voting unanimously to opt out of the deal after this season because they felt like they felt player salaries were biting too deep into revenue. The current agreement expires in March 2011. Without a new deal, there will likely be no 2011-12 season.

What do the owners want? Owners want to be compensated fairly for taking big risks on stadiums and putting up hundreds of millions of dollars to field a football team. First, they want players to accept a lower share of total revenue. Second, they're asking for two more regular season games to raise the total to 18. Third, they're asking to change the revenue-sharing rules that benefit "poorer" teams.

What do the players want? The players want to keep the basics of the collective bargaining agreement the owners signed in 2006, plus some additional considerations including greater post-retirement benefits.* Overall, the 2006 CBA represents a pretty good deal for them.

Do the owners have a right to be mad? Sure. Many of them are seeing diminishing returns to their investments due to player costs growing faster than revenue. The NFL should reward owners who provide the best amenities for their fans and players. Instead, the league is arguably discouraging state-of-the-art stadiums and facilities by forcing the highest-earning teams to subsidize the lowest revenue teams.

Consider the fact that Dallas Cowboys owner Jerry Jones took out huge loans to build his new colossus, but he still has to cut million-dollar checks to subsidize some small market owners who snatch higher profits by slashing their costs. "There are owners who intentionally keep revenues low to maintain their spot in the NFL's lower [half] and ensure that they'll receive money under the current system," writes Yahoo! Sports' Michael Silver.

Do the players have a right to be mad? Sure. Understand, the median NFL salary is $770,000, the average career is a little over three years, and football injuries can last a lifetime. Most players are not excited about taking a pay cut in exchange for playing more games and increasing their chances at brain injury.

What's more, the owners claim the weak economy has hurt their profits. But since most NFL teams are privately owned, they won't open their books to prove it. Players are saying, Show us your bottom lines and then we'll talk about how strapped you are for money. Owners have refused. Here's what we do know: The only publicly owned NFL team, the Green Bay Packers, has seen operating profit fall from $34 million in 2006 to $9.8 million in 2010.

Who has the upper hand? The owners. In the event of a lockout, the NFL's nearly 2,000 players could lose $4.5 billion in salaries. The owners, on the other hand, will still have cash flow even without football. In a lockout, owners could slash expenses in half (no player salaries plus layoffs to other employees). But they could still recover up to half their expected revenue thanks to ongoing TV deals that broadcast networks cannot void even if there's no football airing on Sundays. (Silver explains more here.)

Some owners have accused players of betting on a lockout, which would give them an opening to file an antitrust lawsuit. The players have denied that accusation.

What would happen to players in a lockout? The NFL union has a fund that could pay about $60,000 per player next year. That's not nothing, but it's about one-thirteenth of what the median player makes.

How much would a lost season cost the NFL? Billions. Via BusinessWeek: "The NFLPA says a lost season could cost every NFL city $160 million in jobs and revenue." That amounts to a $5 billion anti-stimulus right there, as bars and restaurants and public transit that rely on football Sundays would struggle.

*Update 1.

This article available online at:

http://www.theatlantic.com/business/archive/2011/02/is-the-super-bowl-2011s-last-nfl-game/70558/