In CBA Disagreement, Does 2+2=5?

Yes, it's another CBA story. Will this ever end? I'm as bored with this as anyone, but this article from the Associated Press caught my attention yesterday. It seems the main sticking point in the disagreement between both sides is how the $1 billion off the top taken by the owners should be counted. Apparently, the owners don't think it should count when discussing the league's gross revenue. As you might have guessed, the players disagree.

Figures obtained by The Associated Press underscore the substantial divide between the NFL and the locked-out players on a core issue: What portion of additional revenue goes to players.

Players' share of incremental increases to all revenues under the NFL's expired contract was about 53 percent from 2006-09, according to calculations by the accounting firm that audited the collective bargaining agreement for both sides.

The NFL has repeatedly said that 70 percent of extra revenue went to players, a main justification for changing the sport's economic system. The league's numbers remove the portion of revenues — about $1 billion a year — taken off the top for owners to spend on expenses.

Data prepared in 2010 by PricewaterhouseCoopers and obtained Monday by the AP show that about $3.8 billion of the $7.2 billion in incremental revenue over those four years — 52.9 percent — went toward players' salaries and benefits.

The league and players agree on the $3.8 billion; they disagree on how to look at revenues. Setting aside the off-the-top expense credits — for things such as stadium improvements or NFL Network — makes the players' take a higher percentage.

Now, for the moment you've all been waiting for - the "he said, he said" regarding this issue:

"The NFL wants to artificially inflate the percentage of incremental revenue going to players by excluding revenues that never go to players," NFLPA spokesman George Atallah said. "League officials ... have been selling a lockout to owners based on misleading and incomplete financial information. They excluded the cost credits to be able to tell owners that player costs are rising faster than all revenues. This is not true."

Responding from the owners' meeting in New Orleans, NFL general counsel Jeff Pash said: "The concept is in the collective bargaining agreement we negotiated that total revenue is the basis on which the salary cap is calculated. There is no dispute between us and the union that the players received 70 percent since we entered into the agreement (in 2006). If you want to change the denominator, you can change the percentage. .`

"The figures we or the union use to compute then comes out to 70 percent — or even 75 percent at times. In terms of what's in the collective bargaining agreement, 70 percent is accurate," Pash added.

Now for some further analysis:

That 70 percent figure not only made an impression on owners — it also made players wonder whether there was, indeed, an adjustment that needed to be made.

"One of the owners' big problems with the deal, as they reported from 2006 forward, is they had the argument that player cost was north of 70 percent, say. When that number was first presented, it caused everyone on our side of the table to sit down. It caught our attention: 'If it is 70 percent, we need to address it,'" said former player Pete Kendall, who has been advising the NFLPA during negotiations.

"It also spurred some discussion and research, and we had PricewaterhouseCoopers look at the numbers," Kendall said last week while at the players' meetings at Marco Island, Fla. "And what they came back with is, the only way the NFL could arrive at that was if they excluded the deductions they take (at the outset). But that is money that came into the league."

According to the figures obtained by the AP:

• In 2005, player costs were $3.32 billion, and all revenue was $6.49 billion;

• In 2006, the first year under the just-expired CBA, player costs rose to $4.1 billion, an increase of $780 million, which is 61 percent of that year's $1.28 billion increase in all revenue to $7.77 billion;

• By 2009, player costs were $4.5 billion, while all revenues were $8.88 billion.

Sorry if all of this is making you remember why you hated math in high school. I'm still confused as to why that $1 billion off the top doesn't count towards the league's gross revenues. There's a big difference between 53% and 70% and the owners' calculations here seem a bit fuzzy to me. Why should everything after the first $1 billion be regarded as "extra revenue?" I understand the owners need a large sum of money for expenses, but why should this amount off the top not count as part of the league's gross?

I'm not feigning confusion here in an attempt to be sarcastic. I really don't get it. What am I missing?

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