The League

Peter Schaffer
NFL Agent

Peter Schaffer

Agent and professor of sports law

No to Player Pay Cuts

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Commissioner Roger Goodell's magnanimous gesture of this week of giving back twenty percent of his current year's salary and abstaining from receiving a raise for the current year raises the question of whether or not NFL players should practice this same type of gesture with their salaries. While on its face the commissioners' financial move might make the leagues players contemplate a similar type of move, the reality is that the system currently in place already creates such a mechanism and thus the players should not consider such a gesture. As Babe Ruth stated in 1932 when queried about the fact that he received more compensation than U.S President Herbert Hoover (the president during the great depression);"I had a better year than the President!

For the record, the commissioner's "giveback" is more of a PR move than a true magnanimous gesture. The commissioner currently receives a yearly annual salary of over eleven million dollars and his twenty percent giveback of two million dollars, while significant to the average American and NFL fan, is a drop in his proverbial financial bucket. This amount when publicized this week seemed incredibly extravagant for the position. The move does not leave him in the poor house. The mere fact that he makes such a disproportionate salary is something that has bothered many people in the league for many years. He is the person who inherited the reigns of a successful and prosperous venture. He is not responsible for the tremendous financial success of the league, he has just been entrusted with managing it for now. Further, he is not one hit or one poor performance away from being released from his team or job. Unlike NFL players, the commissioner's compensation is not based on performance and success, his compensation is in the form of guaranteed compensation whether the league is profitable, successful or prosperous.

NFL players already have a system in place that provides for two methods of "give backs of financial renumeration to the league, both individual and a group give back that are both based upon the purest of capitalistic concepts -- performance. The individual give back comes in the form of a football player's need to perform every year or suffer the cruel fate of being released from his contract and the league. The players' compensation is not guaranteed and they are in essence week to week employees. NFL players do not have guaranteed contracts like their counter parts in the NBA, NHL and MLB. One bad game or season, one injury, or a team finding a younger and cheaper replacement and their careers are finished. This a performance based giveback in its purest of forms. If the commissioner was on such a program he would have given back a lot more that two million dollars, according to his own opinion of the current economic state of the NFL.

The other give back mechanism of NFL players is in the form of the leagues collective bargaining agreement. The players receive a stated amount of the DGR - designate generated (gross) revenue of the league. This is the system agreed to between the players and the Management to share in both the prosperity of and the demise of the league. This is a pure form of a partnership between the workers and management. Each team's salary caps are a percentage of the leagues revenue. If the revenue increases the teams caps increase and if the DGR decreases the caps and subsequently amounts paid to the players also decrease. Thus, the giveback is in place if in fact the league's revenues decrease. There is no reason for the league's most significant assets to give back anything more that they have already agreed to.

It is a very nice offer by the NFL Commissioner to offer to rebate to the league a portion of his inflated salary, due to the inherent and contractual give backs already in place, there is no reason for the current players to match the Commissioners gesture or reason to believe that they are being selfish by declining the same.

By Peter Schaffer  |  February 16, 2009; 9:42 AM ET  | Category:  NFL , Peter Schaffer Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Dang…a bit tough on the Commish! 2 mil is still 2 mill, isn’t it?! I don’t see any underachieving millionaire players pulling a “Ted Williams” and anteing into a performance based pay kitty to be given to those more deserving…or even more ethical, giving it back to his club. But I can certainly see your point. Two comments on how the current system in place does not necessarily make players quite as righteous when compared to Roger’s more than generous gesture:

1. What you purport as an individual give-back has been mitigated by the evolution and magnitude of NFL player contracts in recent history. Due to the ever persistent tact (or should I say cunning…relax, just kidding) of agents, a greater percentage of NFL player contracts are guaranteed nowadays than ever before. What’s more, since prevailing on significant grievances such as Vick and Lelie (yes, that’d be you Dr!) that have effectively etched away at the fabric of our CBA, even that which was originally intended to be bonus conditions has been deemed unenforceable and therefore bonuses are now basically unrecoverable. So in your first scenario, even if a player is cut, more times than not he was already paid much more than his performance merited and some even compound the issue by taking advantage of their newfound free agent status to get paid yet again (e.g. just watch D. Hall this year). Your NFL capitalistic notion of pay for individual performance is not quite that pure.

2. As far as your group give-back is concerned, when the CBA was extended in 2006, player costs became governed by a percentage of TOTAL REVENUES (“TR”) as opposed to the previous DGR concept. This change was key in providing a rather large boost to player costs, as evidenced by the increases in the salary cap and player costs since that time. In addition, a function of the CBA dictates that cap amounts can never decrease, so theoretically even if TR or DGR decreased, the cap would at the very least remain the same. Doesn’t seem quite equitable, does it?!!! At least we have a Cap CAM that makes adjustments both ways.

Posted by: JimBeam2 | February 16, 2009 6:09 PM

Well of course a player agent like Mr. Peter Schaffer is going to say NO to player pay cuts. After all, the more they EARN, the BIGGER his cut off the top is, eh?!

Besides, the owners will probably reimburse Goodell's 20% cut with a hidden BONUS$$ to make up for it, eh?! I think the owners have been paying close attention to the Wall Street firms and the BAILOUT Billion $$ bonues, right?!?!

Posted by: Bigrcube | February 17, 2009 12:31 PM

1. The players receive a portion of the revenues THAT THEY GENERATE. They are the product. They have developed the unique set of skills and abilities that allow them to generate these revenues. When the revenues shrink their portion will as well.

2. Mr Godell's position is secure. He is at no risk to earn back that 2 million and more. from the moment a player enters the league, the clock begins to tick on his earning potential. Any illness or injury could end his career at any moment. A player needs to maximize his earnings in the limited time he has.

Players would be INSANE to give back salaries.

Posted by: jaycee31 | February 17, 2009 12:52 PM

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