Other People Don’t Need To Lose In Order For You To Win: An Essay On The Fallacies Of Gridiron Greats, Part 1

On his radio show today, Jim Rome interviewed former Green Bay Packers offensive lineman Jerry Kramer, whose “Gridiron Greats” initiative means to help retired NFL players who face financial and medical problems.

Kramer is a legend for a reason. He’s also a great interview and, from what I can tell, a very sincere, very charitable and very honest man. But his heart, and his facts, are totally misplaced in his criticisms of the NFL Players Association, as well as the NFL itself, for what he perceives as their inaction, indifference and, seemingly, enmity on the issue of helping out players who helped build the league.

I’m not going to get too specific on that in this post. Rather, I want to address Kramer’s main argument against the NFLPA in his interview: the notion that the current Collective Bargaining Agreement should have given something to the retired players.

First, Kramer got his numbers wrong. He claims the CBA extension of 2006 gives players 65 percent of the NFL’s gross revenues. That’s not even close to right. The players initially asked for 65 percent, but they got a lot closer to the 57 percent the owners offered.

Article XXIV of the CBA is complicated and couched with enough exceptions, exemptions, special cases, acronyms, accounting terms and conditions to make an IRS auditor positively orgasmic. But even so, you merely need to read into it a way to see that in terms of the salary cap, the percentage of revenues that go to players is actually 57-58 percent, depending on the contract year.

But even the factual mistake is a digression from the points I want to address, namely, Kramer’s opinion that the players’ chunk of NFL gross revenues is somehow an absurd share that they should be glad to spread around.

Such statements are borne of two of the worst sophistries out there: That someone else needs to lose in order for you to win; and that there’s such a thing as being overpaid.

Employees Are The Major Expense For Most Service Industries

The idea that even 58 percent of gross revenues, nonetheless 65 percent, is a significant chunk of money for employees of a company to receive is simply foolish, and it’s easy to disprove by looking at the budget figures for any company that doesn’t produce physical goods (and thus, doesn’t have significant materials or equipment costs).

To demonstrate my point, let’s look at the cost of public schools in Maine.

In 2005-2006, the latest years in which figures are available online, Maine spent $1.9 billion on schools (about a third of the $6 billion the NFL made in the 2006 season).

Of that, $1.1 billion went to salaries. That’s — you guessed it — about 58 percent of gross expenditures, and since Maine only spends what it collects, gross expenditures and gross revenues are the same thing. (Note that I have not included the costs of benefits in these calculations.)

We can also look at Major League Baseball for a comparison. Overall, the league made about $4.5 billion in 2005. The same year, team salaries totaled about $2.2 billion.

What does that compute to? About 48 percent — not that far off the NFL figure, when you consider that there’s no real revenue sharing or salary cap in MLB.

How A Salary Cap Actually Increases Payrolls: A Look At MLB

An extended aside on baseball’s lack of a salary cap and revenue sharing, and how it drives payrolls down, not up: Interestingly, not having a salary cap or legitimate revenue sharing means most MLB teams can’t afford big payrolls.

The median payroll for a MLB team in 2005 was $65 million; the mean was $73 million.

Throw out the top and bottom 5 team payrolls, and the mean payroll drops to about $69 million. That means the few teams with absurd payrolls — the New York Yankees, Boston Red Sox, Philadelphia Phillies, etc. — are much further away from the payroll mean than the discount-payroll teams — the Kansas City Royals, Milwaukee Brewers and, of course, Tampa Bay Rays.

Of course, those big-market teams that can afford the big-time payrolls also drive a significant majority of MLB’s total revenues: If every team played like the Rays, there’s no way Fox, or even ESPN, would shell out the big money they pay to broadcast games and the World Series.

Not surprisingly, the teams with the most revenue in 2005 generally had the highest payrolls. Interestingly, they also tended to lose money, largely because of the ludicrous version of revenue sharing baseball does have. But the teams with the lowest payrolls didn’t do so well, either. As one might expect, teams with median payrolls tended to make the most money.

Again, there’s a huge difference between the income of the high-payroll teams, low-payroll teams and the median and mean payroll figures.

The median operating revenue of an MLB team in 2005 was $16 million; the mean was $11 million. Throw out the top and bottom 5 operating revenues, and the mean income level rises to $13 million. In other words, spending less on your payroll means you make more income.

It’s very easy to look at the salary of a star player, such as Manny Ramirez, Alex Rodriguez or Barry Bonds, and think players are paid too much and teams have too much money. But for the most part, teams aren’t giving out huge salaries.

The teams that have average payrolls perform best, and they do so not by scrimping on salaries, but by spending wisely. And that has the effect of keeping salaries low, not high, because most teams are going to control payroll costs by comparing themselves to other teams. If you won’t play for what the average guy at your position makes, you won’t be playing, period.

So long as most teams agree to a relatively low payroll figure, salaries will be low. That’s the exact opposite of the NFL, in which every team is encouraged — effectively, required — to spend every single cent of the cap.

In this case, you must spend an obscene amount of money, but not every player has been in the league long enough to warrant big-time money. So you spend obscene amounts on just some of the players on your roster.

Even though each team only pays a large salary to about a third of its players, each big-money contract sets a pay-grade precedent for all other players in the same position, and who demonstrate similar performance.

So NFL teams are constantly cutting expensive veterans when they have promising rookies and journeymen for the same position, in order to retain money to blow on absurd salaries for other players who are coming out of journeyman status and turning into stars. And the veterans go to some new team that can afford them and doesn’t have new-star talent in the development stages.

All 32 teams do this. And as a result, almost every team has about a third of its payroll comprised of players in the top tier of pay for a given position. Which means many players make much money.

I know that runs counter to all the hot air most people spew on the subject of baseball salaries, but the numbers don’t lie. A salary cap would actually increase player salaries in baseball, the same way it has drastically increased player salaries in the NFL.

Just as it is in the NFL, the only way baseball could afford a salary cap is with true revenue sharing. And any salary cap to which the MLB Players Association would agree would definitely be tied to gross league revenues, as it is in the NFL, because it’s the easiest — really, the only — financial performance indicator that can be measured.

We Can Both Win, But We Both Need Winning Attitudes

I really resent the insinuation, implicit in Kramer’s complaints about not getting any crumbs from the current NFL contract, that someone else’s success is your loss; or, more explicitly, that in order for you to win, someone else needs to lose.

I suppose that’s cogent enough a supposition for an athlete to form, but it’s simply not true.

Should the NFL or NFLPA pay off Kramer and his cohorts in the Gridiron Greats effort? No, I say. Are the NFL and NFLPA morally bound to do something for the founding players? Again, I say no. I might get into specifics as to why I say that at some later point, but that’s not really the point of this entry.

Instead, I want to bemoan the mentality, again, that you can only have more if someone else gets less.

With proper management by experienced nonprofit professionals, retired players could easily be exceedingly successful in raising their own funds from their own sources. But this effort’s appeal to guilt, ham-fisted attempts at strong-arm tactics and amateur mishandling of their own money aren’t going to help older players at all.

Of course, the hypersensitive-to-image-issues NFL and NFLPA are going to react very negatively if you put them in a bad light. Anything they do now is going to look like a payoff or a half-effort, even if you praise them up and down after they do it. The same way buying someone Atripla won’t make up for giving her HIV, nothing the NFL and NFLPA do now is going to take away all the awful things Kramer and his associates have said about them.

Kramer and his organization have stained the reputations of the NFL and NFLPA too dark. There’s nothing that’s going to paint over it well enough for that stain to not show through.

And that problem extends beyond the damage they did to the NFL and NFLPA. Few philanthropic entities — be they people or companies — are going to give money to charitable causes borne of venom and pity.

No one who is in a position of being able to do good is going to give money to people who go around disrespecting other people, because it’s a reflection on the donor. And no donor is going to give money to people who do not have an organized, specific plan for what they are going to do with the money.

Fools who weep at sob stories might be persuaded to send such an organization $20, to make themselves feel less guilty (although how, exactly, they figure they are responsible, and thus should even feel guilt, I don’t know). But the Gridiron Greats crowd has already shot itself in the foot quite badly by Mike Ditka’s organization squandering over $1 million of donor money.

And that’s my problem with Kramer. He should stop blaming the success of current NFL players, and the league itself, for the need he is trying to address.

His tone should change 180 degrees. He should thank the NFL and its current players for driving the popularity of the sport to an all-time high. He should be thankful that the sport is so popular, advertisers are willing to spend nearly $3 million per 30-second Super Bowl ad.

If he were more savvy, he would appeal to just one of those advertisers to donate the price of one ad to his organization, and to the NFL to donate one of their Super Bowl ad slots to that advertiser — or, better yet, for the NFL to run a simple ad on behalf of that advertiser, with appropriate “then-and-now” pictures and video of players who need help: “This commercial slot was originally purchased by Budweiser. But they donated the cost of the ad to Gridiron Greats, so that founding players who struggle with financial and medical problems today might get a helping hand. Some things are bigger than beer and football. If you’d like to help, visit gridirongreats.org.”

Seriously, I just thought of that as I was typing. It’s not hard to come up with winning strategies if you set aside your anger, disappointment and whatever other baggage you’re carrying and start approaching problems with the mindset that everyone is going to win.

You learn this quickly when you are in business of any sort: Your positive attitude is one of the three keys to your success. No one wants more problems. No one wants to pay for negativity and sad stories. People want solutions and Hollywood endings. There’s virtually nothing they won’t pay for problems to go away and to feel better about things.

In business and in charity, it’s the people who deliver positive results who succeed. And you only get positive results from a positive mindset.

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