Taxpayers the biggest losers in the NFL's concussion settlement

The story missed was much bigger and matters to a much larger audience than football players and fans—arguably, to every person in the United States. In reviewing coverage by major newspapers, wire services and broadcast news organizations, I found only one reporter who touched on the big story, and then only tangentially.

First, let's review the coverage to see what was reported and then examine the big play that reporters fumbled.

Sam Farmer of the Los Angeles Times put the official version of events succinctly:

That $765 million number, many news reports noted, is tiny.compared to NFL revenues—a fraction of one percent of likely revenues over the next two decades. That detail was the first sign that reporters gave some thought, just not enough, to the NFL's real game.

The settlement figure seems large on its face, but begins to shrink when taking into account the time value of money—an issue Ken Belson raised in a useful New York Times explainer, though without doing any arithmetic for readers.

As Belson noted, half the money will be paid in the first three years, with the other half spread out over the following 17. The deal will adjust later payouts for inflation. But the delayed payment schedule means owners will come out ahead if their return on their money is greater than the inflation adjustment. And if injury-related care expenses rise faster than inflation, as has been true for medical costs over the past several decades, a general inflation adjuster would not fully protect the players. The fine details of the agreement have not been made public yet, only the broad deal terms.

Still, that is a minor part of the story, looking at who is on the line, not the scrimmage.

So is the fact, widely reported, that as much as $89 million, or 11.6 percent of the total, would go for baseline medical tests, medical research grants and up to $4 million just to inform the players of the terms, or about $889 per player. Legal fees would be on top of the settlement amount.

The Baltimore Sun's Aaron Wilson and Mike Klingaman had a better-than-average piece because they included player comments about dissatisfaction with the payouts under the tentative agreement. Their piece—and some others that raised questions about whether the players had settled too cheaply—was a good step in the direction of the bigger story. But still, it fell short.

A Forbes contributor, Patrick Rishe, went further, analyzing the economics from the players' point of view. Rishe, a professor of economics at Webster University in St. Louis, dissected the settlement to show that it cannot possibly cover the lost wages and medical bills the former players will face during their lifetimes.

Still, Rishe missed the big story by not asking an obvious question: If the settlement does not cover all the costs of medical care, much less lost future wages, who will bear that burden?

Answer: Taxpayers.

Ken Bensinger of the Los Angeles Times was the one major news outlet writer I found who wrote about that—although not until the 11th paragraph of his piece, and then only vaguely:

That is the big story—the taxpayers will subsidize this settlement and may well pay most of the costs, far more than the wealthy owners of football teams. What the NFL has achieved, if the settlement is approved, is to shift costs from itself to the taxpayers, what I call "economic pollution" in my 2007 book Free Lunch.

Professor Daniel Goldberg, a lawyer-bioethicist who has examined the NFL concussion case issues, said they are just part of a broad pattern in the NFL and other industries of shifting costs onto taxpayers. In the current issue of the Journal of Legal Medicine, Goldberg examines how the NFL creates doubt about its responsibilities, writing that "the issues underlying the NFL concussion litigation are in fact legitimate public health problems, the implications of which go far beyond the private labor relationship between NFL players, their teams, and the league itself."

The NFL is not alone in cost-shifting. Once a worker is declared totally disabled, any business, or its workers compensation insurance carrier, can easily shift the costs onto taxpayers by refusing to pay hospital and other bills, which are then picked up by Medicare—which is to say, by taxpayers. (I wrote about this trick to foist costs onto taxpayers in The Fine Print).

For traumatic brain injury, medical researchers cite multi-million dollar lifetime costs at the high end, with low-end cost estimates of around $100,000. Those figures give some perspective to the average payout of less than $150,000 per former player covered by the settlement.

The big—and so far, untold—story about the proposed concussion settlement is that the NFL seeks to limit its cost while forcing taxpayers to pick up the rest of the tab. Those costs are likely to be multiples of the long, slow payout that under the proposed settlement will come to a small fraction of one percent of NFL revenues over the 20-year payout period. Reporters should examine who really benefits, and who is really burdened, in the tentative settlement that must go before Judge Anita B. Brody of United States District Court in Philadelphia for approval. Those who want to pursue this much bigger story might also study this very useful dataset posted by the LA Times listing every workers compensation claim filed in California by NFL players.

This is a significant story just waiting for reporters who will think and write not for the limited audience of football fans, but for the largest audience possible—taxpayers.

David Cay Johnston covers fiscal and budget matters for Columbia Journalism Review's United States Project. He is a reporter with 46 years of experience, including seven at the Philadelphia Inquirer, 13 at The New York Times and a columnist for Tax Analysts. He teaches tax and regulatory law at Syracuse University Law School and is president of Investigative Reporters & Editors (IRE). Follow him on Twitter @DavidCayJ.

Republished with permission from the Columbia Journalism Review.