Why NFL teams' books are such a sticking point

"If they had a willingness to show us how much each team makes, that would be an easy way to solve the problem. The question of how to grow this game where it's fair between players and owners is simply one of transparency."

- NFLPA executive director

DeMaurice Smith, Feb. 3

NEW ORLEANS - How ironic is it that the NFL owners, who have ferociously resisted baring a significant portion of their financial data to the players in exchange for potential labor peace, have gathered this week in a city where one of the most popular customs is women baring their breasts in exchange for beads?

For the last 2 years, every time the owners complained that the collective bargaining agreement they approved overwhelmingly in 2006 was "unbalanced" or "one-sided" or "an unsustainable business model," Smith and the players responded by daring them to prove it. Open your books and show us your shrinking profit margins.

The question before us at the moment, as both sides kill time before their April 6 court hearing by sticking their tongues out at each other, is exactly how open do the league's books really need to be for the trade association formally known as the players union to be able to make an accurate determination of the league's profitability?

On March 7, 3 days after the owners and players agreed to a 1-week extension of the CBA and 4 days before the negotiations blew up and the union decertified, the owners finally offered to turn over 5 years' worth of team-by-team audited operating statements to the union's accountants that they felt would clearly show the need for a reset on the league's revenue split.

The players said thanks, but no thanks. Before decertifying, they said they would need not 5, but 10 years' worth of team-by-team financial data. And it would need to be much more revealing than the operating statements.

Eagles president Joe Banner insisted last week that the information the league offered the players 2 weeks ago provided more than enough information for them to be able to ascertain each team's financial profitability over the last 5 years.

"By looking at those statements, they would be able to answer the fundamental questions of what's the trend of this business, how healthy is it, are there some fundamental aspects that need adjustment," Banner told the Daily News. "De [Smith] has said on the record that if it's true that there's a consequential delineation of your profits as a result of player costs and stadium economics, they would be willing to address that. Those [operating statements] answer that question.

"They know how much the shift in player costs from the 2006 deal was. They know the cost of operation has moved faster than revenue. You don't have to have an MBA to know that if those things are true, your profits must've dropped. In fact, probably significantly."

The operating statements the league has offered to the players provide line-item information. They reveal costs, but not in a totally detailed manner. For example, they reveal the total amount a team might spend on salaries in its player personnel department each year, but not what each employee in that department made.

Is that really necessary for the purpose of determining a team's profitability? Depends on whom you ask. The owners say no, the players say yes.

Some NFL owners are self-made. Many others inherited their money from daddy. Regardless of how they made their money or how they came to own a professional football team, few of them feel the players or the public has a right to snoop into their finances and find out how much they might be paying one of their sons to count desks and chairs or wonder why the director of cheerleaders is making $250,000 a year.

"It's a personal thing," said Carl Peterson, who spent 20 years as the president of the Kansas City Chiefs. "I remember when I was with the Chiefs. Forbes Magazine would call every so often and want to verify some numbers. I'd say, 'Listen, they're not a public company. They're a private company and they don't want their finances disclosed.'

"I think a number of owners have intertwined some of their football business with some of their other businesses. They're not interested in getting into that. They feel they've opened their books for years to their partners [other teams and the NFLPA]. They've showed them all of their revenue and many of their costs. They don't know why they should have to open them more than that."

The NBA's collective bargaining agreement expires this summer. That league's owners have agreed to open their books to the players, but that's because more than half its teams claim to be losing money. No NFL owners are quite ready to make that claim.

"Professional sports owners in all the leagues, going way back for decades, have been reluctant to show their books," said Gary Roberts, dean of Indiana University School of Law in Indianapolis and one of the country's leading sports law experts. "They're private businesses. They're closely held businesses. They have no legal obligation to show their books.

"When you open your books to the public - and, of course, the union could say you're not opening them up to the public, you're opening them up to us, but somehow, I have a feeling the two might end up being one and the same - the owners feel the world would have insights into their business operations in a way that would embarrass them or prejudice them or cause a lot of criticism or whatever. If they do it this time, then they'll probably have to do it every time forever and ever. And they resist doing that."

The owners might have no choice in the matter if Brady v. NFL grows into a real live court battle. One of the highlights of the Freeman McNeil lawsuit against the league in the early 1990s was the revelation that former Eagles owner Norman Braman had paid himself $7.5 million in salary in 1990, presumably to pay himself back for money he loaned the team 5 years earlier. Even if that were true, though, it didn't reflect well on him and his fellow owners.

"As a general matter, in discovery, each side can get all the relevant information they want," Roberts said. "I'm sure the league would try to get the judge to limit what is released and what is made public.

"A lot of time, if a party says something is confidential and proprietary, judges will order the information reviewed by the judge or by an auditor appointed by the judge, and keep it sealed so that it can't be released either to the public or sometimes the other parties. But there's no guarantee of that."

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