NFL Lock-out – how to fix this

NFL Owners:

NFL Owners say - Players received over 70% of incremental Revenues. Let’s look athow they arrived at those numbers (2010):

They deducted close to 2 billion dollars off incoming revenue for new Stadiums or improvements and NFL Network. So here are the owner’s numbers:

Revenues 5.4 billion (7.2 gross revenues - 1.8 in stadium cost, NFL Network)
Salaries to Player 3.8 billion (this is not disputed by players).
Owners say 70% of Revenues paid to players (3.8 / 5.4)

Players Association:
Players Union Say - Players received 53% of incremental Revenues. A look at the numbers (2010):

* Players say the cost associated with stadium build-outs and NFL Network are part of operating cost and not to be deducted from total revenue:

Revenues 7.2 billion gross revenues
Salaries to players 3.8 billion
Players say 53% of Revenues paid to players (3.8 / 7.2)

Stadium Cost at the core of the dispute:

As I suspected all along - this comes down to the accounting of stadium cost. The owners want to deduct stadium cost off the top line (Total Revenues) and players want to deduct it after revenues in the Cost of Operations section of Ledger. My personal opinion is that the cost should stay in Cost section of Income Statement not as a deduction of Revenue BUT I think the players union should bear a percentage of the cost that is vital to growth and popularity to build these stadiums. Don't get caught up in the numbers as they will change going forward...but this really is a matter of - should the players bear some of the cost to rebuild the NFL infrastructure? If the answer is yes (and I believe they should) you basically have three choices:

 

Ways to fix it:

1) Total Revenue is total revenue - Players receive a percentage of total revenues. According to PricewaterhouseCoopers total revenue was 7.2 billion and players received 3.8 billion of that (53%). This is the players dream scenario as the owners are on the hook 100% for stadium build-out and NFL Network and player’s % of income is just north of 50%.

2) Deduct new stadium cost from total revenues - This is owners dream scenario as the stadium cost, NFL Network take close to 2 billion off the top number and now players salaries will represent over 70% Revenue and likely will force players to renegotiate terms as 70% is unsustainable for any business model.

3) This is hybrid of the two - players and owner will absorb cost for stadium build-out. You can accomplish this two ways - allow owners to reduce total income for stadiums and NFL Network but only 50% instead of 100% currently being used by owners. This approach puts player salaries at 63% of income (lower than owners current estimates of 70% and higher than players estimates of 53%). You could also just leave total revenues alone and set up an escrow account that players must pay into for stadium cost that is repaid back to owners over period of time.