Behind NFL's deal, a driving force
As deadline closed in, Kraft plan created framework that helped combative owners find common ground
The second day, which was to be the final day one way or the other, did not start well.
St. Louis Rams president John Shaw opened the NFL owners' emergency meeting in Grapevine, Texas, Wednesday morning with a suggestion so outrageous it almost ended talks of a new revenue-sharing plan -- which would allow the owners to accept the demands of their players' union to extend the collective bargaining agreement -- before their coffee had begun to cool.
Three ownership factions had left a seven-hour meeting the previous evening after hearing much about the past and future of the game, the value of labor peace, and the union's demand for 59.5 percent of total gross revenues for the next six years if the CBA was to be extended. Commissioner Paul Tagliabue suggested they return the next morning with proposals on how to share the growing pot of local revenues that had created a wide financial disparity between teams in different markets.
Shaw's first suggestion was that the pot needed between $200 million and $400 million a year in new money from the top revenue teams. Only minutes into the day, ''It started to get confrontational because that was a ridiculous number," said a league source who was in the room at the time. ''It wasn't a productive way to start off unless you wanted to blow up the deal."
More than a few owners wanted just that. They had no interest in expanding revenue sharing or increasing the players' take. They didn't want to see nearly 60 percent of their revenues go to their employees. Some wanted no salary cap so they could be free spenders. Others wanted no cap so there would be no restrictions on how little pay and benefits they could offer. The wealthiest teams had no interest in writing ''welfare checks" to profitable but indolent owners such as Arizona's Bill Bidwell or Cincinnati's Mike Brown. Frankly, they weren't at all happy to write one last year to Paul Allen, the cofounder of
At one point during the often contentious negotiations, Cowboys owner Jerry Jones mockingly offered to buy the naming rights to Paul Brown Stadium from the Bengals for $5 million ''because I can double that in about five minutes, Mike." Brown did not respond but the heat in the room was building when the Patriots' Jonathan Kraft and the Jets' Woody Johnson offered up a revenue-sharing plan devised by Kraft. Of the four plans that would be discussed, it was the only one that included all three elements essential to a deal: 1. a funding mechanism for expanded revenue sharing; 2. a value on how much was needed for it to work; and 3. a distribution plan. As it turned out, many of the men involved confirmed last week, the key was that Kraft suggested not only that his team was willing to put in $3 million or more of the Patriots' money a year, but that it would forgo its share of new revenues the league had been generating annually, thus increasing the revenue-sharing pie without taking a slice from the present income of high-revenue clubs.
''It's a lot easier to talk about sharing what you don't have yet than it is what you've already got," Jones said later. ''That was a major part of it. We took things from the future and basically shared that. We agreed to some things we're not sure how much will be involved financially. That was a brilliant stroke."
That stroke was Kraft's and it began the movement toward what would become a new revenue-sharing plan that will contribute $900 million over the next six years from the top 15 revenue-producing teams, much of it from streams of income that kept all that money from coming out of their present revenues. This year, for example, the top five revenue teams will put in a guaranteed $3 million apiece, the next five $2 million, and the third five $1 million for a total of $30 million from local revenues. Another revenue stream from club seat premiums that already existed will send in $30 million, and the expected share of annual new revenues generated by the league's ever-expanding licensing deals is expected to add at least $30 million more. So it went until the owners agreed to make available an average of $150 million a year in shared revenues, with the low-income clubs having to qualify to receive it. Getting to those qualifiers also made for a rancorous discussion during which the Kraft-Johnson plan added elements of one proposed by the Steelers and Ravens, and some qualifiers suggested by Jones and others.
Among those qualifiers, which have not yet been agreed to but which Tagliabue was empowered to order if the owners cannot agree, were that once a team financially qualified it could not be in a stadium fewer than two years old and no new owner could benefit from that shared money, under the theory that they knew what they were buying into.
''That delineates between someone like Bidwell and someone like [Jacksonville's] Wayne Weaver, who's working hard but is constricted by other factors like the size of his market and having too large a stadium," one NFC owner said.
This argument over who deserved the money was punctuated when Redskins owner Daniel Snyder, who controls one of the league's richest teams, said he was ready to help any team in a bad circumstance but then turned toward Brown and said, ''But if someone has a publicly funded stadium they pay $1 a year for with no operating costs, I'm not helping that person."
Snyder then looked at Michael Bidwell, son of the Cardinals' longtime owner, and snapped, ''If you have a publicly funded stadium in a great market and charge $10 a game for season tickets in the upper deck, I'm sorry sir, I'm not going to help you."
Alternating currents of enmity and reconciliation rolled through the room for much of the day as Kraft, Johnson, Jones, and Tagliabue worked to broaden the consensus around Kraft's original plan, adding elements from the Ravens-Steelers plan. Eventually it was agreed that if enough teams didn't qualify to exhaust the pool in any year, the money would pay down league debt caused by stadium funding loans or to create a reserve for future problems, a sign to the low-revenue teams that this was not a charade.
''We wanted them to know we weren't looking to pull money back," Kraft said. ''We were willing to leave it in to benefit the league."
Tagliabue slowly cobbled together a coalition, merging the Patriots-Jets plan with the Ravens-Steelers plan, to create one supported by teams at all three levels of income, when he got the Broncos, Panthers, and Giants on board. But that was not the end of it because Ravens president Dick Cass, who was once the Cowboys' attorney, grilled Kraft in front of the ownership group on the plan's details.
''Yeah, he peppered me," Kraft later admitted, although refusing to discuss the details.
At one point Cass urged a funding plan that would require teams that did not spend between 52.5 percent and 55 percent of its total revenues on players to contribute a check for the difference to the new shared pool. Under that plan a team such as Snyder's, which because it makes so much uses only about 40 percent of its revenues for player costs, would have been asked to write a check for $30 million or more. Houston owner Bob McNair remarked he'd been sold a club for $700 million by the men in this room and then said to Cass, ''If we adopted your plan, I wouldn't be profitable." In other words, not happening.
It was in the midst of this discussion, several league sources confirmed, that Denver's Pat Bowlen said many low- and middle-income teams were worried about this proposed $30 million income source that didn't presently exist. What if it didn't materialize?
Kraft said history showed it would and talked about an expected explosion from Internet income. Bowlen then asked if the Patriots would pledge their share of any future Internet deal so the league could borrow against it today, if necessary. When Kraft said, ''Yes," the seminal moment had been reached. There was now only two hours left before the union's 7 p.m. deadline for approval of the CBA extension offer. All that was left was for Tagliabue, who many believe orchestrated the Bowlen question to Kraft during an earlier strategy meeting, to put together a coalition of teams at all three revenue levels. Once he got that, the rest was arm twisting.
Despite some last-minute fussing by Cass and Michael Bidwell, the deal passed, 30-2, as did the approval of a CBA extension for six years. It is a deal that could cost high-revenue teams such as the Patriots, Cowboys, Eagles, Redskins, Browns, and Texans from $3 million to $7.5 million a year in profits paid into the shared pool. Yet despite the vote, not a single owner seemed happy.
They had all agreed they needed to maintain labor peace but one who voted for it said Friday, ''This thing is a powder keg in the future. It puts player costs and revenue sharing to the edge. We handled this the way some teams handle their cap problems. We pushed them into the future but the problems are still there. They won't go away."
With either side able to opt out of the deal after four years, labor problems still loom not far into the future, but for the moment they're gone.