A Detailed Look at the Business Behind an NFL Holdout
By Ryan Riddle
(Featured Columnist) on August 13, 2012
Can MJD summon the dollars he expects by holding out?
Al Messerschmidt/Getty Images
Few things can agitate NFL coaches, players and fans more than an extended holdout. In fact, no party involved prefers to hold out, unless the player’s work ethic is so lacking that his primary motive is to miss camp. But given the culture of the NFL, which typically guarantees little for its players, this very destructive negotiating strategy often is the only option. (Maybe, but it's more often a "Lose/Lose" way of doing things)
@ryan_riddlePerhaps contracts need to become more mutually binding. Currently, the owners have all the leverage in contract language. If we would like to see fewer players holding out or the elimination of that strategy altogether, owners need to be more committed to their players on paper. Talk is cheap; if you want player loyalty, first there must be team loyalty. (Not all, but the lion's share, yes)
It doesn't have to be a "good guy/bad guy" situation like so many portray it. It's not black and white.
— Eric C. Stoner (@ECStoner) August 11, 2012
All contracts are structured in a way that allows the team to opt out whenever it sees fit. Teams may offer a five-year deal on paper, thus obligating the player to the team for that specified duration. But the team can cut ties with that player without giving him any of the money for seasons remaining on that contract. (Yes but subject to a pretty punishing "cap hit" called "dead cap space" in many instances)
Essentially, the only money guaranteed in an NFL contract is the signing bonus, and most signing bonuses are a mere fraction of the contract’s total value, which pretty much equates to a contract that’s only binding for one party: the player. (Not 100% accurate since many deals now guarantee some of the players salary as well)
Every NFL player understands that most long-term contracts are never seen to the end, and 90 percent of the time, it’s the organization that decides to terminate early. Yet we as fans are left focusing on the few guys every year who decide to fight for what they believe they deserve, using the only leverage available. (Almost 100% true)
Will Chiefs fans still embrace Dwayne Bowe should he miss time in regular season?
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@ryan_riddleHowever, as of late, teams have been more willing to guarantee money as agents and players begin to push harder for those contract stipulations.
In a world where they have so few guarantees, I have no problem with #NFL
players getting every penny while they can.
— Ryan Burns (@FtblSickness) August 11, 2012
During my time in the NFL, when the late Gene Upshaw was the NFLPA president and visited the Raiders for a meeting, one of the big issues among players was not having our contracts guaranteed. The NFL is the only major sport in the country not to have guaranteed contracts.
When this was brought up to Upshaw, his reply was, “There is currently no language in the CBA preventing you from negotiating for guaranteed money.” (So now many do and that's what the Forte negotiations were all about)
This may not have been the mandate players wanted to hear, but it did seem as though a bunch of individual light bulbs went off above the players' heads in that meeting.
Many guys, myself included, didn’t realize this was something that could legitimately be placed on the negotiating table. It seems over the last five years, such a realization has become more common in contract negotiations. ( Ya think?Guess most of them didn't major in finance or economics then)
ESPN’s Jamison Hensley has claimed, “With the amount of injuries in the NFL, guaranteed contracts would lead to bankrupt owners.” (Guaranteed deals would backruput these billion dollar franchises of one of the most successful enterprises with one of the greatest business models in the history of American business?)
That comment is absolutely absurd. In reality, established players who warrant big contract numbers are rarely forced into abrupt retirement due to injury in a way that would cause owners to lose substantial amounts of money, and definitely not on any level that would constitute bankruptcy. The NFL product is far too valuable for that, and the labor is remarkably cheap relative to other professional sports.
Has Chris Johnson's holdout ruined it for MJD?
Otto Greule Jr/Getty Images
With all that said, electing to hold out is still a highly questionable career decision, to say the least. (Yes, it really is because in many instances a players immediate production following his hold out declines and seldom do fans sympathize with players involved in long-term holdouts. Although there was a "pay da man" contingent at the beginning of his negotiations last fall how did that turn out for Matt Forte by this July?)
In these economic times it’s hard for fans to sympathize with a guy who’s not satisfied with $6 million for six months of work. From a public-relations standpoint, people find it hard to fathom this amount of money as being unacceptable. Naturally, it can appear from the outside that the player is being greedy and not appreciating his position in life. Perhaps there is some truth to this perspective in many cases. (There's a lot of truth to it and in this economic environment it's very hard for many fans to see it as being relative to the profession a player is in with it's risks of permanent injury and potentially short employment history)
But something else to consider here is the average length of an NFL career, which is less than three years. This means players are trying to make as much money as they can in their brief window of time to do so. This should be an understandable desire for anyone in such a situation. (It might be if more of us weren't experiencing those same brief windows of opportunity these days too but we're not getting a minimum salaries of $355k to multi millions for our efforts and we don't have guaranteed contracts either. Ever heard of "employment at will"?)
Another issue regarding player holdouts is the negative effect it has on a player’s preparation. Clearly, missing training camp is not a good idea for any athlete looking to have an elite season. We have seen this play itself out over and over again, from Chris Johnson to Darrelle Revis. The bottom line is players need training camp in order to perform at an optimum level. (I think this is pretty much a proven fact. No athlete can retain his edge unless he's constantly working at it. If there was no truth to this MLB wouldn't need Spring Training either nor would any other major sport require preseason preparation)
So is it smart for players to compromise their ability to contribute to their team in order to fatten their own pockets? This is the delicate judgment call that every player faced with this situation must make. Every day a player holds out is a day he's hurting his teammates and his own ability to be valuable to the team. (It is a delicate issue and one we could debate until doomsday, or December 21st, 2012, depending on whether the Mayans were right. It may be the only "tough" negotiating tool any pro athlete has but is it a good one? Is it a very effective one?)
Essentially, in the battle to prove their value to the organization, players end up partaking in a strategy that depletes that value more every day they are absent. They are allowing other players to develop further at their position. They are letting the team acclimate to life without them, and they‘re sacrificing their own skill set, ability, conditioning, team rapport and familiarity with the scheme. (There's a lot of truth in this paragraph whether a player accepts this or not)
All with the goal of convincing an organization they’re worth more money. These elements can also be detrimental for their career in the long run. Seems somewhat counterintuitive, doesn’t it? (Maybe it seems that way because it is. Let anyone of you go to your boss for a raise and then refuse to show up for work if you don't get it, then get back to us on how well that worked for you, LOL)
In an NFL AM interview, DeSean Jackson, who went through his own contract ordeal, gave some interesting advice to Maurice Jones-Drew and Mike Wallace in regard to their holdout situation. He had this to say:
Well, going through my little deal and things like that, I definitely found out there’s really not much you can do. There’s no control you really have over that. Trying to force a team to pay and things like that is definitely not something too smart. Has Wallace helped his situation in Pittsburgh with his holdout?
I would say just go keep working hard and go out there and prove what kind of player you are, with them guys, Mike Wallace and Maurice Jones-Drew, actually good friends of mine and hopefully something will happen soon enough and they can get back to playing football. But you know it’s a tricky, it’s a tricky situation. You can’t force anybody, any organization to pay you, so that’s the biggest thing about that.
(It would be hard to find anymore honesty and truth about it than this)
Jared Wickerham/Getty Images
From the standpoint of the owners and GMs, the strategy behind negotiating player contracts is viewed through a simple lens. Teams are given a limited amount of money to acquire and retain talent. In order to maximize talent, many skilled players must be acquired at a discount. If every player on a given roster was paid his actual value, the team would be either horribly lacking in talent or way over the salary cap. This reality demands that GMs seek and covet talent which exceeds its cost. (This has got to be the best and most truthful observation and statement in this entire article. It is absolutely and without question 100% true as far as how an NFL team must operate in order to remain competitive on the field)
With that said, a player who ends his holdout by signing his new mega-contract may start to adversely affect the organization. That's because a lucrative new deal can often end up hamstringing the organization’s ability to re-sign key contributors and acquire new talent, which may be the difference between a Super Bowl and a mediocre season. (It should be interesting to see whether or not Philly can "buy their way into a Super Bowl" with all of the mega-deals they've handed out recently. Stars are great but you need journeymen "worker bees" too.)
This may also cause long-term damage down the road when the team is forced to pay big money to a guy whose skills have clearly diminished, while it lets promising young talent go free year after year as a result of being financially strapped by the salary cap.
This is why teams like the Pittsburgh Steelers are able to maintain such a high level of success in the salary cap era, which began in 1994. The Steelers have established a strong reputation as an organization that rarely overpays for talent. In this era, managing your finances is often one of the most crucial components for long-term success. (And it's one of the big reasons why the Steelers are one of the most consistent winners in the league. They develop a lot of young talent and rebuild on the fly releasing vets who have become too expensive based on their abilities to contribute)
This is a concept Mike Wallace is becoming all too familiar with. (Are ya' listening Mike? Are ya' learning anything? If you're still dreaming of a Larry Fitzgerald or Megatron kind of contract you're playing for the wrong team. Ain't gonna happen brother so best check your ego at the door and accept it)
@ryan_riddle Who is more to blame in a holdout?
Wallace's situation somewhat similar to Cliff Avril's, tough to gage market for perceived niche player w/o long term production
— Josh Liskiewitz (@JoshLiskiewitz) August 11, 2012
Team Player both equally The League Who cares, play football! Submit Vote vote to see results
Whether you agree with the organizations or side with the players, in the end, it’s all business. Each party is merely responding to the environment and playing by the rules established within it. Although this may be “just business,” it’s still business done inefficiently and with palpable collateral damage. (This is true and maybe the biggest flaw in the NFL's business model. What's the best way to retain both unique top notch talent in order to compete for annually for championships yet still maintain profitability and stay within the restrictions imposed by a league wide salary cap intended to level the playing field for everyone? Some teams appear to have a better handle on this than others and many a guy could probably base his MBA Masters thesis on it. It's more than just luck that's for certain.)
If the league or an organization intends to evolve beyond this reoccurring theme of player holdouts, it must first re-establish the '‘rules of engagement.’' If this isn’t going to be done with the current collective bargaining agreement, which is in the first year of a 10-year agreement, then organizations themselves may have to establish a new system by which to operate. (Well don't hold your breath for this to happen. NFL owners seem to operate on two basic principals. 1) "If it ain't broke don't fix it". and 2) The Ostrich Principal, "if I don't see it maybe it will just go away". Not to completely demean them for being the "capitalists" they are but history has already shown us that "Robber Barons" don't stop robbing until someone stops them from doing it. In this case the players weapon of choice would be called the "Taft-Hartley Act" but the NFL has very neatly managed to exempt themselves from it SO FAR.)
If a team is willing to honor the full length of the contract, essentially it would find players much more willing to do so as well. However, for the owners, it appears as if holdouts are a lesser evil than fully honoring contracts. (This contains way too much common sense for any owner to accept and beside this would require a very scary thought.........change. )
Clearly, they prefer the occasional holdout over the option of treating their entire roster from top to bottom with the same level of commitment fans seem to expect from their favorite athletes. But at what point does a player’s cost begin to turn an asset into a liability? Such is the balance between the interest of the group and the individual, perhaps breeding the perfect environment for Darwinian law to play itself out year after year. (Darwinisn should look like this but in the case of the NFL often it looks more like this or when an agent gets involved like this .)