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NFL Players’ Money with the Upcoming Labor Stoppage

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At midnight tonight, the NFL owners and the NFL players will no longer have a collective bargaining agreement... unless there is some drastic, last minute progress. This means players will not be paid, this NFL season may be in jeopardy of being canceled or shortened which means owners won't collect money from ticket sales. There are a lot of reasons why both sides haven't been able to reach an agreement, but that's outside of the scope of this blog. Let's just call it your average strike situation.

Let's amend that, it's not the average strike situation. The players make on average a million a year and owners who make dozens millions (my non-scientific estimate). The average American probably has no sympathy for these guys. I can't imagine what the guy in Detroit who lost his job at the plant is thinking now. He's had enough labor issues to deal with in his life, he just wants to sit back and finally, for the first time in a dozen years, watch his Lions be competitive on a football field (as they look to be fielding their best team in years). If there's anyone with no sympathy for these guys its that guy.

On the other hand, I feel for the players a bit. The average football career is short. I think I read it was 4 years, but don't quote me on that. Not only that, but being a football player is competitive. There are 53 roster spots (not counting the practice squad) and 32 teams. That means that roughly 1700 players are employed at any given time. We read about the Tom Bradys of the world quite often - hey he's got the supermodel wife, those Super Bowl rings, and model good looks. We don't hear about players like Rob Ninkovich, the journeyman outside linebacker for the Patriots. For them a work stoppage is a pretty big lifestyle change. Remember that most of these people are in their mid-20's and this is their first experience earning a full-time salary (albeit a high full-time salary).

With that in mind, I noticed an article from Mike Reiss, one of the best beat writers for ESPN Boston with some sound bites from players about the stoppage:

"Health care, I finally found out how expensive it is, especially when you have a family." - Linebacker Jerod Mayo

"I'm kind of a cheap guy. I have a lot of money saved up. I don't really spend anything. Me personally, I've been in situations where I might not have even played football, because of the situation I was in [as a player trying to prove himself]. So I've always made sure that I take care of my things and make sure everything was set up to where [it needed to be] if there wasn't football." - The aforementioned Rob Ninkovich

"[Since] my rookie year, I've been preparing for it financially. When I was young, I saved every penny I had to get what I wanted. It's no different now that I'm 29. I'm fine with whatever happens." - Leigh Bodden

The interesting thing to me from this extremely sample size is that the players who had all the odds against them seemed to specifically mention their saving habits. Rob Ninkovich has been cut by New Orleans Saints twice and the Miami Dolphins once since being drafted in 2006. He's on his fourth team in 5 seasons. Leigh Bodden wasn't one of the drafted players in 2003. The number of undrafted players with lasting careers is extremely small. In contrast there's a player like Jerod Mayo. He was signed to five-year, $18.9 million deal, which should set him up for life unless he's spends it all away. He didn't mention his saving habits at all. At least he made mention of the cost of the health care. It sounds like he's being woken up to what the average American deals with... and I think that's a good thing for him down the road.

While on the topic of health care costs, previously Mike Reiss wrote that a Patriots player (who is to remain anonymous) was actually delaying adding some family planning because he wasn't sure he'd have health insurance. I hope he got the advice to look into Cobra Health Insurance, because I'm pretty sure he'd qualify.

It's times like this that I'm glad that NFL players like Wes Welker knows his personal finance. Let's hope that NFL players take this a learning opportunity and switch over from their NFL Playbooks to a good personal finance book.

Posted on March 3, 2011.

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10 Responses to “NFL Players’ Money with the Upcoming Labor Stoppage”

  1. Todd says:

    I’m one of those people that have no sympathy for the players. They have a wonderful opportunity to put a lot of money away for a rainy day.

    The owners should be able to make as much as they can… they are the owners of the business. If the employees (the players) don’t like it, than they should start an employee owned team.

  2. I think a core issue that makes sports labor issues different is the fact that the owners cooperate in setting ground rules (draft, waivers, salary caps, merchandising, etc). That’s very different from “real life”. Can you imagine Google and Microsoft agreeing to cap programmer salaries at $X? Doesn’t make sense from a competition standpoint.

    In essence, the owners have their own “union” (albeit not in the technical sense).

    • Lazy Man says:

      That’s a good point Kosmo. I think for the good of the sport, you need to set caps to keep things competitive. The NFL just completed year where there was no salary cap and things went relatively unchanged. So in this way, they were playing like Microsoft and Google for programmers.

      In response to Todd, I was going to say that players can’t start an employee owned team. Starting a new team would require league approval and bunch more confusion and litigation that what they have on their plates now. Plus what about the players who aren’t on that team that want to be. It might make for an unfair situation. They could try to start a new league, but then they’d need to hire trainers, coaches, get television contracts, etc. By the time they are done, they’d recreate the NFL without owners… but it would take a long time for that to get off the ground, if it ever did.

      They probably wouldn’t be able to get stadium contracts, either, so you are looking at a Pearl Jam fighting Ticketmaster situation, which wasn’t good for fans either.

  3. I find it eye opening that the majority of these players (the one’s that make $1M and above) are flat broke. They spend their money on homes for their parents, jewelery and fancy sports cars. I didn’t look up the players you quoted but I would imagine they make the league minimum, which is somewhere around $300K, and save their money. I had a discussion yesterday with a co-worker about not feeling sorry for these players as they need to learn how to save their money. Most of the players have zero student loans as they received full ride scholar ships to college so if they are broke that means they spent all of their money. Another thing that bothers me about professional sports is agents as they take quite a bit of money from these players. John Stockton, who played for the Utah Jazz, did not have an agent and negotiated his own contracts. Professional athletes should learn about contracts and how to negotiate their own deal. Maybe that should be a mandatory class for any college athlete so they can handle their own business and not depend on an agent that takes 10% – 30% (actually I have no idea how much an agent charges, I’m just guessing).

  4. For some reason, I’m thinking it’s 15%. Might even be less. Definitely not 30%.

    The agent does tasks other than negotiating the contract. Often, they’ll handle filing of tax returns for the player, negotiate endorsement deals, and sometimes just act as a buffer between the media on player.

    For example, LeBron James’ agent likely spends a lot of time filtering through endorsement request to find that one that are a good fit. I’m betting there are a lot of request that never make it past the agent for a variety of reasons. How much is it worth for LeBron to have a “funnel”?

  5. @Kosmo: I agree that these players need a “buffer” or “funnel” person to filter through all of the inquiries they receive. Personally, I would hire a personal assistant to handle all of this for me instead of paying an agent.

  6. I’m not sure the roles are as similar as they might appear on the surface.

    The brother of a friend of mine bounced around in baseball until he was 40. It took him 12 years to claim a spot in the major leagues for good. In those years, he was cut by several teams and even ended up in Japan for a while.

    Without his agent, his major league career would have been 13 games instead of 467. Every time he got cut, the agent would be busy knocking on doors to find a new opportunity. Finally, he ended up with a pitching coach who reworked his delivery and he became one of the more effective situational lefty relievers in the game for a short period of time (he made OK money for a couple of years at the end, but never anything close to A-Rod money).

    I’m in the market for an agent myself (not sports) and definitely do not want a personal assistant. That’s not a knock on PAs – it’s just a different set of skills.

  7. @Kosmo: I didn’t even think about all of the background work an agent does for players. Thinking about that maybe having an agent is worth their money.

  8. Interestingly, the agents have to do more work for low end players than the stars. Albert Pujols could probably negotiate his own contract. Matt Treanor needs a lot of help finding a gig. Being a percentage based gig, Treanor’s agent is going to make peanutes for the work (and MLB’s CBA forbids agents from taking a comission on contracts paying the MLB minimum or having a commission that would drop the player’s proceeds below the minimum).

  9. […] bargaining agreement brings out a few personal finance questions. I wrote before about how some NFL players' are handling their money well with the labor stoppage. Today, thanks to an article that Kosmo from the The Soap Boxers passed on, we can get a glimpse at […]

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