Revenue Sharing among NFL Clubs Plummets

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(from Sports Business Journal, October 22, 2012) Wealthy NFL teams aren’t sharing their revenue with financially challenged teams like they did in past years, but this is not cause for concern.  In 2011, the amount of money transferred dropped from around $100 million to close to $15 million, which is a very small fraction of the billions of revenue the NFL prides itself on.  The decrease in sharing could mean the disagreement between high-revenue and low-revenue has finally been resolved, and more importantly the league got what it desired from the new collective-bargaining agreement (CBA).

The league won financial concessions from its players during labor negotiations last year and immediately aimed at decreasing the need for revenue sharing among teams.  This plan is a complete contrast to other popular leagues, such as the NBA and NHL, who have been attempting to increase revenue sharing in their leagues, respectively.  The NFL was able to help those teams in need of financial assistance by keeping a larger percentage of the overall revenue generated.  This also allowed owners of higher-revenue teams to keep more of their own revenue.

When the NFL signed the new CBA last year, they hoped to phase out from supplemental revenue sharing within 10 years.  This goal could be achieved sooner than expected based on the decrease in the first year of the deal, as well as the increase in revenue due to new television deals that will take effect in 2014.  The player’s share of all revenue in the new CBA decreased from the low 50% range to the mid-40% area, but they receive up to 55 percent of national television revenue.  In the previous deal, all revenue was shared equally causing problems for low-revenue teams who were paying the same amount as the Dallas Cowboys.  Now teams pay less on the player’s side of the deal and need less assistance since the player’s local revenue share is lower.

At first glance the deal might have seemed to favor the owners, but it actually looks like what is best for the league.  After reviewing the first year of the new CBA, it appears the NFL is on the right track.