Smith: Threat of Money Loss Ends Lockout

Georgia Dome

There will be professional football in the Georgia Dome this Fall as the NFL and its players agreed on a new labor deal this week. PHOTO: dsearls/Flickr.com

There is labor peace in the NFL.

After more than four months of court dates and negotiations team owners and players of the nation’s most popular sport agreed on a new collective bargaining agreement Monday. In the process, owners lifted a lockout and allowed players back at practice facilities for the first time since March 11.

It came down to the wire, with training camps for the 2011 season opening this week.

In the end, the deal centered on money — especially the threat of losing it over the long term. Tom Smith, an assistant professor in the practice of finance explains:

“The NFL people started looking at the big picture and saying, ‘If we can’t come up with some solution, we’re going to lose the season and we might not have fans again for four or five years. We can afford to give up money right now, but can we afford to give up money three or four years down the road if fans don’t come back?’” Smith told D. Orlando Ledbetter of the Atlanta Journal-Constitution. “My answer was, no, they couldn’t.”

A self-described “pop culture economist,” Smith studies the economies of the sports and entertainment industries.

According to published reports, owners and players agreed to split revenue 53-47. There’s also a new salary cap, a salary minimum for teams to follow, changes in practice setup to protect players’ health and a rookie wage system.

Appearing on WXIA-TV Monday evening, Smith said each side should be satisfied with the deal and that, at least in 2011, the competitive balance the NFL prides itself on may be out of whack.

Teams now must work through an abbreviated free agency period. Those prepared for the madness, Smith said, will benefit. He adds teams with a solid core of players — those not needing to add great amounts of talent — will be better positioned to succeed given the shortened window to prepare for the season.

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