Roger Goodell’s New Contract and the Pay Dynamics of the NFL

Five years, 200 million dollars, and a private jet for life. I don’t care what your job is or how good at it you are, when you hear those terms for a contract you at least have to blink a few times to make sure you read it right. Those were the reported terms Roger Goodell was requesting for his pending contract extension as NFL Commissioner. I think what got most people was the private jet thing; it just sounded ludicrous, conceited, and potentially made up.

So, is Goodell worth that? Does he deserve it? Given that his approval among fans isn’t great and that $40 million per year is such a huge amount of money, the reflex answer is no. However, I’d like to suggest it’s a little more complicated than that.
First, I want to provide as much context to this discussion as possible. Through 2016, Roger Goodell had made a reported $212.5 million since taking over as Commissioner, an average of about $17 million per year. For comparison, Paul Tagliabue made just over $10 million in his final season as Commissioner. As for the more specific terms of Goodell’s new deal, his actual base salary is reportedly somewhere in the single-digit millions with the rest of the contract relying on owner approval, incentives, and other bonuses. In player contract terms, his contract is worth up to $200 million but less than $40 million is guaranteed. That said, I’d be willing to bet than by 2023 Goodell will have earned at least 90% of that money, if not the full value of the contract.

In looking for justification for such a raise, I first looked at how the NFL’s revenue has changed since Goodell has been in charge. In 2006, the NFL generated $6.54 billion in revenue. In 2016, that had climbed to $13.15. For what it’s worth, inflation of the US dollar between those two years was about 19%. TV ratings may on the decline, but the NFL continues to make more and more money. Revenues have more than doubled under Goodell, and his salary will potentially more than double under his new contract. That seems simple enough.

However, such levels of compensation don’t necessarily line up to the way CEOs of corporations with similar cash flow are paid. The NFL’s $13 million in revenue is approximately the same as the revenue of companies such as Monsanto, Office Depot, and Texas Instruments. Meanwhile, $40 million annually would make Goodell one of the nation’s best paid top executives, rivaling the CEOs of companies like Disney, Oracle, and Nike. So, in that respect, Goodell is well ahead of the pace.

 

A second argument for paying Goodell so well is an intangible one. It’s important to remember that the Commissioner isn’t really in charge; he works for the owners. Managing the competing egos and interests of 32 very wealthy individuals is not an easy task. It also often involves being a public punching bag for the league. This has been very evident recently. When Goodell’s proposed terms became public, Cowboys owner Jerry Jones was furious. This was coming off the back of Jones’ frustration with the player protests (he had in less blunt language expressed similar sentiments to President Trump’s views on the matter), and there was extensive reporting that the contract extension had pushed Jones past his tipping point. Personally, i find this odd because Jones makes far more money than Goodell does off of football and also the Cowboys don’t share revenue generated from merchandise sales like the rest of the League does (they get to keep everything they make and don’t get money from other teams’ sales, which works because they move far more merchandise than other teams) but I digress. Jones quickly found himself at odds with the 31 other owners, who all pledged their support for Goodell and his new contract. What this tells me is that when owners criticize Goodell, it’s mostly for show and to garner the favor of their team’s fans and/or players. I think all of the owners understand that Goodell is pretty good at his job, namely making sure they all keep making a lot of money and that any perceived threats to that income are prevented from causing too much damage. Goodell looked like he lacked leadership with all of his statements on the protests, which for the most part were a bunch of words that said absolutely nothing and fell short of picking a side. However, I think that’s exactly what he’s paid to do. Be boring; don’t draw too much attention to yourself.

Goodell has 31 out of 32 of the most influential people in all of sports agreeing that they should pay him more than double what he’s currently paid; he must be doing something right or they’d get someone else.

I don’t have a strong opinion one way or the other on Roger Goodell, but I’m willing to give him the benefit of the doubt that his job’s a lot more complicated than fans and media often make it seem.

Another point I’ve seen made is that it makes sense for an organization’s top executive to be its best paid employee. Matthew Stafford made $27 million last year, so fair enough. This finally brings us to the players.

I want to suggest that “Does Goodell make too much money?” is the wrong question to be asking or spend serious time debating. The question that needs to be asked is “do the players make too little?” That may also sound ridiculous having just mentioned that one guy made $27 million last year, but that’s not the right way to think about it.

The average (mean) salary in the NFL is $1.9 million, but the median is just $770,000. The average length of an NFL career is just 3.5 years. Keeping in mind that the NFL has both far more money and far more players than the other major sports leagues, let’s compare some metrics.

League

NFL

MLB NBA

NHL

Mean Salary

$1.9 million

$4.47 million $6.2 million

$2.4 million

Median Salary

$770,000

$1.5 million $2.6 million

$2 million

Avg. Career

3.5 years

5.6 years 4.8 years

5 years

2016 Revenue

$13.15 billion

$9.03 billion $4.8 billion

$3.7 billion

Player CBA Share

48%

~50% 50%

50%

Guaranteed Contracts?

No

Yes Yes

Yes

I could write an entire post just about this chart but I want to focus primarily on two rows: average career and guaranteed contracts. The NFL on average has by far the shortest career length of the four major sports leagues. This is somewhat a dynamic of the size of NFL rosters and the corresponding high turnover on the bottom half of those rosters, but it’s also because of the physical nature of the sport. The NFL is certainly the sport with the most long term physical consequences for it’s players. The inherent risk of playing football is both why the NFL doesn’t guarantee its contracts and why it’s absurd that they don’t. Contracts aren’t guaranteed because it’s simply a reality that any player is one play away from potentially never playing again (the devil’s advocate argument would be that’s true of any sport, but the risk of this is relatively high in the NFL; I’d say the NHL is similar in this regard, see Marc Savard). From a business standpoint it’s understandable why owners don’t want to be on the hook if a player suffers a terrible injury just months into a long term contract. In such a scenario they can pay the portion of the contract that is guaranteed and release the player.

From a human perspective, though, it’s preposterous that these contracts aren’t guaranteed. While I certainly think NFL players (and athletes in any league for that matter) should be getting collectively more than half of the money, I think it’s much more important for them to get a guarantee on what they’re already offered. Furthermore I think the NFL should be paying these guys’ medical costs for the rest of their lives (as should any employer whose employees do work that will have long-term negative medical consequences). Yes, football is a game, but the physical sacrifice these players are making not just for their day-to-day job but for the rest of their lives is something few people can appreciate.

Huge contracts for Roger Goodell or Matthew Stafford may be what makes news headlines, but the underlying pay dynamics of the NFL and it’s players are in my mind far more important. The current NFL Collective Bargaining Agreement expires after the 2020 season. Roger Goodell got his raise, it’s time for the players to get theirs.

 

Author’s note: In compiling data and information for this post I tried to use reliable sources and double check the numbers when possible. However, it’s entirely possible I’ve screwed something up. If you believe any of my numbers to be incorrect please let me know and I will investigate and update the post as appropriate.

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