Hey Players! Own Your Damn League, Comish and All
The NFL, MLB, and NBA are all involved in negotiations between owners and players on how to reopen and recover some of the lost revenue due to Covid. The NFL has undermined itself via the typically obtuse leadership of Roger Goodell who cannot figure out how to put fundamental American principles of equality above the camouflage-conservative orientation of some of the league’s fans, not to mention Trump-supporting owners. MLB is locked in a struggle with players whom the league office wants to assume both the health risks of playing a game when Covid lurks and the financial risk of poor revenue performance. The NBA is managing its shit better, although the following solution applies equally to it.
There is a legal and much used business model in America that has the power to solve all of the above problems and more for the athletes that provide virtually all of the material content that drives the billions of dollars of annual revenue for every sports league: The Cooperative business model has been around in this country for over 150 years and has been used to allow content and service producers to own and decide on the disposition of all the returns on the value they produce. Thus, when a dozen dairy farmers in Minnesota got tired of being paid bottom dollar for the milk their cows produced, they started a cooperative still owned and controlled by the guys who milk the cows. It’s Land O’ Lakes. Similarly, when a group of hardware store owners leveraged the cooperative business model to build a company called ACE Hardware which now has 5000 independent members around the world. And when private hotel owners realized that they were at a competitive disadvantage to large hotel chains, the started a company called Best Western.
That’s right, all of these recognized brands have one unique factor in common. They are member-owned companies, known by the blanket-term, cooperative. Many Americans don’t know what a cooperative is, how it works, or its fundamental purpose. In fact, most Americans belong to or shop at cooperatives without even knowing it. Credit unions, for example, are member-owned companies whose boards are made up the ordinary users of the business. 120 million Americans are member-owners of credit unions. The reason you never see a Credit Union CEO getting reamed by the Senate Finance Committee for ripping off its customers is because the customers own the company.
The players provide 95% + of the value that any sports league monetizes for fans and consumers. You could argue coaches or cheerleaders provide some value. Or that the guy selling hot-dogs or controlling access to seating provide value, but of course that’s completely ancillary. What you’d rarely hear anyone saying is that the owner — the almost-always white billionaire who has complete control of the team, the commissioner, and the league — actually provides any value to the enterprise. And, they have no loyalty to what the team represents to a community. Ask any San Diego Chargers fan.
If players provide virtually all the value of the ‘product’ why then don’t they just own the league? There’s nothing stopping the top 50 NBA players from saying “we are marrying our fortunes together to start our own basketball league which we will own as a cooperative business.” These players could establish the league on basic cooperative principles, create a voting structure, a brand, seasons, schedules, hire their commissioner and other professional staff, and develop a fair formula for sharing the bottom line.
It’s difficult to get a close look at the numbers because of the guarded clubiness of all the teams and leagues. But roughly, these three leagues generate over $30 Billion in annual revenue. Player expense is approximately $18 billion. Some $5-$7 billion covers other expenses, and the owners take home another $6 to $8 billion. But here’s the amazing thing if you’re a current player feeling a bit bruised by your owner. Collectively, you and your fellow players have all the leverage in the world because you bring all the value that generates this money.
The first argument against this idea that owners and the status quo will make is that the players don’t know how to run a business. They should shut-up and dribble. But guess what, many of the 4000 farmers who own Land O’ Lakes don’t know a whole lot about running a multinational food corporation. But they don’t need to. They vote for a board from among their membership and then the board hires a competent CEO to run the company. Who might a newly formed Football League of America hire as their commissioner? Condoleezza Rice? Michael Strahan? Heck, they could even hire Roger Goodell away from the NFL if they wanted. Remember, the new league, although it would struggle at first as all new ventures do, would eventually have all those extra billions that aren’t going to the owners to invest in real priorities of the player-owners. Retirement programs, internationalization, investment funds or training for players who are retiring, even decent compensation for cheerleaders.
At the very least, the players association should explore the idea, map out the pros (no pun intended) and cons so that they understand the potential upside of such a bold move. If the guys who bring all the value owned the league, served on its board, and hired and fired senior management, would they have any of the problems that currently plague them? In the short term, they’d have a different set of business problems to wrestle with, but the cooperative structure — via which the league would be wholly owned and controlled by players — is a tested and proven model to drive member value and organizational sustainability.
The very act of exploring the feasibility of a player-owned league would strike fear in the hearts of owners, many of whom don’t share the player’s concerns for racial equity, protection against severe injuries, and a fair share of the gains. If nothing else, creating a plan B or what professional negotiators call a BATNA (best alternative to a negotiated agreement) would give the players more bargaining power and result in better near-term outcomes.
But far better to actually do it! To seize control over your profession and to direct the business in ways that advance your needs and beliefs. In the long term, everyone would win. Players, workers, and fans. Teams could actually offer some sort of membership shares to fans, aligning each team with the interests of the community.
The only losers in this scheme would be the owners. Who’s going to care about that?
