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{ Read the transcript of a recent conference call regarding the economic impact a lockout will have on NFL team cities. }
Author: NFL Players Association Posted: 12/6/2010

December 3, 2010

10:30 a.m. EST

George Atallah: Morning everyone. This is George Atallah with the NFL Players Association. I’m pleased today to be joined by Dr. Jesse David, Senior Vice President at Edgeworth Economics, to discuss the economic impact of a potential NFL lockout in 2011. Many of you that are on the call have already taken an interest or written about this issue as of last week. We’re pleased that you’re joining us today. I think one of the things that we’ve been talking about as a players union since 2009 are the ramifications and negative impacts of a lockout on the team communities and on the cities that help stage the games.

The first message that we shared with people was the direct impact on the 100,000 plus stadium workers that would be out of work if there are games missed. In this economy, I think we can all be sensitive to these issues and we’ve certainly done everything we can to move this CBA process along, but in light of the recent developments and the challenges that we have with the Collective Bargaining Agreement, it’s important for people to recognize that it’s not just players that will be negatively impacted by a lockout.

With that, Dr. David is going to provide a brief summary of his findings and go over the methodology. We will field questions about the methodology and where these numbers came from. And with that Jesse, I turn it to you.

Dr. Jesse David: Thanks George. Well I’ll get right into it. We were asked by the NFLPA to come up with an independent analysis of the economic impact of a potential lockout in 2011.

Our approach to doing that is based on publicly available information that all of you would be able to find pretty easily, and I can point you to some of it. What we did was look for other studies that would be relevant and did a survey of those studies. We pulled the appropriate data and aggregated it into a number that we could use.

In particular, I’m sure you’re all aware of the kind of analysis that cities, development agencies, the teams and the league itself often provide to the public when they are seeking public assistance with building stadiums. That happens in almost every case when there’s a new stadium built or a major renovation. We actually calculated that the public has provided an average of about $250 million per NFL facility since 1990. Well when the teams and the developers are seeking that money, they often commission studies of the economic impact that a stadium and the NFL operations in it will have on the local economy. Those numbers are clearly relevant to the question of what will happen if NFL activity stops. So we looked for publicly available studies of that nature, and found about 10 of them in the last decade that were relevant to this question.

They are studies that have been commissioned by, for example, the San Francisco 49ers, by the Metropolitan Sports Facility Commission in Minnesota and by the new Meadowlands Stadium Company who is working to build the new Giants and Jets stadium. Each of them published a study using proprietary data from the teams to estimate the impact that those facilities and the games in them would have on the local economy. We took those studies and did a few things to them to make them comparable and to make them useful for the question that we have here. For example, we extracted the information regarding ongoing operations and separated that from economic information related to construction.

We don’t want to count any of the initial economic impact associated with constructing a facility, because if a football game takes place or doesn’t take place, the relevant question is - what’s happening to the operations of the facility and the team in the facility? We took information where possible from each of these studies relevant for the county in which the stadium is located, as opposed to a broader measure like the state or even a narrow measure like the city. 

So we’re taking comparable results from each of the counties in which the economic activity is occurring - since some of these studies were as much as 10 years old - and we brought them all forward to current dollars to make each of them comparable. 

And our results are that each NFL game, the actual operations of a game, generates an average of about $20 million to $21 million in economic activity. There’s a range, something like $10 million to $40 million, in these studies that averages about $20 million. Over the course of eight home games, and that obviously doesn’t count playoffs and the Super Bowl, that’s about $160 million per year in economic activity. That is activity that would be lost if there’s a full year of a lockout. Over one game you could lose as much as $20 million in economic activity. We’re talking about wages, we’re talking about salaries paid to anybody who is associated with the game including players and the folks who work at the stadium, the folks in the front office and all of the associated businesses that earn money when a game goes on, for example local hotels, restaurants and the like.

So that’s $20 million per game, and I think something that’s very important to consider is that that $20 million is associated with a certain number of jobs. According to these studies it’s approximately 3,000 per site. Those jobs would be lost if there’s a lockout and certainly a significant portion of them would be lost immediately, and then almost all of them would be lost as time goes on, for example the teams could retain some of their front office people if the lockout only lasted a week or two.

But if it lasted a full season, we’d expect to see layoffs increase. And the last point I’ll make is that given the economic conditions that we see today and projected over the next year or two with unemployment at 9 percent or higher, I think it is very unlikely to expect that there would be any kind of mitigation in the economy and that these lost jobs would be replaced.

Certainly under current conditions that’s even less likely than usual. So I think that’s the summary of the work we did. Again, all of the source data is publicly available and I’d be happy to point anyone toward some of the particulars if there are questions about that. George, I think that’s all I have.

George Atallah: Excellent. We can receive questions now. Thank you.

Operator: Our first question comes from Eric Edholm with Pro Football Weekly. Please go ahead.

Eric Edholm: My question is of that $20 million per game number that you cited, what percentage would be players’ salary? Were you able to determine that?

Dr. Jesse David: I believe players’ salaries are something on the order of about 40 to 50 percent of the total. It could be a little bit less but I’d have to go back to check some of the studies. It may be as low as 30 percent in some cases. 

Operator: Our next question comes from Mark Zinno with 105.7 Baltimore. Please go ahead.

Mark Zinno: Morning gentlemen. I guess my question is when you look at the landscape of the owners in the NFL, there are some owners who obviously aren’t doing as well as others who would be more economically impacted by a lockout. Is there a general consensus that in a sense it’s almost the rule by the few that the owners who are doing well financially are going to help push this train forward as far as a lockout is concerned? 

George Atallah: Let me take that one and thanks for joining us on the call. I don’t know the answer to your question because we don’t have the information readily available on who’s doing well and who’s not. So if we’re talking about publicly available figures, such as the Forbes numbers, that tells us that every team is doing well. So it’s going to be hard for us to characterize or pick off or isolate owners to your question that are not doing as well or that can’t afford a lockout or anything like that. It’s really tough to say in the absence of the information and I tried to make that point when I was a guest last week.

Operator: Our next question comes from Eric Sturgis with Atlanta Journal-Constitution. Please go ahead.

Eric Sturgis: Good morning. I had talked to some experts who say that the economic impact of a lockout or who have looked at other sports work stoppages who say that, in general, that there is very little impact economically, because they say people will tend to spend their money on other activities. And I was wondering if you could address that issue or those concerns.

Dr. Jesse David: Right, well there certainly is a range of opinion on these issues. The analysis that we did is based on studies commissioned either by the teams themselves, or by the organizations, the public organizations, that support those teams through stadium ownership or management. And so we based our analysis on their opinions and aggregated them. I think you certainly have to go to each of those studies and see what the different levels of assumptions are.

I know that there’s a range of assumptions in terms of how substitutable football is for other entertainment activities. Generally speaking - so long as there are some folks who come to watch football games from outside the region who wouldn’t visit that region if there wasn’t a game, and if there are some folks within the region who spend money on football but wouldn’t spend that money locally if there wasn’t - as long as there are some of those, you’re going to have some economic impact associated with the football game.

And I think every study that looks at that makes some different assumptions about that. A lot of them, for example, have surveys of visitors and ask them, “How much do you spend and what would you be doing if you weren’t here?” But I think you’d have to go and look at the individual studies, but generally speaking, these are 10 different instances where the opinion was football is not substitutable for some other activity that the fans might undertake if there wasn’t a game.

Operator: Our next question comes Dashiell Bennett with Business Insider. Please go ahead.

Dashiell Bennett: Thank you. I was wondering if you could talk a little more about the types of jobs that would be lost of that 3,000 that you mentioned. Are these mostly like the seasonal part-time jobs? Do these people also receive benefits that would then be lost as well? And could you also repeat what you said the range was for per game? You said $20 million was the average, but what was the range between the per game impact? Thanks.

Dr. Jesse David: The range is - and I’ll pull up the exact numbers here - the range is $12 million to $40 million in the ten studies. That’s in current dollars. You’d get different numbers if you went and you looked at the actual studies say from 2002.  But if you bring them all current, it’s $12 million to $40 million. The biggest number I think was for the Texans facility and the smallest one might have been the Colts. I’d have to go back and look through them one by one, but I’m pretty sure of those two. As far as the type of jobs, there are the players of course who have a significant portion of those earnings, but the bulk of it is what is known as indirect economic activity, which is the spending by the public or the media or other visitors in restaurants, hotels and other local businesses.

That’s most of the spending and therefore translates into most of the jobs. Restaurants will cut back or close. And there is all the rest of the economy that exists to support the spending and the jobs in restaurants and hotels, for example health care. If you’ve got more restaurant workers, you need more healthcare workers in the local economy.

Obviously, if you’re going to lose those jobs, that might take some time. It wouldn’t necessarily happen over the course of one week, and that’s why we believe that the $160 million, that full number, and the 3,000 jobs is most likely to be reached over say a longer lockout period. But you would definitely have some losses even in the short term, for example the workers at the stadium itself, day of game workers such as concessions, parking, security, etc.

In terms of the precise share of the 3,000 average that is made up by each of those categories, I think I’d have to go back and do an analysis that I haven’t done in terms of breaking it down. But again, all of that information is available publicly. 

George Atallah: I have two final thoughts if there are no additional questions. I got to the office today. I looked at the New York Times and the front page of the New York Times was “Jobless Rate Hits 9.8 percent.” There is no question what kind of impact the NFL has on the local economies and cities. We can debate the range or the amount, but it’s interesting to me that once this first round of stories came out, the league decided to put a headline out that was “Union Spinning Economic Fairytales.”

That is interesting to me because these are their own figures. These are the numbers that they use to get public financing for their stadiums, and use taxpayer dollars to get financing for their stadiums. So unfortunately, I think it’s a situation now where we know that there’s going to be an impact. Dr. David’s findings have shown that there is a negative job loss and revenue loss for these cities, and that’s what we’re trying to really focus on over the course of the next couple of months because we know that this game reverberates beyond just the players and the owners.

Operator: We now have a follow up question from Mark Zinno with 105.7 Baltimore. Please go ahead.

Mark Zinno: Gentlemen, I have seen you point to this unemployment rate a couple of times, and I guess just again playing devil’s advocate and forgive the pointed nature of this question, but if the Players Association and the league are both trying to make their points to the public to say, “This is where we stand and this is where we stand,” and I guess, for lack of a better term, curry favor with the public to say, “Come on our side or come on our side,” the idea that the NFL union is a bunch of blue collar pauper kind of guys who are hard hat lunch pail guys who go to work every day, it almost, at least to me, is a little bit insulting from the standpoint that this is a multi-million dollar union with a lot of rich people in it. It’s hard for me, as a blue collar guy myself, to look at it and say, “Okay, well these guys are painting this picture that because they’re out of work, they’re going to be struggling to make ends meet.”

And maybe some of the smaller guys in the union, some of the lesser paid guys in the league may because they haven’t been around that long and haven’t had that big paycheck yet, but again, I’m not trying to accuse anybody of anything, but I’m just saying when I look at it on the surface, it seems like you’re trying to paint the picture that really isn’t the case.

George Atallah: No, I think our perspective is to show that this game is bigger than just the players and I think our players do something that very few people can do and that somebody like me can only dream of doing. Obviously they are well compensated. There are risks associated with the game as well, as you know, but the point here is not to try to get sympathy from a group of players or anything like that. It’s just to identify the broader impact that this game has. The classic example of this is every team city wants a Super Bowl because the cities understand what kind of impact that would have on the city and the community of the team city. So that’s the broader point that we’re trying to make here. I think you know that the owners opted out of the agreement without getting into too much of the CBA jargon.

The purpose of this call and the purpose of us identifying these issues is simply to raise the public consciousness of the negative impacts that a lockout would have. If the owners are going to lockout the players, maybe there will be a significant group of players that will be fine, but many other people that support the game won’t.

Operator: We now have a follow up question from Eric Sturgis with Atlanta Journal-Constitution. Please go ahead.

Eric Sturgis: Yes, I was wondering what type of feedback you all have received thus far from some of the political leaders that you have sent letters to in recent weeks. And also, I was wondering where we could take a look at some of the research that was done for the NFLPA.

George Atallah: Jesse, you guys are going to have a summary of this on your website, is that right?

Dr. Jesse David: Yes, it’s a brief summary and I could, if you’re interested in the details, point you to some of these particular studies that were published. I’d be happy to give you the details on how to find those. It's www.edgewortheconomics.com. That will just reflect the same highlights that we’ve discussed today. Again, I think if you’ve got some more specific inquiries, probably the best thing to do would be to contact George who will pass those requests on to me. But, for example, I can point you to the study by the 49ers in 2007 titled Economic and Fiscal Impacts of a New State-of-the-Art Stadium in Santa Clara. That was published in April 2007. The Vikings commissioned a study that’s similar and there are ten others.

Operator: We now have a follow up question from Eric Edholm with Pro Football Weekly. Please go ahead.

Eric Edholm: George, if I understood what you said right, are you saying that the NFL is actually disputing these particular numbers that you guys have? I don’t know how much they’ve come up specifically in CBA negotiations, but the ones that we’re talking about today, have they said that these numbers are false or misleading or...?

George Atallah: Yes they have.

Eric Edholm: Okay.

George Atallah: Yes, and the direct quote from Greg Aiello is, “It is a series of numbers pulled from thin air in a misguided attempt to inject politics into the collective bargaining process.” 

Operator: Our next question comes from Howard Fendrich. Please go ahead.

Howard Fendrich: Hi, I just wanted to clarify. It’s based on 10 such studies?

Dr. Jesse David: Yes, 10.

Howard Fendrich: And you mentioned the Santa Clara one and there is no stadium there. Are the others all actual places where there are stadiums?

Dr. Jesse David: Yes. In - well wait, I’ll have to go back and look. In general, the studies are done either in anticipation of a stadium being built or to justify existing subsidies.

I’m looking down the list here. The Saints did one, Chargers, Texans, Colts, Ravens, 49ers, Falcons, Vikings, Giants and Jets, Cowboys. As I look at that list, I believe the 49ers are the only one that was for a stadium that has not yet been built, but I’m not 100 percent positive of that. But I will say, by the way, that that stadium included the numbers that they used for the ongoing operations that are based on the team’s spending that largely exists at the present stadium.

But that’s a good point that that is one of the 10 that has not actually yet been built.

Howard Fendrich: But the idea that you’re putting forth is that across the 32 teams, it would be about a $20 million per game impact based on these 10 studies.

Dr. Jesse David: Right, so these 10 were taken as representative. They include teams in large markets or high revenue teams like the Cowboys. They include a smaller market or lower revenue teams like, for example, the Saints. They run over a range of time periods from 2002 to 2010. As I mentioned, I believe nine of the 10 are for current facilities, so we’ve assumed that those as a group are representative of the league more broadly.

If they’re not, then the number could be slightly different. As I mentioned, there is a range within those 10. None of these studies say zero or anything close to zero, so I don’t think that there’s any dispute about whether the numbers are in this ball park or at least I don’t think that the folks who run stadiums and teams would have any dispute with that. I know that there are some out there who dispute this general approach, but we’ve adopted the approach that the league and the teams and the stadiums have put forth in their analyses.

Howard Fendrich: That’s helpful. Thanks very much. 

Operator: We have a follow up question from Eric Edholm with Pro Football Weekly. Please go ahead.

Eric Edholm: Sorry fellows, I’m like the annoying guy that has five follow up questions. You mentioned this study included the Cowboys over a range of years, but I didn’t know if that included them with the new stadium. Was it within the past two years?

Dr. Jesse David: Yes, that was a study by the City of Arlington that was intended to estimate how the new stadium would affect the local economy, and that was actually just done this last year.

Eric Edholm: So it was done after the completion of the new stadium then.

Dr. Jesse David: I think it was done while the stadium was being constructed, and it was intended to be an estimate of what the impact was after it was finished.

Eric Edholm: Okay, thank you.

Dr. Jesse David: And, I mean, you should take a look at that study. It’s publicly available. It’s titled Economic and Fiscal Impacts for the Proposed NFL stadium in Arlington, Texas. Actually, as I’m looking at this, the initial study was actually started in 2004.

Operator: There are no further questions at this time.

George Atallah: Thanks everyone for taking the time to participate. I’m available for any follow up emails. The best way to reach me is g@nflplayers.com andwe can answer any follow up questions that way. Appreciate the time and have a good weekend.

Dr. Jesse David: Yes George, let me just add that I’m happy to give more details about the economics. Just for practical purposes, it might make sense if questions were sent through George and he’ll pass them on to me.

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