For the NFL, “Don’t Fix Something That Isn’t Broken” Is Going to Cost An Eye-Popping $40 Million Per Year

Despite Dallas Cowboys owner Jerry Jones angrily denouncing the 2019-2023 contract extension negotiations with Roger Goodell, a deal has been signed with week with the embattled commissioner for $200 million over five years–assuming all bonuses are earned. Jones had been told by New England Patriots owner Robert Kraft–himself no fan of Goodell and the victim of high handed justice by the commissioner’s office–to get back in the tent with the rest of the owners and support the NFL compensation committee. Committee chairman and Atlanta Falcons owner Arthur Blank sent Jones a cease-and-desist letter. Jones backed down. And Goodell got his contract extension.

Goodell, who started with the NFL as an intern and never left the league in his career, has been paid an estimated $250M in the first eleven years of his tenure as commissioner. No, that’s not a typo. A quarter of a billion dollars to the lawyer who’s job it is to mediate arguments between thirty-two owners and mete out punishment to players that have violated the rules. His last published salary for 2015 was $32 million. That’s not a typo either. That’s right–the NFL has to bribe Goodell, an insider, with over thirty extra large to continue in his position. That’s more than the average salary of any of the league’s top quarterbacks (number 1 is Derek Carr at $25 million). The average compensation of a Fortune 500 CEO is $14 million a year. Adam Silver’s compensation as NBA commissioner is believed to be between $10 million and $15 million per year.

Part of the logic in paying Goodell that much quid likely resides in the cognitive dissonance gripping the the market for Fortune 500 CEO’s. If one is the CEO of a $50 million corporation, they should be paid $750,000 per year…$500 million should be $7.5 million per year…$5 billion should be $75 million per year; and so on. Salaries are scaled to the size of the organization in terms of revenue–without regard to responsibilities, influence over stakeholders, innovativeness and constructive disruptiveness, and organizational complexity.

In Goodell’s case this likely means avoiding a strike with the player’s union and negotiating broadcasting rights with media companies, areas that would result in billions of dollars of losses if they were mishandled. It is unlikely, however, that the thirty-two owners give Goodell carte blanche in either of these cases…too much is at stake to allow a captive employee to dictate the future of the pocketbooks of three dozen billionaires.

What is more likely is that Goodell functions as the parliamentarian of the league. He bangs the meetings into order, reminds all parties of the rules, handles traffic between committees, and hugs draftees when they go onto the stage after being selected. Is this worth $40 million per year? Only the owners know, and by signing an extension with Goodell, they seem to be signaling yes.

I’m not so sure. Jobs like that of NFL commissioner seem to be influenced by the demand for perceived decision-making skills, rather than the supply of actual competent decision-makers. It is sort of the bird-in-hand-rather-than-two-in-the-bush logic, or avoiding being penny-wise-and-pound-foolish, if you prefer that metaphor. Regardless it seems that the NFL owners could do better with less money.

Note (1): Some of this blog entry was adapted from an earlier pre-contract discussion.

One thought on “For the NFL, “Don’t Fix Something That Isn’t Broken” Is Going to Cost An Eye-Popping $40 Million Per Year

  1. I’m amazed the owners are so short-sighted. Goodell has been an awful commissioner. Revenues are high, but they arguably would have been even without him. On the other hand, he’s made mistakes that might be harbingers of the end for the NFL. Player brain damage might be the biggest factor in the end, but over-saturating the schedule, his handling of political concerns, and completely uneven/illogical discipline have been killers.

    There’s no doubt in my mind the NFL could do better than Goodell. I can’t stand Jerry Jones (from his GM position, he’s ruined my team for 20 years), but he does know the business, and I think time will show the other owners should have listened to him on this.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s