The Fix Is Still In: Corruption and Conspiracies the Pro Sports Leagues Don't Want You To Know About

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THE SIMPLE, UNDENIABLE TRUTH

MONEY. It’s the engine powering professional sports. The dominating dynasties, the Cinderella stories, the YouTube-ready highlight plays—none of it would exist without money. Who would risk body, mind and soul to enthrall a stadium full of screaming fans for free? (Well, besides collegiate student-athletes.) But the professional ranks are called just that because of the billions of dollars that have flooded sports with each passing decade.

Fans recognize this, yet at the same time, they don’t. They argue over which players are worth what contracts. They celebrate and rue coaching hirings and firings. They lobby local governments to build, or refuse to build, a team a new stadium. But tell fans sports is a business—and only a business—and that it is business decisions which truly control the games and athletes they love to watch, and these same people suddenly tilt their heads like confused beagles.

The phrase follow the money may sound trite; however, it is the key to understanding the true nature of sports. In fact, money—in the form of revenue sharing—is the first of several proofs which show that the reality of sports is much, much different than fans are often willing to accept.

Modern revenue sharing arrived in sports over 50 years ago. In 1961, CBS owned the broadcast rights to 13 of the 14 NFL teams with only the Cleveland Browns maintaining a local broadcast deal. When CBS and the NFL agreed to a $4.65 million contract which was to be split equally among each team, the Browns ended their media independence. Once the league cleared the federal antitrust issues associated with packaging their broadcast rights, the NFL was on its way to creating a revenue system that would enrich its owners further and faster than any of their rival league owners could imagine.

Because no NFL team has strict local TV regular season broadcast rights available for sale, the league is able to offer an exclusive package of every single NFL game to willing buyers. This gives the league greater bargaining power, and has led to an incredible increase in the value of the NFL’s broadcast rights. What sold for $5 million a season to CBS in the 1960s today reaps over $7 billion a year to CBS, FOX, NBC, ABC/ESPN, DirecTV, Yahoo!, Amazon and Twitter.

If the NFL only shared the revenue from its broadcast rights, that would be one thing. But the league divides much more than that. Teams split ticket sales, with 66 percent going to the home team and the rest divvied up equally among the other 31 teams. Licensing is shared. Even merchandise sales outside of a team’s pro shop are shared, which means if you order a New York Giants jersey from the NFL’s website, your money is going to the Washington Redskins and Philadelphia Eagles as well. But it’s not being shared with the Dallas Cowboys. Jerry Jones is the only NFL owner with an exclusive merchandise deal. So every dollar from the sale of Cowboys gear goes back to the team, yet Jones doesn’t receive a dime from the other 31 teams’ merchandise. What this boils down to, though, is that 61 to 75 percent (depending on the source) of all the revenue the NFL generates is equally shared.

Thanks to the aberration that is the Green Bay Packers, the only publicly owned franchise within the four major sports leagues, we are able to glimpse into how much money this amounts to. According to the Packers’ 2015 earnings report, it and every other NFL franchise received $222.6 million in national revenue.¹ Or, in other words, each of the NFL’s 32 teams split a $7.1 billion pie which does not include any local revenue, including stadium naming rights, luxury box sales and advertising.

This means that in the capitalistic, free-market-loving America, its most-watched sport is incredibly communistic.

It also makes wins and losses worthless.

In a paper published in the International Journal of Sport Finance in 2015, authors Michael Leeds, Peter von Allmen and David Berri examined the statistical link between a team’s wins and its total revenue. Their conclusion? In the NFL…a 10 percent increase in regular season wins for an average team only leads to a 0.14 percent increase in revenue. Because the NFL has embraced much more sharing, the financial incentive to win is muted….An examination of the link between revenue and wins in the NFL reveals that each additional victory is worth about $412,000 to an NFL team.² In other words, the value of a win in the NFL is chump change. As Berri wrote in an accompanying Atlantic article, But although winning can make people in the NFL happier, the big economic story is that winning doesn’t make owners in the NFL much richer. In sum, teams simply do not have much of a financial incentive to win.³

Think about that for a moment. Common sense would make one believe a dynasty team like the New England Patriots or the Pittsburgh Steelers would earn more money than the hapless Detroit Lions or Cleveland Browns, but in the NFL, this isn’t exactly the case. Because of revenue sharing, a 16–0 team’s yearly earnings are basically the same as a team that goes 0–16.

Making the playoffs isn’t a financial boon, either. All playoff attendance revenue goes directly back to the NFL.⁴ The league then doles this money back to teams to cover their playoff expenses (which includes players’ salaries). The only money a host playoff team keeps comes from parking and concessions. In fact, according to a Forbes article, NFL teams…sometimes even lose money during the playoffs as expenses and incentive payouts pile up.⁵ At the same time, the story lines these winning teams generate benefit the losers. The more fans that are drawn to their televisions by great playoff matchups increase ratings, ad revenue, and later, TV contracts which will fill the pockets of every franchise owner in the long run. So, where’s the incentive to upset the apple cart and derail a popular story line or a winning franchise? For an NFL owner, hoisting the Lombardi Trophy is a mere feather in the cap. A gold star. It’s not a financial windfall.

Though revenue sharing is the NFL’s modus operandi, every league has taken to this way of spreading the wealth in some form or the other. For the NBA, it all comes down to Basketball Related Income (BRI). This comprises the money from the NBA’s national broadcast rights, merchandise sales, tickets and concessions.

Ever wonder why even the eighth man on a 12-man NBA roster makes so much money? It’s because the players, via their Collective Bargaining Agreement with the owners, are entitled to 50 percent of all BRI the NBA earns⁶ (which is actually down from 57 percent). It’s that 50 percent which creates the salary cap, and when the league has nearly $5 billion a year in BRI, it offers each team a lot of cap space to spend on a 7-foot-2 center who plays eight minutes a night.

Despite NBA owners retaining the other 50 percent of that $5 billion-a-season BRI pie, many are claiming to be poor. In fact, in 2015 NBA Commissioner Adam Silver stated, I don’t know the precise number and don’t want to get into it, but a significant number of teams are continuing to lose money and they continue to lose money because their expenses exceed their revenue.⁷ Boo-hoo, right? But it is true. According to NBA financial data from 2011, only 10 NBA teams made a profit, most of which reside in the major markets, such as the Los Angeles Lakers, Boston Celtics, Chicago Bulls and New York Knicks.

In an attempt to level the playing field, in 2013–14 the league initiated a somewhat complex revenue-sharing model which would shift approximately $140 million from the haves to the have-nots.⁸ In doing so, each team is guaranteed to receive revenue equal to the salary cap for that season. In other words, every team has its largest expense—the players’ salaries—covered regardless of the number of bad contracts it racks up. But in order to get their fair share, small market teams are required to generate revenue equal to 70 percent of the league average. And that’s where it can get sticky for some franchises.

Dallas Mavericks owner Mark Cuban was quoted as saying, [The new revenue-sharing plan] certainly helps level the playing field. The question is whether it is enough to overcome the growing disparity in media rights fees.⁹ And that is a big chunk of change. Unlike the NFL, NBA teams can and do sell their local media rights. But not all teams are created equal. Take the Lakers: In 2011, the franchise signed a 20-year deal with Time Warner Cable which will pay the Lakers $200 million a season. No small market team can match that. In fact, the Lakers earn more broadcast money from a month’s worth of games than teams like the Milwaukee Bucks and Memphis Grizzlies make over an entire season.

Other factors increase the revenue gap between franchises. All non-Basketball Related Income skews heavily in the major markets’ favor. And unlike in the NFL, making the playoffs does financially benefit an NBA team. While some playoff revenue is shared, the NBA has a playoff pool which is funded by ticket sales. The longer a team lasts in the playoffs, the more money it can draw from that pool. And unsurprisingly, the longer the playoffs last, as in the more seven-game series there are compared to four-game sweeps, the more money fills that pool. Remember that fact.

Despite such disparities, NBA franchises are not folding. In fact, their valuations are increasing at an incredible rate. There is an abundance of revenue out there for teams to share. With a new $24 billion broadcast rights deal with ESPN and Turner Sports, a recent $1 billion merchandising deal with Nike, growing interest from international markets, and more corporate sponsorships, the average NBA team was valued at more than $1 billion, representing a 74 percent increase from 2014 to 2015.¹⁰

This may explain why prospective owners of the NHL’s Arizona Coyotes franchise pitched investors by stating, We’re not buying the team. We’re buying 1/30th of the National Hockey League.¹¹

The NHL was the last major sports league to initiate a revenue-sharing program, and the one currently in place is there mainly to cover player salaries which, like the NBA, equates to 50 percent of all Hockey Related Revenue (HRR). The league’s revenue-sharing program also puts an onus on the 15 teams eligible to receive such funds to improve their financial standing, thus bolstering the league as a whole. That is difficult to do because, believe it or not, approximately 53 percent of the NHL’s revenue comes from ticket sales.¹² The league’s broadcast rights—which are twice as valuable in Canada as they are in the U.S.—account for less than 20 percent of the NHL’s revenue stream. Because of this unusual disparity, about 10 franchises bring in 50 percent of the NHL’s total revenue.¹³ So in 2012–13, the NHL established an industry growth fund which pools $20 million annually from all HRR. For a franchise to pull money from that fund, it must submit a business plan for league approval explaining how the team expects to increase sales. A rejected plan, or one met with failure, might—emphasis on might—limit a franchise’s ability to withdraw money from the pool.

The NHL has had its fair share of labor strife with a lockout in 2004–05 that canceled the entire season and another in 2012–13 that cut the regular season’s length in half. Nonetheless, the league increased its HRR between those two incidents from $2.2 billion to $3.3 billion annually. And the league could be making even more money if owners could get out of their own way.

The league’s seven Canadian-based franchises are among its most profitable, but the league has insisted on expanding into the southern United States. This attempted shift in its fan base has proven costly. While the move south may have helped the league land a $200 million-a-year television deal with NBC, these same southern teams are consistently the ones dipping into the revenue-sharing pot due to low fan turnout. It’s possible for the NHL to expand and/or relocate to more hockey-friendly locales—which would seem to make more financial (and common) sense—but so many hurdles have been installed in the league’s constitution to prohibit such changes that the league instead took a stab at launching the first-ever major league franchise in Las Vegas with its Golden Knights in 2017.

It may have taken until the new millennium for the NHL to initiate a revenue-sharing program, yet it’s clear that such a decision makes a league stronger and more interconnected than fans may believe. Rich teams keep their weaker counterparts afloat. It’s another form of corporate welfare. If it’s true that 10 teams earn 50 percent of the NHL’s money (while a similar situation exists in the NBA), then what’s the point of having those other 40 teams in both leagues? Aren’t they just filler? The NHL started with an Original Six teams in the 1920s. In many ways, those six teams are still the only franchises that matter, financially speaking. Yet the more teams there are across the country (and soon, the world) the more exposure the sport will achieve, which will mean more money for both the weak and the strongest of franchises. This is why owners willingly engage in revenue sharing no matter what form it takes. It’s spending money to make money.

Revenue sharing has become so important to professional sports that in 2002 even Major League Baseball got into the act. If you’re familiar with the history of baseball and the greediness of its owners, you’ll recognize how remarkable this is. But it’s not without its detractors. Taking a shot at its crosstown rivals the Mets in 2016, New York Yankees president Randy Levine told Fox Sports, What is very burdensome to us—and is unfair—is the amount of money we have to pay in revenue sharing compared, for example, to teams in our market that pay 10 times less than us. Hopefully that is something that will get looked at in the next labor agreement.¹⁴

Those poor Yankees. MLB rules stipulate that each franchise must contribute 34 percent of net local revenue into a pool which is to be equally shared among all 30 teams.¹⁵ The 34 percent isn’t a hard and fast number, though. Some teams have worked out deals that limit that percentage, most notably the package the Los Angeles Dodgers agreed to with MLB that saved the franchise from bankruptcy. A separate pool collects 20 percent of national baseball revenue, 75 percent of which is shared. The remaining 25 percent is doled out to the lowest revenue producing teams based on how far below average a franchise’s earnings might fall. At the same time, 15 MLB teams—the Yankees, Mets, Dodgers, Angels, Cubs, White Sox, Phillies, Red Sox, Rangers, Braves, Nationals, Blue Jays, Astros, Giants and A’s—were deemed ineligible to draw from that pot while the other 15 teams that did were monitored by the league to ensure the money was being properly utilized for improvements. On top of this, MLB instituted a luxury tax which penalizes high payroll teams on a dollar-for-dollar basis. This money does not go to the franchises with the lowest payrolls; it is instead placed in the MLB’s Industrial Growth Fund which is used for marketing. As for the Yankees, the MLB’s richest team, the extent of these contributions amounted to a reported $90 million paid out for revenue sharing plus another $26 million in luxury taxes in 2015.

Had the Yankees done more in the 2015 playoffs than lose the AL Wild Card Game 1–0 to the Houston Astros, the team would’ve been subject to even more revenue sharing. To quote the website The Fields of Green, Baseball’s CBA is very specific when it comes to playoff ticket revenue sharing. MLB Rule 45 stipulates that 15 percent of paid attendance receipts go directly to the Commissioner’s Office. The remaining 85 percent is distributed between the participating teams and the Players Pool, which is used to pay out contractual bonuses and incentives, as well as to cover additional salary and expense considerations. The current agreement calls for the Players Pool to receive 50 percent of the paid attendance receipts from wild card games, 60 percent from the first three divisional series games, and 60 percent from the first four championship series and World Series games. Under this format, participating playoff teams lay claim to any ticket revenue not paid to the Commissioner’s Office or the Players Pool—while the home team takes home the millions of dollars in ancillary revenues from concession, merchandise and parking that a playoff run generates. An MLB franchise can maximize the amount of revenue from a title run if both the league championship and World Series are won in seven games.¹⁶ Notice that once that the longer the playoffs or the World Series last, the more money the teams involved earn. That’s what most people would call incentive. But I digress….

In 2016–17, the Big 4—NFL, NBA, NHL and MLB—generated approximately $36 billion in total revenue. Athletes took home nearly $14.8 billion, or 42 percent of that money. While owners in every league may be recognizing the necessity of revenue sharing, so, too, are their employees, the athletes.

Owners and athletes have often been adversarial, and the debates over their respective Collective Bargaining Agreements have caused work stoppages that angered millions of fans, but both sides have always come to their senses before too long. Why? Money. As the owners profit, so, too, do the athletes. At the end of the day, they are all businessmen.

But what business are they actually in?

Let me run a scenario past you. A wealthy owner hires a general manager who in turn appoints a staff to oversee an operation which includes trainers, equipment managers and coaches. Then, the general manager seeks out the best employees available, each of whom is a specialized talent capable of doing what few others in the world can do. Once this roster is assembled, the coaches work with them, teach them, train them, and push them to be the best they possibly can be. The work is choreographed and practiced time and again until it becomes routine, muscle memory even, and can be executed with split-second timing and precision. Then, when the time comes, this troupe is brought out to perform in front of a paying audience who marvel at the athleticism on display.

Now did I just describe an NFL team? Or the Bolshoi Ballet?

Truth be told, there is little difference between the inner workings of each operation. What’s different is the perception of the audience. For the people that witness the football team perform, they consider it sport. For the ballet audience, it is art. In reality, in each case what is on display is merely entertainment.

Don’t believe me? At the 2012 Ninth Circuit Judicial Conference, the following exchange took place at a panel discussion titled Federal Courts, Federal Law and Professional Sports: Emerging Trends in Antitrust, Labor and Intellectual Property. Former President and Chief Operating Officer of Major League Baseball (2002–10) Robert A. DuPuy, Esq. told the assembled audience, We sell fantasy. We don’t sell reality. And we have grown men and women in costumes playing for millions of dollars, and more importantly enthralling tens of millions of people. And furthermore, we sell competition. Our teams and our athletes have to be bitter, bitter rivals and competitors on the field of play, but they’ve got to be partners off the field of play. And we need rules. We sell uncertainty of outcome, and so we need rules, both playing rules, and frankly, we need economic rules.

DeMaurice Smith, the current Executive Director of the National Football League Players Association (NFLPA), responded with, Isn’t the reality that it’s a business when owners want it to be a business and it’s a sport when they want it to be a sport and for a fan it’s—and I agree with you—it’s a fantasy.

A little later in their discussion, Smith reiterated, They sell fantasy; we work on the field. To which DuPuy quickly replied, And if we didn’t sell fantasy, you wouldn’t work on the field.¹⁷

To take it one step further, lawyers representing the NFL made the following argument before the U.S. Supreme Court when the league sought to increase its antitrust exemption, "[As] long as the NFL clubs are members of a unit [NFL lawyers argued that the NFL should be considered one business, not 32 separate entities/teams working together]; if they compete as a unit in the entertainment marketplace…they should be deemed a single entity"¹⁸ [emphasis added].

It’s not just the leagues’ upper echelon that believes this. It’s a prevalent opinion among athletes, too. They recognize that they are entertainers and understand everything that goes along with that idea. Consider the following quotes:

Josh Hamilton of the Anaheim Angels, When it comes down to it, people don’t understand, fans don’t understand, this is a business, this is an entertainment business.¹⁹

Golden Tate of the Detroit Lions, I think there’s a bigger problem when you mess up and don’t show passion or when you do something great and you’re just whatever. It gives off the vibe of not caring—and that’s not who I am. At the end of the day we are entertainers.²⁰

Martellus Bennett of the New England Patriots, It’s an entertainment business. We are all entertainers.²¹

Rashard Mendenhall, who retired from the NFL at the age of 26, I’ve always been a professional. But I am not an entertainer. I never have been. Playing that role was never easy for me.²²

LPGA golfer Paula Creamer, As you said, we are entertainers too. We are athletes, but we have millions of people watching us do what we do. It’s exciting….²³

Heavyweight boxer Dominic Breazeale, With individuals like myself, Deontay Wilder, Tyson Fury, we have guys who are characters who bring a lot of charisma to the division. That’s something that we need. Yes, we are athletes but in the end we are entertainers and we want to see a show. I’m the type of guy that brings a show every single time I fight.²⁴

NHL head coach John Tortorella, We are playing hockey. Other people are doing real stuff. This gentleman who spoke to us this morning is doing the real stuff. Life and death. We just want to give to our country in our own little way. Quite honestly we are entertainers.²⁵

Josh Norman of the Washington Redskins, Fans want to see excitement. They work their tails off during the week. They go to work 9–5 and they get a day off on Sundays to come out here and watch their team put on a show. We are entertainers, whether you like it or not.²⁶

Joe Thomas of the Cleveland Browns, I’m not sure if he [NFL Commissioner Roger Goodell] realizes what he’s doing is brilliant, but what he’s doing is brilliant because he’s made the NFL relevant 365 [days a year] by having these outrageous, ridiculous witch hunts [referring to the New England Patriots Deflategate scandal]. It’s made the game more popular than ever and it’s become so much more of an entertainment business and it’s making so much money. That’s why I’m sure there’s plenty of people saying this is embarrassing for the league. But it’s an entertainment business when it comes right down to it. When the game gets eyeballs in newspapers and on TV, that’s what in the end is the goal for everyone. And that’s what this controversy is giving them….But I think we’re talking about a different NFL now. Like I said, before it was more about the game. Now it’s such an entertainment business. It’s almost like the Kim Kardashian factor that any news is good news when you’re in the NFL….It’s an entertainment business. It’s turning into the WWE really. It’s like the Vince McMahon stuff. Basically Goodell is like Vince McMahon.²⁷

Thomas made an excellent comparison in that last quote. The NFL is like the WWE, and Goodell has become a mirror to McMahon. Just listen to how the fans boo Goodell at the NFL Draft or when they let him have it after Super Bowl LI. He’s become a heel. An object of derision. And to Goodell’s credit in this regard, he recognizes it and plays to it. It’s part of the act. Unfortunately, the fans don’t realize he’s in on it. They think he cares. They believe their disdain of him matters. The only opinions that matter in his regard are those of the 32 NFL owners, and to them, he’s doing just fine, thank you.

Even outside of Goodell’s dog and pony show, the NFL and all other major league sports aren’t very far removed from professional wrestling or any of the other quasi-sports that inhabit this country. All of it is merely entertainment…only professional wrestling is at least honest about its definitional existence.

How many times can sportswriters refer to the NFL as the best reality show on television before it sinks in? We all know—or should know—that reality TV is far from real. It is manipulated, staged, selectively edited, highly produced, and sometimes even scripted or reshot in order to get the desired end result. Is that what the sports pundits really want to compare these supposedly random and unscripted sporting events to? Fake programs? Yet even this comparison is accurate because sports leagues are entertainment entities. Existing as they do within the show business realm, the leagues are permitted several legal loopholes fans probably don’t believe are possible, leaving the common man with little to no recourse if they should ever decide to take action against the industry.

It was supposed to be a marquee Thursday night NBA on TNT matchup. The 13–3 San Antonio Spurs traveled to Miami to face the 10–3 Heat for a late November game in 2012. Though Miami demanded the 19,000-plus fans in attendance pay a higher premium ticket price that night, Spurs head coach Gregg Popovich had a surprise in store. An hour before tip-off, Popovich informed the NBA that Tim Duncan, Tony Parker, Manu Ginóbli and Danny Green would not be suiting up. They had been sent back to San Antonio. Not due to injury, but simply to rest up after a long road trip.

When asked about this decision after the 105–100 loss, Popovich said of his missing stars, If I was taking my six-year-old son or daughter to the game, I would want them to see everybody, and if they weren’t there, I’d be disappointed.²⁸ NBA Commissioner David Stern was quick to comment as well, saying that Popovich did a disservice to the league and our fans.²⁹

On behalf of all ticket buyers that night, Larry McGuinness sued the Spurs claiming that fans had suffered economic damages due to having to pay that premium ticket price to see a Spurs team devoid of its star players. This, according to McGuinness’ suit, was an unfair and deceptive practice which constitutes a violation of Florida’s Deceptive and Unfair Trade Practices Act…which prohibits unconscionable, unfair, or deceptive acts or practices in the conduct of any trade or commerce.³⁰

Unfortunately, McGuinness voluntarily dismissed this suit prior to taking the Spurs to court. Perhaps it was because David Stern acted and fined the Spurs $250,000 for Popovich’s decision. Or perhaps he backed down after learning what few rights ticket holders actually possess.

When owner Georgia Frontiere picked up her Los Angeles Rams and moved them east to St. Louis in 1995, Larry Charpentier sued, claiming the team had breached its contract with season ticket holders. In his suit, Charpentier, who originally filed suit under the name Fight for the Rams, alleged that since 1946, the team had granted every season ticket holder the right to renew his tickets in the subsequent year—even when the team moved from Los Angeles to Anaheim. However, when they transplanted to St. Louis, this right was denied despite the fact that the season ticket renewal form stated in part, YOUR SEASON RESERVATION IS VALUABLE. You have the privilege to renew reserved seat locations for the upcoming season³¹ [emphasis in original].

Charpentier stated he did not purchase his tickets with the intent of watching a poor performing football team play for the 1994 season, only to have the team leave at the end of the year. Instead, [he] purchased [his seat] merely to ‘reserve’ the seat location of [his] season tickets in the future when [he] hoped that [the Rams] would provide a quality professional football team product.³²

Unfortunately, the court didn’t see it that way and dismissed the case. In the court’s opinion, several obvious—and frankly, disturbing—conclusions were reached. For one, Just because a team has played for years in a particular location and has always done something a particular way does not mean that it must always do so.³³ This was why Rams fans had zero say in the team moving back to L.A. in 2016, or why Chargers fans were shafted when the team decided to relocate to Los Angeles as well in 2017. The court also wrote that Charpentier did not buy the right to watch a good team or to have enlightened (in his opinion) management decisions made.³⁴ And though the court admitted that, It is common knowledge that professional sports franchisees have a sordid history of arrogant disdain for the consumers of the product, the final ruling stated that Charpentier’s recourse was limited to a personal decision to give up on the team when he felt it had given up on him.³⁵

Despite this result, when Art Modell relocated the Cleveland Browns to Baltimore a year later, season ticket holders again attacked the offending franchise for trampling on their assumed rights.

Two different suits were brought. In the first, Stern v. Cleveland Browns Football Club, the fan posited that when the