Mr. COHEN. I am sorry. You said you would like to share or swap your salary for those received by the Mr. CAROTHERS. No. I said that there had been many occasions in which I would have liked to have had access to a reliable, authentic figure for average player salaries in the NFL. Mr. COHEN. I am sorry. Mr. CAROTHERS. What you have in the NFL today is contracting procedures whereby the standard player contract is just the starting point. I would venture to doubt whether there is a single player on the Redskins who is under a standard player contract by its terms. They negotiate deviations of all kinds; guaranteed contracts, injury-free provisions, deferred compensation, no-trade provisions, and so on. Now, to work out what an average player's salary is really requires & résumé of every experienced incentive bonus and every other factor in that contract. You cannot pick up the contracts and determine it. Mr. COHEN. In order to arrive at your averages, you must have access to the payrolls, obviously. Mr. CAROTHERS. What we have is total payroll figures, yes. Mr. COHEN. And that is all we are asking for; a breakdown of that, and the other information that I requested. I think that would be helpful to the committee. I am not sure-perhaps you would turn to page 3 of the statement; that you indicate that no other NFL court decisions have afforded the opportunity to have such wide input on these issues. But the fact is that every time a case has been brought and a temporary order has been issued, it has been the ownership that has retracted away from that, has it not? Mr. CAROTHERS. That is incorrect. Mr. COHEN. That is incorrect? Mr. CAROTHERS. Yes. Mr. COHEN. Thank you. Mr. Rozelle, you indicated I think on page 7-you talked about the life cycle of the various teams. How long is that life cycle? For example, I am thinking of the superstar who might want to break into professional football. He would not be able to go to the team of his choice, necessarily. He might be put off to a losing team. How long is the life cycle? Mr. ROZELLE. I think the statistics for every player who would come into the League, start a season; I believe that, through the pension plan actuarial studies, it is four and a fraction. However, I think they also show that for a good football player, for every one who goes into his third season, his average would become probably seven or eight. This four-plus average, in other words, would take into effect the marginal players who make it the first year and are not good enough to stay. But the basic average would be four-plus before a player goes into his third year; his average would probably be seven or eight. Mr. COHEN. And the life cycle in the shift in the superstar teams? I assume it is quite possible to be a superstar in terms of talent, and yet miss your opportunity at the golden ring that might never come around during your cycle. Mr. ROZELLE. I would assume that has happened, but I think that for the really outstanding football players-O. J. Simpson being an example you know, right from the start, they are stars. Mr. COHEN. And in essence, what the Rozelle rule and the rules that have been developed really is that you may have to make a personal sacrifice-whether you call it civil liberties or constitutional rights or privilege to play football-make sacrifices and even run the risk of not getting your shot at the $31,000 Super Bowl fee for the overall good of the league itself. In other words Mr. ROZELLE. Well, I think that one of the problems there is illustrated by sports in the last year, in your celebrated cases where a player moves within a league. Now, much attention has been placed upon the National Football League. However, the National Football League, since 1960, has had 180 players play out their option. Of those 180 players, 46 have moved to another team within the National Football League; 84 re-signed with their club after playing out their option, and those 84 re-signed at a figure that averaged 46 percent higher than their previous salary, to illustrate that they were not exactly economically frozen to the team. Now, you had others who signed with other leagues, but I am speaking of those that played out their options and stayed in the National Football League. Now, let us talk about other sports. Until Catfish Hunter was made a free agent by an arbitration procedure in baseball, there had never been a baseball player-never-move from one team to another within the league other than by trade or waiver. I think we all will accept that, basically. In basketball, another major sport, as Mr. Garvey testified, that had never happened. No player had moved from within the sport, from one team to another, other than trade or waiver, except Cazzie Russell. In hockey, no player had ever, within the National Hockey League, moved from one team to another other than by trade or waiver until recently, under the compensation procedure in hockey that has been approved by the NHL Players Association. Marcel Dionne moved from Detroit to Los Angeles. Now, let us talk about where they went. Catfish Hunter went to New York. Marcel Dionne left Detroit; he went to Los Angeles. Cazzie Russell left San Francisco; he went to Los Angeles. Kareem Abdul Jabbar threatened to play out his option in basketball, called his shots where he wanted to go. He went to Los Angeles; Milwaukee traded him there. Ron Jessie, in the case that Mr. Garvey referred to, played out his option in Detroit in our league. He went to Los Angeles. This is exactly what we are talking about. If you are going to have a free market, you are going to have a select group of cities that will attract your superstars. Now, I have pointed out to you that we are the only sport that has had movement. There seems to be great attention on the National Football League. When I said that we have had 180 play out their options, we have had 46 move, and I have given you in the other three sports the ones that have done it-I believe I have given you, what, one in each sport; one in hockey, one in basketball, and one in baseball. And yet football seems to be the center of attention. Mr. COHEN. I just wanted one final point. It is my understanding that the current practice for an owner who has recently purchased a franchise is to write off, as a deduction against his income, the depreciation of the football players reserved by the team. Is that correct? Mr. ROZELLE. Sports, tax-wise, follow the policies of other business, and they have to settle depreciation with IRS on the purchase of franchises and assets. Mr. COHEN. And, in your opinion, or that of your attorney, if this bill were enacted into law, would the property right which a team has in its players be undercut, so that the purchaser would be deprived of that tax advantage? Mr. CAROTHERS. I am not a tax lawyer, but I think it wouldn't help. It would certainly militate against some of the arguments that are used. Mr. COHEN. That is all I have for now, Mr. Chairman. Mr. SEIBERLING. Thank you, Mr. Chairman. Mr. Rozelle, you have made a very strong plea that, for professional football to survive successfully, competition in the business sense must be limited, the way the particular rules we are debating here limit it. Is that correct? Mr. ROZELLE. Yes, sir. Mr. SEIBERLING. Now, in every other situation that I am familiar with where we have decided, as a matter of national policy, to limit competition, we have set up regulation by the Government to replace competition; because, ordinarily, we rely on competition to regulate business from the standpoint of the public. Would you favor Federal regulation of professional sports? Mr. ROZELLE. No. I testified-that was another congressional hearing where I testified, sir. Mr. SEIBERLING. Well, then, you are in effect saying that you want a sport which is permitted to an industry which is permitted to avoid some of the harshness of the free market, and yet you do not want to have it regulated from the standpoint of the public. This would be a historic departure, it seems to me, from other patterns, and I just wonder how you can rationalize that. Mr. ROZELLE. First, I would like to ask Mr. Carothers to speak on part of it, and then I will. Mr. CAROTHERS. When you talk about monopoly in professional sports, you have to consider that they are in the entertainment business. And I cannot think of one form of entertainment in America that the National Football League does not compete with. When you talk about it in relation to players, there is a players' union, and unions in any industry are there to protect their union members' interests. And these problems have been dealt with in other sports leagues, and could be dealt with in this league, at the collectivebargaining table. The present Rozelle rule has never been a hard-bound, definite, unnegotiable item. Its complete elimination is not going to be well received by the clubs, I can guarantee you. But if anyone can come up with something imaginative that will let the league survive as a successful medium of entertainment, and at the same time in some way meet some of the players' objections, that would be a substantial contribution. There have been 18 months of discussion on that at the collective-bargaining table, and it was recently resolved in hockey with an acceptance of a slightly revised form of the Rozelle rule. And I am personally convinced that it would have been resolved in 1974 at the collective-bargaining table, if it was not this consistent overhang of other forums which this union goes to. It just destroys the incentive for bargaining. Mr. SEIBERLING. Well, I would like to ask you, Mr. Garvey; do you believe that the NFL is subject to the antitrust laws? Mr. ROZELLE. You mean Mr. Rozelle, I believe. Mr. SEIBERLING. Excuse me, Mr. Rozelle. Pardon me. Freudian slip. Mr. ROZELLE. Yes, of course, sir. Mr. SEIBERLING. Well, then, I would be interested in asking you how you reconcile that conclusion with the statements on pages 11 and 12 of your prepared statement; and I am going to just read some excerpts from it: The immediate response of the antitrust mind is in the direction of a series of assumptions; i.e., that the NFL member clubs stand in the relation of horizontal business competitors to one another. In fact, none of these is so. The NFL is nothing more than a joint-venture operation among its member clubs. NFL franchises are neither conceived of nor intended to be business competitors of one another. NFL teams are partners, not business competitors. The teams do not, in fact, compete with one another in a business sense. If it were established that damaging competitive effects were produced by these situations, it would not be in the interest of either the teams or of the league itself to maintain these situations. These partnership aspects of NFL functioning touch every phase of each NFL club's operation, and represent the principal "business" of the league itself. Then you go on to say, The league is designed to permit NFL franchises to compete with one another, but on two planes only: on the playing field, and in the exercise of management skills. I must say that, in effect, you are saying, we are subject to the antitrust laws, but not their mandate to compete with each other. And I just wonder how you can reconcile those two statements. Mr. RozELLE. Mr. Carothers. Mr. CAROTHERS. The teams have to play each other. They have to play each other. Every game Mr. SEIBERLING. That is not the competition I am referring to. Mr. CAROTHERS. The game that was played in Washington last night resulted in income to the Cardinals and income to the Redskins, and every game is of that character. The number of people that watched that game on television contributed to the income of every club in the league. You may suggest that it would be possible to play football today on a barnstorming basis, with anybody in any city creating his own football game. But the practical realities require a league, they require intensive profit sharing, intensive income sharing, and joint business operations in every income-earning opportunity they have. Mr. SEIBERLING. In effect, you are saying this should not be operated-these teams should not be operated as a business operation, and they should be exempt from the other strictures of the antitrust laws. As long as they compete on the playing field, that is all they are supposed to do. Mr. CAROTHERS. Well, this is what 5 months of litigation in Minneapolis is all about, sir. If my position on this is wrong, we can look for an adverse result in that litigation. Mr. SEIBERLING. Well, I would not feel very comfortable about it, if I were you. Do baseball leagues have more restrictions on players than the NFL? Mr. ROZELLE. Yes. Mr. SEIBERLING. Could you name a couple of the significant ones as an example? Mr. ROZELLE. One is they are tied to lifetime contracts, the lifetime reserve clause. There is no movement other than by trade or waiver or the case that I explained previously. No movement whatsoever; no 180 players in baseball have played out their options. Mr. SEIBERLING. Is that just a coincidence, or is that because they are set up that way? Mr. ROZELLE. It is because they are set up that way. Mr. COHEN. Would the gentleman yield for just a moment? Mr. SEIBERLING. Yes. Mr. COHEN. With respect to Catfish Hunter, as I understood that case, he left his team based upon the theory of breach of contract, and was therefore able to start off fresh with a new team. Would that be permitted in the football league if there were a breach of contract? Would a player still be able to move to another team? Mr. ROZELLE. I guess that would depend upon what the breach of contract was, and how it would be processed; in other words, a grievance, or a court proceeding, or arbitration. I cited Catfish Hunter, of course, to say that he did not go to San Diego or Kansas City. He went to New York, which is one of the key points of attempting to create some competitive equalization among the teams. Mr. COHEN. But he was able to leave as a result of breach of contract? Mr. ROZELLE. He left through an arbitrator's decision within the baseball collective bargaining structure, as I understand it. Mr. SEIBERLING. Now, Mr. Rozelle, how do you explain the fact that other entertainment industries do not require such restrictive rules? Think of the legitimate stage, television, movies. Mr. ROZELLE. I guess the best answer would be that Olivia Newton John could come in here and attract five people to a concert, and I do not think Elton John would give a damn. There is no sharing of income within the entertainment business, sir. They do not play each other. They do not play each other. Mr. SEIBERLING. Well, that is the principal difference, I agree. Now, are you familiar with the Brookings Institution study of government and the sports business? Mr. ROZELLE. I am familiar with the study, yes. Mr. SEIBERLING. On page 415, the following is stated: None of the empirical or theoretical analysis in this book, even by the authors who favor maintaining some form of reservation system, lends any support to the view that player reservation has a significant effect on the balance of competition. Do you agree with that statement? Mr. ROZELLE. No. I do not agree with the Brookings report. I believe that a quick study of it will show the very limited source material they had in developing it, and if you would have the time, with my counsel, I could go through that book with you and find so many inaccuracies that I barely spent 15 minutes skimming it. Mr. SEIBERLING. Well, I would be interested in doing that, if that could be arranged. It also says, on page 416: Perhaps more important than the debate over the exact effects of the reserve clause is the fact that all three of its alleged benefits-more balanced competition, greater financial security for weaker teams, and player salaries more in line with the player's value to the league-could be obtained by mechanisms other than the reserve clause. Then, it cites three. It says: All three objectives could be served if teams divided income more evenly. |