It’s a win for NFL concussion suit – by Jordan Kobritz

KobritzsmYou can sum up the announced settlement of the NFL concussion suit as a win, win, win:  for the players, the league and the lawyers. The players had no choice but to accept the $765 million offer from the league.

When the presiding judge in the case, Anita Brody, urged both sides to settle the case through mediation she strongly indicated she would grant the league’s motion to dismiss most of the players’ claims.  Additional pressure to resolve the case as soon as possible came from the realization that many of the players who stand to benefit from the settlement wouldn’t be around at the end of the litigation – estimated to be another decade, or more – had the case gone to trial.

That’s why the settlement is a big win for the players, at least some of them.  Many players need the money to help alleviate the physical and mental effects of playing a violent game.  With 4,500 plaintiffs, you might think each one will receive $170,000 from the settlement.

But the reality is most players will receive far less.  The settlement covers a total of 18,000 former players.  Individual payouts could rise to $3 million for dementia, $4 million for those with chronic traumatic encephalopathy, the deadly brain condition that has led to a number of player suicides, and $5 million for players who have been diagnosed with Alzheimer’s disease, which reduces the average payout even further.

Here’s where the settlement is an even bigger win for the NFL.  The payout will be spread out over the next two decades, although half of the amount must be paid in the next three years. That’s an average of $4 million per team in each of the first three years of the payout and $700,000 per year for the 17 years thereafter.

To put those numbers in perspective, average team revenue is currently $300 million per year and NFL Commissioner Roger Goodell projects that teams will be earning almost three times that amount by 2025. More importantly for the league, it doesn’t have to admit wrongdoing, is not required to divulge internal documents which would have disclosed what the league knew – and when – about the effects of concussions and officials won’t have to address questions about ongoing litigation during the season.

The settlement is a public relations coup for the league and doesn’t adversely affect its bottom line.  All in all, a slam-dunk win for the NFL. To be fair, the settlement figure doesn’t include attorneys’ fees.  Judge Brody is expected to approve in the neighborhood of $200-250 million for the players’ attorneys, a sum the league will pay in addition to the tens-of-millions of dollars they have spent on their own counsel to defend the suit.

As long as we’re doing the math, legal fees will add an additional 40% to the league’s overall costs of the litigation, pushing the final number beyond a billion dollars.  While that figure may be incomprehensible to you and me, it is an infinitesimal cost of doing business to the NFL.  If you add the league’s expected revenues during the 20 years of the payout to the amount earned during the years covered by the suit, the total approaches half a trillion dollars.

Where does the league go from here?  Nothing in the settlement changes the fact that football is a violent game.  Spurred in large measure by the concussion litigation the league has adopted a number of measures – fewer off-season practices, elimination of two-a-days, concussion protocols, rule changes that ban hits to the head and neck and to defenseless players – designed to reduce the kind and number of traumatic injuries that led to the lawsuit.

But the fact remains that the motivation behind many of these measures is to protect the league’s TV ratings and popularity, i.e., the bottom line.  Precious little, it seems, can be done to satiate the fans’ appetite for violence which has fueled the sport’s popularity – and revenue streams – over the past two decades. While it appears as if the settlement is a victory for the long-term financial health of the sport, it is merely a short term – not to mention inadequate – fix for the health of the gladiators who make the embarrassment of riches possible.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner.  He is a Professor and Chair of the Sport Management Department at SUNY Cortland and is a contributing author to the Business of Sports Network and maintains the blog: http://sportsbeyondthelines.com  Jordan can be reached at jordan.kobritz@cortland.edu.

© Copyright 2013 Tanna K, All rights Reserved. Written For: Tinytown Unleashed
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