Originally Published: February 21, 2012 10:42 p.m.
Prior to the Super Bowl, NFL owners announced that Commissioner Roger Goodell had received a five-year contract extension through 2019. In the last years of the extension, the commissioner's current salary will double, to $20 million per year.
Reaction to the news was mixed. The media were almost unanimous in their belief that Goodell had earned his huge paycheck and would continue to do so. A number of players, on the other hand, were outraged.
Goodell is the CEO of a $9 billion per year business that, like the commissioner's salary, will likely double by the end of this decade. The NFL is not only the premier sports league in the U.S., it is also the most popular programming on television. Due in part to Goodell's guidance, the league successfully weathered a labor dispute last year that resulted in no lost games and little, if any, lost revenue. Would the league be as successful as it is with someone other than Goodell at the helm? Perhaps, but that person would undoubtedly command a salary similar to Goodell's.
Atlanta Falcons wide receiver Roddy White was outspoken in his opposition to Goodell's soon-to-be $20 million paycheck. White tweeted that, "The NFL is not a company it's a nonprofit organization that makes a lot of profit." That comment is further evidence of the dangers of Twitter and suggests that White majored in something other than business at Alabama-Birmingham. He should stick to playing the game on the field, not off it.
Goodell's salary has mostly trailed the compensation of his counterparts with the other three Major League team sports, perhaps because he is both the youngest and shortest tenured of commissioners. Goodell is 53 and in his sixth year as commissioner. By contrast, MLB commissioner Bud Selig will be 78 in July and is rumored to earn in excess of $20 million. He was paid $18 million in 2007, the last time MLB was required to report executive compensation prior to changing its tax status to nonprofit. Selig has received two extensions since then, presumably including a raise in pay.
NBA Commissioner David Stern, 69, has been on the job for 28 years. Although his compensation has never been made public, it is believed to rival that of Selig. NHL Commissioner Gary Bettman will be 60 in June and has held his post for 19 years. His total compensation was reported as $7.5 million for the 2009-10 season, for a league that generates roughly a third of the revenue of the NFL.
Contrary to White's belief, Major League sports are a business, big business. Their goal is to maximize revenue and profits. Companies around the world are tripping over themselves to throw money at the NFL, and it's likely that none of them have ever heard of White. But they all know who Goodell is and they know his business is successful.
Goodell's salary is approved and paid by the 32 team owners, most of whom are billionaires and none of whom are losing money on their NFL investments. If they think Goodell is worth $20 million per year, that's their decision, not White's, not yours and not mine. If White wants to complain about excessive compensation, he should focus on executives in the financial sector who were paid more than Goodell to run their companies into the ground and then accepted a trillion dollar bailout from taxpayers. Worse still, many of those executives continue on the job today.
Despite the financial success that motivated owners to reward Goodell, all is not rosy at NFL headquarters. While revenue from new media deals alone will exceed team payrolls, one major concern looming on the horizon is the spate of concussion lawsuits brought against the league by former players. While plaintiffs have a steep burden of proof to overcome in order to prevail against the league, the NFL is facing potential payouts in the billions of dollars. What effect that may have on the league's finances is unknown.
As for White and other players who object to Goodell's compensation, they should remember that their salaries are based on a percentage of league revenue. The more revenue Goodell can generate for the league, the more the players will earn. From that perspective, there is no salary figure that is unreasonable for the commissioner.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Associate Professor of Sport Management and Sport Law at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at firstname.lastname@example.org.