New playbook works for union

Partnership with NFL works for players' union

NFL: Forming the Players Inc. subsidiary has put the once-struggling NFL Players Association ahead of other league unions in earning power.

January 25, 2003|By Jon Morgan | Jon Morgan,SUN STAFF

WASHINGTON - The last time his old team, the Raiders, reached the Super Bowl, Gene Upshaw was a newly hired labor chief desperately trying to save the football union.

The Raiders will once again appear in the championship tomorrow, but Upshaw is in a better position to enjoy the game. The NFL Players Association he has led for two decades has not only averted disaster but grown into the richest union in sports, largely due to a pioneering subsidiary that he founded.

Players Inc. goes beyond the commercial endeavors traditionally pursued by players associations. All generate royalties when members appear on trading cards and other products.

But, as the only for-profit, sports marketing agency owned by a union, Players Inc. has nimbly exploited opportunities. It jumped on the growing popularity of computer and video games such as the hot-selling Madden NFL, and created an interactive Web site. It offers a Players Inc. credit card and produces TV and radio shows. It also schedules its 5,000 active and retired members to appear in commercials and on corporate golf outings.

"Players Inc. is the only one that has set itself up as a separate corporation and they are very active and the most savvy in the business," said Marty Brochstien, executive editor of The Licensing Letter, a New York-based newsletter.

Boosted by football's growing popularity, and its singular labor harmony, revenues for Players Inc. now exceed $50 million a year. That's enough cash to cover the union's expenses - it has rebated all the dues collected since 1987 - and to pay its membership millions of dollars a year.

"It just makes all the business sense in the world," said Upshaw, 57, who has also profited from the success. His salary and expense allowance of $1.8 million last year made him one of the best-paid labor leaders in the world.

It is a far cry from 1983, when Upshaw, a recently retired offensive guard, became executive director. A 57-day strike the year before had demoralized the membership, nearly emptied the union's treasury and alienated fans. Things would get worse in the next few years.

Then, in 1993, a negotiated settlement with the NFL club owners turned adversaries into partners, and led to the creation of Players Inc. the next year.

The NFL now pays the union more than $6 million a year to permit the league's corporate sponsors to use the names and pictures of its players. That makes the NFL, along with Microsoft, Reebok and more than 100 other companies, an official licensee of Players Inc.

"Frankly, the things we are doing would shake the roots of George Halas and Pete Rozelle. They wouldn't believe it," said Ravens owner Art Modell, who, as chairman of the NFL labor committee in 1968, negotiated the first contract with the union.

Members are free to make their own endorsement deals, hawking car dealers or mortgage brokers. But when six or more are involved, it is considered group licensing and Players Inc. calls the shots. Virtually all the 1,700 active players - the Washington Redskins' LaVar Arrington is the lone holdout - have signed over their group marketing rights.

So when Pepsi decided recently to feature NFL players on its soft drink cans, it had to pay both the league, which owns the trademarks on its team names, and the union.

"We've come a long way and everyone is happy," Modell said.

This is the same union that Modell and the other team owners steadfastly refused to recognize in the early 1960s, and nearly bankrupted in the 1980s.

In the most memorable clash, in 1987, the NFL fielded non-union walk-ons to break a strike.

Then the league went for the financial jugular: It persuaded 700 players to reclaim their group licensing rights and turn them over to the NFL, in exchange for what the union charged were bribes disguised as royalties.

The teams also encouraged players in right-to-work states to stop paying dues, something the Virginia-based Redskins did en masse.

The players association fought back in court, and key victories led to a settlement in 1993. The resulting labor contract gave the players free agency, and a guaranteed percentage of NFL revenue each year, in exchange for a cap on team salaries. The clubs also agreed to stop meddling in the union's licensing business.

The result has been a sharp rise in salaries, which averaged $1.1 million in the just completed regular season, and a prolonged period of peace.

"It's a totally different type of relationship than we had," said Ed Garvey, who was executive director from 1971 to 1983.

Now an attorney in Madison, Wis., Garvey applauds the union's vitality yet expresses philosophical concerns about its financial ties. "There are caution lights that should go off when you are accepting money from management," he said.

Upshaw, who also serves as chairman of Players Inc., acknowledged some grumbling among the ranks about the subsidiary's cozy relationship with the league. But he said those who understand the setup appreciate what it has done for the players.

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