Greed is good in NFL labor talks
Take a deep breath, suspend all disbelief and walk through the following hypothetical (and admittedly ridiculous) scenario with me ...
It's December 2006.
I decide to leave ESPN, start my own blog and charge $10 per year for anyone to read my column. Just for fun -- again, it's hypothetical! -- let's say one million readers sign up, guaranteeing me $10 million for that first year (2007). And let's say I sign advertising deals with three sponsors for another $2 million apiece, raising my total haul to $16 million for Year 1. I spend the next 12 months writing and pinching myself for my good fortune. Life is good.
Fast-forward to December 2007. I just learned something about myself. I don't like it. I know it's wrong. I can't shake it. I can't deny it. See, I really, really like money. Even if I never imagined making $16 million in my lifetime, much less for a single year, I now find myself smitten by those dollar signs. How much more can I make? How high can this go? Someday, I want my financial adviser to cackle and say, "Good Lord, I don't even know what to do with all this cash flow." That's what I want.
Hence, I need to raise the total value of my "franchise." I build a more sophisticated website, pay for designers and extra bandwidth, then hire a team of writers and editors to work for me. That creates $2 million in expenses for Year 2, which I pay off by finding a fourth sponsor. In order to cover these additional expenses, I'm "forced" to raise the 2008 subscription fee to $25. (That's what I tell my idiot readers.) This time around, only 700,000 readers sign up. Between sponsors and subscribers, I am still guaranteed a total haul of $23.5 million for Year 2. Profit. This is good. I am showing "growth." Even as I slowly antagonize my audience.
By the end of Year 2, I have the hottest sports website on the Internet. Everyone wants to work for me for the visibility and prestige, and also because I share revenue with employees (they get salaries plus a small piece of everything I am pulling in). An overload of potential sponsors allows me to jack my rates and pocket $30 million in ad revenue for Year 3. But you know what? I love the smell of money. I can't get enough of it. Sometimes I go to the bank, withdraw a wad of $100 bills, throw it on my desk, lean my face over it and smell the pile like cookies baking in an oven. I can't get enough. I am insatiable. I need more.
For Year 3, I limit subscriptions to 300,000, then sell "personal subscription licenses." For an upfront fee of $200, a reader would purchase the right to subscribe for 10 years -- a decade-long contract of sorts -- at whatever price I charge. Did you catch those last five words? At whatever price I charge. How stupid are these people? Yeah, I know, they are my fans ... but don't they realize that I'm throwing on a ski mask and holding them up? And so what if this makes me the greediest, most soulless a-hole who ever lived? I WANT THAT MONEY! This is America! Greed is good! I have lost my mind.
Incredibly, I sell those 300,000 PSLs for a total haul of $60 million, then make another 50,000 PSL-free subscriptions available on a first-come/first-serve annual basis. (Those sell, too.) Was that influx of money worth getting ripped by media reporters and savaged on message boards and blogs? Are you kidding? Please. Throw in another $12.25 million from the $35 subscription fee for Year 3 (which, very quietly, I jacked up another 10 bucks) and a robust $20 million in ad revenue and, even after you remove expenses and revenue sharing, I still pocket $80 million.
Now I'm on the cover of Business Week, I'm featured in Vanity Fair, I'm making appearances on Bill Maher and "The Daily Show." ... I'm a rock star, the writer/entrepreneur who turned his little blog into a nine-figure operation. I spend another $5 million on staff, then another $10 million on a five-story building on Hollywood Boulevard, then another $10 million renovating it into a state-of-the-art office that features a lavish two-story sports bar with a 250-inch Panasonic HD plasma that costs $400,000 (the first of its kind) ... which, by the way, I didn't have to pay for because I convinced the city of Los Angeles to fund almost all of it with taxpayer money. I will generate revenue from journalism buffs, tourists, you name it. Or so I think.
See, I may have bitten off a little bit more than I could chew this time.
My site wasn't as good in Year 3. A few of my best writers bolted because I didn't give them a bigger revenue cut. A few rival sites launched -- all free, all cutting into my traffic -- and the backlash over my PSLs and exorbitant subscription fees hasn't slowed down. Not that I care; my only concern is not showing enough growth. Even after selling one-third of the business to foreign investors for $100 million (my employees don't get a cut of this, of course), and even after raising subscription fees to a staggeringly obscene $50 for Year 4 -- which my 300,000 subscribers are forced to pay since they were dumb enough to buy those PSLs that they can't sell now -- my bottom line looks like this:
Year 1 (2007): $16 million profit
Year 2 (2008): $23.5 million profit
Year 3 (2009): $80 million profit
Year 4 (2010): $95 million profit
I'm not growing fast enough. I don't fully own my business anymore. I already played my two best quick-hit tricks (PSLs and investors) for cash flow. I have a 100-person staff at this point that's growing every month. Looking ahead to Year 5, I decide to change my revenue-sharing agreement with my employees -- ask them for more money back, basically -- to make up for my projected fall in revenue. They resist. They want the same agreement as before, only with better health care.
My counter: That's fine, as long as you work six days a week to help me generate more revenue, because again, MY BUSINESS NEEDS TO KEEP GROWING!!!!
That was my ballsiest request yet. I made it despite new medical evidence (take an extra leap of hypothetical faith here) that spending too much time in front of a computer is significantly more dangerous than we ever imagined. Doctors believe over-computer stimulation (OCS) directly leads to early death, Parkinson's, concussions, cancer, blindness and various other terrible things -- a slight problem for me, since, you know, my business revolves around people reading computers and writing on them. For three years, I willfully ignored this information even as the New Yorker and New York Times repeatedly wrote about it, then belatedly pretended to care halfway through Year 4 -- although, really, I could have given two craps, I just had to PRETEND I did -- because legally, I might be liable for making employees work even longer hours despite the risks. Thank God none of my media cronies crushed me for ignoring those same dangers in 2007, 2008 and 2009. Phew.
My long-term fear? The dangers of extensive computer use will scare writers and readers away from computers altogether. But that's decades away. Habits take time to break. I'll be living on my own beach in Mexico or St. Bart's by then.
My short-term fear: My employees will walk at the beginning of Year 5 unless I give them a slightly better deal and bend on six-day workweeks. You'd think I would take care of these people, that I made enough money already, that it's the decent thing to do. But my franchise isn't worth quite what it could be. I wanted to be generating a $150 million profit in Year 5. I can't slam on the brakes. Not now.
I scramble and swing a deal with Apple: $200 million for five-year rights to sell applications for my site. There's an evil wrinkle: The deal can't kick in until the start of Year 5. If my site goes into hiatus because I locked out my employees, I can still cash that $200 million for myself. How does that windfall help me? Now I don't care if my employees walk: I have my Apple money, my foreign investor money and my PSL money. I can play hardball. I can afford to wait them out.
They are peons. They live paycheck to paycheck. They will fold. They will accept my crappy deal. Eventually.
What I don't anticipate: My employees are savvier than I thought. They file a lawsuit claiming my Apple deal was unethical, that I intentionally sought that $200 million nest egg as a negotiating advantage, that I shouldn't be allowed to touch that money during a labor dispute. Uh-oh. A judge rules in their favor. So long, nest egg. Meanwhile, my foreign investors are incensed that Year 5 might not happen; they feel like I deceived them. My PSL owners are threatening to sue for failing to deliver promised content. My bills at my Hollywood complex keep piling up. And the media is crucifying me for being greedy and losing touch with the same readers who made me wealthy.
Guess what? I still don't care.
If Charlie Sheen is addicted to winning, then I am addicted to making money. I have lost any and all perspective. I don't care if I lose my readers in the short term; they will come back. I don't care if I lose my staff; I can always find new people. I don't care about the health of my employees; as far as I'm concerned, they knew the risks. I don't care if my website is gravitating toward quantity over quality, or that we chase page views with shorter, Google-friendly stories instead of posting the same top-notch content that got people reading us in the first place; I want only to generate more revenue than the previous year.
Heck, I don't even care that one of my former employees was so destroyed mentally by OCS that, instead of just killing himself, he made arrangements ahead of time for his brain to be studied by OCS scientists, then shot himself in the heart. It was the creepiest, most haunting story in recent memory, the kind of incident that makes you sigh and say, "Wait, what are we doing to these people?" I don't care. I don't care. I don't care.
Remember the scene in "Shawshank" when Andy tells the warden that he's done with laundering money for him? The warden's eyes narrow. He shakes his head. He looks at Andy as dismissively as one human being can regard another.
"Nothing stops," he says. "Nothing."
That's me. I'm the warden. Nothing stops. I will make more money than I did last year, and I will continue to regard employees and readers as disposable pawns. This isn't about common sense, dignity, relationships, long-term plans, or even preserving the fragile relationship between a customer and a provider. It's about generating more money in Years 5 through 8 than I made in Years 1 through 4. That's it. Oh, and steamrolling anyone who gets in my way. I forgot that part.
Now tell me ...
Would I make a good NFL owner?
Bill Simmons is a columnist for ESPN.com and the author of the recent New York Times No. 1 best-seller " The Book of Basketball," now out in paperback with new material and a revised Hall of Fame Pyramid. For every Simmons column and podcast, check out Sports Guy's World or the BS Report page. Follow him on Twitter at http://twitter.com/sportsguy33.
ESPN TOP HEADLINES
- Kraft expects apology if NFL can't find culprit
- Report: NFL eyes Pats locker room attendant
- Berdych ousts No. 3 Nadal in Aussie quarters
- Kobe will have surgery on torn rotator cuff