NFLPA Owes $41.8M in Affiliate Licensing and Marketing Payments After Crypto Crash

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A close affiliate of the National Football League Players Association was unable to raise $41.8 million in licensing and sponsorship revenue and pay it to the union at the end of its fiscal year, the organization has revealed. in its annual report filed last week in the United States. Ministry of Labour. The numbers appear to be tied to the crypto market crash, with a person who was involved in deals with the NFLPA and a representative from another sports union both familiar with the process and likely pointing to similar issues in other sports unions. other unions and sports leagues.

The figure represents about a quarter of the NFLPA’s commercial revenue based on an analysis of its annual report (this percentage does not include payment for the NFL’s $75 million marketing deal, including the fact that success accounts for less than one-fifth of trade union transport) . Spread among the 2,135 active NFL players noted in the annual report, the absentee payments could deprive each of them of $19,578.

As of February 28, 2023, there is uncertainty regarding the collection of certain accounts receivable from OneTeam Partners, LLC. Therefore, an allowance was recorded from that date for those amounts, the union wrote in a footnote at the end of the annual report. Earlier in the report, the NFLPA listed $41,799,008 for OneTeam next to accounts receivable, a category for funds owed by customers.

OneTeam Partners is a joint venture launched in 2019 by the NFLPA, Major League Baseball Players Association and private equity to oversee the business ventures of sports unions. The group, in addition to the baseball and soccer unions, now oversees the business operations of the United States Women’s National Soccer Team, Major League Soccer Players Association and Womens National Basketball Players Association, among others. He also recently moved into the college name, image and likeness space with a deal to pay players $500 to enable their use in the upcoming college football video game.

The venture has so far been successful, with initial private equity investor RedBird Capital Partners cashing in last year with an estimated profit of $600 million. Unions control group licensing (i.e. commercial rights for multiple players) for businesses such as video games, trading cards and apparel at a time when demand for sporting consumer items exploded.

OneTeam Partners, for example, is listed as having paid the NFLPA a year ago $66 million, a figure that rises to $105.3 million in the most recent report (NFLPA’s fiscal year ends on February 28, so the most recent year reflects the 12-month period that ends on that day). It’s unclear if the nearly $42 million in non-payments are included in this figure.

OneTeam referred the questions to the NFLPA, which did not respond for comment. An MLBPA spokesperson said the union is aware of OneTeam’s non-payment issues. In the MLBPA’s annual report for the 2022 calendar year, no mention is made of missing payments from OneTeam, which paid the union $36.4 million.

The unpaid bills appear linked to news from Sportico last month that Dapper Labs, the platform for the NBA and NFL pulverizing non-fungible tokens, and the DraftKings Reignmakers NFT had each hired the NFLPA to renegotiate their deals in light of the plummeting value of digital assets. Then came a report this month that Dapper Labs NFL NFT was seriously lacking financial targets.

OneTeam reportedly expected approximately $60 million from Dapper & DraftKings, of which $41 million would go to the NFLPA, the person who has been involved in past dealings with the NFLPA wrote in a direct message. Now, NFTs are relatively new, so most of the money usually comes from Madden and Trading Cards. By that, this person means that bread-and-butter licensing businesses like video games and NFLPA trading cards remain healthy. Cryptocurrency is a relatively new category for Syndicates and has not been a reliable source of income. Yet this person described the non-payments of $41.8 million as horrible.

Cryptocurrencies like NFTs were all the rage two years ago, skyrocketing in value. Leagues and teams were signing cryptocurrency deals with companies like FTX, now bankrupt, and touting a wide array of NFTs. But crypto crashed with NFTs, which are essentially authenticated digital duplicates of something real, like a highlight, trading card, or piece of art.

The true value of an NFT has long been debated, and opponents seem to have the stronger hand now. But in 2021, they didn’t, and that’s when the NFLPA and NFL reached their deal with Dapper.

The irreplaceable nature of the NFT captures what’s special about sports fandom, said Steve Scebelo, president of NFL Players Inc., the marketing and licensing arm of the NFLPA, in the 2021 release announcing the partnership. Our players are extremely excited for the NFLPA to work with our enterprising partners at Dapper Labs and OneTeam to make this significant breakthrough in the digital collectibles market.

Unions like the NFLPA have built their trade arms to create war chests for labor battles with the leagues. In the years before a collective agreement expires, unions will typically withhold certain license payments to create a sick leave account. The NFLPA and MLBPA have long-existing CBAs and, as noted, NFT revenue is not a primary source of revenue. So, while concerning, the loss of NFT payments does not pose a great threat to the health of unions. Indeed, NFLPA assets have grown from $1.003 billion to $1.055 billion in the past fiscal year, according to the annual report.

The latest developments emerge as the NFLPA prepares to select its new executive director. The union has scheduled a meeting next month at which a new executive director could be selected by the 32 player representatives. We don’t know exactly who is in the running.

Whoever is chosen will take over from DeMaurice Smith, who has held the position since 2009. The latest annual report shows he earns $9.3 million, of which $5.6 million comes from deferred retirement pay. He still has $4.3 million left in his retirement account, according to the NFLPA report.

(Photo: Rich Graessle/Icon Sportswire via Getty Images)

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