Brilliant Simmons Article

[Jetsfan80]

Take a look.

http://m.espn.go.com/nfl/story?w=1af...=6179146&i=TOP

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?

[Larz]

so billionaires making millionaires is now a bad thing ?

when the players agree to assume the risk if a franchise loses money, I'll sypathise with them wanting 50% of the revenue

until then, the owners have every right to hire who they want and pay what that person will accept and agree to

nobody puts a gun to your head and makes you play pro football

[Jetsfan80]

so billionaires making millionaires is now a bad thing ?

when the players agree to assume the risk if a franchise loses money, I'll sypathise with them wanting 50% of the revenue

until then, the owners have every right to hire who they want and pay what that person will accept and agree to

nobody puts a gun to your head and makes you play pro football

Wow, you read that thing in 4 minutes? I'm impressed.

[#27TheDominator]

nobody puts a gun to your head and makes you play pro football

The way they run it is close enough. Do they give them the option to play anywhere else? Anywhere you want? Left to their own devices the owners would be unable to control themselves and salaries would go through the roof.

When was the last time an NFL franchise lost money? I'm sure it was before revenue sharing.

[slats]

The way they run it is close enough. Do they give them the option to play anywhere else? Anywhere you want? Left to their own devices the owners would be unable to control themselves and salaries would go through the roof.

When was the last time an NFL franchise lost money? I'm sure it was before revenue sharing.

100% true.

It'll be funny after all this is done -and the owners take back a little more from the players, and are making a little more than that from an 18 game season- when they cry to the fans about how they want to sign so-and-so player, but they can't because of the big old mean salary cap.

[dbatesman]

so billionaires making millionaires is now a bad thing ?

when the players agree to assume the risk if a franchise loses money, I'll sypathise with them wanting 50% of the revenue

until then, the owners have every right to hire who they want and pay what that person will accept and agree to

nobody puts a gun to your head and makes you play pro football

Fetishizing the invisible hand seems kind of specious when we're talking about an industry whose profitability is due almost entirely to revenue sharing.

[Bergen Jet]

so billionaires making millionaires is now a bad thing ?

when the players agree to assume the risk if a franchise loses money, I'll sypathise with them wanting 50% of the revenue

until then, the owners have every right to hire who they want and pay what that person will accept and agree to

nobody puts a gun to your head and makes you play pro football

I pay to see the players play. I pay to see Braylon Edwards, Santonio Holmes, Revis, Harris, Sanchez, LT2, etc. I do not pay to see Bob the UPS driver as I pay for him to deliver a package. I could care less if Steve or Tony delivers the package as long as the package gets delivered. If Steve or Tony were cathing passes from Bob the NFL doesn't have a product. If Braylon and Santonio deliver packages for UPS their business would still function as normal.

The players are the product... conventional business thinking does not apply when your employees are the finished product that consumers pay to see.

[Bergen Jet]

Fetishizing the invisible hand seems kind of specious when we're talking about an industry whose profitability is due almost entirely to revenue sharing.

"Invisible hand." Impressive. You remember something from Intro to Macroeconomics...

Agree with your point though...

[Klecko73isGod]

so billionaires making millionaires is now a bad thing ?

when the players agree to assume the risk if a franchise loses money, I'll sypathise with them wanting 50% of the revenue

until then, the owners have every right to hire who they want and pay what that person will accept and agree to

nobody puts a gun to your head and makes you play pro football

Did Dave Duerson know the risks associated with playing in the NFL when he first strapped on a Bears helmet in the early 80s?

[Kleckineau]

"Invisible hand." Impressive. You remember something from Intro to Macroeconomics...

Agree with your point though...

Adam Smiths metaphor for free markets ability to self regulate.

I know politics and religion are taboo here.

Is economics allowed or will the union members here burn down the site?

[Bugg]

I'd agree the NFL is pushing the limits of it's market with PSLs and trying to squeeze every drop of revenue out of all of us. The article seems more about Simmons himself-overexposed, commercialized, empty, a lousy and worsening product(do we need 4 hour bullsh*tting podcasts with his pals, or reams of bandwidth wasted on the NBA before the playoffs?), increasingly and unjustifiably expensive.And with a gratutious "Shawshank" reference.

[Larz]

Wow, you read that thing in 4 minutes? I'm impressed.

I skimmed a lot of it, and had to LOL at this

"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."

talk about naive. LOL

[Larz]

The way they run it is close enough. Do they give them the option to play anywhere else? Anywhere you want? Left to their own devices the owners would be unable to control themselves and salaries would go through the roof.

When was the last time an NFL franchise lost money? I'm sure it was before revenue sharing.

don't put your name in for the draft. simple

don't know about the losing money thing as the NFL won't share the info even with the players. if you were an owner would you agree to a 50/50 split with the players without the players accepting some risk as well ?

[Larz]

I pay to see the players play. I pay to see Braylon Edwards, Santonio Holmes, Revis, Harris, Sanchez, LT2, etc. I do not pay to see Bob the UPS driver as I pay for him to deliver a package. I could care less if Steve or Tony delivers the package as long as the package gets delivered. If Steve or Tony were cathing passes from Bob the NFL doesn't have a product. If Braylon and Santonio deliver packages for UPS their business would still function as normal.

The players are the product... conventional business thinking does not apply when your employees are the finished product that consumers pay to see.

then let the players assume risk and put up money for stadiums, and all that jazz

[Larz]

Did Dave Duerson know the risks associated with playing in the NFL when he first strapped on a Bears helmet in the early 80s?

he didn't tell me, and I think a few guys did get hurt before the 80's

[Jetsfan80]

don't put your name in for the draft. simple

don't know about the losing money thing as the NFL won't share the info even with the players. if you were an owner would you agree to a 50/50 split with the players without the players accepting some risk as well ?

The owners risk damage to their wallets. The players risk physical, long-lasting damage to their bodies. Huge difference.

then let the players assume risk and put up money for stadiums, and all that jazz

Why should they? If there's no players there's no game. The players (and fans by default) will eventually be the ones to cave on this one, but that doesn't mean the owners are right.

[Larz]

The owners risk damage to their wallets. The players risk physical, long-lasting damage to their bodies. Huge difference.

Why should they? If there's no players there's no game. The players (and fans by default) will eventually be the ones to cave on this one, but that doesn't mean the owners are right.

if you can't take the risk, don't buy a team or play for one.

the owners make the rules, as with every business since the first cave man pimped out a cave woman. I'm not 100% on the owners side, I think the retired players deserve a lot more, and they should open the books more, but if I'm an owner I tell them to kiss my a$$ at a 50/50 split unless they also agree to have their pay reduced if team's revenue goes down, it wouldn't even have to be a net loss.

if the jags make $50 million this year, but only make $30 million next year, the players salaries are reduced accordingly. although that would turn the NFL into the WWF with players calling out the opponents wives during pre-game to boost ratings, so that may not be a good thing

[Bergen Jet]

Adam Smiths metaphor for free markets ability to self regulate.

I know politics and religion are taboo here.

Is economics allowed or will the union members here burn down the site?

I am familiar with Adam Smith and the invisible hand. I was just making a joke about it due to concept being one of the first thing that is covered in the most basic of economics classes.

[Bergen Jet]

then let the players assume risk and put up money for stadiums, and all that jazz

Let the owners assume the risk of severe head injuries, other bodily injuries and in some cases paralysis.

[BroadwayJ667]

Did Dave Duerson know the risks associated with playing in the NFL when he first strapped on a Bears helmet in the early 80s?

He may not have, but the players that play now do. Yet they still continue to play.

[dbatesman]

if you were an owner would you agree to a 50/50 split with the players without the players accepting some risk as well ?

lulz

Is economics allowed or will the union members here burn down the site?

If the mere mention of an abstract macroeconomic concept compels you to start barfing freeptard talking points in everybody's laps, you probably shouldn't be preaching forbearance to those of us capable of critical thinking. I'd cite the mote and the beam, but that's probably too social justice-y.

[Jetsfan80]

If the mere mention of an abstract macroeconomic concept compels you to start barfing freeptard talking points in everybody's laps, you probably shouldn't be preaching forbearance to those of us capable of critical thinking. I'd cite the mote and the beam, but that's probably too social justice-y.

It always intrigues me that you choose to use such lofty language in your posts. I can appreciate that you're a brilliant guy, but you must realize at SOME point that many of your posts go over peoples' heads on a football message board, no?

[T0mShane]

I scratch my head at the guys who constantly stick up for the same owners who charge them $50 bucks to park in lots that taxpayer money built, who charge ridiculous PSL fees with little to no justification for such fees, and who charge them $11 bucks for a warm beer to sit in a plastic seat that costs upwards of $200 a game. It's cool if you can afford it, and it's fine if you accept it as a free-market side effect, but at some point you have to realize that charging--what--500%(?) on any product is a slap in the face of those who you hope will buy it. And paying that price just makes you a sucker.

[dbatesman]

It always intrigues me that you choose to use such lofty language in your posts. I can appreciate that you're a brilliant guy, but you must realize at SOME point that many of your posts go over peoples' heads on a football message board, no?

I don't choose to do it, I'm not trying to make anyone appreciate anything, and I'm not particularly brilliant. I just don't know any other way to write.

[Kleckineau]

lulz

If the mere mention of an abstract macroeconomic concept compels you to start barfing freeptard talking points in everybody's laps, you probably shouldn't be preaching forbearance to those of us capable of critical thinking. I'd cite the mote and the beam, but that's probably too social justice-y.

You you you obfuscator you!

[JetsFanInDenver]

Pretty nice article from Simmons. Did not know he had it in him to come up with something like this.

It shows the greed of the owners, giving somewhat of a pass to the players. But at the end of the day its the fans who are taken for a ride!

[T0mShane]

I don't choose to do it, I'm not trying to make anyone appreciate anything, and I'm not particularly brilliant. I just don't know any other way to write.

I'll let you use my template for football message board colloquial speech (AKA "Joe Sixpackin' It"):

"Word/Bro/Dude.(,)

<assert bias-laden point> <back up bias-laden point with vague references to statistics that don't exist> <further attempt to support point with disorienting anecdote> <insert self-effacing, marginally witty close> <flee thread>"

[madmikeisback]

Anyone arguing any free market garbage when it comes to the NFL is a moron. There is no organization more socialist than the NFL. The Owners assume zero risk and it's the players who are dying every year because they assume the ultimate risk stepping out on the field every game.

[Larz]

Let the owners assume the risk of severe head injuries, other bodily injuries and in some cases paralysis.

OK, let me just get some things out there. I'm not in the owners corner, I just thought the article was hokey and unrealistic. are there any billion dollar businesses that aren't about growth and profit over "dignity, relationships, long-term plans, or even preserving the fragile relationship between a customer and a provider" ?

when I say risk I am referring to the financial side of the current negotiations obviously, and what I am saying is if the players want to be essentially equal partners in the revenue side, they should be equal partners in the expenses side as well. I sure as hell wouldn't give them a 50/50 split without a major concession on their part. the owners need to step up and open the books to the players here, to be fair. it wouldn't surprise me at all if the compromise is something like a 50/50 split for a rookie cap and 18 game schedule

the players assume an injury risk when they play for booster money in college, or for nothing in high school, so that argument really doesn't carry to much weight with me to be honest with you. if they don't want to assume that risk, they don't have to put their name in for the draft

[Larz]

I don't choose to do it, I'm not trying to make anyone appreciate anything, and I'm not particularly brilliant. I just don't know any other way to write.

so what did you think of the article in question anyhow ?

[dbatesman]

so what did you think of the article in question anyhow ?

Typical faux-populist pap from Simmons, but his premise is sound. The owners are killing the golden goose.

[Larz]

Typical faux-populist pap from Simmons, but his premise is sound. The owners are killing the golden goose.

based on what ? the super bowl being the highest rated TV show ever ? they haven't even missed an OTA yet

if cancelling the world series didn't kill baseball, they would have to miss 2 entire seasons to kill football, and we'd stil be here arguing about gholston and martin the whole time

[dbatesman]

based on what ? the super bowl being the highest rated TV show ever ? they haven't even missed an OTA yet

if cancelling the world series didn't kill baseball, they would have to miss 2 entire seasons to kill football, and we'd stil be here arguing about gholston and martin the whole time

Nevermind.

[T0mShane]

IMO, it's going to be a Starbucks situation. The owners will overestimate the public demand for an over-priced product and will be left holding the bag when most people just stop going to the games. Instead of continuing to buy a $4 cup of coffee, people are going to be more than happy to buy from Dunkin Donuts--or stay at home and watch whatever's not black out on their flat screen.

[#27TheDominator]

OK, let me just get some things out there. I'm not in the owners corner, I just thought the article was hokey and unrealistic. are there any billion dollar businesses that aren't about growth and profit over "dignity, relationships, long-term plans, or even preserving the fragile relationship between a customer and a provider" ?

when I say risk I am referring to the financial side of the current negotiations obviously, and what I am saying is if the players want to be essentially equal partners in the revenue side, they should be equal partners in the expenses side as well. I sure as hell wouldn't give them a 50/50 split without a major concession on their part. the owners need to step up and open the books to the players here, to be fair. it wouldn't surprise me at all if the compromise is something like a 50/50 split for a rookie cap and 18 game schedule

the players assume an injury risk when they play for booster money in college, or for nothing in high school, so that argument really doesn't carry to much weight with me to be honest with you. if they don't want to assume that risk, they don't have to put their name in for the draft

First of all, there is no financial risk in football. With that tv contract there is no chance they could lose money. You are right about the owners opening their books. They (and you) can't complain about percentages of profit and assuming risk, when the owners won't even provide expenses.

Almost every player playing in college and high school is doing so with the dream of NFL glory and millions. Please don't get me started on the crooked nature of forcing kids to play football for 2 years so that those factories can print money and pay for swimming pools and mansions for the dean.

I don't think it's as easy as "not putting your name in for the draft". That doesn't make you a free agent or give you the opportunity to just sign anywhere. If it did nobody would put their name in for the draft and Elway and Jeff George wouldn't have held everybody up. I'm unsure of the exact current rules (the whole process is so against our general legal structure they monkey with it) but I'm sure that Carl Lewis didn't "put his name in for the draft" and the Cowboys still picked him.