What if a company you invested in never paid you a dividend for your investment, but the value of the company increased by 500%? That would be a pretty rotten deal right? If you invested your hard-earned money in a company, when its value is low, because of your faith and love for the company itself, it would be hard to swallow watching that company grow generating huge profits from your investment.
The definition of a dividend is the following: payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. The most successful companies in the world pay a dividend to their shareholders for a multitude of reasons, the main one being the fact that a dividend makes it attractive to investors.
Now imagine that you are a pre-1993 NFL Legend. You have invested in the company (team) your blood, sweat, tears, and broken bodies, Super Bowl’s, conference championships, Pro Bowls, and the occasional Hall of Fame. In return, from the company (team), you received a minimal return on your investment. That exchange doesn’t seem to equitable does it?
Now imagine that the company (team) continues to take investment funds from you in the form of your media rights and your name and likeness. Imagine that company (team) continues to generate hundreds of millions of dollars from your images, your video, your name, Your Legacy, while you generate nothing from your investment anymore. Even worse, imagine the company’s (team’s) value growing from small-cap status to a large-cap status, to the tune of 500%, with your hard-earned investment and you received no increased return in the form of a dividend or any percentage of the upside. Now that sounds like the worst deal possible right?
Well it’s happening right now, and has been for years in the National Football League. Now, I get the fact that the 32 NFL teams are private corporations and not public corporations, but the concept is the same. The 32 NFL teams are continuing to earn millions of dollars off of the legacy of its players and paying no dividend return on that investment. The NFL Players Association Former Players have been advocating for the past two years for a legacy fund to be created so that these 32 NFL teams can start paying back those dividends earned by the players that helped build these teams from a value of approximately $300,000 to a value of approximately $1 billion. Each individual NFL team should have the responsibility of making whole the investors who helped grow the game to the tune of $9 billion in revenue per year.
Who can argue that the men, investors, Sunday heroes, who we see now hobbled and crippled from their investment, should not be entitled to that dividend which they earned and continue to earn every debilitating day? The 32 NFL owners should recognize that continuing to profit from investors without allowing them to share in the dividends is not just bad business practice, but it’s ethically wrong. What’s worse, using it as a negotiating tactic in the current labor issue hits the moral low ground. Let’s hope in the coming days the pre-1993 NFL Legends will finally see dividend returns on their investments and start to recover from their 18 year economic depression.
by Nolan Harrison III
Senior Director
NFLPA
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