Proposed changes to the way NFL referees receive their retirement benefits are at the core of the lockout, and neither the league nor the refs are backing down. In an open letter released Tuesday, NFLRA Union Chief Tim Millis outlined the impasse:
“Every current NFL official was hired by the NFL with the promise of a defined-benefit pension package,” Millis wrote. “All of these officials and their families have made important life-planning decisions based on this benefit promise. The NFL now wants to break the promise by eliminating that benefit; instead, turning to an inferior defined-contribution plan. I call that plan inferior because the League’s offer would reduce their funding obligation for the plan by some 60%, and at the same time transfer long-term investment risk to the individuals (each official).”
In plain English: the defined pension plan gives retirees a stable, fixed income, regardless of the paying company’s performance. The 401(k) plan gives employees a portion of their paycheck to invest for retirement, shifting the risk to the employee.
Many companies in the private sector have made this shift, especially as profit margins become unstable. But the NFLRA and Millis argue, rightly, that the NFL is only growing more profitable: The league netted about $9 billion in revenue last year, and the average team is worth $1.1 billion. That trend shows no sign of reversing itself as the league continues its dominance of the American sports landscape.
The NFL, which has shifted its other employees to a defined contribution/401(k) plan, sees the change as more than fair. In a memo released after the Sept. 2 labor talks, the NFL noted that under the proposed deal (pre-lockout) a league official working at least 20 years could make “as much as $160,000 in additional compensation or retirement contributions for each official.
The referees would accept the change, but only if all currently employed officials could remain under the old plan, a proposal rejected by the league. If any one issue will keep the replacements on the field, it’s this one.
