united states project

Think taxpayers, not just NFL fans

There is a big--so far, untold--story about the proposed NFL concussion settlement
September 5, 2013

Journalists threw the public for a loss last week when reporting on the tentative settlement of a lawsuit brought by former professional football players with concussive brain injuries against the National Football League. As reported, the story was about a minority of retired players, a story of interest mostly to the minority of Americans who are football fans.

The story missed was much bigger and matters to a much larger audience than football players and fans–arguably, to every person in the United States. In reviewing coverage by major newspapers, wire services and broadcast news organizations, I found only one reporter who touched on the big story, and then only tangentially.

First, let’s review the coverage to see what was reported and then examine the big play that reporters fumbled.

Sam Farmer of the Los Angeles Times put the official version of events succinctly:

The NFL and more than 4,500 retired players reached a proposed $765-million settlement of concussion-related lawsuits, a court-appointed mediator announced Thursday.

Former US District Judge Layn Phillips announced the parties have agreed to a deal that would end the litigation against the NFL and NFL Properties and provide medical and other benefits, as well as compensation to qualifying injured players and their families.

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That $765 million number, many news reports noted, is tiny compared to NFL revenues–a fraction of one percent of likely revenues over the next two decades. That detail was the first sign that reporters gave some thought, just not enough, to the NFL’s real game.

The settlement figure seems large on its face, but begins to shrink when taking into account the time value of money–an issue Ken Belson raised in a useful New York Times explainer, though without doing any arithmetic for readers.

As Belson noted, half the money will be paid in the first three years, with the other half spread out over the following 17. The deal will adjust later payouts for inflation. But the delayed payment schedule means owners will come out ahead if their return on their money is greater than the inflation adjustment. And if injury-related care expenses rise faster than inflation, as has been true for medical costs over the past several decades, a general inflation adjuster would not fully protect the players. The fine details of the agreement have not been made public yet, only the broad deal terms.

Still, that is a minor part of the story, looking at who is on the line, not the scrimmage.

So is the fact, widely reported, that as much as $89 million, or 11.6 percent of the total, would go for baseline medical tests, medical research grants and up to $4 million just to inform the players of the terms, or about $889 per player. Legal fees would be on top of the settlement amount.

The average left after those costs above is just $150,000. [Update: To arrive at these illustrative calculations I divided the settlement figure by the approximately 4,500 plaintiffs. Dividing by the full list of retirees and surviving spouses–several times larger–would reduce the average per-player allotment.] Since some players, or their families in the case of dead players, may collect as much as $5 million, even that average figure is inflated. That figure, a typical payout of less than $150,000 per player, should have set reporters to asking if it was in fact enough to cover the players’ medical costs. NFL players only have health insurance while workingfor the length of their careers plus five years, a highly relevant detail for any industry that knows many workers will be unemployable due to on-the-job injuries.

The Baltimore Sun‘s Aaron Wilson and Mike Klingaman had a better-than-average piece because they included player comments about dissatisfaction with the payouts under the tentative agreement. Their piece–and some others that raised questions about whether the players had settled too cheaply–was a good step in the direction of the bigger story. But still, it fell short.

A Forbes contributor, Patrick Rishe, went further, analyzing the economics from the players’ point of view. Rishe, a professor of economics at Webster University in St. Louis, dissected the settlement to show that it cannot possibly cover the lost wages and medical bills the former players will face during their lifetimes.

Still, Rishe missed the big story by not asking an obvious question: If the settlement does not cover all the costs of medical care, much less lost future wages, who will bear that burden?

Answer: Taxpayers.

Ken Bensinger of the Los Angeles Times was the one major news outlet writer I found who wrote about that–although not until the 11th paragraph of his piece, and then only vaguely:

Advocates for the players argue that if they cannot file for cash compensation or medical coverage in California, many will be forced to fall back on taxpayer-funding public programs such as Medicaid and Social Security Disability.

Players excluded by the bill “who do not have private health insurance will become a burden on the state or federal system,” said Ron Mix, a hall of fame former NFL lineman who works in San Diego as a workers’ compensation attorney specializing in making claims for athletes.

That is the big story–the taxpayers will subsidize this settlement and may well pay most of the costs, far more than the wealthy owners of football teams. What the NFL has achieved, if the settlement is approved, is to shift costs from itself to the taxpayers, what I call “economic pollution” in my 2007 book Free Lunch.

Professor Daniel Goldberg, a lawyer-bioethicist who has examined the NFL concussion case issues, said they are just part of a broad pattern in the NFL and other industries of shifting costs onto taxpayers. In the current issue of the Journal of Legal Medicine, Goldberg examines how the NFL creates doubt about its responsibilities, writing that “the issues underlying the NFL concussion litigation are in fact legitimate public health problems, the implications of which go far beyond the private labor relationship between NFL players, their teams, and the league itself.”

The NFL is not alone in cost-shifting. Once a worker is declared totally disabled, any business, or its workers compensation insurance carrier, can easily shift the costs onto taxpayers by refusing to pay hospital and other bills, which are then picked up by Medicare–which is to say, by taxpayers. (I wrote about this trick to foist costs onto taxpayers in my 2012 book, The Fine Print).

For traumatic brain injury, medical researchers cite multi-million dollar lifetime costs at the high end, with low-end cost estimates of around $100,000. Those figures give some perspective to the average payout of less than $150,000 per former player covered by the settlement.

The big–and so far, untold–story about the proposed concussion settlement is that the NFL seeks to limit its cost while forcing taxpayers to pick up the rest of the tab. Those costs are likely to be multiples of the long, slow payout that under the proposed settlement will come to a small fraction of one percent of NFL revenues over the 20-year payout period. Reporters should examine who really benefits, and who is really burdened, in the tentative settlement that must go before Judge Anita B. Brody of United States District Court in Philadelphia for approval. Those who want to pursue this much bigger story might also study this very useful dataset posted by the LA Times listing every workers compensation claim filed in California by NFL players.

This is a significant story just waiting for reporters who will think and write not for the limited audience of football fans, but for the largest audience possible–taxpayers.

Related reads and resources:

• Sports subsidies are explored at the website Field of Schemes run by journalist Neill deMause.

• Professor Judith Grant Long, who teaches urban planning at Harvard University, analyzes sports subsidies in her book Public-Private Partnerships for Major League Sports Facilities.

• Bruce Fisher, a former deputy executive of Erie County (NY), wrote recently for the Buffalo (NY) weekly Artvoice about sports subsidies not saving fans money.

Corrections: This article originally said half the settlement money would be paid out in one year; it is three years. It also originally said NFL players have health insurance only during their careers; coverage extends five years after retirement. Those errors have been corrected.

The article also said incorrectly that the settlement does not adjust future payments for inflation. That passage has been revised. CJR regrets the errors.

Follow @USProjectCJR for more posts from this author and the rest of the United States Project team.

David Cay Johnston covers fiscal and budget matters for CJR’s United States Project. He is a reporter with 46 years of experience, including 13 at The New York Times; a columnist for Tax Analysts; teaches tax and regulatory law at Syracuse University Law School; and is president of Investigative Reporters & Editors (IRE). Follow him on Twitter @DavidCayJ.