The Breakdown

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NFL refs lockout: A $10 billion league versus $16 million in labor demands

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Had enough yet? NFL players, coaches, and fans seem pretty fed up, after a controversial conclusion to Monday night's game between the Seattle Seahawks and the Green Bay Packers. Touchdown? Interception? "Simultaneous catch?" 

The replacement referees brought in while the regular refs are locked out in a labor dispute were disoriented by it all, but it's not as if we haven't been warned and warned and warned some more that something like this was happening. The question is: Will the NFL budge on the lockout, now that the nightmare scenario — potentially botched call that costs a team the game in the final seconds — has come to pass?

The numbers on the refs' side are all...rather small, relatively speaking. True, average pay is about $150,000 a year. But there are less than 200 NFL refs, and in a league that's looking for $10 billion in annual revenues by next season, with $12-$14 billion in sight, you'd think that such a small group with such a large impact in the overall package could command more. Especially when you consider that in 2011 the NFL wrapped up a $3-billion-per-year extension to its TV deal.

What pro football's refs are holding out for is actually pretty mundane and may only amount to about $16 million in concessions by the league. Bottom line: They want to keep their old-school defined-benefit pension plan, rather than shift, as so much of corporate America has, to a defined-contribution plan — a 401(k). 

There are complex arguments about why defined-contribution (DC) plans can be better than defined-benefit (DB) plans, and vice versa. But what it comes down to is risk. With a DB plan, the risk that the market won't live up to expectations is absorbed by the employer: He covers market shortfalls. With DC plans, the employee absorbs some of that risk. When the market underperforms, both employee and employer lose out.

DB plans can be a problem if the employer goes out of business. But it seems...well, exceedingly unlikely that the NFL will do that. So the refs do have a farily good reason for sticking to their guns on the pension issue. Furthermore, they don't actually want to avoid the shift to the DC plan — they just want to keep the DB plan around for legacy hires. 

There are some negotiating points where the refs don't have a strong a case, notably their reluctance to create a full-time core of officials (all refs are part-time now). But as Monday night's controversy demonstrated, the cost of getting hung up on pension matters could cost the NFL far more than $16 million.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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