NFL Officials Lockout Ends

The NFL has ended its lockout of the officials.  Baltimore Ravens fans gave referee Gene Steratore and his crew a standing ovation before tonight's game against the Cleveland Browns began.  Fans may decide for themselves whether or not the lockout's end had anything to do with the atrocious call that awarded the Seattle Seahawks a victory against the Green Bay Packers Monday night.

Among the reasons the NFL locked out the officials in the first place, the union and the pension plan emerged as primary.  For decades now, American unions have been in decline.  In the private sector, only about one in twelve workers belongs to a union.

Unions still matter more for public employees, but government officials have begun wresting power away from them, too.  Scott Walker, the governor of Wisconsin, which includes Green Bay, took collective bargaining away from some public employees' unions and then defeated a recall effort.  Ironically, Walker then helped lead the call for the "real" NFL officials, the union members, to return to their jobs.

In the case of the NFL, almost everyone seems to have agreed the guys who worked their way up through the system and who belong to the union are simply better than the ones who replaced them.  In this private club that receives tons of public support, especially through funds for beautiful stadiums, taking away the union members downgraded the product.  With the credibility of an industry worth billions at stake, the owners felt tremendous pressure to yield.

Pension plans, as they have existed for several decades, are -- in a word -- unsustainable.  Workers have followed thirty year careers with forty year retirements.  Not enough new money and capital gains are moving through the system to support indefinitely the people who retire every day.

Practice is shifting away from defined benefits plans to defined contributions plans.  In other words, instead of the company promising the employee a certain percentage of her salary when she retires, based on her years of service and other factors, the company instead puts a combination of part of her salary and matching funds into a 401(k) and, ideally, gives her some choices about how to invest the money.

Investments that perform solidly can lead to a comfortable retirement.  Unfortunately, for employees who have entered 401(k) plans in recent years, two once-in-several-generations calamities have occurred: the dotcom bomb of 2000 and the Great Recession of 2008 - 2009.  The Dow, the S&P 500, and the NASDAQ are all currently lower than they were in March of 2000.  Fixed yields often run less than 1%, far below even inflation.  From current levels, bond prices have very little room to go up and a lot of room to go down.  None of these factors speak well for a "well diversified" portfolio of stocks, bonds, and cash.

The billionaires who own all the NFL teams except the publicly owned Green Bay Packers (again!) can easily afford to continue paying their referees pensions.  All the same, the new agreement will result in pensions giving way to 401(k)s.  Officials near retirement will do fine.  Their younger and future colleagues' futures are far less certain.

The deal between the officials and the owners may feel like a win for the officials, but it is not a convincing one.  It seems an unlikely catalyst for any union resurgence, and the 401(k)s are coming, even to the officials.  Many of their and our children may one day wonder what these "pension" things were.

The standing ovations may go on through this weekend, but I don't see them lasting longer.  Hating referees, umpires, and even lowly side judges is too ingrained in American sports fans.  The officials should enjoy this love while they can.  If Gene Steratore plans a run for public office, he'd better get his name on the ballot -- quickly.