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(Updated with labor settlement.)
The outrage over the National Football League’s replacement officials reached new heights Monday night, after a controversial call handed what most agreed was an unearned win to the Seattle Seahawks over the Green Bay Packers. Now, after a torrent of criticism, the league has settled with referees. But what are we to make of the decision by NFL Commissioner Roger Goodell to lock out the officials in the first place?
Goodell’s decision wasn’t about money—it was about power and control. The enhanced benefits the referees sought were a rounding error in the world of professional football. The NFL is a vigorous, highly profitable monopoly, with $9 billion in annual revenue. Existing TV deals guarantee that the league has many bright years ahead.
What the lockout and resulting threat to the NFL brand should remind us is the important distinction between shareholders and stakeholders. Goodell has owners—shareholders—to please. After all, he serves at their pleasure. He has the power he has because it’s been vested in his position by shareholders. Everyone else involved—players, fans, television networks—are mere stakeholders.
This conflict between the interests of shareholders and stakeholders should be familiar to those who follow the debate in corporate governance circles. There have been many impassioned pleas over the years for chief executives to give more weight to the impact of their decisions on stakeholders—with little traction gained. Stakeholders often suffer when their interests become misaligned with those of shareholders. That’s the case here. Shareholder interests were protected by Goodell’s hard line; stakeholder players stood to suffer injury as head-to-head contact penalties went unflagged, or as players who sensed officials didn’t have control took matters into their own hands. And they could suffer an unfair workplace environment as calls were blown.
Stakeholder fans suffered as the outcome of games became more a roll of the dice than something settled between teams. And they—and advertisers—stood to lose as games took longer and became duller to watch.
Fortunately for league owners, the NFL has earned such an enviable position over the past few years that the concerns of stakeholders are nothing more than a nuisance. Ironically, the one team where the shareholder and the stakeholder-fan are one and the same is the Green Bay Packers—the publicly held team that most clearly lost a game due to officials Goodell hired on their behalf.