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Doug Farrar

Documents show owners planned for lockout in TV contracts

Doug Farrar
Shutdown Corner

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INDIANAPOLIS -- While most of the NFL is focused squarely on the talent on the hoof at the scouting combine at Lucas Oil Stadium, the back-story with legs is happening across the street at the Indianapolis Convention Center. That's where agents and the NFLPA were to be meeting Friday morning to discuss several issues related to the possible impending lockout, and the issues that could affect how long -- and if -- that lockout actually happens.

Key among these issues is the recent decision by Special Master Stephen Burbank that the NFL owners would be allotted the $4 billion due to them for television contracts in the 2011 season, despite the fact that there's no guarantee any games will be played. The NFLPA wanted a decision that would have put that money in an escrow account until a new collective bargaining agreement could be put in place, and the Players Association also alleged that the owners negotiated new TV contracts in bad faith, essentially taking slightly less money upfront (affecting gross revenue on both sides) in order to guarantee the payment of that money.

Now that certain documents from the case heard by Burbank have been made public (albeit in redacted form), we know that some extended TV deals had "lockout clauses" -- specifically, deals with DirectTV, CBS, NBC and FOX. According to Burbank's ruling, the CBS and FOX contracts had pre-existing provisions that would require the networks to pay rights fees in the event of a work stoppage of any kind. The most interesting revelation about this in the Burbank decision is the notion that "the parties would negotiate a refund in good faith." In other words, there was no specific timeframe in which owners would have to return the money, and those conditions were not set out. The owners then added work stoppage language to the extended ESPN and NBC deals; both of those deals were signed in 2010.

Burbank's ruling splits letter and spirit -- he talks about the NFL's responsibility to use best efforts and good faith in the negotiations of TV contracts to be "terms of art" under law. He then states that there is no specific provision in the CBA that nails down what those terms mean in the negotiation of any contract. In other words, guys, the owners may have sacrificed some of the revenue you're supposed to receive in the interests of filling their own coffers after locking you out. But because the agreement you signed doesn't spell out what best efforts and good faith mean, there's no real boundary.

Burbank's ruling seems to hinge on the notion that the NFL can somehow act in the best short-term interest of the players (actually, both parties) and its own long-term business interests at the same time. A specious notion at best, but that's what we're left with at this time. What the NFLPA can't seem to prove at this time is the crux of its case -- that the owners willingly and specifically went out of their way to deny players revenue. Without that proof, the notion of lockout insurance becomes a bit more reasonable, if not entirely palatable.

In other recent labor news ... in a recent column in the Washington Post, Senator Jay Rockefeller of West Virginia -- the Chairman of the Senate Committee on Commerce, Science and Transportation -- advocated that the league open its books in the interest of full financial disclosure.

What I'd like to see from NFL Commissioner Roger Goodell and the owners is a simple display of good faith: Show the union your books. Don't keep secrets. If there are financial pressures that keep you from agreeing to the revenue-sharing plan proposed by the players, let's see the proof.

Ask a neutral third party to review your financial data, redact anything sensitive and prepare an unbiased bottom-line assessment of the league's finances.

Certainly, some owners make significant investments while managing a professional sports team and I don't want to play down their long-term expenses and obligations.

But the players deserve a good-faith effort to demonstrate that these expenses are real and not just an excuse.

A Senator espousing the idea of the league opening its books, at the same time the NFLPA is looking to decertify in order to bring possible antitrust action against the NFL? Stay tuned, folks. This labor stuff is once again about to get very interesting.

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