We recently went over the Supreme Court's interpretation of the American Needle case, which walled the owners off from permanent antitrust immunity. Now that they, unlike the lords of baseball, are required to act in good faith, NFLPA executive director DeMaurice Smith has fired the next shot in what looks to be a protracted border war. On Wednesday, the players association filed a Special Master claim, contesting that the league took lower revenue (the kind that would be shared with the players under any agreement) in exchange for guaranteed money in the event of a lockout in 2011 (not a cent of which the players would see) in a renegotiation of television contracts. Smith and the players say that this is a direct violation of the fiduciary duty the owners are required to act under — they must seek revenue with an equal eye for the good of the players as for themselves.
Baltimore Ravens cornerback Domonique Foxworth(notes), a member of the NFLPA's Executive Committee, doesn't believe that the league has done so. "It appears that the owners bought a strategy to lock players and fans out and nonetheless financially protect themselves," he told NFLPA.com. "The players want to leave no stone unturned to make sure that CBA negotiations proceed in good faith and that next season is played in its entirety."
NFLPA counsel Jeffrey Kessler had a more pointed take in the same article: "In essence, the NFL knowingly left money on the table ... at the expense of the players. The NFL thus has acted in bad faith."
In an NFLPA conference call on Wednesday afternoon, Smith said that in this particular legal proceeding, the NFLPA would ask for discovery, especially to clarify the notion that the owners would be required to pay back the lockout guarantees, estimated to be approximately $4 billion, in the event that football would not be played over a period of time. And while that would come out in discovery, one wonders if larger fish might not be caught — would discovery in this case force the owners to open up their books? "If it is the case that networks have obtained digital right or other media rights for free, in exchange for the promise that the full funds will be available to the teams even if the games aren't played, that means that [they've] left revenue on the table," Smith said. "If there are facts from which a reasonable person can conclude that they undertook these agreements with the idea of gaining a bargaining advantage, the players would argue that this would specifically be in violation of the White stipulation and settlement agreement."
In a nutshell, the 1993 case of Reggie White et al vs. NFL et al (which is well-explained here) signified the beginning of free agency for the players and the end of legalized collusion for the owners. It brought about the original Collective Bargaining Agreement, and insured that the players would get an equitable share of profits that were shooting through the roof with ever more lucrative television contracts.
I asked Smith how it would affect future negotiations (and current player revenue) if the owners are found to have not acted in good faith. "It follows what the Special Master could do with the finding. He could make specific findings of fact in regard to the absence of good faith, and that would give the players certain contractual remedies. He could make a decision to place some or all of those funds in escrow until further discovery. There could be damages resulting from the conclusion that money was left on the table and revenue was not maximized as obligated by the stipulation agreement. So, there are any number of potential remedies that could certainly have an impact on negotiations, but that's going to fall on what the findings are, and what actions the Special Master could or would take."
Having won American Needle at the highest level, the players association became more empowered to look elsewhere for signs of dirty dealings. Whether the spat over TV money is just a bump in the road, or the Godzilla version of the original Reggie White ruling, one thing's for sure: There's more at stake now than there ever has been for both sides. Never has the NFL been so powerful or profitable, and while the league issues standard denials to all the charges brought by the NFLPA (its reference to the current economy is particularly egregious), the owners would be wise to gauge the momentum before speaking out as such. Their original ideal scenario, in which a league-mandated lockout would break the players once and for all, is melting like thin ice beneath their feet. Adding a bad-faith revenue decision tied to television money would shove negotiations into the NFLPA's wheelhouse, leading to a much more encouraging football future.
The short version: There's always right and wrong on both sides, but if you want football in 2011 and beyond, it's probably time to start rooting for DeMaurice Smith to get what he wants.