Fans’ guide to NFL labor battle
Roger Goodell was in the midst of a leisurely training camp tour last month when the NFL commissioner began experiencing severe labor pains.
Goodell, as part of his weeklong bus trip to seven NFL camps with Hall of Fame coach and broadcasting icon John Madden, initiated locker-room meetings with players at each stop, and the level of interrogation he faced became increasingly charged as players expressed anxiety and anger over a potential lockout next spring.
At one point in the commissioner’s visit with the Cleveland Browns, linebacker Scott Fujita(notes), a member of the NFL Players Association’s executive committee, asked: “What do the owners want? What’s it going to take to get a deal done?”
“I can’t answer that,” Goodell replied.
“You’re the NFL commissioner,” Fujita shot back. “You’re here as the mouthpiece for the owners, and you can’t even tell us what they want? The CBA [collective bargaining agreement] is up in March. Don’t you think you need to start giving us some answers?”
By the end of his visit with the Browns, players were referring to the league’s chief executive as “Roger the Dodger.” It got worse for Goodell during the final visit of his tour, this stop coming at the Indianapolis Colts’ training camp. According to two sources familiar with the meeting, some Colts players admonished Goodell with swear words, to the point where star quarterback Peyton Manning(notes) was embarrassed by their behavior. Veteran center Jeff Saturday(notes), another executive committee member, cut the meeting short to keep the situation from escalating further.
Welcome to the strange world of the 21st-century NFL, a wildly profitable business in uncertain economic times whose proprietors and employees can’t just get along. With the two sides seemingly headed for a rancorous and incongruous labor showdown next spring, America’s most prosperous and popular sporting enterprise could be walking a fine line between hard-fought progress and shameful self-immolation.
Two years ago, when the owners voted unanimously to opt out of the current collective bargaining agreement following the 2010 season, it set the stage for a confrontation that could well result in the league’s first work stoppage since 1987. As the deadline for striking a new deal nears – things will likely come to a head on or around March 1 of next year – each camp is preparing for battle on numerous fronts. There has been legal wrangling, political maneuvering, spin-doctoring and economic leveraging by both sides … and much of it has been lost on a blissfully oblivious fan base.
Internal NFLPA studies have shown that only 33 to 40 percent of hardcore NFL fans have the impending labor drama on their radar screens. For everyone else, the prospect of football interrupted – and the potential havoc it could wreak upon everything from video games to fantasy drafts – may come as an unwelcome shock.
As we head into a season that could end with an abrupt dose of harsh reality, here’s a fan’s guide to the labor landscape based on exhaustive research and conversations with owners, NFLPA officials, players, agents and other league insiders.
Which side is forcing the issue?
The owners, particularly a faction of aggressive, entrepreneurial Goodell confidants (Jerry Jones, Robert Kraft, Pat Bowlen, Jerry Richardson) who want a CBA that accounts for the high-risk investments they’ve made on new stadiums and other capital expenditures. For the most part, the owners are unified in their belief that they agreed to a lousy deal when the current CBA was extended in 2006, and that the players currently receive too great a share of their adjusted gross revenues. At last March’s NFL owners meeting in Orlando, Fla., the Carolina Panthers’ Richardson gave a fiery speech in which he exhorted his peers to “take back our league” by forcing a more favorable deal down the throats of the players. This is likely to be accomplished in the form of a lockout, though it’s possible that the owners could opt for a milder approach: negotiating to impasse and imposing terms of their choosing, which might compel the players to strike. DeMaurice Smith, the NFLPA’s executive director, is convinced that a lockout is coming, and a majority of his constituents – many of whom are more engaged and informed than is commonly perceived – share this belief.
Are the two sides making any progress toward a new deal?
Not really. Though there have been recent reports of an improved atmosphere between the NFL’s management council and the players’ union, there has been no substantial movement toward a new CBA. This may be partly due to the desire of some owners to play hardball and lock out the players until they capitulate; it also may simply be a function of timing. Think of it as akin to negotiations between a team and its first-round draft pick. Though the NFL draft is in late April, talks usually don’t begin to heat up until the approach of training camp, and often the contract isn’t signed until deeper into the offseason. In this case, though the CBA expires after the 2010 season, the real deadline isn’t until a year from now, when there’s a risk that games will be lost.
Why are the owners so upset about the deal they cut in 2006?
Many owners believe that the late Gene Upshaw, who served as the NFLPA’s executive director for a quarter-century, caught then-NFL commissioner Paul Tagliabue in a weak moment and muscled through an extension to the CBA that was, in essence, a resounding victory for the players. Upshaw, they believe, knew that Tagliabue – who was preparing to step away after a 17-year stint as commissioner which included unprecedented labor peace – was loath to tarnish his legacy by ending his tenure with a messy fight between the players and owners. He also understood that several of the league’s most powerful owners, such as the Cowboys’ Jerry Jones, were unwilling to entertain thoughts of a work stoppage because of expensive stadium plans. So Upshaw successfully got Tagliabue to sell a deal that gave the players 59.6 percent of total revenue and implemented a revenue-sharing plan in which the league’s 15 highest-earning franchises subsidized the 17 teams that earned the least. A little more than two years after agreeing to the extension by a 30-2 vote, the owners unanimously voted to opt out of the deal two years early. Upshaw’s sudden death from pancreatic cancer three months later may have given some owners an increased sense that the union is in a vulnerable position this time around.
Why do some owners think the system is broken?
Revenue sharing fails to address the reality that some teams (such as the Cincinnati Bengals and Arizona Cardinals) have favorable stadium deals that call for little or no expenditures from the organization while other owners, such as Jones, Denver’s Pat Bowlen or the Green Bay Packers, took out massive loans for new or renovated stadiums. Thus, someone such as the Panthers’ Richardson might be forced to write an eight-figure check that subsidizes a peer such as the Bengals’ Mike Brown(notes), who is actually making a far greater profit because of his relatively low overhead. Further, there are owners who intentionally keep revenues low to maintain their spot in the NFL’s lower 17 and ensure that they’ll receive money under the current system. All of this is mystifying to the players, who believe the owners who are most averse to revenue sharing greet a potential work stoppage as an opportunity for prevailing in an internal struggle.
Do the owners really want the players to take an 18 percent pay cut?
Yes and no. What the owners have actually proposed is that the players take the same cut (roughly 60 percent) of a smaller pie. Under the current deal, owners receive a credit of slightly more than $1 billion for operating and investment expenses off the top of an annual revenue pool that’s approximately $9 billion before the remainder of the money is divided. The owners are seeking an increase to about $2.4 billion in credits, a number they say reflects the changing economic realities of the era. Whereas stadiums which were partly or wholly subsidized by taxpayers were once the norm, owners are now pouring much more capital into state-of-the-art facilities – essentially saddling them with enormous mortgage payments. The owners believe that the players should account for their risk and the bounty (in the form of increased future revenues) it provides. Players, conversely, argue that they are not in a true partnership absent an ownership stake in franchises whose values have increased exponentially over the past decade and a half.
Are the players sympathetic to the owners’ concerns?
Yes, but they’re also skeptical. For one thing, when the players hear the owners talk about “risk,” some of them cringe. As one put it recently: “They’re taking risks? We’re the ones risking our health on a regular basis – we all know there’s a 100 percent injury rate in the NFL. Give me a break.” Players also are dubious of the insinuation by some owners that their profit margins have been vastly reduced under the current deal. Smith, who became the NFLPA’s executive director in March 2009, has repeatedly called for owners to open their books as a means of substantiating their claims of financial distress … and the owners have steadfastly refused. There is also rampant distrust of the league’s proposal calling for the dramatic increase in credits off the top. According to one NFLPA source, among the categories included by owners in their proposal were “professional fees,” practice-facility costs and travel. Says the source: “What company asks its own employees to pay for their overhead?”
Which side is better positioned to withstand a work stoppage?
The owners, based on simple economics. In theory, they could reduce their operating expenses by 50 percent (an estimated $4.4 billion) via the elimination of player salaries and benefits and the temporary layoffs or salary reductions of various other employees. Meanwhile, thanks to the terms of the extensions to the lucrative TV deals the league has with DirecTV and several broadcast networks, the owners would continue to receive payments during a lockout – though the money would eventually have to be repaid via credits for future games. Still, that’s a serious cash-flow advantage that would, again in theory, allow the owners to realize more than 50 percent of their revenues (nearly $4 billion) and, therefore, to cover their operating expenses for an entire season if necessary. Players, meanwhile, would theoretically be much more financially stressed in the short term, and the relatively short career span of NFL players would make the prospect of missing games even more unpalatable.
What legal proceeding could give the players the upper hand?
In June, the NFLPA surprised owners by filing a legal complaint with the Special Master appointed to resolve CBA disputes, challenging the structuring of the television deals. The NFLPA charged that, in negotiating extensions with DirecTV and at least three networks (Fox, CBS and NBC), the league extended valuable benefits in 2009 and 2010 in exchange for the provisions which would allow the cash flow to continue in the event of a lockout – effectively depriving the players of potential revenues in the short term while setting the stage for a work stoppage. Owners, citing the fact that similar provisions have been included in past TV deals, seem to think the players have little chance of prevailing. However, NFLPA executives have been encouraged by early findings during the discovery process that may have documented the league’s intentions, and appear to think that there’s a chance the union’s request to have the TV money placed in an escrow account during a work stoppage may be granted. Also encouraging to the NFLPA: Any appeal would likely be heard by federal judge David Doty of Minneapolis – the architect of the historic 1993 settlement, which brought unrestricted free agency and a salary cap to the NFL. In 2008, the league accused Doty of being biased in favor of the union and asked him to remove himself from further handling of CBA-related disputes. When Doty refused to step aside, the league took its case to the U.S. Court of Appeals for the 8th Circuit, which rejected the request last November. Thus, Doty’s involvement, at least on paper, could not be construed as anything but a positive development for the NFLPA. And remember that, before being voted Upshaw’s successor, Smith was a trial lawyer and litigation partner in an influential Washington firm. Legal disputes are clearly in his comfort zone.
What was the significance of the Supreme Court’s decision in the “American Needle” case?
It was a big victory for the players – or, more accurately, it spared the players from the prospect of what would have been a brutal defeat. The background: In 2000 the NFL signed an exclusive apparel-licensing deal with Reebok, prompting American Needle, an apparel manufacturer which had individual deals with NFL teams, to file an antitrust lawsuit. The NFL argued that it is a single entity in which the 32 franchises compete on the football field but not in business, and the league won favorable rulings from a federal district court in Chicago and, in 2008, the 7th Circuit Court of Appeals. American Needle appealed to the U.S. Supreme Court, and in a surprising move the NFL filed a petition urging the high court to take the case, hoping that a favorable ruling would essentially exempt it from antitrust litigation. A victory in American Needle, in theory, would have allowed the NFL to insulate itself from the NFLPA’s equivalent of the nuclear bomb – decertifying as a union and suing the league for antirust violations. This was the strategy the NFLPA applied after the ’87 players’ strike, ultimately winning the suit that gave the players unprecedented leverage and set the stage for the historic 1993 agreement which brought the salary cap and unrestricted free agency to pro football. Though some viewed the decision to take American Needle to the Supreme Court as the NFL’s version of a “Hail Mary,” Smith was deeply worried about an unfavorable outcome. In May, however, the NFL suffered a resounding, 9-0 defeat, which allows the NFLPA to at least use the threat of decertification as a negotiating tool.
Is decertification an option for the NFLPA?
In theory, but it’s probably a long shot. Some owners believe Smith, who has a flair for public speaking and seems to enjoy the limelight, would never subject himself to the risk of a reformed union that might choose a different leader in its new incarnation. “Would they De-certify?” one owner mused. “He might not want to take that gamble.”
What is the relationship between Goodell and Smith – and could this be an obstacle toward an amicable resolution?
On a personal level, Goodell and Smith haven’t gotten off to the best of starts, with each man at times having felt slighted by the other, based on comments by sources and my own observations. Whereas Tagliabue and Upshaw had a mutually appreciative relationship and were sometimes accused of being too chummy – remember Bryant Gumbel’s famous “personal pet” comments on HBO’s “Real Sports”? – Goodell and Smith may lack the chemistry conducive toward a peaceful resolution of a complex situation. As Goodell’s training camp tour illustrated, players increasingly view the commissioner, at least when it comes to labor, as a somewhat disingenuous adversary. Meanwhile, some owners view Smith as a shameless grandstander who loves the spotlight but lacks the depth necessary to make a savvy business deal. Both depictions are exaggerated, but it’s certainly likely that as leaders dealing for the first time with a labor showdown, each man feels compelled to prove to his constituents – and to one another – that he is no pushover. In the end, egos could be an issue. As one league source says, “It’s not about how much those two hate each other; it’s how much each guy loves himself.”
Who would be the first casualties of a lockout?
A lot of people who aren’t on your fantasy team – and that you might not have heard of – might find themselves in a tough spot come March. Low-to-mid-level employees ranging from ticket sellers to personnel assistants to community-relations officials to quality-control coaches could be facing temporary layoffs, and there is talk of reducing coaches’ pay by 50 percent until the labor dispute is settled.
Besides the TV lawsuit, what other cards does the NFLPA have to play?
The union has broached the possibility of retaliating against the networks who broadcast the league for what it views as a funding of the lockout by advising players to skip out on production meetings and other interview requests. That may not actually happen, but George Atallah, the NFLPA’s executive director of external affairs, warns, “If there are networks that are not portraying this situation fairly, the players are prepared to act.” The union also sent letters to some of the NFL’s major sponsors reminding them that all marketing deals will cease in the absence of a CBA, impairing companies’ ability to use players or their likenesses in advertising campaigns. Finally, Smith, who has connections on Capitol Hill, has done some behind-the-scenes lobbying with legislators who might be persuaded to introduce antirust legislation – though such measures would likely come into play only if the situation worsens to the point of triggering a pronounced public outcry.
Could there be replacement games?
During the ’87 strike the league staged three weekends’ worth of games with replacement players, which helped to weaken the union’s resolve as numerous veterans began crossing picket lines. In theory, this could happen again. However, it would be a much tougher sales pitch to the public this time around – thanks to the immense popularity in fantasy football. Somehow, a draft in which Maurice Clarett and JaMarcus Russell(notes) go first and second overall doesn’t sound so alluring.
Could the players stage their own games?
Possibly. Fantasy freaks would likely warm to exhibitions featuring the Tom Bradys and Chris Johnsons of the world, even if the uniforms and team names were kind of funky. There are also more available venues than there were during the last work stoppage in ’87 – for example, the soccer-specific stadiums in cities like Carson, Calif. and Columbus, Ohio would be sufficient for staging such spectacles, assuming the players could get a TV network not currently in business with the NFL, such as TBS, to pay for broadcasting rights.
Could the UFL provide players with a safe haven?
Absolutely. Some believe the United Football League, which debuted in ’09 and is about to begin its second season, was launched with a potential lockout in mind. As one NFL source speculates, “It was the equivalent of betting the Don’t Pass Line in craps – it was banking on a lockout, so it could be there to fill the void.” In theory, the upstart league could rapidly expand beyond its current vision of six teams for the 2011 season and provide jobs for many of the NFL’s high-profile players during a work stoppage.
If there’s a lockout, will there still be a draft next spring?
Yes, but it won’t be business as usual for the teams or for the players they select. With no CBA in place, teams won’t be able to sign players, and those post-draft minicamps will be non-existent. Also, in the absence of a CBA, the league’s ability to generate revenues from the new crop of big-name draftees will be limited. In other words, if you want to purchase one of those sweet new Jake Locker jerseys in the aftermath of his being drafted, you’ll have to buy one without his name on the back of it or wait until a new CBA is signed.
Who will be on the cover of Madden ’12?
Maybe no one, depending upon how aggressively the union protects its marketing interests in the absence of a CBA. Or, given the supposed Madden Curse, perhaps the NFLPA will persuade EA Sports to put an owner on the cover. (Yes, that was a joke.)
What marketing deals might we see in the absence of a CBA?
“Let’s put it this way,” one player says. “We’ll have no restrictions. So imagine a player doing commercials for a casino, or a liquor company. Or picture a guy skydiving with body paint and landing on top of a strip club. Anything goes, and the league might not like that at all.”
In the absence of a new CBA, will some NFL players get in touch with their inner Cheech and Chong?
Damn straight. If there’s no CBA, the NFL won’t be able to test or monitor players, even prior offenders who’ve run afoul of the league’s policies against substance abuse and/or performance-enhancing drugs. “It’s gonna be an old-fashioned Smoke In for some guys,” predicts a league source. “They’ll be in pot heaven.”
Will the needs of retired players be addressed in negotiations?
Presumably, and that’s a very good thing given the way they’ve been slighted in the past. In theory the new CBA will ensure that both sides will contribute to a fund that benefits debilitated and destitute ex-players, and others who played in the era before the current system was established in 1993. In terms of public relations, being perceived as aiding the cause of retired players is crucial for both the owners and the union; more important, it’s the right thing to do.
Will a new CBA result in an 18-game regular season?
Probably, assuming the two sides can work through the potential complications such a change might present. As I wrote two weeks ago, an Enhanced Season has been criticized by star players like Brady and Ray Lewis(notes) because of its implications relating to injury, career longevity and post-football disability. A switch to 18 games would also affect the union’s push for standardized rules regulating offseason workouts, impact the current training camp format and force players to play additional games before qualifying for post-career benefits. Right now players are understandably resistant to the change because, as one put it, “they’re asking us to take less money and do more work.” In the end, however, the union will likely try to use players’ supposed opposition to the Enhanced Season as a bargaining chip designed to extract other concessions.
Will a new CBA result in an NBA-style rookie wage scale?
You betcha. Again, the union won’t automatically yield on this issue, instead using it as a means of placating owners in exchange for a better overall deal. But in reality, the majority of players believe that the current system – in which the players picked at the very top of the draft receive more guaranteed money than established veteran stars – is a travesty. (For example, this year’s top overall pick, Sam Bradford(notes), got a deal that will guarantee him at least $50 million, more than Brady, a three-time Super Bowl champion, is likely to receive if he and the Patriots reach a deal on a contract extension this week.) Most current players quarrel with the logic behind such a slotting system and aren’t sympathetic to the plight of the future draftees who’ll stand to make less. The players, in fact, have already put forth a proposal that would implement a rookie wage scale, sending a letter to the league last February detailing a “Proven Performance Plan.” The plan called for rookie deals to be reduced in length to three years – the union later said it would agree to a four-year threshold – and created a revenue pool that would fund incentives for players who outperform their contracts (such as the Titans’ Chris Johnson rushing for more than 2,000 yards in his second season) and benefit retired players. Some owners believe that the savings should be spread out to include veterans with low-to-mid-level salaries, providing them with a means of realizing performance bonuses. However the two sides decide to redistribute the money saved, look for the mind-boggling rookie contracts like Bradford’s to disappear under the new CBA.
How do we solve this mess?
We’re glad you asked (and glad you’re still with us after all these questions). As with most labor disputes, this is a gap that can be bridged through creativity and compromise – and, ultimately, it will come down to money and perception. The first thing that has to happen for a deal to be forged is that each side has to move past the rancorous rhetoric and intense emotion that is likely to worsen over the coming months. Certainly, this is a volatile issue that involves principle and impacts the careers and lives of numerous individuals and their families – but in the end it’s a business dispute between two entities that have it pretty good in a strained economy. If the owners and players test fan loyalties by robbing them of an entire season – or, in a worst-case scenario, dragging the dispute past the fall of 2012 – both could end up as losers. Conversely, there is a way to resolve their differences in a win-win scenario that involves growing the pie, rewarding the owners for their investment risks and keeping total player revenues relatively stable. By adding two regular season games and establishing a rookie pool, a new CBA can theoretically create enough additional revenues that owners can get some of what they want (more money credited off the top) and veterans won’t have to take less. For this to happen, the NFLPA needs to abandon its focus on its percentage of revenues – a holdover from the Upshaw regime – and focus on total dollars. Owners, meanwhile, have to get past the perception that they were duped into taking a poor deal in 2006 and try to leverage a deal with the union that seems more like a partnership than a vengeful comeuppance. All of this can be accomplished by rational, well-meaning negotiators who have pro football’s – and its adoring public’s – best interests at heart. “People on both sides have to study the lessons of the Cuban Missile Crisis,” says one league source. “Ultimately, in order to settle this standoff, everybody has to feel that they’ve won, or at least saved face, and that they were part of the process.” Until then, players, owners and those of us who love football will be experiencing labor pains on an uncomfortably frequent basis.