Owners ask for a lot, offer very little in return

Michael Silver

As Friday's third and perhaps final deadline for a deal between the NFL Players Association and the league's owners approaches, there remains a serious philosophical gulf between the two camps – and the ball is in the hands of the billionaires.

Simply put, to avoid pro football's version of Armageddon – union decertification, the NFLPA's filing of an antitrust lawsuit and an attempted lockout by owners, all of which would be subject to judicial intervention – the owners need to move beyond "Trust Us" as a negotiating strategy.

It's time for the owners to open their books, or to acknowledge that doing so is not an option and lower their financial demands accordingly.

For all the apparent progress made in advance of last week's expiration of the collective bargaining agreement, which led to a pair of short-term extensions in the hope of reaching a deal, the two sides went into this week's sessions with a $750 million annual gap that needed to be bridged, according to several sources familiar with the negotiations.

The discrepancy concerns the amount the owners want credited off the top of the league's total gross revenues before that money is divided with the players: It's roughly $1 billion in the current CBA, and owners have advocated for raising that number to $2 billion because of investment expenses such as new stadium construction.

The players, who since May 2009 have formally insisted that the owners provide them with financial information justifying such a shift, have made concessions thus far that helped narrow that annual divide by approximately 25 percent. But on Tuesday, Y! Sports has learned, the situation reached a stalemate that threatens to derail the push for a new deal.

Last week, according to a well-placed source, the NFLPA's executive committee informed the owners' negotiating committee that it would not consider less than a 50-50 split of revenues (including those taken off the top under the current formula) unless the owners agreed to provide them with the full audited financial statements of all 32 clubs for the past decade. (The NFLPA received slightly more than the 50 percent figure during the final year of the expiring CBA and made the "50-50" offer last month.)

On Tuesday, the source said, the owners' committee said it would provide only aggregate profit figures for the 32 teams collectively spanning the 2005-09 seasons – one number per year. No individual-club profits would be revealed, even if the name of the club in question was withheld. The league also said it would provide the union with the total number of teams that experienced a decline in profit from the previous year.

The union consulted a professional auditor and the investment-banking firm it has retained for the potential review of the owners' statements and was told the information being offered by the NFL wasn't nearly enough to justify the significant financial concessions sought by the league. Among the information to which the union wouldn't have access was each team's list of non-player costs; how much each particular franchise's profits might have declined; whether overall-profit decreases on the league level were the result of one or multiple teams; and documentation of each team's cash flow, balance sheets and expenses.

The union's executive committee then voted to reject the offer by the owners' committee and renewed its request for 10 years of complete audited statements.

The NFLPA, of course, has no divine right to the financial information it seeks. Nothing can force the owners to stop stonewalling the union on this issue – but there are strategic reasons why continuing to do so may not be such a great idea.

For one thing, if the union decertifies – as it was within minutes of doing last Thursday, according to a report by SI.com's Jim Trotter – an antitrust lawsuit will follow. If so, the owners will almost certainly be forced to open their books during discovery proceedings.

Secondly, the union can make a reasonable case, both in the bargaining room and in the court of public opinion, for the importance of receiving such information. In the wake of last Tuesday's ruling by U.S. District Court Judge David Doty that the owners had failed to represent the players' interest when negotiating lockout friendly TV extensions, the NFLPA has reason to be dubious of the league's claims that the business is struggling and thus more money off the top is necessary for the NFL's financial health.

"It's really the same argument we've been making for the better part of two years," one player active in union affairs told Y! Sports. "We've conceded a lot already, and we can't go any further just because they're asking us to 'trust' them. We saw how trustworthy they are with the TV case."

To be fair, there may be some very logical reasons why the owners are resisting this revelation. The financial statements could contain embarrassing information that could be used against them if made public, or even shady dealings that might attract outside attention from authorities. In addition, owners may not want their specific financial information revealed to their peers given the obvious competition between franchises for on-the-field success.

Giants owner John Mara arrives for Tuesday's negotiations.
(Alex Brandon/AP Photo)

However, the league could mitigate these concerns by negotiating with the union for a conditional release of information. For example, team names and/or other sensitive details could be redacted, and NFLPA officials could sign confidentiality agreements which would subject them to steep penalties if they leaked the information to media outlets.

There is, of course, an even simpler solution: The owners could put a price on the secrecy of their financial statements and proceed accordingly. The smart move might well be to tell the union, "We refuse to open our books" while dropping their demands significantly – say, $250 million off the top, annually, for starters.

I realize that's a lot of money, but the owners could look at it as though they're paying a tax for keeping their books closed. Many of them may ultimately conclude that it's a compromise worth making.

And if the owners cling to their current strategy of concealing their financial statements while refusing to back off on their demands? If that happens all the way to Friday, I fear that the end of the week will usher in a new, uncertain era in which each side is taking a major financial risk, and both may end up losing in the end.

It's possible that the owners could hold firm and get their way, but I wouldn't count on it. To this point, the players and NFLPA executive director DeMaurice Smith haven't been the pushovers some of the owners expected them to be – and many union sources to whom I've spoken in recent days say they're steeling themselves for a showdown.

"They continue to back us into a corner, and it's just making our guys stronger," the aforementioned player said. "The players are tired of the [expletive] and are unwilling to [concede so much]." The owners don't want to share information with each other, so they're hell-bent on making us pay for it. But the reality is that they're going to screw this whole thing up."

In other words, if the books stay closed, let's hope the owners are open to sweetening their offer.