Stuff You Should Know: NFL Labor Negotiations

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You might remember that last week we posted a guide to essential purchases for surviving the impending NFL lockout. A funny thing happened after we wrote that. Another site posted a link to it, but also added a blurb about how nobody really thinks a lockout will happen because everyone stands to lose too much money.

Oh how we wish that was true. The reality is that both sides are more than willing to sit through an extended lockout. If anything, each side’s underestimation of the other’s willingness to take a financial hit in order to get what they want could be the very thing that dooms us to a 2011 without the NFL.

In words that we’ll try to make as easy to understand as humanly possible, here are ten things you should know about the current NFL labor negotiations…

First, Some History

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The current labor agreement didn’t happen by magic. Originally signed in 1993, the Collective Bargaining Agreement (CBA) as we know it now was the culmination of player strikes, antitrust lawsuits and all sorts of other league turmoil. Eventually, the players agreed to a salary cap in return for free agency and an enhanced share of league revenues.

Since then, the CBA has been extended several times, most recently in 2006. Seeing as how the 2006 extension passed by an overwhelming 30-2 vote among league owners, you’d think they would be fine with just extending the current agreement as it stands now. That couldn’t be further from the truth. In fact, the reason we’re even talking about this now is because in 2008, a mere two years after the extension was signed, the owners unanimously voted to opt out of the agreement two years early.

So Why the Extension In the First Place?

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It’s like they say, hindsight is 20/20. It might have seemed like a great idea at the time, but now, the owners feel like they were fleeced. The common belief is that former NFLPA executive director, the late Gene Upshaw, caught then-NFL Commissioner Paul Tagliabue in a moment of weakness and capitalized on it to push through an extension that was a goldmine for players.

Tagliabue was preparing to step down from his 17-year tenure as NFL Commissioner, which was marked by an unprecedented lack of labor strife. Not wanting to tarnish that legacy of harmonious relations between players and owners, Tagliabue was allegedly persuaded by Upshaw to sell the owners on a deal that gave players a 59.6% cut of revenues.

What did the owners get in return? A new revenue sharing plan which dictated that the league’s 15 most profitable franchises would make payments to help subsidize the 17 least profitable franchises. Here’s a fun fact, Red State NFL fans! That’s exactly how Socialism works too!

While that might have seemed like a solid plan at the time, several of the league’s highest earning owners came to regret it. Why?

New Stadiums Aren’t Cheap

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It’s an inevitable fact of NFL team ownership that, at some point, you’re going to need a new stadium. Or at the very least, you’re going to need to renovate the one you’re currently playing in. If you don’t believe that, just ask the Minnesota Vikings…

When it comes time for a facility upgrade, things usually go one of two ways. Ideally, your local government will pony up some taxpayer dollars to help foot the bill. Alternately, you might be like the Jerry Joneses of the world who operate in an area where tax hikes are akin to sexual assault, which means you’re on your own to cover the expense of building a new stadium.

Under the labor agreement as it stands now, no matter how you financed your new stadium, if you’re one of the top 15 franchises, you still have to shell out a percentage of your earnings to the bottom 17 franchises. So, take Jerry Jones again as an example. Thanks to the Cowboys new privately financed kajillion dollar stadium, he’s got a lifetime of loans to pay off. Meanwhile, he also has to share his team’s profits with teams like the Cincinnati Bengals and Arizona Cardinals, who were lucky enough to get taxpayer help building their new homes.

There are even rumblings that some teams purposely keep their profits to a minimum just so they can stay on that bottom 17 list and continue to eat from the rest of the league’s plate. Couldn’t the owners just work that bullshit out amongst themselves? Not really. The way negotiations work on their side of the table, it only takes nine owners to vote against any new proposals to block it from taking effect. Would you vote to stop receiving free money from Jerry Jones?

So, the owners want the players to foot some of that bill. Currently, the owners take a cool $1 billion off the top of any league revenues to cover operating costs. Due to the stadium building drama, they want to increase that by 18%, which amounts to another $2.4 billion. For their part, the players would possibly be alright with that, if it weren’t for one thing…

Trust Issues

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Here’s the thing about those NFL owners and their financial situation…since forever, they’ve refused to open their books to the NFLPA. If there really is widespread financial distress among league owners, the players aren’t opposed to chipping in to help out, they just want to take a look at the owner’s financial records to, you know, verify that they aren’t being lied to. After all, every report that comes out these days seems to indicate that the league is seeing record profits and, under the current agreement, franchise values have shot up significantly. So where’s all this financial strain coming from? If it’s a legitimate concern, it seems like making the information available to the NFLPA would be a great way to prove it.

On the flip side, the fact the owners steadfastly refuse to open the books has instilled a healthy amount of distrust among players. If there’s nothing to hide about all of this talk of decreasing profits, why so secretive with the data?

It’s a legitimate concern if we’ve ever heard one. Handing an extra $2.4 billion to the owners without some kind of assurance that they really do need it has all the makings of handing the homeless guy at the freeway exit ramp a dollar to feed his family only to see him walk away and get into his Mercedes a few hours later. There’s something in those books the owners don’t want the players to know about.

But it could still all work out if the players make a couple of other concessions instead.

Remembering Ryan Leaf

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For one, the owners want to put a cap on rookie salaries. Of all the negotiations on the table, this is the one that is likeliest to be resolved in an amicable manner. If there’s one person who hates to see an unproven rookie who has yet to play a down of NFL football take home $50 million in guaranteed money on draft day more than an NFL owner, it’s a veteran NFL player. In recent months, the NFLPA has softened their stance on rookie salary caps, but it’s not something they’re just going to full on agree to without some limits.

The players want those rookie contracts limited to three years whereas the owners are thinking more like five years. Given the fact that most NFL contracts don’t include much in the way of guaranteed money, it’s understandable that the NFLPA would be reluctant to accept a five year contract term for rookies when the average NFL career is usually less than three years. If a player gets injured and can’t play for the remaining years of that contract, he’s just out that money. The owners don’t have to pay it. As far as bonuses go, the owners have already proven their willingness to ask for those back, just like they did in the case of Michael Vick when he went to prison.

To further complicate matters, the judge who currently presides over the NFL labor negotiations, US District Court Judge David Doty, has proven to be more than a little sympathetic to players in situations like this. So sympathetic, in fact, that the owners asked that he remove himself from the case, a motion he promptly dismissed. How sympathetic has he been to the players’ cause? Well, he let Vick keep that bonus, if that tells you anything.

Even if this particular issue doesn’t work itself out, there’s another possible solution that seems like a win for just about all of us…

“Hooray! More Regular Season Games!”

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You know who loves preseason football? Nobody. Season ticket holders get gouged for full ticket price just to see the starters take three snaps then sit and people at home are still too busy enjoying the last vestiges of summer weather to be bothered to watch on television.

So why not cut two of those preseason games and extend the season to 18 games instead? That’s what the owners want to do, and you’d be hard pressed to find a fan who doesn’t to see two more games that matter as opposed to two worthless exhibition games. And the extra revenue generated by adding two games to the schedule might just be exactly what we need to get this labor bickering squashed for good.

Surely, everyone is in favor of a solution like that, right?

“Boo! More Regular Season Games!”

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Not exactly. The players seriously want no part of an 18 game season. In fact, even talking about it just makes them question the owner’s motives even further. For the past few years, all we’ve heard is how the league’s first priority is player safety, hence the increased fines for helmet to helmet contact and new rules that protect quarterbacks from any contact that might muss up their womanly hair.

But now, the league wants to add two more regular season games? Not only does that put players in harm’s way for an extra two weeks per year, but the physical strain of a prolonged schedule coupled with less time to prepare for it could significantly lessen the shelf life of the average NFL career. Owners see it as a no-brainer, while players see it as just another obvious money grab.

That said, it’s all but inevitable that an 18 game schedule is going to result from the current negotiations, but it’s going to come at a price. Most likely, the league will have to cough up some cash to pay for player’s health insurance after they retire. That just adds a whole new set of bickering and negotiating to the already convoluted talks. It will get settled at some point, but the chances of it being settled in time to avoid at least some sort of work stoppage is slim to none.

But the Owners Will Lose a Ton of Money If There’s No 2011 Season, Right?

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Wouldn’t it be nice if that was the case? Unfortunately for us, those crafty owners negotiated their television deals in a way that guarantees them $4 billion in revenue even if there are no actual games in 2011. Why, it’s almost as if they knew a lockout was coming and decided to have a safety net in place when it happened! For the record, that’s exactly what the players are alleging they did.

So, if you’ve been hearing all this lockout talk and scoffing at it as a bunch of lunacy because “owners would never give up all that cash,” well, think again. A guaranteed $4 billion in revenue combined with the savings that come with not having to operate a team or pay players means the owners are far more ready for this than you could ever believe.

They’ll still lose a bit of cash, but not enough to bring them to their knees in a financial sense. Sure, it will be a public relations nightmare, but they’ve recovered before. There was a player strike in 1987, you know, and unlike Major League Baseball, they recovered from it quite nicely. They have no reason to believe they can’t recover from a lockout this time around either.

Okay, Then Surely the Players Will Give In, Right? Right?!?!?!

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Sure, they might. Someone is going to have to give up something. But it’s not going to happen overnight and probably not anytime soon. Current NFLPA head DeMaurice Smith has basically told the players to be wary of giving up anything they’ve gained, because they’ll never get it back. It might have happened before any of them were in the league, but the players are well aware of what it took to get things like free agency and revenue sharing, and without the owners opening up those books to explain why it’s needed, they aren’t likely to part with any of it anytime soon.

In fact, one of the most terrifying aspects of all of this is that if there’s anything the owners and players agree on, it’s that everyone is underestimating the players willingness to take a financial hit to make sure they don’t lose any of the things they’ve gained since 1993. Check out these dueling quotes from Brian Billick’s fascinating book “More Than a Game: The Glorious Present and Uncertain Future of the NFL”…

From an NFLPA rep…

“My biggest concern about this thing blowing up is that the owners are seriously underestimating our resolve to not go backward with regards to what we have already earned.”

From a league executive…

“I think the owners underestimate the players’ ability to withstand an extended work stoppage.”

There you have it. It looks like the only people who think a work stoppage is a ridiculous impossibility are the fans. As for the owners and players, they’ve dug in and prepared for the worst.

So What Happens Next?

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Well, a lockout is a damn near certainty at this point, unless some sort of miracle happens. Today isn’t the day to panic, but if progress hasn’t been made by month’s or even week’s end, we’re pretty much screwed. And then what happens? Chaos. Among the possibilities…

  • The players could decide to decertify the union, which would clear the way for a strike and more antitrust lawsuits.
  • We could be treated to a season filled with replacement players and scrubs, which, you know, kill us if that happens.
  • In that same buyer’s guide we ran last week, we mentioned UFL tickets possibly becoming a hot commodity, which was something else more than a few people scoffed at. But here’s the thing, some people think the entire reason that league was started was because people knew a lockout was coming. It’s not at all out of the question that several high profile players could defect to the UFL until this mess is sorted out. Suddenly, living in Omaha wouldn’t seem quite so bad when you have Peyton Manning under center for your shitty UFL squad instead of Jeff Garcia. Sounds ridiculous, we know, but don’t discount it. Players want to play, even if they have to do it somewhere else for awhile. And a league flourishing thanks to an influx of NFL talent makes for a mighty nice bargaining chip in the players’ pockets.
  • Whatever happens with the game itself, expect some off-field antics of the highest order. With no CBA to answer to, things like drug testing and conduct codes go right out the window. But understand, we’re not suggesting a lockout means Ricky Williams will spend 2011 smoking enough weed to keep your average hip-hop entourage high for a decade. We’re not suggesting that at all, we’re promising it.

But whatever comes to pass should a lockout happen, we’re pretty sure there’s one thing we can all agree on…2011 is going to suck.

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