Commentary

An NFL labor impasse primer

Updated: March 11, 2011, 7:00 PM ET
By Lester Munson | ESPN.com

It's been a news-filled couple of weeks -- last-gasp mediation sessions, extensions of the talks, union decertification and 11th-hour litigation -- but the NFL's divide with its players is hardly a last-minute development. Rather, it's the result of long-term strategic planning by the team owners and their commissioner, Roger Goodell, and it is nothing less than an attempt at a total restructuring of the most profitable and popular enterprise in the history of sports.

[+] EnlargeJerry Jones
AP Photo/Luis M. AlvarezJerry Jones and the other owners were unable to come to an agreement with the NFL players.

In fact, shortly after the league's management and union concluded a collective bargaining agreement in March 2006, the owners began to consider the possibility of a lockout. Both sides took a step closer to that when the NFL Players' Association decertified Friday after extended talks. Why, the owners began to wonder five years ago, did they agree to a deal that gave the players nearly 60 percent of the league's income?

Although both sides prospered under the arrangement, the owners were not happy with it from the beginning. They believe their investments in their teams entitle them to greater profits, and a number of them have borrowed huge sums to build new stadiums. They watched as NHL owners used a lockout of the 2004-05 hockey season to impose a hard salary cap on players who pledged to fight any cap, so they know it can work.

The word "lockout" became a popular term among owners. According to witness testimony and documents filed in recent litigation over NFL television contracts, a lockout was on the agenda of all NFL owners' meetings in 2007 and early 2008. The NFL demanded that documents and testimony from Goodell and others in that litigation be kept under seal and away from public view, but excerpts and fragments were described in public documents filed last week in federal court in Minneapolis.

When the owners had an opportunity in May 2008 to opt out of the arrangement early, they acted quickly and decisively, notifying the players then they intended to terminate the collective bargaining agreement after the 2010 season and negotiate new terms for the 2011 season and beyond.

Internal NFL documents and testimony from Goodell two months ago show that the owners knew early in 2008 that "in order for them to get a new labor deal that works for them, they need to be able to sustain a lockout, which requires financing and requires proper planning." Dallas Cowboys owner Jerry Jones told his fellow owners that they "needed to realistically assume they were locking out in 2011" to obtain a CBA that "worked for them."

[+] EnlargeRoger Goodell and DeMaurice Smith
Chip Somodevilla/Getty ImagesNegotiations between Roger Goodell and DeMaurice Smith didn't work. Now it's up to the courts.

The key words are "financing" and "planning." Both were immediately evident in actions the owners initiated to set up the lockout.

• The financing of the lockout was to come from the five television networks that broadcast NFL games. According to the testimony and the documents now available in court in Minneapolis, NFL staff made prodigious efforts to renegotiate existing contracts and to obtain lockout clauses that require the networks to pay for games that would not be played during the lockout. It was a bold tactic that was made possible because of the enormous audiences that are drawn to NFL games. None of the five networks wanted to lose NFL games, and they agreed to provide what the players now call "lockout insurance" for the owners. When NFLPA executive director DeMaurice Smith and other union leaders realized what the NFL was doing, they initiated a legal challenge to the lockout clauses. U.S. District Judge David Doty, who has presided over player-owner disputes in the NFL since 1989, ruled last week that the lockout clauses violate the owners' duty to obtain maximum revenue for the NFL and for the players. Although his ruling is a setback for the owners, it is not final. The league is expected to appeal his decision.

• The owners' planning was equally bold. The league and its lawyers knew the players had been highly successful in antitrust litigation against the owners in the past, as a series of cases led by the late union leader, Gene Upshaw, resulted in skyrocketing salaries, bonuses for players and free agency and vastly increased health and disability benefits. If a lockout was to succeed, the owners reasoned, they must do something about their exposure to antitrust liabilities. In a development that stunned lawyers, judges and law professors across the nation, the league and its attorneys asked the U.S. Supreme Court to review a case the NFL had already won, arguing for an expansion of the decision to a total exemption from antitrust scrutiny. If the league's strategy had been successful in American Needle Inc. v. NFL, it would have eliminated the most formidable weapon the players had in their quest for fair treatment from team owners.

But in a 9-0 decision, the Supreme Court rejected the league's claim of immunity from antitrust laws. It was a humiliating end to an owner strategy that could have changed the entire landscape of sports labor. As a result, the league likely faces another antitrust lawsuit from the players in Doty's courtroom, which, based on their track record there, is the last place the owners want to be.

Despite the setbacks in the financing and the planning for the lockout, the owners remain steadfast in their willingness to use the lockout to force the players to give back at least some of what they gained in the split of revenues the two sides agreed to in 2006.

There are, of course, other issues on the bargaining table. The owners want to play 18 games instead of 16 games. Should a rookie wage scale replace the gargantuan bonuses that have been paid in the last few years? What can be done for older, retired players who face medical and financial issues? What improvements can be made in injury protection?

But the key issue is money. They players are happy with what they have and are not asking for more. They owners are not happy with what they have and are asking for more. With revenues approaching $10 billion per year and record-breaking television audiences, it seems likely that a compromise could be reached. If a new agreement extends over four or five years, for example, it could provide for a gradual increase of the owners' share and a gradual decrease of the players' share. With more money coming into the league each year, the actual dollars for each side would increase each season. No one would suffer a loss of real money. Is that so difficult to understand?

Yet despite the NFL's prosperity, it appears that a lockout or extended battle between players and owners could go on for months. It won't be popular and could jeopardize part, if not all, of the 2011 season, but it is important.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.

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