Reading the lockout tea leaves
Six factors to keep an eye on as the National Football League looks for labor peace
It's now a two-minute drill for the NFL's owners and players.
Unless they come to an extension agreement by March 5 (which union chief DeMaurice Smith says is unlikely), a number of changes to the current structure of the league's labor relations will go into effect. And the entire collective bargaining contract that governs those relations expires in 13 months, a relatively short period of time in which to conclude a new agreement involving 32 owners, nearly 2,000 players and billions of dollars.
The final deadline for a new deal is March 31, 2011. If there is no agreement, the owners and commissioner Roger Goodell appear to be ready for a lockout that would begin on the next day, April 1, 2011. Then, instead of "organized team activities" and the hope of a new season, the NFL's players, owners and fans will face the dissonance of the negotiation process and the fear of the loss of an entire season.
Will it happen? Will the most successful and profitable enterprise in the history of sports end two decades of labor peace and descend into a costly war?
It's always difficult to gauge the state of bargaining between owners and players, but here are some things to watch, signs and symptoms that can give us clues to what is happening as the league moves toward the 2010 season:
Everyone knows by now that the coming season will be an uncapped year as soon as that March 5 date two weeks from now passes without an extension agreement. The expiring contract means that there will be no cap on player salaries, and many believe an uncapped year will be a bonanza for players.
LABOR PAINS AHEAD
During Super Bowl week earlier this month, ESPN.com's Tim Graham outlined some of the issues in the current labor negotiations between the NFL and its union. Read his report here
But along with the elimination of the salary cap, the team salary minimum will also be eliminated. In the capped year just finished (2009), the salary maximum per team was about $128 million, but the owners also faced a payroll minimum of about $111 million, meaning every owner had to invest at least that much on player payroll.
There might be some owners who will use the upcoming uncapped year to increase payrolls beyond the former cap. This is where we all say in unison, "Daniel Snyder." But there may be more owners who will use the opportunity to reduce payrolls below the former minimum, increasing their profits with every dollar they save on player salaries. If the players see that owners are disciplined enough to use the uncapped year to reduce their payrolls, the players then face a real possibility of giving back some of the gains they have made.
Lockout Clauses in Coaches' Contracts
In reaching contract agreements with coaches, NFL owners have been insisting on lockout clauses. There is nothing subtle about them. It is one of many clear signals that the owners are preparing for a lockout. When the lockout begins, these clauses dictate that the coach's salary will drop by an automatic 50 percent or, in some cases, be eliminated entirely for the length of the lockout, according to a representative of a coaches organization and an agent who represents coaches. Both wished to remain anonymous due to the sensitivity of the issue and would not describe the specifics of any coach's individual contract.
An owner's insistence on a lockout clause is a measure of the league's determination to use the work stoppage for a dramatic restructuring of the league's economics.
First-round draft picks and their agents may face a new and challenging market this summer as they seek the outsized bonus money that has become the norm in the NFL. With the expiration of the union contract and the prospect of a lockout looming, the top rookies lose significant leverage. They may be forced to make a hard choice: Sign now or face a rookie salary scale.
In past drafts, the top picks could make their demands and wait for the team's owner to meet them, serenely confident that they could sit out the season and go through the draft again and achieve their financial goals. But in this uncapped year, there might not be a next season for the top picks. The league could either be in lockout or operating under owner-imposed rules that could include a rookie salary scale. One of the few things the owners and players now seem to agree on is that too much is being invested in untested first-round picks (and their agents) at the expense of veteran players. If the top picks are signing for less money this summer, it could indicate that a lockout and a new system are on the NFL's horizon.
The owners' negotiating team includes, for the first time ever in NFL bargaining, a lawyer named L. Robert Batterman of the Proskauer Rose law firm in New York. Batterman was one of the chief strategists and masterminds for NHL owners as they managed a lockout that killed the entire 2004-05 hockey season. Participants in the protracted NHL negotiations agree that Batterman's strategies and tactics were critical to an NHL team owners' effort that succeeded in establishing a salary cap and brought the union to near ruin. According to the Proskauer firm's Web site, Batterman and the Proskauer lawyers specialize in "high-stakes contract negotiations" and "counter-campaigns and defensive strategizing" that "neutralize union tactics."
To veterans of the labor movement, that is code for "union buster."
Smith, the executive director of the NFL Players Association, will face a serious challenge as he leads his membership toward and perhaps through what appears to be a certain lockout. The average career in the NFL is less than four years; and it can be difficult, even impossible, for players to see the need to sacrifice a year to a lockout for the benefit of future players. The NFL, according to one union source, has been "surprisingly blatant" in its attempts to soften the players for the lockout. Goodell has formed a player advisory council in an obvious attempt to establish a parallel organization that is supposedly concerned with player welfare.
And the NFL has now hired former NFLPA president Troy Vincent, who served in the leadership of the union for 10 of his 15 years in the league. It is the first time a union leader has moved to the other side of the bargaining table, and union officials, speaking anonymously because of the pending negotiations, are quick to use the word "betrayal" in reference to the shift in sides. Vincent's new responsibilities as a director of player development will include visits to the league's 32 teams, and discussions with the players. How will the players react to him? The answer to that question will be a measure of their solidarity in preparation for a lockout.
Supreme Court Ruling
Both owners and players await a decision from the U.S. Supreme Court in the case known as American Needle v. NFL. If the court grants the NFL the broad immunity from antitrust scrutiny that the league requested in its early filings in the high court, it will radically reduce the union's bargaining leverage. The league told the court in its petition for review that it wants antitrust immunity for its "core business functions," including player salaries.
A victory for the owners in the Supreme Court will eliminate the NFLPA's powers to decertify as a union and to file antitrust lawsuits to seek free agency, higher salaries and other player benefits. It was the decertification-antitrust route that the late Gene Upshaw pursued after a disastrous strike in 1988, and it led to enormous increases in player benefits, huge bonuses and skyrocketing salaries.
NFL officials now say their interest in the American Needle case is only in the licensing of NFL logos. (Yeah, right. If that is true, why did they appeal to the high court after winning rulings concerning logos in two lower courts?) If the Supreme Court issues a narrow ruling, affecting only American Needle's business in hats with NFL logos, the decision will have little or no effect on the bargaining between the owners and the players.
There you have it. The labor situation might not have the appeal of a Drew Brees or Peyton Manning drive at the end of a game. However, it bears watching just as closely, because it might mean we won't be seeing those other two-minute drills in 2011.
The loss of an entire NFL season to a lockout might seem unthinkable, but both sides appear to be ready to fight for what they believe is their fair share of NFL profits.
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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