NFLPA ups the lockout ante
Union's action Wednesday looks shrewd and serious, and should give the owners pause
In a legal action filed on Wednesday, the NFL Players Association attacked the NFL's $4 billion in guaranteed television contracts that will pay owners for the 2011 season whether or not any games are played. The union and its attorneys claim that league owners are using the agreements as leverage against the players and to finance a lockout when the current collective bargaining agreement (CBA) ends in March 2011. They assert that instead of working to increase the TV revenue they share with the players, the owners made deals that are designed to enhance their bargaining leverage with the union as the CBA expires. The players' legal filing action and the threat of a lockout raise legal questions. Here are some of the questions and their answers:
How important is the players' legal action?
This is the most significant public action that DeMaurice Smith has taken since he became the leader of the union, and it demonstrates that the players understand the serious nature of the lockout possibility and are willing to fight the owners on the most significant of issues: money. The owners have been preparing for a lockout for many months. They made TV deals that guarantee income to the owners even without games to broadcast. They hired Robert Batterman, the attorney who led NHL owners through a season-long lockout. They have included lockout clauses in contracts with coaches. They hired Troy Vincent, the former president of the players' union, as an owner emissary to players, which many on the labor side view as an obvious attempt to divide and to break the union. They attempted to obtain a ruling from the U.S. Supreme Court in the American Needle case that would have significantly reduced player bargaining leverage, a maneuver that failed in a 9-0 opinion from the high court but is indicative of the owners' aggressive lockout strategy.
Now, in this action, the players have counterattacked. Their attack is aimed at the heart of the owners' lockout strategy. If the players are successful in this action, the owners will lose the $4 billion safety net they thought they had created for the duration of their planned lockout.
How can players question deals that owners make with television networks? Aren't these contracts solely the prerogative of the owners?
The players and their lead attorney, Jeffrey Kessler, are relying on a court-approved settlement that Kessler engineered 17 years ago in an antitrust free-agency lawsuit involving Reggie White. The governing documents of the settlement include a requirement that the owners must maximize revenue during the term of the agreement. It was a part of the original deal and was written in 1993 to "protect the players against what is happening now," Kessler said on Wednesday. The players are entitled to a specific percentage of revenue, and Kessler and the late Gene Upshaw included the contractual provision to make sure that their share of revenue was the best that it could be. In addition to the owners' duty to obtain maximum revenues, the agreement prohibits any "transactions that circumvent" the duty to obtain maximum income, Kessler said. It was prescient work by the brilliant Kessler and is now the basis for a legal action that could change the topography of player-owner negotiations.
What is the effect of this legal action on the possibility of a lockout?
It would be easy to say that filing a lawsuit against them is not a good way to make an agreement with the owners. But this legal action by the players probably reduces the probability of a lockout. The legal action filed against the owners on Wednesday, along with the unanimous Supreme Court decision against the NFL in the American Needle case, seriously damages the owners' plans for a lockout. If the players prevail in this action before Special Master Stephen Burbank of the University of Pennsylvania, the owners' leverage over the players will be seriously reduced. Instead of enjoying what union leader Smith called a season of "windfall profits," the owners would face a year of interest payments and stadium payments without any income from games or the broadcasting of games. Even if the players do not win this case, the threat of a win will be a factor in collective bargaining talks that are now under way. The owners, who have been sure of their ability to withstand a long lockout, must now think it through again.
Will this case come to a conclusion before the CBA expires?
The legal action filed Wednesday is expected to move quickly to a conclusion at this first level. The players and the owners will be doing depositions and exchanges of documents as they try to bargain a new contract. A decision from Burbank is expected before the CBA expires in March of 2011. But both the players and the owners can appeal Burbank's decision to U.S. District Judge David Doty in Minneapolis, and then to the U.S. Court of Appeals for the 8th Circuit. It's difficult to project the time frame for an appeal. Doty and/or the higher court may require expedited briefing, but they could also take their time. The important thing to remember is that the owners and players will be battling on this case at the same time they are bargaining over a new labor deal.
Can the players win this case?
Yes. The union and Kessler have achieved historic and important gains for players through litigation. This could easily be another breakthrough for them. This action is creative and is based on the precedents and agreements that the players have earned with epic struggles that began with a failed strike in 1987. If, for example, the players and Kessler are correct in their assertion that league owners gave away highly valuable digital rights (broadcast of games and the Red Zone channel on phones) to DirecTV and allowed DirecTV to pay for them next season, it appears to be a clear breach of the agreement between the players and the owners. As the players investigate other deals with Fox, ESPN and NBC, other breaches may be discovered. This is no mere "distraction," as the league suggests. This is a serious case, and could be a winner for the players.
If they win, what do the players get?
The players want the TV networks to pay the money to the league as the 2011 contracts require, but they want a court order that requires the league to deposit the money in an escrow until a lockout ends with a new collective bargaining agreement. If the owners see their money sitting in an escrow and watch their loan interest piling up, they are likely to be considerably more interested in striking a bargain with the players that will allow the games to begin.
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.