NFL's lockout-likelihood plot thickens
No question the owners are preparing for it; the players are making their moves, too
In their headlong dash toward a lockout that threatens the 2011 season, NFL owners have made a series of five dramatic moves that erase any doubt about their strategy.
• They attempted to persuade the U.S. Supreme Court to adopt a radical new rule of law that would have eliminated the antitrust leverage the players' union used to obtain free agency and other important benefits;
• They agreed to extensions of their television contracts that require the networks to pay the league billions of dollars even if there are no games to broadcast during a work stoppage;
• They included lockout clauses in coaches' contracts that will eliminate their salaries during a lockout;
• They hired attorney Robert Batterman, the New York lawyer who led the NHL owners through a lockout that killed the entire 2004-05 hockey season;
• They persuaded Troy Vincent, a former president of the players' union, to join the NFL staff in an apparent effort to split the union membership.
The first of these maneuvers -- the case known as American Needle vs. NFL -- ended in a stunning 9-0 defeat for the owners as the high court adopted an argument offered by the Obama administration and its then-solicitor general (and current Supreme Court justice-designate) Elena Kagan. The decision preserved the players' legal option to decertify their union and attack the league in antitrust cases as any lockout begins. The opinion by retiring Justice John Paul Stevens ended the owners' effort to eliminate the legal rights that have allowed the players to achieve enormous increases in bonuses, salaries and benefits in antitrust cases filed by Freeman McNeil and Reggie White in the early '90s.
So far, that's the only setback the owners have experienced. But now, their second maneuver -- the move involving broadcast deals -- is in similar legal jeopardy as the result of a fiendishly clever attack on the league's TV contracts led by players' union chief DeMaurice Smith and the union's lead attorney, Jeffrey Kessler of the law firm of Dewey & LeBoeuf.
The stakes in this legal proceeding are nearly as high as they were in the American Needle case. The players' challenge to the television contracts is a dramatic counterattack to the owners' lockout plans, and it's the latest chapter in the players' efforts to preserve and build on the advances they made in the McNeil and White litigation.
The union's case begins with a pact between the owners and the players known as the "White Stipulation and Settlement Agreement (SSA)," a detailed set of bargains and partnerships that have governed the league during its phenomenal growth over the past 20 years.
The centerpiece of the SSA is a complicated formula that allows the owners and players to share the league's revenues, designed to allow both sides to thrive as the league grew into what the Sports Business Journal says is "the strongest entertainment programming vehicle in North America."
The most significant of NFL revenues, of course, is television. Each of the league's 32 teams shares equally in TV income, with most of it going each year to player payroll.
Although the players have an obvious interest in the NFL's television deals, the union is not part of the bargaining process between the league and the networks.
But in a series of SSA provisions that the players insisted be included (and that now appear to be prescient), the players received written promises from the owners that they would "act in good faith and use [their] best efforts to maximize total revenues."
Recognizing that their salaries were coming from television contracts, the players even demanded and obtained the owners' commitment in the SSA to not engage in any "agreement or other transaction" that would "serve the purpose of defeating or circumventing" the owners' duty to obtain maximum income to be shared with the players.
In a now critical provision, the players made sure that the owners were obligated to act only in "good faith" and "fair dealing" in anything they did while the agreement is in effect.
These provisions are now the key to the players' attack on the NFL's extensions of it broadcast contracts.
In TV deals made while the SSA has been in effect, the players contend, the owners failed to obtain the maximum revenues the agreement requires. Instead of using remarkable increases in television ratings to extract greater fees from the networks, the players assert, the owners accepted less money in return for payments during a lockout.
In the letter that initiated this legal proceeding last week, Kessler states that the owners, in their efforts to set up a lockout, "knowingly left money on the table during the SSA's term at the expense of the players."
With the SSA still in effect (it expires in March 2011), Kessler says, the league made deals with DirecTV, NBC, CBS and Fox that gave the networks valuable rights to online streaming of games and highlight packages but resulted in no new income to be shared with the players.
The NFL did not negotiate an extension of its contract with ESPN because the eight-year pact will remain in effect through 2013, according to ESPN executive vice-president John Wildhack. "Our deal was always for eight years. The others were for six years. So there was no need to extend our contract."
Asked whether the ESPN contract contained a requirement that ESPN pay during a lockout, Wildhack replied, "I have no comment on that."
Instead of using the new broadcast rights to earn new income, the union says, the owners settled for payments during the potential 2011 lockout season, payments that will not be shared with the players.
In the league's new TV contracts, the owners "accepted less revenues during the SSA's term in exchange for a guaranteed revenue stream that the NFL could use for its sole benefit during any lockout in 2011," according to the players' letter demanding action from Stephen Burbank, the "special master" who decides disputes that develop under the SSA.
The owners and the players are meeting and negotiating on other issues -- including the length of the season -- even as they begin this battle over the $4 billion in TV contracts. At this stage of the bargaining, though, those meetings probably amount to little more than going-through-the-motions developments. With the CBA expiring, both sides must agree to negotiate even if the negotiations are perfunctory. If one side refuses to meet, the other side can accuse it of bad faith.
The more important factor right now in the future of the league is the players' attack on the TV contracts, their most serious response yet to the owners' preparations for a lockout. That legal maneuver is dramatic evidence that union chief Smith and the players are ready for an epic battle. If Smith and the players are right about the owners and their lockout-based TV contracts, it may be considered the most egregious violation of player rights since the baseball players' union caught MLB owners colluding on free agency in the mid-'80s.
One of the owners' five moves toward a lockout, the U.S. Supreme Court gambit, has ended in defeat. The television contracts move is now in jeopardy, with a decision expected during the 2010 season. But the other three maneuvers remain in place. If there is any doubt anywhere about the gravity of a season-killing lockout possibility, the doubt disappears when you see the players say in their legal documents that the owners are "prepared to lockout the players in 2011 and beyond." (Emphasis added.)
Risky Bonds business
It appears that federal prosecutors in San Francisco are deciding to accept a 2-1 appeals court ruling issued against them last week in their prosecution of perjury charges against Barry Bonds.
Instead of asking the U.S. Court of Appeals for the 9th Circuit to reconsider the decision "en banc" -- which would allow a panel of 11 judges to review the decision made by the first three judges in the appeals court -- the prosecutors will push for a trial, possibly in the fall.
If that's the prosecutors' final decision, there is one individual who will not be happy: Judge Carlos Bea, who wrote a powerful, 36-page dissenting opinion that explains how the prosecutors could succeed in presenting positive drug tests and logs to the jury that decides whether Bonds lied to a grand jury investigating his use of performance-enhancing drugs.
Bea, 76 years old and a star on the Cuban basketball team in the 1952 Olympics in Helsinki, was harsh in his criticism of the ruling that bars the government from using the drug tests and the logs. His dissent offered a detailed road map around the steadfast refusal of Bonds trainer Greg Anderson to testify on the authenticity of the documents.
The key to Bea's assertion that the documents are permissible evidence is the fact that Anderson was acting as Bonds' "agent" when Anderson obtained vials for blood and urine, gave them to Bonds and his physician, and then quickly took the samples to BALCO for testing.
Anderson, Bea notes, was paid for this and other work and was doing all of it with Bonds' permission, support and authority. Bea relies on an impressive grasp of the evidence gathered in the BALCO investigation and a masterly synthesis of the law that applies to the situation. He uses previous cases from the 9th Circuit Court of Appeals and authoritative material from a definitive statement of American law known as a "restatement."
Reading Bea's opinion, there is little doubt that he is laying the foundation for an appeal to a larger group of judges (the "en banc" appeal) that, if successful, would give government prosecutors an overpowering array of evidence against Bonds.
What will the prosecutors do? If Bea is right in his analysis of the applicable law, then the U.S. Department of Justice may want to use his dissent as the basis for the en banc reconsideration. If the appeal were successful, it would become a major weapon in other prosecutions in which a witness such as Anderson refuses to cooperate with the authorities.
If they ignore Bea's invitation to further appeal of the 2-1 ruling, they may have some uncomfortable moments in their next court appearance before him.
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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