Commentary

NFL labor: Smile for the TV cameras!

A game-changing amount of money is at stake in the battle over television contracts

Originally Published: April 22, 2011
By Lester Munson | ESPN.com

Depositions. Legal briefs. Injunctions. Mediation. And money, money, money.

By now, you should be familiar with the ways of the National Football League in the Year 2011. Maybe you aren't as thrilled by those kinds of plays as you are by the down-'n-dirty X's and O's on the field. But, then, you don't see the league the way we do. Our view is from a Courtside Seat. Today, we start with …

Television Timeouts

Remember the National Football League's renegotiated television contracts, and the NFLPA's objections to them? Courtside Seat has dealt with the issue in a number of columns, including here, here and here, among others.

Now, the disagreement looms especially large. A resolution is approaching, and it just might be the key to the future of the lockout.

We're going to explain why, of course. But first, this quick recap.

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Scott Boehm/Getty ImagesThe economics behind the way in which NFL games are brought into our living rooms is a critical issue in the lockout.

In their elaborate plans for the lockout now completing its sixth week, the league's owners successfully renegotiated their lucrative broadcast contracts, forcing five networks to agree to pay for games that might not be played. The renegotiated TV deals appeared to be a strategic triumph for the owners, and seemed to provide them with enormous lockout leverage over the players. It appeared that during a lockout, the owners could enjoy enormous income from the networks while the players struggled to subsist on zero income and the prospect of losing an entire season.

It was a major effort for NFL commissioner Roger Goodell and his staff. Court records show the league spent months in meetings with executives from CBS, Fox, NBC, DirecTV and ESPN, demanding concessions and changes for the 2009 and 2010 seasons and lockout payments in 2011 as well as (ready for this?) in 2012. Each of the five networks, conscious of the enormous profits they gain from televising NFL games, agreed to substantial changes in existing multi-year contracts originally negotiated to be in effect, in some cases, into the 2014 season. In legal briefs and in a preliminary opinion issued by Judge David Doty on March 1, it's clear that the networks submitted to the NFL's demands.

Many of the details -- there are some 12,000 pages of documents -- of the renegotiations and the revised network commitments remain hidden from view at the request of the owners. But a close reading of available materials now shows that the owners' apparent triumph actually could be the undoing of their lockout.

Here's how that might happen.

In the player-owner partnership that provided a bonanza for both sides from 1993 until March 11 of this year, when the collective bargaining agreement expired, the owners were obligated to use their "best efforts" to maximize TV revenue for the partnership. But the players say, in return for lockout payments, the owners willfully didn't maximize the league's TV income during the 2009 and 2010 seasons. Glimpses into the documents available to the public show that the players are correct in that assertion. Doty has already concluded that the changes in the 2009 and 2010 contracts were violations of the owners' obligation to act in "good faith" in their negotiations with the networks. The judge ripped the NFL for its "failing … to maximize total revenues for each playing season."

Testimony from expert witnesses in the network lockout payment litigation shows that the players typically receive 57.5 percent of the money that the networks pay to the league to broadcast games. So for every dollar the owners failed to collect from the networks for the 2009 and 2010 seasons, the players lost nearly 58 cents.

The NFL countered in a court filing late this week that there is no evidence the networks would have paid more in 2009 and 2010 to avoid the work-stoppage provisions about 2011, thus questioning the legal basis for the players' request.

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AP Photo/Jeff RobersonSo far, Judge David Doty has backed the union in the dispute over the NFL's television revenue.

Neither the players nor the owners will discuss how much money is in play for the last two seasons, and the specific amounts are blacked out in the court papers. But a close reading of the Doty opinion and publicly filed documents shows that the owners gave away more than $1 billion as they negotiated for lockout payments. The word "billion" is used three times in descriptions of what is at stake in the players legal action. It is never "billions" -- plural -- but is clearly more than $1 billion.

If the players' share of the lost television revenue is 57.5 percent, then the players' share of the lost television money is at least $575 million and probably more.

The players want that money. They're asking Judge Doty to turn things completely around and force the owners to pay it to them now, and they have a powerful argument that could easily succeed. If it does, Judge Doty could force the owners to pay the players those hundreds of millions of dollars as the lockout continues, meaning the owners, in effect, would be paying the players for games that would not be played as well as collecting money from the networks for those unplayed games.

That's not all. The players are also asking that Doty enjoin the owners from spending any money that they collect from the five networks during the lockout.

As we've mentioned, Doty was clearly unhappy with the owners' renegotiation of the TV contracts in his preliminary opinion. If he rules for the players on money damages (a refund of the 2009 and 2010 money) and the injunction to keep the owners from spending their 2011 television revenue, it would be a monumental double setback for the owners.

If we assume that the owners must repay, say, $600 million for 2009 and 2010 and simultaneously face the prospect of a 2011 lockout without the availability of the television cash flow, even the most hawkish owner would face a new situation. Goodell and his staff would have some difficult explaining to do for owners who suddenly must pay almost $19 million ($600 million divided among 32 teams) apiece to players they have locked out. It could easily be the end of the lockout.

On May 12 in Minneapolis, Doty will again address the renegotiated network contracts and the lockout payments. What will he do? His decision may be a more important factor in the chances for a 2011 season than the ongoing court-ordered mediation or the players' attempt to obtain an injunction stopping the lockout.

Warning: Litigation May Be Hazardous To Your Health

Any poll of American judges no doubt would show that their primary concerns are their salaries and their pensions. Just like most of us.

We might not share their next likely priority, though: mediation.

It's been the flavor-of-the-month in American jurisprudence for several years. So it is no surprise that U.S. District Court Judge Susan Richard Nelson ordered NFL owners and players into mediation.

Still, they were in Nelson's courtroom only because a previous attempt at mediation had failed. George Cohen, one of the nation's most highly respected mediators, spent dozens of hours shuttling between the two sides in Washington, D.C., trying to mediate a settlement. If Cohen didn't succeed, why would Nelson order the same people facing the same issues back into the same process?

Judge Susan Richard Nelson
AP Photo/U.S. District Court in MinnesotaThere might be a message in U.S. District Judge Susan Richard Nelson's court-ordered mediation.

Here's why Nelson's mediation is different. She has a hammer that Cohen did not have: Her court has the players' request for an injunction to stop the lockout. So her mediation order carries with it a signal that both sides must analyze and try to interpret. By ordering more mediation, Nelson is warning that one side or the other will be better off with an agreement than with hotly contested litigation.

But which side? The players may believe that Nelson is signaling to the owners that she intends to grant the players' injunction request. The owners may believe that Nelson is warning the players that she is leaning toward refusing the injunction. Either way, the idea is to force both to reconsider their positions, a step that could lead to a previously unforeseen agreement.

It isn't the first time a judge or an arbiter has used the technique in sports litigation, and it won't be the last time. In the historic Andy Messersmith quest for free agency for himself and his fellow Major League Baseball players, arbitrator Peter Seitz told both sides they would be better off in negotiations than they would be if they forced him to decide the fate of MLB's reserve clause.

It should have been a clear warning to then-MLB commissioner Bowie Kuhn and the owners. Seitz had already ruled against the NBA's nearly identical reserve clause, giving Rick Barry free agency after he played out an option year.

You're better off bargaining with MLBPA leader Marvin Miller, Seitz signaled to Kuhn, than you will be if you lose the reserve clause. Seitz wanted the two sides to get together voluntarily and settle things.

Kuhn and the owners ignored the signal, and Messersmith won free agency, forever changing MLB's basic structures.

Judge Nelson has taken the Seitz signal one step further. Instead of hoping the parties will voluntarily get together to negotiate, she ordered them into mediation and negotiations.

Will it work? Probably not. The negotiations, despite hours and days of bargaining, still appear to be stalled and going nowhere. The players and the owners will not meet in mediation again until May 16. The players clearly are anticipating a favorable ruling from Nelson on their request for an injunction, and the owners are anticipating a favorable outcome in the next step up the legal-process ladder -- their appeal of Nelson's ruling to the U.S. Court of Appeals for the 8th Circuit.

Mediation may be highly fashionable among judges. But for NFL owners and players in a lockout struggle, it's just a distraction.

More lawyers! Just what we need!

At least two law firms appear to be trolling for NFL players dumb enough to respond to claims that their attorneys can somehow help the players with the complex issues that pervade the lockout.

In emails to NFL players, these lawyers offer "a seat at the mediation table." They offer "tactical opportunities." And then there's the promise that only a group of lawyers could make: They offer "their potential involvement relating thereto." There is nothing more encouraging and reassuring -- and Courtside Seat sincerely hopes you hear the sarcasm rattlin' around those words -- than a lawyer who wants a hefty retainer for "relating thereto."

The firms are Barnes & Thornburg, a 550-lawyer enterprise with its headquarters in Indianapolis, and Cafferty Faucher, a small class-action operation with offices in Philadelphia and other markets.

Chasing down a client in a major class-action case is the kind of thing these lawyers do. There is nothing unusual about it. Aggressive pursuit of a client does not automatically make a lawyer a bad guy.

In a dispute as contentious and as complex as the owner-player dispute in the NFL, however, these lawyers can do serious harm. Although they are pursuing the players, it will appear that the players are seeking their help because they are dissatisfied with what their leaders and their leaders' lawyers are doing. The NFL's owners, in fact, are already pouncing on the activity, arguing that a report of some 70 players possibly signing with a law firm to intervene in the antitrust case shows a fissure in the players' solidarity.

The Barnes & Thornburg firm, according to its email, once represented the NFL. When the firm asked for a waiver of the possible conflict of interest to enable it to sign up players, its email said, the league's "response was welcome" with the league telling the law firm "the present list of players that are in Mediation right now are not negotiating in good faith." (The NFL says it denied the firm's request for a conflict-of-interest waiver.)

You can see why the owners would view the firm's work as evidence of a fragmenting group of players.

That was not all that the Barnes firm claimed. In its second email to NFL players, the firm also stated in an embarrassing run-on sentence: "This information is important as they believe the players/PA reps and counsel are acting on the idea that the judge will rule in their favor and this is a bad idea even if it does that would mean this will drag on for months or worse."

Aside from the errors of syntax, the firm's language demonstrates a breathtaking lack of comprehension of the mediation and the two antitrust lawsuits now underway. The Barnes firm did not respond to calls and emails from ESPN.com.

With three player representatives from each team, brilliant legal representation, and continuing updates from DeMaurice Smith, the last thing any NFL player needs is outside lawyers second-guessing decisions and strategies.

Here's a tip for players who find these notes in their email. When you discover that it's a note from a lawyer offering to help, find the delete button and use it.

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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