Commentary

Harsh reality: Labor pains ahead

Here's what you need to know about potentially ugly labor battle

Originally Published: February 1, 2010
By Tim Graham | ESPN.com

Roger Goodell and DeMaurice SmithAP Photo/Charles DharapakAfter the Super Bowl, commissioner Roger Goodell, left, NFLPA executive director DeMaurice Smith and other key principals will focus on a new collective bargaining agreement. The deadline is March 5.

MIAMI -- The NFL will be in full glory this week. A marvelous Super Bowl matchup between the Indianapolis Colts and New Orleans Saints is days away.

Soon after the confetti flitters about Sun Life Stadium and the Lombardi Trophy is hoisted triumphantly, football's showcase event will give way to uncertainties and insecurities about an imminent labor clash, one that will have significant ramifications on the 2010 season, could lead to a 2011 lockout and might even scuttle an entire season.

You've ignored the NFL labor situation, hoping it would fix itself before you invested one minute of your life, one ounce of worry.

"I'll just watch football," you thought. "I'll concentrate on the season, the stars, the X's and O's. I'll carry on as though the NFL is simply in the greatest league in the world, a game, a diversion from real-world issues -- not an industry."

Time to start paying attention to the big business, folks.

Big trouble is near.

Collective bargaining agreements, economics, uncapped seasons and revenue haggling aren't nearly as entertaining as game highlights and chalk talk.

But if you want to follow along with what could evolve into the most important off-field storyline in recent sports history, you'll need to learn the issues. (The NFL, league and owners are synonymous. So are the NFL Players Association, the union and the players.)

What's on the line?

The owners and players have until March 5 to hammer out a new collective bargaining agreement, essentially the off-field rule book for an $8 billion industry. If they do not reach new terms, a host of provisos will be triggered.

Most significantly, the 2010 season will be played without a salary cap or floor, allowing teams to spend as much or as little as they wish. Two weeks ago, New York Giants owner John Mara indicated that an uncapped season appeared unavoidable. If a new CBA isn't struck by March 2011, a lockout would be highly probable.

How did we get here?

The players got the upper hand on the owners in 2006, the last time they hashed out a CBA. The players were able to renegotiate what revenues were considered a part of the financial pie, from which they would receive about 60 percent.

The salary cap skyrocketed from $80 million per team in 2005 to $102 million the next year. In each subsequent season, the cap climbed to about $109 million, $116 million and $128 million for the 2009 season. The salary floor -- the amount of money teams are forced to spend -- was $111 million this season, or $32 million more than the highest ceiling under the previous CBA. By doing so, the owners froze the percentage of revenues dedicated to player costs at 57.5 percent.

In 2008, the owners voted unanimously to exercise a clause that allowed either side to opt out of the CBA one or two years early.

What does the league want?

The owners' objective is to retain more revenues, because they're assuming virtually all of the risk in this business venture. Their mission statement is that they want to provide long-term stability and growth opportunities, but their margins are thinning because of the U.S. economy. Sponsorship dollars are scarcer. There were 22 blackouts this season, up from nine in 2008. Money has been sunk into stadiums and practice facilities.

At the top of the league's wish list is an 18 percent rollback in salaries and a rookie salary cap that would redirect money to proven talent rather than players who might not have what it takes. Another way for the owners to grow the revenue pie would be expanding the regular season to 18 games.

What does the NFL Players Association want?

Maintaining the status quo would be just fine with the players.

What would an uncapped year mean in 2010?

It sounds like an uncapped year would favor the players, because it gives the impression that freewheeling owners would start throwing money around in their quest for a Super Bowl title. But the uncapped year is a bit of a misnomer. It's true there wouldn't be a salary cap. Deep-pocketed teams such as the Dallas Cowboys, Washington Redskins and New England Patriots could spend as much as they want. But in reality there would be no financial limitations at all. Teams would have no salary floor to maintain, although minimum individual player salaries still would need to be met.

How would the uncapped year affect free agency for the upcoming season?

These changes would be unfavorable for the players. The requirement to be eligible for unrestricted free agency would jump from four years to six. Rather than being allowed to hit the open market, 212 players would be restricted free agents instead. Teams have the right of first refusal on restricted free agents and would receive draft compensation if they chose not to match the offer.

Some of the bigger names who would have been unrestricted but would not be in an uncapped year include Denver Broncos receiver Brandon Marshall and outside linebacker Elvis Dumervil, San Diego Chargers receiver Vincent Jackson and linebacker Shawne Merriman, Houston Texans linebacker DeMeco Ryans and Cowboys receiver Miles Austin.

How would an uncapped year affect franchise and transition tags?

Teams could further limit free agency because, in an uncapped season, they may place an extra transition tag on a player. Normally, a team can place one franchise tag or one transition tag on a player each offseason. In an uncapped year, they can place franchise and transition tags or two transition tags on players.

A franchise tag is a guaranteed one-year contract offer that pays a player a salary that averages the five highest-paid at his position, or 120 percent of the tagged player's previous salary. If the player is allowed to negotiate with other teams and reaches an agreement the original team declines to match, the player's new team must fork over two first-round draft choices as compensation.

A transition tag averages the 10 highest-paid at his position. Other teams can sign a transition player to an offer sheet. The original club has the right of first refusal, but if it declines to match, it receives no draft compensation.

What other changes would there be when it comes to player acquisitions?

An interesting quirk to the uncapped season is what's being called the "Final Eight Plan," which pertains only to the teams that reached the divisional playoffs. These teams would face added constraints for free agency, and the four teams that reached the conference title games would be even more limited.

In essence, none of the eight (Colts, Baltimore Ravens, New York Jets, Chargers, Saints, Arizona Cardinals, Minnesota Vikings and Cowboys) would be able to sign an unrestricted free agent until they lost one, and the salaries of the incoming and outgoing players must be similar.

The four teams that lost in the divisional round (Ravens, Chargers, Cardinals and Cowboys) would be permitted to sign one unrestricted free agent for as much as $5.5 million in his first season and an unlimited number of unrestricted free agents who can make no more than $3.7 million in the first seasons of their contracts.

What's the difference between a strike and a lockout?

A lockout is a labor action by management to prevent union members from working under pre-existing conditions. A strike is a refusal to work under those conditions. In 1982 and 1987, the NFL Players Association went on strike. The 1982 season was reduced from 16 games to nine. The 1987 season will be remembered for owners hiring non-union replacement players and for stars such as Lawrence Taylor then crossing the picket line. Although a strike technically would be possible in 2011, the players love the current deal. The owners are the ones who want an overhaul, which portends a lockout.

Who is Bob Batterman?

Batterman is a menacing figure in the world of sports labor negotiations. The league's decision to hire Batterman as outside counsel in 2007 was ominous, a clear warning that the owners were ready for a long slog. Batterman and Howard Ganz are partners at the powerful New York law firm Proskauer Rose, which now represents all four major sports leagues. Ganz's clients include Major League Baseball and the National Basketball Association.

Batterman represents the National Hockey League and presided over negotiations when the NHL became the first North American sports league to sacrifice an entire season, boldly locking out the players for the duration in 2004-05.

Tim Graham covers the NFL for ESPN.com.

ALSO SEE