Owners driving the NFL labor strife

There is a multitude of issues that make up the backbone of the issues between the owners and the players. Both sides are currently on public relations offensives trying to get the fans on their side and ready to vilify the other.

Unlike most labor-management issues conflicts where there are two sides, the NFL owners don’t present a monolithic front. There is a rift in ownership that is not getting enough attention, and could potentially be exploited in negotiations by labor. The small market and large market teams are in conflict with each other as to which revenue streams are shared among the teams.

In the NFL envisioned by former commissioner Bert Bell, the revenue streams would be shared between all of the teams to ensure the collective health of the league. Following work stoppages in 1982 and 1987, a court battle ensued over the NFL’s anti trust exemption. By 1993 the players and owners had reached a new collective bargaining agreement that established the salary cap and free agent system that has become familiar to football fans.

In 2006 the collective bargaining agreement was set to expire, and both sides were talking tough about defending their side. It was going to be NFL Armageddon if the CBA was allowed to go to a “last league year” and go without a salary cap. It was expected that there would be a work stoppage in 2007. However, that was avoided by a last minute agreement between the late union director Gene Upshaw and the ownership that extended the then-current CBA through 2011. This kept football played indefinitely, or at least that is how it seemed.

However, once the extension was pushed through, a faction of the owners had immediate buyers’ remorse. They felt they had given too big of a piece of the pie to the players and were hurting their own bottom line. These owners were primarily from the smaller market clubs who relied on revenue sharing to maintain their profit margin. This led to the rift between the ‘haves’ and ‘have-nots’ among the NFL owners.

Meanwhile, some teams were building their new stadiums which give them larger revenue streams that are outside the realm of shared revenue, creating a situation where certain teams were becoming much more profitable than other teams. The two factions have had negotiations over what constitutes shared revenue and what doesn’t, but revenue sharing is part of the collective bargaining agreement, so the owners have knew they had to have the players at the bargaining table to get their deal done. So, rather than wait until 2010 which would have been the penultimate year in the 2006 deal, the owners voted to opt out of the contract they had signed only two years before.

Because of that decision by the owners, the 2010 season is without a salary cap. During the 2006 negotiations, the late Gene Upshaw said that if the cap went away, it was not coming back. However, there are aspects of a capped league that could benefit the players.

As it stands, if there is a work stoppage the NFL owners stand to make even more profits than if a season is played. The money from the networks, which makes up the backbone of the teams’ incomes is guaranteed even if the games are not played. The NFL owners are set to receive over a billion dollars from this revenue stream, which is shared evenly among the teams. In the event of a lockout, the teams can keep only a minimal support staff, and would not have to pay the players a cent, thus making the TV money pure profit.

In 2009, the last capped year, the players received a collective 52% of the gross NFL revenue. The salary cap has been based on a percentage of the NFL’s revenue since its inception in 1993. The owners care claiming that they pulled out of the agreement because they are losing money because the players’ share is too high. However, the players share is fixed by the percentage in the contract. If the NFL’s revenue is contracted, the amount of the cap would be reduced. What the owners want is to reduce the percentage of the revenues that are slated for the players.

Whilst this is being cast as a battle of “millionaires against billionaires,” it is a matter of the owners trying to reduce the salaries of the players who are central to their business model.

In fact, many of the players are not millionaires. Many of the contracts that make headlines sound like absurd lottery jackpots, but the vast majority of the contracts fall closer to the league minimum, and this amount is not guaranteed. The average career of an NFL player who is not a star is only a few years, and they are often left with medical conditions that are expensive to care for.

The fact of the matter is that the owners are in a power position, and they are looking to impose their will upon the players. Their first option is to take a hard line in negotiations and impose a lockout. This would be the owners instigating the work stoppage and using their leverage to try to break the union, and make them agree to their demands before allowing the players to come back to work.

The owners second option, which is more likely because they would be able to put the onus on the union in the eyes of the media, and thus give them an upper hand in the public relations side, would be to once again take a hard line in their negotiations with the union. Instead of locking the players out, they can declare an impasse and impose working conditions. This would force the NFLPA to either acquiesce to their demands or to declare a strike. In this case, even if the owners had not negotiated in good faith, the public perception would then be the “greedy players striking for more.”

The first scenario gives the union some leeway in the public relations side, as they can say that they were not the one who initiated the work stoppage. In the second scenario, their hand is forced where they have to take the PR hit or be faced with a bad deal. Either way, the owners will have the network income to hold them through any work stoppage, whilst the players will be left with their savings.

In 1987 as players began to scab, the union ultimately returned to work in defeat. At that time, they decertified and sued the NFL. That decertification and suit is something the NFLPA has kept in its hip pocket for any future labor battle. The recent case in the lawsuit of American Needle v NFL has somewhat strengthened the player’s hand if they have to choose this nuclear option.

Right now, both sides are playing a very high stakes game of chicken, trying to make the other side blink. They are also posturing for public support for their side, hoping that they can get the fans to shift the momentum their way. However, both sides know that a work stoppage would be suicide. Both sides have seen the damage that was done to MLB, NHL, and the NBA for their lost seasons due to labor issues, and even though the owners would make large sums of money from the lost season, the long term consequences would be disastrous.

Expect the negotiations to begin in earnest in January of 2011 once the regular season ends. The critical date is going to be the first week of March of 2011. That is when the new league year is supposed to begin. If there is no CBA signed, sealed, and delivered by that time, all hell will potentially break loose.

Regardless of the outcome, the NFL is a multibillion dollar enterprise, and there is no danger of contraction. There hasn’t been an NFL team contracted since the original Dallas Texans played their only season in 1952, nearly 50 years ago.

Ultimately, one of the sides will blink, and the deal should get done in time for there to be a 2011 season. There is far too much for both sides to lose for that not to happen.

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