Putting the NFL’s potential lockout in dummy terms

If you, like me, live in fear of the fall of 2011 having no NFL football, but don’t understand all of the legal mumbo-jumbo associated with the labor dispute, I’m hear to put things in terms we all can understand.

First things first, and that is that the owners unanimously opted out of the current CBA (Collective Bargaining Agreement) in 2008, one that they had signed off on in 2006. Since I’m making this as easy as possible to understand, let me tell you that a CBA is the agreement two sides, usually labor and management, come to on various topics, most of which include how money will be divided. And in this case, the owners realized that player salaries were escalating out of control and that their profits were being squeezed more each year. Yes, part of the problem is they are agreeing to these salaries, and player agents are a huge part of that. In the bigger picture, the real problem is revenue sharing, a.k.a. how to split the financial pie. And while the NFL is bringing in a ridiculous amount of money ($7.6 billion in 2008), about 62% of that goes to player salaries, a number that keeps climbing due to increases in the overall salary cap. To make matters worse, there is also revenue sharing among teams, meaning the big market teams have to help the small market teams to help them compete with each other on the field.

So the owners want something like 18% of the pie back, in the form of salary cuts to the players. Naturally, the players do not want to give them this money back, and that is why head of the players’ union DeMaurice Smith announced during the Super Bowl’s hype week that the chance of a lockout were a 14 on a scale of 1 to 10. For his part, NFL commissioner Roger Goodell denounced that, saying he hoped it wouldn’t come to a work stoppage, but he also knows that it’s a very real possibility. The players aren’t necessarily saying they won’t give part of the pie back, either. Smith wants the owners to show the players that they are struggling to run their businesses, meaning he wants them to open up their books. And the owners won’t do it. So are the numbers being reported not what they say? It’s hard to say the owners aren’t lying about these numbers, when they keep agreeing to player contracts and they keep building huge state-of-the-art stadiums, but they also have the right to not open their books if they don’t want to. And the bottom line is that the owners are not happy about doling out more and more of their profits.

Then, of course, there is the issue of an uncapped 2010 season. The current structure calls for a salary cap through the 2009 season, with 2010 being an uncapped year if the owners opt out of the CBA, which they did. Last time this happened, in 1993, player salaries rose to 69% of NFL revenue, and that is expected to happen again. But of course, nothing is guaranteed in 2011, so the players have to be careful of what they wish for.

If organized sports have taught us anything, it’s that the possibility of no games being played can and will happen. You might remember the NFL had a similar situation in 1987, and the owners used replacement players for a few games before the dispute was resolved and the regular players went back to work. MLB cancelled the last two months of the 1994 season as well as the playoffs and World Series, a black mark they have not recovered from. The NBA had a similar situation in 1998-99, with almost half a season being wiped out. And of course, the freshest in our memories is the NHL’s 2004-05 season that was not played due to a labor dispute.

So as fans, we have to hope a few things happen between now and the summer of 2011, which is spewing a black cloud that keeps getting darker and more imposing by the day. We have to hope the owners agree to open up their books, and we have to hope the players agree to give back part of the pie for the health and financial well being of the NFL. Sure, we want the players we love to watch get the money they deserve, but within reason. Certainly it’s not worth much to anyone to have no NFL games being played, but it may very well come to that.

Of course, the NFL is not the only business that would be affected by a lockout. Besides the local businesses near stadiums that thrive during the season, fantasy football and all of the money (reported as upwards of $3 billion in 2007) associated with that is threatened here. Think about that for a second. The folks that make their livelihood in that world will be flattened financially. Well, maybe that’s going to be the subject of my next piece on this, but for the moment I wanted to do my part to help everyone understand the dispute between owners and players, and what it all really means.

Many think that a lockout won’t really happen, and I’m optimistic myself that it won’t. But history surely does make us all nervous, doesn’t it?

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Mr. Smith goes to the negotiating table

In March, the NFL Players Association (NFLPA) made an historic move by electing Washington D.C. power attorney DeMaurice Smith as their new executive director, and skeptics wondered if this was the right time for the union to bring an outsider into a leadership role. All eyes will be watching as he begins negotiation with the NFL on a new labor contract this week in New York.

Smith wowed the NFLPA’s board with an hour-long presentation detailing his plan for their upcoming collective bargaining sessions, as he promised to use his Congressional friends to challenge the league’s long-standing anti-trust exemption in order to obtain a better deal.

The owners have believed for a long time that the players’ cut of the revenue pie has been too big for too long, and opted out of the current agreement last year, which almost guarantees that there will be no salary cap for the 2010 season. With concerns of a slowing economy, the owners feel that escalating salaries within the league could impact the revenue stream for several clubs.

Smith recognizes the economic challenges facing the league, and has requested the NFL to open each team’s financial books. The league’s negotiating team has rejected his request and claims the union has enough information to secure a fair deal.

Many NFL insiders feel the league is at a disadvantage in this upcoming labor negotiation due to the fact that Smith is an unknown entity. He speaks like a politician (insisting on calling the players “businessmen”) and promises the union will maintain a hard line stance in the upcoming labor negotiations.

Everyone involved expects to play football in 2010, albeit without a salary cap, but Smith warns the owners that no new agreement will include a salary cap if the 2010 season is played without one. There is a good possibility that some form of a work stoppage will take place in 2011, either in the form of a players’ strike or an owners’ lockout prior to the start of training camp. Smith pointed out that a lockout would hurt not only the players, but the people and businesses that rely heavily on the NFL to make a living.

If the NFLPA had hired an insider that had a better understanding of the league’s politics and the current state of the labor/management relationship, many believe both parties would find common ground for a new agreement and the NFL would continue to flourish. But this isn’t the feeling anymore, as Smith encourages the players to prepare for war inside the board room.

It should be an interesting negotiation.

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