NFL, NFLPA Return To Court April 6 To Address False Labor Pains

While the National Football League (NFL) owners are being pulled into U.S. District Court on April 6 to address the legality of their decision to lockout players, fans are losing patience. Many have some questions they'd like to have answered.

First, many fans are struggling with what vernacular to use for the current status of the NFL Collective Bargaining Agreement (CBA). 

Is it a work stoppage?  A lockout? 

Do they call it “The National Football League Players Association (NFLPA) decertification and reorganization into a trade association that then organized a class action antitrust lawsuit?” 

An adequate summary might be: “It is a stupid squabble over budget dust that is alienating the fan base and putting the quality of the 2011 product in jeopardy.” 

But that may be too wordy to catch on.

In deference to all the above, perhaps it is best to just call it what it is: false labor pains.

NFL fans should be watching press conferences introducing the free agents their teams just signed and pondering what their division rivals are doing.  Instead, fans are watching a frustratingly dangerous (and boring) game of chess, pondering if there will be a free agency period prior to the NFL draft and wondering if there will even be an NFL season.

Despite Judge David Doty’s best efforts, the owners and the NFLPA couldn’t come to terms on a new CBA prior to the extension that ended on March 11.  Many had hoped (and my earlier article on the subject had predicted) that the two sides would have been close enough to sign a longer extension, begin free agency and continue to work on final arrangements through the spring. 

This didn’t happen.

And that brought about a response from a reader for a status update and a hint that a retraction was in order.  That is fair, as my March 2 article predicted a several months-long agreement would be signed, allowing the NFL to resume business as usual. Free agency would have started prior to the draft, OTAs would be held, players could work out with their teams and the integrity of the final product would be assured. 

After all, why would a league at the top of the sporting world put its reputation at risk? 

Looks like I’m as wrong as the NFL and the NFLPA. 

The frustrating part is that it looks as though the two sides were close enough to sign another extension.  A review of where the two sides have been, and where they are currently, supports this assertion.  To keep the article a workable length, I've included links to view history.

Review of activity to date

Opening the Books

Current Status

The NFL is concerned that the players’ percent of the overall pie continues to rise.  Given that a large chunk of the owners’ revenue is fixed without being tied to an inflation factor, the players will obtain a slightly larger percent of the pie whenever total revenues increase. 

This is a valid concern. 

However, the owners’ attempt to fix this issue seems as off-base as the players requesting to see the books. 

During the first four years of the owners’ proposed CBA, there would not be a “true-up” factor.  Thus, if the owners’ projected revenues are understated, as the players are contending, the owners would be keeping a much larger percent of revenues.

While this causes concerns for the players, this approach is actually just what the league should be looking at.  They just need to be a bit more open about it.  Tell players the NFL needs to absorb the lion’s share of increases over the next four years for investment purposes.  Realistic projections show there will be enough money in the pot over the next four years to make both sides happy, but a lack of transparency has undermined negotiations.

A tenable solution seems so close. 

Peg player salaries near current value at approximately $145 million per team (an average of the money that would have been available if there was a cap in 2010 and what teams actually spent).  Provide for mild escalators over the next four years. But allow the owners to take a lion’s share of the increased revenues during this period so they can build up to their target revenues for infrastructure investments.

The players will inevitably want a cut of stadium profits, so they need to take a short-term freeze in salaries and look at it as an investment in their retirement fund.

There is a ready example of how league revenues are currently at risk. 

Spring is when new sponsorship deals are commonly negotiated.  For example, PepsiCo negotiated an eight-year deal worth $560 million for marketing and advertising rights.  That deal just expired, and it stands to reason the NFL would like to keep the advertiser on board and increase their revenues. 

However, there is uncertainty in the NFL’s reputation—at least on a short term basis.  The labor issues also raise concerns for the quality of the product that will be on the field in the coming year. Not to mention, there is increased competition from other products.  The UFL is in a start-up mode, but a prolonged work stoppage creates risk that some players will take whatever paycheck they can get. 

They will take fans with them.

Back into court

There is a chance these negotiations could be taken out of both parties’ hands.  Not that either side has taken proactive steps—there have been no discussions since the lockout started on March 12.

Judge David Doty did his best to get both sides at the table to negotiate openly. 

The case goes back to the courtroom today, this time to be heard by U.S. District Court Judge Susan Nelson.  Appointed to the bench last December by President Obama, Nelson was assigned the case randomly by a computerized allotment process.  

Judge Nelson’s background and how she might approach this case

As for the case itself, the Minneapolis, Minnesota-based trial will feature 10 plaintiffs that represent the NFL players as a whole.  They are asking for a preliminary injunction, arguing that the NFL is violating antitrust laws by locking out the players.  By decertifying the union, the players claim to be individuals and not part of a collectively bargained group. 

Given that there is so little background on Nelson as a judge, it is difficult to predict how she will rule.  What is clear, though, is Nelson is a very skilled mediator. 

An initial ruling by Nelson could take a week or two.  Following that decision there will be a lengthy appeals process, and unless Judge Nelson intervenes her ruling could be postponed well into summer.  One potential outcome is that Judge Nelson will look to assist with rejuvenating negotiations and assist the two sides in finding common ground, avoiding the need for her ruling to ever be implemented. 

Her ruling alone might help spur negotiations, particularly if she finds for the players.  A preliminary injunction wouldn’t be the final word on the lawsuit; it would be a temporary decision. But that ruling would tip the hand of how the eventual case could fall.  The losing party would be at a diminished bargaining position.

There are four primary points that will fall under her consideration to offer the requested preliminary injunction, thereby enjoining the owners from continuing the lockout and returning players to “work” while CBA negotiations continue.

Likelihood the Players Can Win the Suit

Judge Nelson needs to look at the facts in the case and determine how likely it is the players can win this suit.  The purpose is to offer temporary relief to protect the players from undue harm while the legal case and labor dispute are resolved. And this leads to issue two.

Will Players Suffer Irreparable Harm?

It is clear that players are being harmed in the short term. 

Payments are not being made, free agents can’t sign contracts, players don’t have health care benefits even as they recover from work-related injuries, etc.  The question is whether or not these are short-term trivial issues, or if they could do long-term damage. 

The financial concerns will likely be seen as short-term issues, but where the NFL could find trouble is the cessation of medical treatment for the players.  It isn’t hard to argue that a prolonged absence from surgeons, trainers and rehabilitation staffs could cause a permanent impairment that would impact a player’s career.  This type of concern will help the court to rule in the players’ favor.

Impact on the Owners/NFL

The court can’t offer players relief if it does more damage to the NFL than the amount of relief it gives the players.  This will be a difficult argument for the owners. 

The NFL continues to collect revenue, and would essentially be resuming business under the 2010 operating rules. There is little doubt that the league flourished last year, with owners and players faring very well under the extended rules of the CBA.  Requiring the two sides to continue under that structure, in exchange for continued favored treatment under Federal Antitrust Laws, seems quite plausible.

The owners are contending that the players attempted to dodge antitrust laws with an illegal decertification of the union.  If the NLRB agrees with the owners, the players would be seen as a bargained group.  This would mean the players have no real case, and the owners would be adversely impacted.

Their only hope under this section is that Judge Nelson decides to delay a decision until the NLRB makes a ruling on the owner’s suit.

Public's Interest

This concern should be the easiest decision. 

The American populace is enthralled with the NFL.  It is our most popular sport, and is ingrained in our society—be it through fantasy football, weekly office pools, etc.  It will be hard to argue that a quick resolution of this issue is not in the best interest of the public.

Going Forward

Judge Nelson will decide on one of several remedies. 

She can simply grant or deny the players’ request, which will likely include a decision on whether or not the decision is effective immediately or if it becomes effective after the appeals process.  She certainly has the ability to end the lockout and put the players back to work, and this option could happen before the draft. 

Judge Nelson could also decide to pend her decision, and wait for a ruling from the NLRB.  This would not seem likely, though, as a new judge might be hesitant to take a back seat in her first high-profile case.

The most likely outcome will include her remanding the case back to mediation, with Judge Nelson taking a prominent role.  This will allow her to put her stamp on the case and get the two sides working together.  She will make it clear that one of the two sides won't like her ruling, and help them find common ground and come to a workable settlement. 

There seems to be far too much common ground to be where we are today.  There are too many opportunities for the NFL and the players to expand revenues. So it is time for them to be back at the table and talking about expanding revenue through an expanded season. 

Not to 18 games, though. 

If the owners are so concerned about players' safety, leave kickoffs alone (well, too late there), leave the regular season at 16 games and add another bye week into the schedule.  This will give teams extra time to heal over the season and allow the league to expand revenue by offering another week of televised games. 

Another revenue solution would be to expand the playoffs by four teams.  Right now, the top two seeds in each conference have the advantage of a bye week. Adding two more teams in each conference would take away that perk, but provide a significant expansion on revenues.  Expecting them to beat the seven and eight seeds doesn’t seem too onerous for the benefit.

The last thing the NFL can afford is to have their theme, “Are you ready for some football,” play, and not have a product on the field. 

After all, it isn’t hard to fathom that, if a work stoppage does impact games, fans may say, “Nah, I’m good.”