By Bryan Natale, Exemplar Law
Will an $8.5 billion dollar industry be put on hold in 2011? The NFL Collective Bargaining Agreement (CBA) expires next March as the 2010 season marks the “Final League Year” of the existing CBA and the likelihood of a 2011 lockout grows with each passing negotiating session. In fact, the issue is so real that, in a recent letter to all NFL agents and player representatives, the NFLPA is encouraging players to place up to 60% of their performance-based pay check into a personal account. In addition, the NFLPA has suggested that an additional 25% of 2010 paychecks be put into the same account. The way things stand today, only two things are certain at this time: we will have NFL football in 2010 and there will be a draft in 2011. So what stands between the NFL and the NFLPA?
To no surprise, the most contentious item on the table is the numbers. According to the NFLPA, the players, under the existing CBA, receive approximately 52% of the revenue pool. However, the NFL represents that the players receive 60% of the revenues. Although the NFLPA is content with the terms of the existing CBA, the owners of the NFL are vehemently opposed to the existing CBA which is why they opted out of it last spring, as was their right under the bargained rules.
According to sources the NFL, in its proposal to players, would like to trim the portion of revenues going to players by 18%. The owners argue that the players receive 60% of the revenues and the owners assume 100% of the costs. Further, the owners claim that the money they have put into new stadiums and facilities, coupled with skyrocketing player costs and a down economy, makes the business model currently in place almost impossible to maintain.
To push back on the owners, the NFLPA has requested that the owners open up their financial books in an attempt to justify the cut. The NFLPA argues that until the owners agree to more substantial disclosure of the financial records and business operations, the NFLPA is hard-pressed to submit a counterproposal to the 18% cut that adequately protects the players and is justified.
Although the “Final League Year” has other implications, including an uncapped 2010 season, substantial additional restrictions on player free agency and reductions in player benefits, the red flag remains how big a piece of the pie the players take home. Until the gap is narrowed between the NFLPA and the NFL, the game clock will continue to click.
On the bright side, there are some things that are agreed upon in the negotiating sessions. Both sides want to see some form of cap on rookie spending and more money diverted back to veterans and retired players. The NFLPA’s model would make players free agents after three years in the league, limit rookie spending and put $200 million back into the player pool for established players. Despite the contentious hot items still being negotiated, there is at least some common ground.
But let’s be honest, all of this back and forth is nothing new. It is simply part of the game, and it’s endemic to any pro sports league going through a long negotiation. Although there is sufficient time left to get a new CBA together, grave concern is warranted if in the spring of 2011 everything continues to stall. But for now, expect more of what we’ve seen the last few months – a bitter game of tug of war.
