NFL Labor dispute Update 3-5-11

Posted: March 5, 2011 in Pop Culture, Sports

This is for all my friends asking me about the NFL labor issues here is how I see the latest development

Monday evening, U.S. District Court Judge David Doty overturned a decision that would have allowed the NFL to use more than $4 billion dollars in media fees during a potential lockout next year. Briefly I discuss three areas of interest in this blog

  1. Why the court ruled the way it did
  2. What the ruling means
  3. How the court’s decision affects the ongoing NFL Labor negotiations

 

Why the Court Ruled the Way it did

The NFL Player’s Union (Players) filed suit against the NFL and its franchise owners collectively because it believed that the league had violated its duty to the Players by manipulating and renegotiating media contracts with DirecTV, CBS, FOX, CBS, NBC, and ESPN to give the league an unfair advantage over the Players in the event of a lockout. The media rights contracts would have given the NFL $4.2 billion for the 2011 season even if no football was played due to a lockout. Even without football games being played owners would still make money in 2011 while Players would recieve no income from their respective teams.

The structure of the league is made up so that the NFL acts not only to benefit itself to fullest extent possible, but to also do the same for its players. When the NFL was renegotiating the media contracts with the broadcasters they did so with only themselves in mind. The league leveraged its power and position with the pending lockout to charge broadcasters more in 2011 and beyond the expiration of the current Collective Bargaining Agreement. They did so in exchange for not charging broadcasters more in the 2009 and 2010 seasons which are covered by the current CBA. The district court in handing down its decision said that the NFL had a duty to act in “good faith” (honestly) and with their “best efforts” (diligently) and using their sound business judgment to benefit both themselves and the players. In the negotiations the only used their sound business judgment in good faith and best efforts to benefit themselves and not the Players. Al Davis once said “if you ain’t cheating, you ain’t trying”, the court here said that the NFL was trying a little too hard.  

What the ruling means

If the original ruling on the case had stood the NFL would have been able to use money from its media contracts during a potential lockout to “wait out” the Players. This would have given the NFL tremendous leverage against the Players. Judge Doty’s ruling blocked the NFL from waging their war of attrition on the Players. The judge may elect either to put the revenue from the media contracts  in an escrow account until the labor dispute is resolved or he can disburse the funds to the league and the union with the Players receiving a 59.5% share of that amount as provided for in the terms of the current Collective Bargaining Agreement. Either way the effect is that the NFL no longer has its “warchest” to fall back on. Owners will now have to bear the brunt of the lockout with their own reserves, rather than new revenue from the media contracts funds that they thought would be there to carry them through.

  How the ruling affects the current NFL Labor negotiations

Shortly before the expiration of the current CBA on March 4th – the NFL and the Players announced they would extend the CBA deadline by 24 hours. Then today, they announced that they would re-extend the CBA deadline for a week. NFL Commissioner Roger Goodell has stated that the ruling on the NFL Media Contracts case had no bearing on the league’s decision to extend the deadline. BALDERDASH!!! In fact, the NFL’s top attorney, Jeffrey Pash said that “I wouldn’t be surprised if the owners are here next week.” Considering that the owners have rarely opted to directly participate in labor discussions with the union, this signals a seismic shift in the NFL’s strategy surrounding the CBA and the Lockout. What changed? Metaphorically, the owners thought they had a big tax return check coming back to them this year. They were planning on using that money (like so many of us do when we get our refund checks) to go on “vacation” (collecting checks without working). Now that the owners have been told that they’re practically getting nothing back this year because they “fudged” on their taxes, all those plans have changed.

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