Key issues in NFL labor dispute

DeMaurice Smith, head of the NFL Players Association, will present his union's case on Thursday.
DeMaurice Smith, head of the NFL Players Association, will present his union's case on Thursday.
Posted: February 03, 2011

By Monday morning, a question that has long loomed in the background will come into sharp focus: After Sunday's Super Bowl, when will we next see an NFL game?

With the league's collective bargaining agreement set to expire March 3 and a lockout widely expected to follow, the answer could be a long way from being resolved.

You've probably heard about the public-relations stunts and the barbs fired from the two sides. We're about to hear more: NFL Players Association executive director DeMaurice Smith is scheduled to address the media at the Super Bowl on Thursday, and NFL commissioner Roger Goodell is up Friday. The two sides are scheduled to meet Saturday in the first formal bargaining session since November.

But what's at the root of the dispute?

Here's a primer on the key issues:

How to divide $9 billion

The players' case. The 18-game season has received the most attention, but this is the No. 1 issue: The owners are asking for an additional $1 billion from the league's roughly $9 billion of total revenue. The union estimates that this would cut its share of revenues by 18 percent.

Here's how it currently works: The NFL takes in about $9 billion a year, and the owners get in the neighborhood of $1 billion for "expense credits" associated with running the league - things such as stadium construction, scoreboard upgrades, and promotions that they say keep the game popular. The remaining money is split roughly 60 percent (players) to 40 percent (owners). If you factor in the expense credits, though, the players have received about 50 percent to 53 percent of annual NFL revenues under the current CBA. The owners are asking to take out an additional $1 billion in expense credits before the rest of the pie gets divvied up.

To the players, this is like asking them to take a pay cut while being pushed to play two more games. With the expense credits largely going to stadiums and other items that, after all, belong to the owners, the players see this as akin to asking a secretary to help pay for office renovations. The players say they are content to keep working under the existing agreement, pointing a finger at the owners as the group that wants more.

"The players haven't asked for anything more, and literally don't want anything more," NFLPA spokesman George Atallah wrote in a column on ESPN.com. It was the owners who voted to end the current labor deal March 3 instead of letting it run its course to the end of the 2012-13 season. The owners would also be the ones to formally initiate a lockout.

The owners' case. The league says there's a good reason the players don't want more: They already scored a big win in the last CBA.

The owners concede that they made themselves a lousy bed. "It is not an agreement that has worked out in a satisfactory way," said NFL chief counsel Jeff Pash. That's why they say they are seeking a new agreement that they say will fuel league growth. Even if the percentages shift, they say investment will create a bigger total revenue picture, and more money for everyone.

An 18-game season is the easiest way to add revenue for both owners and players, and the league argues that its request for more "expense credits" will allow for investments in stadiums and promotions that will drive the NFL's popularity. While no one disputes that the NFL is healthy, owners say costs, particularly salaries, are rising faster than revenue, cutting the owners' cash flow by about $200 million. This hurts owners' ability to put money back into the game, according to the league.

"That's not good for the players. It's not good for the game. It's not good for the fans," Goodell recently told the Wall Street Journal.

Players have done well under the current CBA. The salary cap has grown from $85.5 million in 2005, the year before the deal went into place, to $128 million in 2009, the last year with a cap. (Of course, the players can also claim credit for a significant jump in overall revenue.)

Owners say the expense credits they're seeking won't go directly into their pockets since the credits would go toward promoting the game. Their bottom lines would be helped, though, since the credits help pay for things the owners would otherwise have to buy themselves.

The NFL is thriving

Perhaps the toughest challenge for the owners is making the case that they need help when every public indicator shows that the NFL is America's most popular and powerful professional sports league. The NFL had landmark television ratings this season, and revenue grew by 43 percent from the year before the current CBA, 2005, to 2009, according to Forbes.com.

The league argues that much of its new revenue has been consumed by rising player salaries. The Green Bay Packers, publicly held, are the only team whose books are totally open to the public. They showed a $9.8 million profit in the last fiscal year, down from $20.1 million the previous year and $34.2 million the previous year.

But the Packers are just one team in a small market, the NFLPA says. The union has demanded that the NFL open the books on all its teams to prove that it needs help. The league says the players already have information on the biggest costs - salaries - and audit rights to a wealth of other information. But there is one notable exception: profits.

Many observers have looked skeptically at the NFL's warnings of impending financial problems while the league refuses to make more details public.

The 18-game season

Most observers expect it to happen. The owners say it could bring in another $500 million. That's money that helps both sides, and could help the players recoup some of the money lost by shifting more to the owners' expense credit.

The players have resisted, citing concerns about the impact on health and longevity. But their rejections have come with caveats. They can't accept 18 games "as proposed" or "under the current system." The NFLPA is looking for something in exchange: a reduction in mandatory off-season work, and improved health coverage, particularly in post-career care. Changes that increase roster sizes could also help.

Rookie wage scale

The owners want a rookie wage scale to reduce the huge salaries going to top draft picks. In an open letter to fans, Goodell wrote that without a new CBA, "outrageous" sums will continue being paid to "unproven rookies." A new deal could leave more money for veterans, the league says, another step that would help players affected by altering the revenue pie.

Lockout scenario

Once the current CBA ends, owners have the option of locking out the players, though they don't have to do so immediately. The NFL's Pash said Wednesday the league could delay a lockout if progress is being made March 3, but he said the two sides have "to make a shared commitment" to getting a deal done. Each side has accused the other of stalling negotiations.

If a lockout does start, players would be barred from any contact with teams. Teams couldn't sign any free agents or trade players. The draft would be the last official event until a new deal is signed.

Endgame

Expect talks to heat up between the Super Bowl and March 3, though that doesn't mean a deal gets done then.

An 18-game season, rookie wage scale, and improvement in player health benefits seem likely. How the pool of revenue gets divided is the big question.

A lockout might cause some costly off-season collateral damage: $350 million if there's no deal by the preseason, up to $1 billion if a lockout lasts until the start of the regular season, according to the NFL. If regular season games are missed, everyone loses big money: $400 million a week, according to the NFL. If there is one thing both sides can agree on, it's that neither wants that.


Contact staff writer Jonathan Tamari

at 215-854-5214 or jtamari@phillynews.com. Follow him

on Twitter at www.twitter.com/JonathanTamari

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