Tuesday, January 25, 2011

Labor Leverage: The NFLPA's Collusion Claim & TV Revenue Complaint

The NFLPA’s recent filing of a collusion claim against the NFL is part of its broader strategy to apply pressure on the league as the sides continue to work on a new CBA. The Union has also filed a complaint regarding the NFL’s television deal.

Things are getting getting a bit intense, with one NFLPA exec telling player reps that they were at "war".

Here are details on the two claims:

1) TV Deal

In June of this year, the NFLPA filed a complaint over the NFL’s television contracts.

The Union's complaint alleges that the NFL structured its contracts with broadcast partners, such as CBS and FOX, to ensure that fees would be paid even if there were no games played in 2011.

Why is this a big deal? In the event that football is not played in 2011, the NFL won’t be sharing television revenue with the players, and in securing a payout for not having a season in 2011, the Union is arguing that the NFL did not seek to maximize revenue in other seasons when the league would need to share that revenue with players. So for the Union, the deal violates an agreement between the parties that the NFL must negotiate in good faith with a view to maximizing revenue for players.

By the way, in the event there is no football in 2011, the NFL will be paid $4 billion by the networks.

2) Collusion Claim

On January 18, the NFLPA also filed a collusion claim against the NFL. The specifics of the claim are not available. However, it has been reported that the thrust of the claim is that owners improperly conspired to restrict player salaries in the offseason, which resulted in a lack of activity in the restricted free agent market.

What is collusion?

In the context of professional sports, collusion refers to two or more teams acting in concert to deprive players of collectively bargained rights.

Collusion has been accounted for in the CBA in Article XXVIII, which is entitled, “Anti-Collusion”. In particular, Section 1 provides that teams can’t agree, be it expressly or impliedly, to undermine contract offers, etc.:
Section 1. Prohibited Conduct: No Club, its employees or agents, shall enter into any agreement, express or implied, with the NFL or any other Club, its employees or agents, to restrict or limit individual Club decision making as follows:

(a) whether to negotiate or not to negotiate with any player;

(b) whether to submit or not to submit an Offer Sheet to any Restricted Free Agent;

(c) whether to offer or not to offer a Player Contract to any Unrestricted Free Agent or Undrafted Rookie;

(d) whether to exercise or not to exercise a Right of First Refusal; or

(e) concerning the terms or conditions of employment offered to any player for inclusion, or included, in a Player Contract.
Collusion can be tough to show. The fact that contracts are not being offered is not by itself evidence of collusion. In fact, the CBA provides as follows:
The failure by a Club or Clubs to negotiate, to submit Offer Sheets, or to sign contracts with Restricted Free Agents… or to negotiate, make offers, or sign contracts …shall not, by itself or in combination only with evidence about the playing skills of the player(s) not receiving any such offer or contract, satisfy the burden.
There can be lots of reasons why players aren’t get contract offers, including the economic climate, the needs of teams and the skill of players.

In order to establish collusion, the Union may argue that there was a statistically significant drop in player salaries this past offseason that is not in keeping with general and recognizable trends. If they can find it, they may also point to statements made by teams with respect to keeping salaries down.

The NFLPA may also point to a couple of seemingly inconsequential trades made before the end of training camp. And this ties into the 85% Rule.

The CBA provides that in an uncapped year, teams that cut drafted players must contribute 85% of the player's salary into a pool that will be distributed to rookies who do make the team. However, the contribution must not made if the drafted player is traded to another team and then cut.

At the end of training camp, the Redskins traded Dennis Morris to the Rams for a conditional pick, and the Rams turned around and traded Hall Davis to the Redskins for a conditional pick. Both players were rookies and were cut shortly after the trades (the Skins cutting Davis within 24 hours). The moves saved both teams $272,000. 

The NFLPA would argue that two teams trading away drafted players to each other so they can be cut by the other team to avoid paying money into a rookie pool strongly suggests collusion.

So where do these two claims leave us? The NFLPA is relying on these claims as added leverage in CBA negotiations, which are not going well at this point. However, maybe things are getting worse before getting better.

And that's my guess. With record revenue of $8 billion, a faltering economy and labor fatigue among fans, my guess is that the sides will hammer out a deal ahead of next season.

1 comment:

Daniel Gilbeau said...

Only the NFL could pull off a deal like this. I mean, really, getting $4 billion dollars in TV revenue even if there is no football. I can't see the players' association winning their fight but at least it brought this information up for us fans who did not know.