The Big Game After the Super Bowl

Before getting back to your Super Bowl talk for the next 48 hours, here is an opening primer on the NFL-NFLPA negotiations regarding a new Collective Bargaining Agreement.
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Before getting back to your regularly scheduled programming of Super Bowl talk for the next 48 hours, here is an opening primer on the NFL-NFLPA (NFL Players Association) negotiations regarding a new Collective Bargaining Agreement (CBA), the issue that you will be hearing a lot about -- some accurate, much inaccurate -- over the coming weeks/months/year(s).

Why is the NFL frustrated with the negotiations?

The owners want the players to share the risk. They point to their numbers showing that NFL players have received a $500 million increase in compensation since the terms of the player-bloated 2006 CBA was ratified while their side has been cutting costs. They point to further numbers showing that players have received $2.6 billion in salary and benefits from incremental revenue growth since that CBA, while ownership has only received $1 billion in new revenue during the same period, with operating costs of $1.2 billion.

In the league's view, the downturn in the economy, the ebbing of sponsorship and suite sales and the massive debt undertaken to finance these new stadiums are all being felt by ownership without being similarly felt by labor.

In the bargaining meetings, the theme from the NFL is Collective Sacrifice. The NFL wants the players to roll back some of their gains made through the 2006 CBA to more accurately reflect the cost of doing business in the NFL and financing these massive facilities.

Why is the NFLPA frustrated with the negotiations?

The NFLPA -- through its new leader DeMaurice Smith -- wants full disclosure in this age of transparency in corporate America. They listen to the problems that ownership presents and ask repeatedly "Show us your books." With the Green Bay Packers as the only team mandated to report its financial statement publicly, the union looks at the smallest market in the league making money and says that there must not be any issues.

The union, as evidenced by its press conference yesterday, is trying to paint a picture of a league that wants to break its players, putting out in the public that:

•The NFL is asking for an 18% reduction from the present status quo.

•The NFL is asking for the players' current share of 59% of revenues to go to an "applied revenue" number of 41%.

•The NFL is a business that has seen its teams' values rise almost 500% since 1994.

•The NFL says it has financial problems but refuses to "show us the books."

•The NFL is preparing in all ways for a 2011 lockout of its players in several ways:

Its teams are adjusting coaching and front office contracts to reflect a possible lockout with reductions in pay and notice to terminate

It has negotiated contracts with broadcast partners such as DirecTV that insure payment even in the event of a lockout -- although with later credits back to the broadcaster -- to insure steady payments without football

It has hired Bob Batterman, the attorney who guided the NHL through its recent lockout.

The league's response to these repeated requests are to point out the audit rights the union already has through the CBA. The NFL also points to the fact that the "opening the books" in the NBA and the NHL did little to avert work stoppages. The league simply feels the union has enough information without opening up the inner workings of the team's finances, frustrates the union to no end.

Is the NFL really asking for an 18% reduction?

There is internal data showing the need for that type of rollback to offset the gains the players have made compared to the league's incremental revenue since 2006.

At the end of the day, this is a negotiation. That's the opening offer.

Why is the Rookie Salary Issue a Non-Starter?

Pay no attention to this; nothing to see here. Both the league and the union understand something has to be done, especially at the top of the Draft. Both sides have agreed that the incoming rookies in future years have no voice in this negotiation and will be the sacrificial lambs.

Why does the Supplemental Revenue Sharing (SRS) decision cut both ways?

The union declared victory this week in a decision by the Special Master to continue the SRS system into 2011. However, it may be a pyrrhic victory for the players, as the SRS is based on revenue rankings only, and some of the top revenue producers also have enormous debt, largely due to private stadium construction. The fact they are paying down debt with some of their revenue and now sharing it more with other teams, who may have low revenue but no debt, may have a chilling effect on player spending in the long run.

The union's focus should be on ensuring that owners do not pocket any revenue sharing money, no matter how much or how little, but spent on players. That is the real issue.

What's Ahead?

Today is Commissioner Goodell's press conference to refute some of the assertions made by Smith. Goodell may best be served by not engaging in the back and forth with Smith on a public stage, but rather continuing with vague language about trying to get a deal done that works for both sides.

There will be more meetings -- starting Saturday -- and probably more frustration from each side; the NFL frustrated that the union will not share the risk and the union aggravated that the NFL will not share its financial information to prove its point. Meanwhile, teams and players are - or should be - preparing for an uncapped year and a different way of operating in the NFL, coming soon to a team near you. As for 2011, a potential lockout year, all bets are off.

The bottom line is that football will continue in 2010, but perhaps differently than we have known it. The bigger question is whether we are going to be having these dueling press conferences at the Super Bowl in Dallas next year.

To get you ready for the Uncapped year ahead and the new way of doing business in the NFL, I will be offering a Webinar on February 17 to go through all you need to know (and some you don't) about the new NFL landscape in 2010. I hope it will be "must-have" information for every football fan.

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