SBD/January 7, 2011/Leagues and Governing Bodies

Potential ESPN-NFL Extension Could Have Major Impact On Labor

Agent Drew Rosenhaus thinks potential ESPN- NFL deal "severely reduces" lockout chances

If ESPN winds up paying the NFL $1.8-1.9B per year for the rights to "Monday Night Football," it could have major implications for the league's labor situation. Some, like sports agent Drew Rosenhaus, believe the big rights fee increase "severely reduces the chances of a lockout at this point," as the deal "clearly shows the NFL is at an all-time high." Others, like NHL agent Ian Pulver, believe ESPN's record-high payout will have little effect. "I think the news of the TV deal confirms what we already know, economic times are vibrant for the NFL," Pulver said. "However, it won't have any impact on whether the owners will lock the players out, so long as the owners believe they can get what they want, and not what they need." SportsCorp President Marc Ganis said the new ESPN numbers could help make the NFL's case that, as required by the CBA, it is maximizing revenue. Ganis also said that the new ESPN numbers reinforce the NFL's position that if revenues grow, players will not be hurt by a reduction in the salary cap. There is a Special Master proceeding underway in which the union is arguing the league took in low amounts of TV money from CBS, NBC and Fox when they signed extensions in '09 to lock in payments during a work stoppage. But National Football Post’s Andrew Brandt, a former Packers executive, said of ESPN's potential deal, "You would certainly think they are maximizing revenues with that" (THE DAILY).

GIVING PLAYERS FIREPOWER: In N.Y., Starr & Tharp cite experts as saying that ESPN's new NFL deal "could give the players more firepower as they push for a greater share of the revenue pie -- but at the same time make the rancorous labor talks with management even more bitter." One source said, "It's a good news/bad news situation for the owners. The owners are crying poor and it's going to strengthen the Players Association's stance that the owners aren't as bad off as they say they are." Another source familiar with the contract talks said that the ESPN deal is "just another sign of 'double dealing' by owners." The source: "On one hand, the owners have been claiming economic hardship, and then to turn around and do a record TV deal -- it's a slap in the face to the players" (N.Y. POST, 1/7). FORBES' Kurt Badenhausen wrote the NFLPA "has to love seeing TV contract extensions at huge increases," as it "gives less credence to the owners' position that they cannot make things work under the NFL's current financial structure" (FORBES.com, 1/6). But Mediatech Capital Partners Managing Partner of Corporate Finance Porter Bibb said the deal "diminishes the threat of a strike, as far as I'm concerned" ("Taking Stock," Bloomberg TV, 1/6). NEWSDAY's Neil Best wrote, "The net effect of all this is more of your dollars landing in the pockets of NFL owners and players" (NEWSDAY.com, 1/6).

STATING THEIR CASE: In a special to ESPN.com, NFLPA Assistant Exec Dir for External Affairs George Atallah wrote the NFL is "at the height of its popularity and success," and "all signs and indicators point to extraordinary success and rapid growth for the business of football." Yet the league and team owners have indicated the "economic model in the NFL doesn't work." Atallah wrote, "By the way, in a league with no guaranteed contracts, revealed dangers of the game and injury concerns at their peak, they want players to play two extra regular-season games. The players maintain that one fundamental question needs to be answered in earnest if there is to be an agreement before a lockout: Why is the current deal so bad? ... Our repeated requests for detailed financial information that would help us answer the quintessential question have been denied." Atallah added, "The NFL players have asked me to share a simple request on their behalf: Open the books and let us play" (ESPN.com, 1/6).

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