SBJ/March 6 - 12, 2006/This Weeks News

NFL labor showdown goes into OT

The NFL and its players’ union were playing a high-stakes game of chicken late last week, with the financial foundation of America’s top sport at stake.

“The difference between now and the past is a fundamental
change in the way they are defining their expectations …
and unwillingness, or inability, to recognize the very real
costs that are associated with all the real things
the league has done to build new stadiums, generate
revenues, investing in a whole range of enterprises.”

Paul Tagliabue, NFL commissioner
The NFL broke off talks Thursday morning to extend the collective-bargaining agreement, a move that could lead to the elimination of the salary cap, only to then announce hours later that it would extend the league calendar by three days to continue negotiating. At press time, the new deadline was 12:01 a.m. today.

“The reason they did this is both looked into the abyss and said this is worse than working out a deal,” said Marc Ganis, a sports consultant who has worked for several NFL teams.

If the talks fail to extend the CBA, the repercussions could be enormous.

The coming season could be the NFL’s last with a salary cap, which along with labor peace and revenue sharing, have been the foundation for the league’s mighty growth. The final year of the current CBA, 2007, has no cap.

The most immediate effect of a failure of the union and league to renew their labor pact would be widespread dumping of players as teams scramble to conform to a salary cap that would have been larger with an extension.

Longer term, the cost controls imposed by the cap, the promise of games always played thanks to labor harmony, and the competitive balance stoked by revenue sharing all could be called into question.

“It is a mess. I never thought it would come to this,” said Sal Galatioto, a well-known sports banker, who was speaking before news broke that negotiations were back on. “Even in my darkest moment I never thought it would come to this.”

Fitch Ratings, which covers the bonds that the league sold to fund stadium construction, warned it could downgrade the NFL debt if the financial pillars of the sport are weakened.

With the NFL up to $6 billion annually in revenue, observers figured the sides would find a way to slice up the riches, as the union and league were only a few hundred million dollars a year apart. And that was a possibility at press time, with the league apparently willing to come up off its offer of 56.2 percent of revenue. The union is at 60 percent.

Whether the NFL increases enough to satisfy the union is a drama that was to be played out over this past weekend, and perhaps even longer if the sides decided to again extend the negotiating period.

“There is nothing magical about Thursday, and there is nothing magical about Sunday,” said Bill Gould, a Stanford Law professor and a former chairman of the National Labor Relations Board. Deadlines can be extended, he said. “Collective bargaining can be, and often is, theater.”

One element of that theater was the united force the owners showed Thursday, flying into New York for only a 57-minute meeting and unanimously voting to reject the union’s proposal. Even more to the point, the owners in unison said the revenue-sharing debate between low- and high-revenue teams was irrelevant to reaching a new CBA, dismissing the union’s contention that the real argument was among the clubs.

“Right now, the league is unified,” said Buffalo Bills owner Ralph Wilson, who has been a champion of additional revenue sharing and said previously that he would like the revenue question settled before cutting a labor deal.

Commissioner Paul Tagliabue added, “The revenue-sharing issue has never been an impediment in the past to getting an agreement done with the players association. And it is not an impediment now to an agreement.

“The difference between now and the past is a fundamental change in the way they are defining their expectations … and unwillingness, or inability, to recognize the very real costs that are associated with all the real things the league has done to build new stadiums, generate revenues, investing in a whole range of enterprises.”

Union lawyer Jeffrey Kessler, speaking before the decision to renew talks, blasted the league’s position, calling it “insulting,” and described the owners as “dysfunctional.”

“It’s a rewrite of history,” he said of the commissioner’s position that the only issue was the union. “It has been clear from day one that this deal has been all about getting revenue sharing from the owners, and this is what stopped the deal.”

The 60 percent of all league revenue the union was asking for, Kessler said, is the same percent the players have enjoyed in the past, which the NFL disputes. And Kessler said NFL players are the only ones in pro sports to give up pay to help build stadiums.

“When [the owners] are making more money than God, they are seeking to roll back the players because rich owners won’t share with the poor owners,” Kessler said. “That is the truth.”

Tagliabue, though, called the NFLPA position a “kind of have-your-cake-and-eat-it-too proposal.”

If the two sides fail to reach an agreement, the union has warned that the cost to owners of winning a new CBA would mushroom. With the potential riches in an uncapped year beckoning, union executive director Gene Upshaw has said there is little chance the players would want to renew after last week’s old deadline passed.

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