SBJ/20080922/This Week's News

NFLPA strike funds climb past $118M

Bracing for potential labor unrest, the NFL Players Association had strike funds totaling more than $118 million at the end of its 2007 fiscal year, a sum that is likely at least $10 million higher today.

The nine-figure total was disclosed as part of the unsealing of a wide range of documents in a lawsuit brought by retired players against the union for allegedly failing to pay royalty income. The amount underscores the serious possibility that the NFL in 2011 could suffer its first labor disturbance in more than two decades.

“The financial statements of the NFLPA report that the union has created a large fund to deal with the possibility of a breakdown in collective bargaining,” wrote professor Roger Noll of Stanford University in the expert report prepared on the union’s behalf in the retired players’ case. Noll’s report had been shielded until the judge in the case late last month unsealed all documents filed as part of the lawsuit.

“Fund A contains $18.6 million … and is designated for future expenses of the organization,” Noll wrote. “Its value has remained constant for several years. Fund B contains over $100 million, and grows each year by the difference between revenues from [player] dues and rebates of dues.”

In the fiscal year ending Feb. 28, 2007, the difference between player dues and rebates was a positive $10.2 million to the union, and thus to Fund B. For fiscal 2008, the figure is likely similar.

Noll cited the strike fund to rebut charges from the retired players’ expert who contended the union kept an inordinate amount of licensing income and distributed too little of it to players (see story, Page 35).

In 2006, when the league and union agreed to an extension of the collective-bargaining agreement, the labor group decided not to rebate player dues that had accumulated in the strike fund at that time because the teams had insisted on including an early opt-out provision in the new deal, said Jeffrey Kessler, the NFLPA’s outside counsel. The union had already been holding back on the rebates, Kessler said, though he declined to define for how long.

Traditionally, the union has rebated player dues three to four years after they are paid.

The owners exercised the opt-out in May, arguing that the deal is tilted too far in favor of the players. That makes 2010 a season with no salary cap and the last one under the current deal.

Kessler

The strike funds would pay for the operations of the NFLPA, now about $50 million annually, as well as legal costs, Kessler said.

“The players made commitments back in the early 1990s that they would never be in a position that they were in the 1980s, when the union’s funds were greatly at risk,” he said. “If you decide to decertify, you need to make sure … you have adequate funds.”

If the owners lock the players out in 2011, the union may decertify in response. Decertification would allow the players to sue the league for unfair labor practices.

Sports consultant Marc Ganis, who has advised several owners on business matters through the years, described the amount in the strike funds as an “enormously large sum of money” and perhaps is designed as a message to the league that the union is willing to fight it out.

In January 2007, the MLB Players Association distributed to its players $67.8 million in funds saved from 2002-05 as protection against a potential labor disturbance that never materialized after a new, five-year labor deal was struck in October 2006. That money came from diverted licensing income.

Kessler said that in addition to the funds, the union also owns its building, which he said the NFLPA could borrow against if necessary.

While Ganis did not believe the owners had a similarly designated strike fund, he pointed out that the league does have lines of credit and broadcast money that would come in during the first year of a labor disturbance that could see the owners through.

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