NFL is heading toward a labor showdown
NEW YORK — Rich, powerful and more popular than ever, the NFL gets closer to a doomsday scenario every day.
Without a deal in the next five weeks to preserve the labor peace that has lasted since a bad month in 1987 — anybody remember scab football• — next season will have no salary cap. That means richer teams such as the Redskins and Patriots will be able to far outspend clubs such as Jacksonville and Buffalo for free agents, while the Jaguars and Bills might try to pinch pennies to stay in business.
And if no deal can be reached next season, that uncapped, maybe less competitive year will be followed by no NFL at all in 2011. Stay tuned as the nation's most lucrative and most watched sport heads into the Great Unknown.
"It looks very bleak to get a (deal) done before March of this year or the beginning of the new NFL season," says Titans center Kevin Mawae, president of the players' union.
"We're going to continue to try. ... Until we come to some terms of what's really important and what are the big issues in this deal it's going to be tough to get something done.
"The players are more united than ever before, and we're preparing for a lockout."
And getting antsy about the future.
"From our standpoint right now, you not only prepare for the worst, that seems like the direction it's headed," Titans defensive end Kyle Vanden Bosch says. "If players aren't prepared, if guys are in bad financial situations, it hurts our leverage as players."
The main issue, of course, is money — despite soaring TV ratings, an average franchise value of $1 billion and even a storybook Super Bowl featuring the hard-luck Saints and MVP Peyton Manning's Colts.
The NFL owners in 2008 opted out of their contract — called the collective bargaining agreement, or CBA — and have asked for significant givebacks from the players, including a reduction in salaries of nearly 20 percent.
That works out to about $800 million; overall NFL revenues are estimated at $6.5 billion. Those owners say the agreement that will expire next year is far too favorable for the players, who get about 60 percent of the revenues actually used to determine the salary cap.
"What we're trying to accomplish here is to have an economic system ... that will allow us to look back 15 years from now and say that we, meaning the clubs and the players, were creative and thoughtful and laid the groundwork for the game to continue to grow," says NFL executive VP and chief counsel Jeff Pash.
"If we have the right type of structure, it will lead to better salaries and benefits for current and retired players, and a better and healthier game for fans."
A work stoppage similar to 1982 and 1987, when the union went on strike. Under labor law, the union has the right to strike and management has the right to lock out.
"Our focus is on getting a deal and we will have a deal," Pash says. "The only question is when."
For most of those years since the two sides reached the contract that brought the current free agency and salary cap system, mention of an uncapped season was heresy.
Now, it's nearly upon us. It would mean:
· Players would need six years in the league before becoming unrestricted free agents rather than four. Some veterans with less than six years in the league would become restricted free agents, meaning their current club will have the right to match an offer or be compensated for losing them.
· Each club already has one transition player tag and would get a second. A transition player must be offered at least the average of the top 10 salaries for his position during the previous season, or 120 percent of the player's previous year's salary, whichever is greater.
· The eight clubs that made the divisional playoff round this year will have limits on signing unrestricted free agents under what's called the Final Eight Plan.
· The 32 teams would be relieved of their obligation to fund numerous player benefit programs, including 401Ks, player annuity, severance pay, and tuition assistance. That would be a reduction of more than $7 million per club.
· A supplemental revenue-sharing plan will be scrapped by the league, which says about $100 million is involved; the union claims it's closer to $200 million. That's not a huge sum in the scheme of NFL finances, but would still hurt clubs on the financial bottom rung.
· There would be no salary floor or salary ceiling. In 2009, the cap was $128 million and the floor was $111 million.
"I think the fans will see a different system with no limit on the high end or the low end, and on what teams can spend," says Falcons president Rich McKay. "Each team will have to decide how they will operate."
Does that mean the NFL salary structure will resemble baseball's rich get richer-poor get poorer model — at least for one year?
No, says Marc Ganis, president of Chicago-based consulting company Sports Corp. Ltd.
"It won't happen, at least now, because of the competitive balance rules that are in effect during the uncapped year," Ganis says. "You will not see a baseball type of hoarding of the all-stars occur in the NFL, certainly not this coming season."
For one thing, the crop of players available won't be as substantial as in previous, capped seasons, with the likes of Shawne Merriman, Miles Austin, Elvis Dumervil, Owen Daniels, Brandon Marshall and DeMeco Ryans now becoming restricted free agents. And, as Mawae notes, if NFL owners are looking to save money on player costs, here's their opportunity.
Agent Tom Condon, who counts both Manning and Saints quarterback Drew Brees among his clients, agrees that that, overall, less money will be available.
"The market has been gutted from not only a large number of players being unrestricted, but some high quality players," Condon says. "There is the Final Eight Plan ... taking 25 percent of the teams and having them not participating totally in free agency.
"Over the past three years, 90 percent or so of the NFL teams have not, on average, spent up to the salary cap. Now you have no floor, so you have teams that were required to spend to the floor who don't have to participate or can participate on a lower level. I think you may see teams on selected players spend a lot of money and have a lot less participation overall than usual."
Which also might lead to no bidding wars when free agency begins March 5, or to only a few teams participating for a minimum number of free agents.
That's good news for the low-income teams. With no minimum team salary, no longer are small-market franchises going to be forced to spend close to what every else does. Instead, they will spend what they can afford.
"That is the big issue here," Ganis says. "The NFL has had a mandate through its CBA where they force teams to pay beyond their means — some of these owners are not making money. This last CBA was so unbalanced that you have a meaningful number of teams that in any given year could be on the negative side on a cash basis."
Probably not so in 2010.
And in 2011• Well, ever since DeMaurice Smith was elected NFL Players Association executive director in March, the players have been warned to prepare for a moment when the league stopped playing.
"Until we sign a deal, we have a responsibility to the players of the NFL to provide them with the best counsel for how to prepare for the worst," says George Atallah, Smith's top assistant. "From our perspective, we want a deal before the uncapped year to avoid any unintended consequences to hurt the overall product."
But time rapidly is running out, and it's a brave new world the NFL appears to be entering. Condon warns that what comes beyond 2010 is even more critical for the sport than what occurs this year.
"An uncapped season is not as important as what happens after that," he says. "A lockout or decertification by the union• Nobody really knows."
Some effects of an uncapped NFL season
· Players would need six years in the league before becoming unrestricted free agents rather than four. This includes plenty of stars among the 212 players who would be impacted, including Shawne Merriman, Miles Austin, Elvis Dumervil, Owen Daniels, Brandon Marshall and DeMeco Ryans. They will become restricted free agents, meaning their current club will have the right to match an offer or be compensated for losing them. Any player with three, four or five years in the league whose contract is up would become a restricted free agent.
· There would be no salary floor or salary ceiling. In 2009, the cap was $128 million and the floor was $111 million.
· Two players on each team, instead of one, would get a transition tag. A transition player must be offered at least the average of the top 10 salaries for his position during the previous season, or 120 percent of the player's previous year's salary, whichever is greater.
· The eight clubs that made the divisional round this year (New Orleans, Minnesota, Dallas, Arizona, Indianapolis, San Diego, Baltimore and the New York Jets) will have limits on signing unrestricted free agents. Called the Final Eight Plan, the number of players those teams lose to free agency will determine how many they can sign from other clubs. The Colts, Jets, Vikings and Saints will have other obstructions.
· A supplemental revenue-sharing plan will be scrapped by the league, which says about $100 million is involved; the union claims it's closer to $200 million. That program involves the top 15 teams by revenue placing funds into a pool from which many of the lower income clubs can draw. It does not include television money or box office revenues. Nine franchises qualified to receive funds last year, although the league has not identified them.
· The 32 teams would be relieved of their obligation to fund numerous player benefit programs, including 401Ks, player annuity, severance pay, and tuition assistance. That would be a cost reduction of more than $7 million per club.
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