Potential NFL Lockout in Near Future

19-Aug-09
Published in: Pittsburgh Tribune Review
Author: Scott Brown and Carl Prine
Description: Dr. Rishe offers his perspective on labor and revenue sharing issues that the NFL is facing in the near future, less they risk a lockout before the 2011 NFL season.

NFL owners will lock out the players in 2011, renewing labor strife dormant for two decades and jeopardizing an $8 billion industry, according to players' union chief DeMaurice Smith and a dozen athletes and agents interviewed by the Tribune-Review.

NFL Players Association executives asked the Steelers recently at St. Vincent College to save a quarter of their earnings over the next two years while negotiators try to hammer out a new Collective Bargaining Agreement.

NFL officials and their attorneys declined to comment. The last NFL labor strife came in 1987, which lasted 24 days.

"Hopefully, it doesn't come to that point," said Steelers cornerback and union representative Deshea Townsend. "I'm sure we're going to do everything to make sure it doesn't come to that point.

"But if they lock us out, it's not like we can go play. It's not like we can cross a picket line or anything like that. You just have to prepare yourself and stay together in case it does happen."

With nearly $300 million in a special "lockout fund," the union said the latest turmoil was presaged by two NFL moves in 2008.

League owners unanimously opted out of the contract that was negotiated in 1993 and extended in 2006. At the same time, the NFL announced the hiring of Manhattan attorney L. Robert Batterman, the man behind the NHL lockout that nixed the 2004-05 season.

"When you recognize that the league has retained the services of the lawyer who is best known for orchestrating and effectuating the NHL lockout, you don't need a crystal ball to appreciate that the lockout is the strategy," Smith said. "And while we have had some talks about the Collective Bargaining Agreement, it appears to me that there's been more preparation for a lockout than there has been discussion about a new Collective Bargaining Agreement."

Smith replaced the late Gene Upshaw as executive director in March and has been scrambling to salvage the old work agreement. It currently gives players a 60 percent cut of most revenues, mostly from broadcast rights paid by TV networks and DirecTV.

Under the existing contract, games will be played through 2009 and '10. In 2010, however, the salary cap will be scrapped, allowing free agents to negotiate wages with any team that will hire them -- a provision in the expiring deal that owners and the union concede will trigger skyrocketing paychecks.

Considered a key to retaining parity in the NFL between large-market franchises like the Dallas Cowboys and small-market clubs like the six-time Super Bowl champion Steelers, the salary cap, once gone, won't return unless it's put into a new contract.

"I see a great deal of risk in this," New York University sports economist Lee Igel said. "The strength of the league really came from the old guard -- the Maras in New York and the Rooneys in Pittsburgh -- getting in a room with commissioner Pete Rozelle and agreeing that teams in the big markets, like Maras' Giants, wouldn't run away with the league. Now, they're flirting with damaging everything."

Experts have long studied the shifting balance of power in the NFL between big-revenue clubs like the Giants and small-market rivals. While franchises in lucrative mega-markets erect new stadiums to maximize revenues -- such as luxury boxes, club seating and stadium naming rights -- other clubs find their digs less profitable and their labor costs the same as those of the richer teams.

After owners extended the current contract by a 30-2 vote in 2006, Buffalo Bills owner Ralph Wilson warned that teams like his couldn't remain financially viable for much longer.

"A lot of this was predictable," said Patrick Rishe, a sports business professor at Webster University in St Louis. "You see the haves and the have nots, the ones with the new stadiums and the ones with the old ones. The haves want to protect the new revenues that they're making, and the have notes want to either have some of that or, if they can't, band together and try to get it from the players."

Since scrapping the contract in 2008, owners have failed to agree on a way to split profits between big- and small-market teams. Players say that because the NFL and its owners can't find a way to divide their own pie, they have set their eyes on breaking the players' union and slashing wages.

NFL commissioner Roger Goodell has publicly described this as a need for players to take more "risk." He also has claimed that every NFL franchise lost money last year. On June 20, however, the Green Bay Packers announced that they earned $20.1 million in operating profits last season.

Currently, the small-market Packers' "Preservation Fund" -- designed in part to shore up the team's finances in the event of a lockout -- has nearly $128 million, but the NFL declined to say if other clubs were following the Packers' piggybank lead.

Players say that the $4 billion DirecTV deal signed with the owners in March will pay out $1 billion, no matter whether there's a stoppage. Football insiders just pray that players and owners hash out a deal quickly.

"The players of the National Football League are still in the dark about why this deal isn't good enough," Smith said. "And the easiest way to demonstrate any problem with the deal is the way any business in America demonstrates it: They turn over what the profit or loss numbers are. And if there's a problem with the model, we'll fix it.

"I haven't seen anything that would indicate to me that we have a problem with this model."