NFL: Dividing line drawn: Transition into uncapped year kicks off season of labor uncertainty
By JARRETT BELL
As usual, the NFL’s new league year and start of the free agency signing period begin on a Friday morning, just after midnight in the Eastern time zone.
Happy New Year? Maybe not.
This time the ball is dropping to christen the witching hour. The NFL this week enters the final year of its labor deal with the players, accompanied by a unique feature of the collective bargaining agreement that mandates it operate without a salary cap for the first time since 1993.
While the first reaction to an uncapped year might be that teams can load up with as many free agents as they desire without complying to a salary limit, fans had better hold off on the bubbly. There are different limits.
With the CBA set to expire in March 2011, this year is seemingly the precursor to a labor battle threatening to rock the foundation of the nation’s most popular sport and perhaps pave the way to the worst-case scenario of a lockout or other work stoppage.
“We - everyone who works in the NFL - are privileged to be part of the greatest game in America,” New England Patriots owner Robert Kraft said Tuesday via phone from Fort Lauderdale, where owners are meeting on labor negotiations. “If you grow the top line the right way, there’s something for everybody.”
Despite play uninterrupted by labor strife since 1987 - the longest current run of any major U.S. pro sports league - the NFL has seen its climate morph from an atmosphere of labor peace to labor war. The lines are distinctly drawn: Owners contend they are spending too much on player costs, which included a $123 million-per-team salary cap last season. Players scoff at proposed givebacks.
Never mind the league’s immense popularity, crystallized with a 2009 campaign that had the highest television ratings since 1989, capped by an audience of 153.4 million for Super Bowl XLIV last month that was the largest to watch a TV show in U.S. history, and revenue that swelled to $8.83 billion. In May 2008, owners voted unanimously for an early opt-out clause in the CBA.
“We just want to play football,” Patriots linebacker Adalius Thomas, one of his team’s alternate union representatives, said last week. “We weren’t the ones who opted out.”
During a Super Bowl news conference, NFL Players Association executive director DeMaurice Smith rated on a scale of 1 to 10 the chances of a lockout in 2011 at 14. Citing data from Forbes magazine, he maintained that asking players to roll back salaries is a “tough sell.”
“How do I go in front of my players with information from Forbes that teams average $31 million in profit and justify an 18 percent pay cut?” Smith said.
Last week, the players union, concerned that the absence of a salary floor attached to a salary ceiling will drive down payouts, proposed extending the cap system for another year while the sides worked toward a CBA extension. It was rejected.
“That’s why the owners terminated out of the deal,” NFL Commissioner Roger Goodell said at the league scouting combine. “They want a new deal, but they want to restructure it. They made the decision two years ago (that) they’d rather be in an uncapped year than the current deal. That’s what we’re trying to address.”
Free agency but no frenzy
The league’s modified position on a salary cap is striking. For many years, owners embraced the cap as a tool in maintaining competitive balance. Now it’s the players who want a cap and owners, at least for this year, who are eager to let it go.
In the midst of typical offseason business that includes evaluating prospects for the NFL draft in April, parties on both sides are in a wait-and-see mode regarding the impact of the changing rules. A prized, unrestricted free agent such as Carolina Panthers Pro Bowl defensive end Julius Peppers still is expected to attract attention on the open market.
Yet it is tough to project whether Peppers will command a wide-open bidding war in this environment. Team executives and agents expect many contracts to include language to account for a potential work stoppage and the possibilities of a cap or non-cap system. Several say they don’t know what to expect on the free agent market this year.
“It’s just an unknown,” San Diego Chargers general manager A.J. Smith says. “I have a comfort in knowing that whatever we have to deal with, everybody else is dealing with the same thing.”
This year’s restricted free agent list is filled with proven players who in other years would have been free to shop their services to the highest bidder.
Before this year, players with expired contracts needed to have played four seasons to qualify for unrestricted free agency. Rules for the final league year, however, bumped the requirement to six years, which affected 212 players. That effectively prevents star players such as Chargers linebacker Shawne Merriman, Miami Dolphins running back Ronnie Brown and Denver Broncos linebacker Elvis Dumervil, the NFL sack leader, from automatically leaving with mega contracts.
Restricted free agents still can fetch offers, but their existing teams have the option of retaining them by matching the deals or receiving draft-pick compensation.
Says Chargers tight end Antonio Gates: “I feel bad for the guys in their fourth or fifth year, like (Chargers wide receiver) Vincent Jackson. Now, unless there’s a new deal, he’s got to play until he’s 28 before he can get his second contract. And take a guy like (Cleveland Browns kick returner-receiver) Josh Cribbs, playing on all these one-year deals, while some rookie defensive tackle comes into the league saying he wants to make $10 million a year and hasn’t played a down? That’s got to change.”
Gates, an eighth-year pro entering the final year of his contract, touched on one of the thorny issues among veterans: rookie pay. When the Dolphins drafted Jake Long with the top pick in 2008, his five-year deal made him the league’s highest-paid offensive lineman, guaranteed about $30 million.
There is sentiment on both sides for a rookie wage scale. “They need to do it like the NBA,” Pittsburgh Steelers veteran linebacker James Harrison says. “Get a rookie salary cap, then let a guy play for three or four years and prove himself.”
The rookie contract debate, though, is a small part of what divides the two sides. The real issue stems from the owners seeking to have players contribute more to growing the business. Owners say the fact that players have been paid nearly 75 percent of $3.6 billion in new revenue generated since 2006 proves the current deal doesn’t work. The CBA was extended four years ago.
“We want to do a deal that’s good for both sides,” says Kraft, a member of the league’s top labor committee. “As owners, we assume the risks, debt and cost in growing the business. None of my other businesses spend 60 percent of the revenues on salaries.”
Players point to a $1 billion cost credit off the top, before the 59.5 percent used for salaries is equated, as the key contribution to developing growth. They have long contended that ownership reaps its biggest benefit when franchises are sold.
The union has asked for more access to the financial records, which the league has refused, preferring to use independent auditors.
“If they opened the books, maybe we’d roll back a few points,” Harrison said.
David Cornwell, who was a finalist for the top union job a year ago, suspects the league will declare an impasse in negotiations rather than declare a lockout. Work rules established by the owners would then be instituted. The union might then be moved to decertify, as it did in the late 1980s, as a basis to sue the league on antitrust grounds.
Such a scenario could take years to sort out in the courts - while games continued. “If it takes as long as it did the last time, from 1987 to 1993, that’s five years of substantial savings for the owners with reduced salaries and five years of continuing the games,” Cornwell says.
Court case `not make-or-break’
A case pending before the Supreme Court, American Needle Inc. vs. the NFL, might also be a factor. The case, with a ruling expected in June, questions whether the NFL acts as a single entity or as a collection of 32 teams. James Smith, a partner for Bryan Cave LLP who is not associated with the case, says, as a single entity, the NFL could not be charged as colluding to keep salaries down in an antitrust case. Smith senses skepticism on the high court for the NFL’s argument. Added Cornwell, “It’s not a make-or-break case for the NFL.”
That might not apply to players in a sport laden with injury risks. Agent Gary Wichard, who represents Dumervil, is miffed that owners were not penalized for opting out of the CBA. Instead, they gained leverage. Cornwell said the 212 suddenly restricted free agents could have received perhaps as much as $300 million in guaranteed money if they were unrestricted. “The language should have said, `If you’re going to opt out, there’s going to be a little penalty here,’ ” Wichard said. “Instead, it’s a reward for the owners.”
During the combine last weekend, with more than 300 college prospects trying to land NFL jobs, there was a concurrent buzz about labor.
“I don’t know much about it, but I hope it all gets worked out,” said Michigan linebacker Brandon Graham, a possible top-10 pick. “One thing I know, I’d better save my money.”