NFL Lockout Breakdown

NFL Lockout! The Lockout is here! After two years of stop start negotiations since the NFL opted out of the league’s Collective Bargaining Agreement in 2008, the NFL Players Association (NFLPA) decided to decertify. The NFL responded by locking out the players and, with star player’s suits against the league already filed, football’s first work stoppage since the 1980s has begun. Let’s take a look at how we got here, the key issues still to be resolved for both sides, what is likely to happen in the future.

How Did We Get Here?

Sports analysts like to say that owners were very unhappy with the current NFL Collective Bargaining Agreement. The truth is, owners have been unhappy since they lost crucial leverage to the players during the late 1980s work stoppage. The owners were penalized for locking out players and getting replacement players for the season and the NFL was forced to institute free agency and divide up league revenues much more evenly with players. However, the NFL’s popularity grew rapidly in the 1990s and early 2000s so owners were content to tolerate the player’s gains. But the recently expired CBA, which was signed in 2005, represented a virtual surrender by owners to player interests and revenue was divided up so that 60% of the profits went to players for the first time. Owners were unhappy with the agreement almost from the get-go and, as profit margins dwindled even with the league still growing in popularity, NFL owners decided to opt out of the CBA early in 2008. As a result, the NFL and the NFL Players Association have spent the last two years trying to negotiate a new Collective Bargaining Agreement but the problematic issues separating the two sides proved too difficult to bridge.

What Were the Main Issues for Each Side?

The NFL Players want to maintain the status quo. At first glance, this makes them appear to be the injured party but the last Collective Bargaining Agreement was so clearly made to benefit the players that the NFL’s problems are understandable. But the NFL was a bit too greedy and far too opaque during negotiations. NFL owners originally want one billion dollars more exempted off of revenues (on top of the current one billion exempted for stadium upgrades) before dividing revenue, which would create a 50-50 revenue split instead of 60-40. Owners wanted an eighteen game season and a rookie wage scale for first round picks. Plus, they didn’t want to share audited financial information with the players before getting agreement on that deal, which all added up to two years of complete deadlock.

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However, the two sides made great progress during the last two weeks of federal mediation. The two sides were reportedly only two hundred million dollars away on the exemption payments; a lot of money but nonetheless only twenty percent of the original gap. Plus, owners agreed at the last minute to scrap the eighteen game season and to give veteran players most of the monetary savings from a rookie wage scale. The one issue stopping an agreement: the NFL still refused to share full audited financial records with the NFL Players Association. Unable to make a fully educated decision, the players opted to test the courts.

The Lockout and its Consequences

At first glance, the NFL Players seem to hold most of the leverage. The Players won a controversial decision last week that blocked NFL owner’s access to four billion dollars of TV revenue for 2011. The judge who granted that ruling, District Judge David Doty of Minnesota, holds jurisdiction over NFL labor matters and has ruled in favor of the players on almost every occasion. So, from that perspective, the courts seem like a good venue for the players: they can sue the league individually now since the NFL Players Association is dissolved, claim triple damages, and try to get detailed financial records.

However, owners have one major advantage that could prove their trump card: their collective and individual wealth. Although some owners owe serious debt payments on their teams and stadiums, most owners are very wealthy individuals who do not rely on their football teams as their sole source of income. Some are even billionaires. By contrast, most NFL players live paycheck to paycheck. Aside from some major stars, NFL players make one million dollars per year or even less and cannot last through a lockout. Before its decertification, the NFL Players Association stockpiled an emergency fund of up to sixty thousand dollars per player to tide them through a lockout. Sixty thousand dollars; considering NFL Player’s lifestyles you can guess how long that reserve will last. So, despite the player’s leverage over the TV money and the presence of Judge Doty, NFL owners are betting that they can either win a better settlement outright since the expired Collective Bargaining Agreement so obviously favored the players or appeal the decision, keep the lockout ongoing, and simply outlast the gradually depleted player’s reserves.

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The bottom line is that NFL owners know this is their chance to win both a practical and symbolic victory over their players. The NFL has not won a serious labor battle with players since the early 1980s and has gradually ceded more leverage to the players with each new Collective Bargaining Agreement. Owners look at the NBA, where half of all teams lose millions annually despite the rising popularity of basketball, and see their future if they don’t challenge the players now while they still can. The NFL owners are still rich, powerful, capable owners of profitable businesses and they know that they have a good shot of outlasting the players and arresting the trend that has seen player share of revenues grow exponentially over the last two decades. Looking over at the NBA and that league’s eight hundred million dollar deficit this year, can you really blame them?

Ultimately, the fate of the NFL lockout will come down to how the courts rule and, perhaps more importantly, how quickly they rule on the issue. If Judge Doty rules quickly in the player’s favor and appeals are denied, then the NFL Players could win serious damages and keep most of the benefits from the recently expired Collective Bargaining Agreement. But, the more this drags on, the poorer the NFL players would be and, if it drags on long enough, don’t be surprised to see them settle with the owners just to see their paychecks come in the mail again. Either way, there will be football again….but no one knows when. After two years of failed negotiation, that is now up to the courts.

Read more at NFL Lockout Summary and our latest Will New NFL Mediation Lead Anywhere?

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