>League plans to lock out players, whose union decertified

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NFL labor talks broke down Friday, just hours before the collective bargaining agreement was set to expire, as the union rejected a proposal from the league, then decertified, and 10 players, including MVP quarterbacks Tom Brady and Peyton Manning, sued the owners in federal court.
In response, the NFL planned to impose a lockout of players, starting at midnight ET, after the CBA officially expired, two team sources told NFL Network insider Michael Lombardi. No official announcement of a lockout was made.
The players went to court to request an injunction to block such a move by the league.
Despite two extensions to the collective bargaining agreement during 16 days of talks overseen by a federal mediator — and previous months of stop-and-start bargaining — the sides couldn’t agree on a new labor deal.
“The parties have not achieved an overall agreement, nor have they been able to resolve the strongly held competing positions that separated them on core issues,” mediator George Cohen said. “No useful purpose would be served by requesting the parties to continue the mediation process at this time.”By dissolving and announcing it no longer represents the players in collective bargaining, the union became a trade association and cleared the way for class-action lawsuits against the NFL, which opted out of the labor deal in 2008. The antitrust suit — officially known as Brady et al vs. National Football League et al — attacked the league’s policies on the draft, salary cap and free-agent restrictions such as franchise-player tags.Invoking the Sherman Act, an 1890 federal antitrust statute that limits monopolies and restrictions on commerce, the players are seeking triple the amount of damages they’ve incurred. That means the stakes could be in the hundreds of millions.It could take a month for there to be a ruling on the union’s injunction request, and antitrust judgments should take longer.The CBA originally was due to expire last week, then was extended twice, in hopes that the sides could find common ground on the key issues: how to divide more than $9 billion in annual revenues, and how much financial information the league would be willing to reveal.”I would dare any one of you to pull out any economic indicator that would suggest that the National Football League is falling on hard times,” NFLPA executive director DeMaurice Smith said. “The last 14 days, the National Football League has said, ‘Trust us.’ But when it came time for verification, they told us it was none of our business.”
It all sets the stage for a courtroom fight. The last time NFL games were lost to a work stoppage came when the players went on strike in 1987, leading to games with replacement players.
Even though the NFL is early in its offseason — and the regular season is six months away — this is hardly a complete down time. Free agency usually begins in March, and hundreds of potential free agents are now in limbo. Also this month, under a regular schedule, offseason workouts would start, and the owners meet to establish rules changes.Plus, March and early April are when many sponsors and corporate partners renew their deals with the NFL, part of why the league says hundreds of millions of dollars in revenue now will be lost.
“This obviously is a very disappointing day for all of us,” New York Giants owner John Mara said. “I’ve been here for the better part of two weeks now, and essentially … the union’s position on the core economic issues has not changed one iota. One thing that became painfully apparent to me during this period was that their objective was to go the litigation route.”The NFLPA also decertified in 1989. Antitrust lawsuits by players led to a 1993 CBA that included free agency, and the union formed again that year.
The sides met from 10 a.m. until about 4 p.m. ET Friday, discussing a new proposal by the league’s owners. When the possibility of another CBA deadline extension was raised, Smith said the union first wanted assurances it would receive 10 years of audited financial information from the league.
“I will tell you this: Any business where two partners don’t trust each other, any business where one party says, ‘You need to do X, Y and Z because I told you,’ is a business that is not only not run well, it is a business that can never be as successful as it can be,” Smith said.At 4:45 p.m., Smith and the union’s negotiators left. About 15 minutes later, the union decertified, saying it now becomes a professional trade association that supports the interests and rights of current and former players.
The players’ union immediately shut down its websites — NFLPA.org and NFLPlayers.com. A search for NFLPA.org yielded this message: “Error 404: Football Not Found. Please be patient as we work on resolving this. We are sorry for the inconvenience.”
NFL general counsel Jeff Pash said the owners were on a conference call discussing the NFLPA’s financial-records request when the union decided to decertify.
“No one is happy where we are now,” Pash said. “I think we know where the commitment was. It was a commitment to litigate all along.”A league statement added: “The union left a very good deal on the table.”After Pash spoke, outside union lawyer Jim Quinn said: “I hate to say this, but he has not told the truth to our players or our fans. He has, in a word, lied to them about what happened today and what’s happened over the last two weeks and the last two years.”
Smith also strongly disagreed with Pash’s assessment of the deal. Smith said the players were willing to give the league up to $1 billion in cash per year to fill revenue gaps in exchange for an equity position in an NFL team or any NFL property.”And we were told by their lawyer a few months ago that his clients weren’t, quote, interested,” Smith said. “And when we made that same proposal today, we didn’t even get a response.”
The NFL said its offer included splitting the difference in the dispute over how much money the owners should be given off the top of the league’s revenues. Under the expiring CBA, the owners immediately received about $1 billion before dividing the remainder of revenues with the players; the owners entered negotiations seeking to roughly double that by having an additional $1 billion up front.
But the owners eventually reduced that to about $650 million. Then, on Friday, they offered to drop that to approximately $325 million. Smith said the union offered during talks to give up $550 million over the first four years of a new agreement — or an average of $137.5 million.
“We worked hard,” said NFL Commissioner Roger Goodell, who was joined at mediation Thursday and Friday by nine of the 10 members of the owners’ labor committee. “We didn’t reach an agreement, obviously. As you know, the union walked away from the mediation process.”
Also in the NFL’s offer, according to the league:

>One-Week Extension of NFL Talks Triggers Optimism Shutdown Will Be Avoided

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The extended labor negotiations between the National Football League and its players union may be the most positive sign yet they’ll avert a shutdown of the U.S.’s most popular sport.

Talks resumed yesterday for about four hours under the guidance of a federal mediator and the sides plan to meet again today in Washington.

David Cornwell, president of the sports law firm DNK Cornwell, said he’s increasingly hopeful for an agreement between the sides, which remain split over how to divide $9 billion in revenue — the most of any sports league.

“Both sides want to get a deal done, and we’re seeing that manifest in the fact that they’re continuing to talk,” Cornwell, who was an NFL lawyer and a finalist for the union executive director’s job, said in a telephone interview.

The NFL and NFL Players Association decided last week to twice extend the current collective bargaining agreement to continue negotiations. George H. Cohen, head of the Federal Mediation and Conciliation Service, said the latest one-week extension ends the evening of March 11. NFL Commissioner Roger Goodell and NFLPA Executive Director DeMaurice Smith have declined to discuss specifics of the talks, adhering to Cohen’s request to keep matters private.

“There’s a commitment on both sides to engage in another round of negotiations at the request of the mediation service,” Smith told reporters last week in Washington. “We look forward to a deal coming out of that.”

Owners voted in 2008 to opt out of the league’s collective bargaining agreement with players, saying it didn’t account for costs, such as those of building stadiums. Talks have also included topics such as expanding the regular season to 18 games from 16, a rookie pay ceiling and health care.

Setting Aside Revenue

The league wants to double the amount of revenue set aside for expenses before paying players, according to the union. Under the expiring agreement, about $1 billion is deducted before player payrolls are calculated for costs related to stadiums, marketing, NFL.com and NFL Network, according to Smith.

Had the deal expired, owners could have locked out players. The union could have abandoned its role in the talks and become a trade association, starting a process that would let players file antitrust lawsuits seeking to block a shutdown of the sport. The union used the same legal tactic after a 1987 strike broken by replacement players, spawning about 20 lawsuits, including one that helped create free agency.

Chris Carr, a union representative for the Baltimore Ravens, said he felt more hopeful when last week’s extension of the deadline pre-empted a union legal filing or an owners’ lockout.

“If they thought the best strategy was to lock the players out, they would not delay,” the Ravens’ cornerback said in an e-mail. “I am optimistic.”

Doty’s Decision

The week-long extension came three days after U.S. District Judge David Doty in Minneapolis ruled that team owners improperly negotiated $4 billion in television rights fees they might have tapped in a work stoppage. He will consider damages in a yet-to-be-scheduled hearing.

Doty, ruling on March 1, overturned an arbitrator’s decision rejecting a union complaint that the NFL improperly negotiated to receive broadcast rights fees from its most- important television partners — CBS Corp. (CBS), News Corp (NWSA)’s Fox, Comcast Corp. (CMCSA)’s NBC, Walt Disney Co. (DIS)’s ESPN and DirecTV (DTV) — even if a work stoppage cancels games in 2011.

Anthony DiClemente, a media and entertainment analyst for the Barclays Capital unit of Barclays Plc (BCS) and author of a report “Lockout Looms: Cause for Concern?” said Doty’s decision may help bring a deal more quickly, by placing both sides on a more equal footing.

‘More Optimistic’

“It’s likely to hasten talks and lead to a shorter-than- expected timeline on reaching an agreement,” he said in a telephone interview. Combined with the extension of talks, “We’re more optimistic that the two sides can come to a resolution than we were this time last week.”

The report found that CBS had the most at stake in an NFL work stoppage, because 41 percent of its 2010 national revenue came from its broadcast network and local television stations. Disney has the most to gain, because ESPN and ABC carry most college football, including 33 out of 35 bowl games, and ESPN is protected from a decline in advertising sales because it gets 62 percent of its revenue from affiliate fees.

A day after Doty’s ruling, the rating company Standard & Poor’s halved, to one year, a 2-day-old estimate of how long NFL teams could repay stadium bonds in a work stoppage.

Michael Cramer, director of the University of Texas’s program in sports and media, said the sides should reach an accommodation, for their own sakes.

‘Not a Path’

“Nobody wants to go through the difficulty of what would happen if you just let the contract die,” said Cramer, who is a former president of baseball’s Texas Rangers and hockey’s Dallas Stars. “That’s not a path you want to go down if you can avoid it.”

Cornwell said a lot of work remains to be done, on topics ranging from revenue sharing to performance-enhancing drugs.

“There’s more reason to be optimistic than pessimistic, but they’ve still got substantial ground to cover” he said. “The fact that they are still talking is a cause for optimism.”