NFL: Any labor lawyers here?

[GA Russell]

I know nothing about labor law. I don't understand this NFL lockout.

Since the union has decertified, that means that there is no union, right? So if there is no union, what is the logic of locking the players out?

[Chicago Expat]

I know nothing about labor law. I don't understand this NFL lockout.

Since the union has decertified, that means that there is no union, right? So if there is no union, what is the logic of locking the players out?

I'm not a labor or any kind of lawyer.

By decertifying, it allows the players to individually sue the NFL under anti-trust law.

As far as the lock out goes, it doesn't change anything. The owners and players still have to come to an agreement over how to divide up revenues. That's gonna have to happen before football gets played again.

Unlike certain state governments, it was never about trying to break up the union.

Edited March 14, 2011 by Chicago Expat

[GA Russell]

Expat, I don't see how you have dealt with the issue. If there is no union, why don't the owners sign anyone they want at whatever wage each player will accept?

Without a union, I don't see why the league has any need to come to an agreement with players regarding how to divide its revenues.

[Jazzmoose]

Expat, I don't see how you have dealt with the issue. If there is no union, why don't the owners sign anyone they want at whatever wage each player will accept?

I seriously doubt any players would sign a contract, for various reasons.

Without a union, I don't see why the league has any need to come to an agreement with players regarding how to divide its revenues.

Because nobody will pay a dime to watch an NFL executive...

[PHILLYQ]

By decertifying, the players are then free to sue on antitrust grounds with the possibilty of treble damages if they win- that's a huge hammer for the players and could result in damages in the billions. Without a union to bless the draft and some sort of salary structure etc the owners are legally acting in a non-competitive manner and are thus open to an antitrust lawsuit.

Of course the numbers are different, but what the owners proposed was about a 20% DECREASE in salaries for an 18 game season. That's about the same as say, you make 50,000/year for a 40 hour workweek and your boss tells you that starting next week you'll be working 45 hours for $40,000/year.

[papsrus]

... That's about the same as say, you make 50,000/year for a 40 hour workweek and your boss tells you that starting next week you'll be working 45 hours for $40,000/year.

Well, the percentage decreases aren't the same, but this scenario sounds awfully familiar.

Difference is, many folks who took pay cuts, and took on some of the added work of their laid-off former colleagues, are in struggling industries. The NFL is by and large thriving. Maybe not making as much $$$ at the stadiums as they could, but fat TV revenue is locked in.

In fact, the owners were able to accumulate a considerable 'war chest,' which they are presently legally barred from tapping.

I can't muster much sympathy for either side in this one. If the league (which, btw, isn't exactly overflowing with quality teams these days) stayed shuttered for the entire season, that'd suite me fine.

[Chicago Expat]

Expat, I don't see how you have dealt with the issue. If there is no union, why don't the owners sign anyone they want at whatever wage each player will accept?

Without a union, I don't see why the league has any need to come to an agreement with players regarding how to divide its revenues.

Ah, sorry. Here's the thing, all this money that's being made... tv revenues, ad revenues, merchandising, etc etc* aren't going into the owners' pockets for them to then fund their respective teams payrolls with. I mean, procedurally it may happen this way, but I believe that it works more to the effect of a giant revenue pool which no side (owners vs. players) have a right to without an agreement on how to divvy it all up.

(*I don't think ticket sales and stadium-specific revenues are part of the equation here; I think those go directly into the individual team owner's pocket)

The owner portion of the revenues (I think previously set at around 40% of total revenues) goes directly into the owners pockets, which they can use to upgrade their stadium or eat at Gibson's every night of the week. I'm pretty sure that money is theirs free and clear.

The players portion of that money is disbursed to players in the form of salaries. This is done through the salary cap (and related floor), which basically "gives" the money to the owners to pay the players they want on their team. The salary cap (and floor) is the same for all teams. So, see, even though the owners are "getting" the players share of revenues, they're really just acting as pass-through agents, and I suppose, since they choose who gets to be on the team, sorting mechanisms as well.

There's also a cut of those revenues that goes towards retired player pensions and benefits, and there's also other current player benefits it does toward, but the majority of player-related revenue sharing is for salaries.

In theory, if NFL owners wanted to field a team, they could use whomever they wanted, but I think they wouldn't have a right to any of those revenues. I believe those would stay in an escrow of some sort. I think they'd have to come to a separate agreement with tv,radio,media,merchandisers if they wanted to begin fielding scab teams. Honestly, I can't remember how that whole thing was handled during the last strike back in the eighties. This whole paragraph is kinda doubtful, based on memory first thing in the morning.

But I think the only way for owners and players to get at that money is for a new CBA to be in place, and by decertifying the union, well, there can be no new CBA if there's no entity which can legally bargain on behalf of the players as a collective whole. The thing is, the owners were already going to lock them out, so it's not like that was an impediment to anything.

EDIT: I should add that I haven't become a labor lawyer in the interval between my first post and this one.

Edited March 14, 2011 by Chicago Expat

[papsrus]

... So, see, even though the owners are "getting" the players share of revenues, they're really just acting as pass-through agents, and I suppose, since they choose who gets to be on the team, sorting mechanisms as well.

It seems like they are more than 'pass-through agents' here. The top payroll in the league in 2009-10 was the NY Giants at $138 million. The bottom payroll was the KC Chiefs at $81 million. What accounts for the disparity?

[Chicago Expat]

... So, see, even though the owners are "getting" the players share of revenues, they're really just acting as pass-through agents, and I suppose, since they choose who gets to be on the team, sorting mechanisms as well.

It seems like they are more than 'pass-through agents' here. The top payroll in the league in 2009-10 was the NY Giants at $138 million. The bottom payroll was the KC Chiefs at $81 million. What accounts for the disparity?

Well, some of that will be related to the difference between the salary cap and the salary floor (about 90% of the salary cap number).

But without researching the numbers you pulled, I'm gonna say that those salary numbers you posted are actual amounts paid out, but don't represent "Salary Cap Salaries" for the 2009-10 year. What causes the biggest discrepancy there has to do with signing bonuses. What happens is that when a player signs a new contract, let's say 5 years for $30 million, that player may get a $20 million signing bonus as part of that $30 million total. That's guaranteed money up front. The players gets that $20 million even if the team cuts him one week later. It's probably also reflected in the numbers you posted above.

But in terms of the salary cap, that $20 million signing bonus, even though it's paid on day one, the salary cap effect (or "cap hit") is spread out over the life of the contract. So even though the team paid out $20 million (plus any current amounts due of the remaining $10 million) during year one, only $4 million of the signing bonus ($20 million divided by 5 years of the life of the contract) is applied toward the salary cap of the current year.

So, even though you have that huge disparity in your posted salary numbers, the "cap amount" for the current year would have those teams much much closer in salary amounts paid.

Now, you're thinking, that seems like a way to circumvent the salary cap. In some ways it is, but what comes back to haunt teams who give the big signing bonuses is the backend of those contracts. Because for our above hypothesized player contract (and let's say for the sake of argument that the remaining $10 million is spread evenly over all five years, thus $2 million per year), even though in year two the team is only paying the player $2 million bucks, the player's "cap hit" is actually $6 million ($2 million Year 2 salary + $4 million of amortized signing bonus)... that's $4 million less that the team can use of the Year 2 salary cap on other players. This becomes a huge hindrance, especially if the hypothesized player turns out to be a real suck-fest or he gets injured or suspended or any reason for which you need to replace him, because now you not only have less cap money to pay other players but you also need cap space to pay his replacement. And the thing is, you can't necessarily cut him, because that could, depending on the terms of the contract, screw the team's cap space even more.

Let's say our above player gets cut during year two of the contract. That $20 million signing bonus, instead of being amortized against the cap over the 5-year life of the contract, now it's gonna be amortized over the effective two-year life of the contract, which means the player's cap hit against Year 2 is now a little under $12 million (original $4 million signing bonus amortization + original $2million Year 2 salary - pro-rated Year 2 salary saved by cutting player mid-season + additional cap hit from signing bonus now pro-rated over two years of $6 million). I can't remember, actually, how the re-allocation of the signing bonus on a cut player works, if some of that money goes to a previous year and potential penalties of that re-amortization brings them over the salary cap or if, in fact, the entire $16 million of unamortized signing bonus is applied in Year 2/Current-Year cap space, but that's over and above this conversation.

Anyways, Paps, I think that explains the disparity.

P.S. Still not a labor lawyer.

Edited March 14, 2011 by Chicago Expat

[Shawn]

The Giants have "star players" with inflated salaries.

The Chiefs have very few star players, so they don't spend as much on salary.

Operating like the Chiefs with a lot of salary cap space is a good idea, so when someone you REALLY want comes along, you have the money to get them.

[papsrus]

... So, even though you have that huge disparity in your posted salary numbers, the "cap amount" for the current year would have those teams much much closer in salary amounts paid. ...

Thanks. I just grabbed the numbers from a quick google search. Semi-random, and meant only to illustrate that some owners spend more, some less.

As best I can understand, every team is "required" to spend a certain amount (against the cap). I'm guessing that in 2010 KC was somewhere around the minimum threshold while the NY Giants were in the upper end of that range. I'd also guess that the ownership in KC basically pocketed the difference. Nothing wrong with that, but it's hard to cry poor if you do.

I recall that back in the day Bucs' owner Hugh Culverhouse made handsome profits year after year owning a losing team. Just kept the profits and didn't invest in the product. Generated a nice return.

[Chicago Expat]

... So, even though you have that huge disparity in your posted salary numbers, the "cap amount" for the current year would have those teams much much closer in salary amounts paid. ...

Thanks. I just grabbed the numbers from a quick google search. Semi-random, and meant only to illustrate that some owners spend more, some less.

As best I can understand, every team is "required" to spend a certain amount (against the cap). I'm guessing that in 2010 KC was somewhere around the minimum threshold while the NY Giants were in the upper end of that range. I'd also guess that the ownership in KC basically pocketed the difference. Nothing wrong with that, but it's hard to cry poor if you do.

I recall that back in the day Bucs' owner Hugh Culverhouse made handsome profits year after year owning a losing team. Just kept the profits and didn't invest in the product. Generated a nice return.

Okay, a couple things now that I'm wrapping up my second cup of coffee...

Your numbers actually may not reflect a salary cap disparity. The 2010 year was an uncapped year based on the last CBA. Now, most teams actually still treated it like a capped year, because when a new CBA is put into place, those contracts will have to abide by it, so teams didn't want to shackle themselves to contracts that put them into a bind like the hypotheses I presented above. However, with the current year, there may have been some wide discrepancies, so I'm no longer confident without looking more into your specific numbers to attribute them to cap vs. actual salaries.

And, yes, there is a cap floor, which is 90% of cap "ceiling". So if each team in 2009 had a cap allocation/ceiling of $128 million on which to use on salaries, their required floor (the minimum on which to spend those salaries) would be 90% of that $128 million, which comes to about $115 million.

Regarding your old-school Bucs, I don't think there was a salary cap/floor back then. I want to say that didn't show up until the early nineties. But, yeah, I recall some bad Bucs teams in the old Central Division back in the day and the payrolls to match their poor on-the-field output.

Edited March 14, 2011 by Chicago Expat

[Chicago Expat]

As best I can understand, every team is "required" to spend a certain amount (against the cap). I'm guessing that in 2010 KC was somewhere around the minimum threshold while the NY Giants were in the upper end of that range. I'd also guess that the ownership in KC basically pocketed the difference. Nothing wrong with that, but it's hard to cry poor if you do.

Something to keep in mind about pocketing the difference, unless a team is determined to spend as little as possible on salaries every single year, that money unspent on salaries during the current year is likely to get spent on future years. Because, remember, even though the team is able to amortize the huge signing bonuses over the length of the contract, they still have to have the actual cash in the bank to pay those bonuses to the players on signing day. Some teams will spend less than their maximum allowed cap salaries during a current year in order to have extra real cash on hand to target a player they want in the upcoming free agency period. Some teams, like NY or Dallas, rarely have to worry about cash on hand as a guiding principle, but small-market teams like the Chiefs and Bucs may have issues regarding their bank account balance. Of course, this is speculation on my part since I don't have access to their books, and besides, it's all relative anyways... this is huge money we're talking about and a dispute between billionaires and their millionaire employees.

The people I feel sorry for are the temp employees who need jobs like selling beer at the stadiums or stadium clean-up crews or ticket agents... all the hourly grunts who really need those jobs that result from an NFL schedule.

[Dan Gould]

Aren't those jobs the epitome of "part-time"? 16-game schedule, 8 at home, over a four+ month period. I'd think there aren't that many who truly rely on that income.

What I've never understood is the whole "we'll pay a big signing bonus up front but none of the salary is guaranteed" system. Doesn't this favor the best players at the expense of the guys who end up walking away from the game (if they can) having earned a lot less, or have some sort of career-ending injury after which they are immediately 'cut'?.

My question is, what would happen to the whole system if they scrapped signing bonuses but made salary guaranteed, as baseball does? Wouldn't that basically shift a lot of money from the stars toward the less-famous? Seems fairer for the rank-and-file than the system they have now. But I think its the stars who make sure that it continues.

Anyway, this is hardly at the forefront of the dispute, which is over divvying up the pie, not how the player's pie gets divvied up. But to me it shows how the player's union in baseball is so much more successful than the player's union in football.

[GA Russell]

I understand the antitrust implications, but I still don't understand the idea of a lockout. Does the union still exist or not?

If there is a possibility of playing with replacement players, then all the world is not locked out - apparently only those former members of a union which no longer exists.

Perhaps the union does still exist legally, and my assumption of the meaning of decertification is wrong.

By the way, something to keep in mind...I remember reading a few months ago the prediction/reminder that although all of the press would paint the scenario as owners vs. players, the real issue is owners vs. owners. Apparently some owners are doing just fine, while others are hurting. My understanding (and this may be wrong) is that teams that have been owned by a family for decades have inferior stadium revenues and can't keep up with the new money types like Daniel Snyder. I also understand that some recent owners borrowed too much money to buy the team, and are spending so much on their debt that they cannot compete with those in more comfortable circumstances.

[Chicago Expat]

Aren't those jobs the epitome of "part-time"? 16-game schedule, 8 at home, over a four+ month period. I'd think there aren't that many who truly rely on that income.

I guarantee you anyone selling beer at the stadium or cleaning up ain't making much money, and that any loss of income is categorized as significant. Plus, they probably have cobbled together two or three jobs together that all kind've fit into a year's job schedule, which makes it difficult to replace the NFL portion of that job schedule. It's not going to apply to all NFL-reliant positions (I think grounds crew has a different type of deal), but, yes, there are going to be some grunts that take a hit, making less annual income when they were already barely getting by.

What I've never understood is the whole "we'll pay a big signing bonus up front but none of the salary is guaranteed" system. Doesn't this favor the best players at the expense of the guys who end up walking away from the game (if they can) having earned a lot less, or have some sort of career-ending injury after which they are immediately 'cut'?.

I think the best players should make more money. The NFL has a healthy minimum salary level, though it's arguable if it's high enough in the scheme of things considering that many of these players, talented and average alike, have trouble walking and thinking by the time their career is over.

My question is, what would happen to the whole system if they scrapped signing bonuses but made salary guaranteed, as baseball does? Wouldn't that basically shift a lot of money from the stars toward the less-famous? Seems fairer for the rank-and-file than the system they have now. But I think its the stars who make sure that it continues.

Signing bonuses are the NFL's version of MLB's guaranteed contracts. I don't know that scrapping the current system for a more direct form of guaranteed contracts would change much of anything. I suppose players would have to wait longer to receive their money.

Anyway, this is hardly at the forefront of the dispute, which is over divvying up the pie, not how the player's pie gets divvied up. But to me it shows how the player's union in baseball is so much more successful than the player's union in football.

MLB's union make the NFL union look like chumps. There are some fabulously mediocre MLB players receiving some exorbitant guaranteed salaries. I mean, you've got utility second basemen getting seven figures.

[Chicago Expat]

I understand the antitrust implications, but I still don't understand the idea of a lockout. Does the union still exist or not?

If there is a possibility of playing with replacement players, then all the world is not locked out - apparently only those former members of a union which no longer exists.

At this point, the entire world is locked out. If the owners decide to field teams this year, they can hire, in theory, whomever they want. The NFL had a lockout/strike back in '87. Non-union/scab players were fielded by NFL teams. Some union NFL players broke the strike line, though a lot of that had to do with contracts that would've been voided had they not shown; most of those union-players played very little if at all, if my memory is correct. It was a different NFL legal landscape back then. I doubt player contracts wouldn't have clauses that dealt with this issue these days.

All in all, revenues were down big time. Owners lost money, players lost money, the NFL lost fans... it was a bad deal for all. Then they got a deal done. Now they're going through it again. No signal yet from owners whether they're entertaining the idea of scab games or not.

EDIT: Also, game quality was miserable. The NFL became a joke in terms of talent with the replacement players.

Perhaps the union does still exist legally, and my assumption of the meaning of decertification is wrong.

No, the union, from a legal standpoint, is over. It's what allowed individual players to sue the NFL under anti-trust, to say to a judge, hey, these bastards are a monopoly and they're screwing with us and out livelihoods.

By the way, something to keep in mind...I remember reading a few months ago the prediction/reminder that although all of the press would paint the scenario as owners vs. players, the real issue is owners vs. owners. Apparently some owners are doing just fine, while others are hurting. My understanding (and this may be wrong) is that teams that have been owned by a family for decades have inferior stadium revenues and can't keep up with the new money types like Daniel Snyder. I also understand that some recent owners borrowed too much money to buy the team, and are spending so much on their debt that they cannot compete with those in more comfortable circumstances.

All of this is correct. It's owner vs. player, player vs. player, owner vs. owner.

Something I was remiss in mentioning above regarding the signing bonus vs. guaranteed contracts in the post above is that a big thing that will come out of the new CBA will be a rookie wage scale. Currently, the biggest salary/signing bonuses aren't going to the biggest PROVEN stars, but the first round draft choice UNPROVEN rookies. Many of these guys flame out and it's all wasted money. The new rookie wage scale will shift a lot of that guaranteed money/cap space to players who've been in the league longer and who deserve it.

The NBA, which also has a salary cap system (though it's considered "soft" because of ways to legally get around it, purposefully planned that way by the league), it has a rookie wage scale which has been a big help to teams, as well as veteran minimum wage salaries as compared to non-vet min salaries, etc. The NFL will likely explore some of these other alternate wage scales. And they should.

Edited March 14, 2011 by Chicago Expat

[GA Russell]

A Cleveland season ticket holder has sued the Browns and the league on the grounds that the lockout breaches the contract terms of his personal seat license.

http://www.theglobeandmail.com/sports/football/browns-fan-sues-nfl-and-teams-over-lockout/article1956570/

[alankin]

Breaking News Alert

The New York Times

Mon, April 25, 2011 -- 6:11 PM ET

-----

Judge Grants Injunction to End N.F.L. Lockout Pending Appeal

A federal judge gave professional football players a

significant victory Monday, granting an injunction to stop

the N.F.L.'s six-week lockout Monday. Judge Susan Richard

Nelson of United States District Court did not stay her

decision, sending the N.F.L scrambling to seek a stay from

the Court of Appeals for the Eighth Circuit to prevent the

league from having to open for business immediately.

If the stay is not granted, the N.F.L. will have to put rules

in place allowing players to return to work and free agency

to open within days, creating a flurry of activity similar to

the normal operations of an off-season. Teams will be allowed

to hold workouts with players, players will be permitted to

meet with trainers to rehabilitate injuries and coaches to

study game film.

Read More:

http://www.nytimes.com/2011/04/26/sports/football/26nfl.html?emc=na

[Chicago Expat]

A Cleveland season ticket holder has sued the Browns and the league on the grounds that the lockout breaches the contract terms of his personal seat license.

http://www.theglobeandmail.com/sports/football/browns-fan-sues-nfl-and-teams-over-lockout/article1956570/

The lawsuit won't go anywhere, but as a fan, I totally think the guy is a hero.

Breaking News Alert

The New York Times

Mon, April 25, 2011 -- 6:11 PM ET

-----

Judge Grants Injunction to End N.F.L. Lockout Pending Appeal

A federal judge gave professional football players a

significant victory Monday, granting an injunction to stop

the N.F.L.'s six-week lockout Monday. Judge Susan Richard

Nelson of United States District Court did not stay her

decision, sending the N.F.L scrambling to seek a stay from

the Court of Appeals for the Eighth Circuit to prevent the

league from having to open for business immediately.

If the stay is not granted, the N.F.L. will have to put rules

in place allowing players to return to work and free agency

to open within days, creating a flurry of activity similar to

the normal operations of an off-season. Teams will be allowed

to hold workouts with players, players will be permitted to

meet with trainers to rehabilitate injuries and coaches to

study game film.

Read More:

http://www.nytimes.com/2011/04/26/sports/football/26nfl.html?emc=na

I haven't yet read anything about what the potential fallout from this will be. But from the view of my recliner, IMO, it will really test the resolve of the owner's solidarity. All it'll take is for one owner to scoop up another team's free agent or make a trade of draft picks with another team's arch rival, and then the owners will begin a major slap-fight over who's not being nice.

And if the owners don't go to any Machiavellian lengths to screw a division rival before an owner-friendly judge reinstates the lockout, the players will claim the lack of personnel activity is proof the owners are colluding against the players.

Heh.

Edited April 26, 2011 by Chicago Expat