Collective Bargaining 101

[Note by JimmyK, 02/04/11 9:40 AM EST ] - Very well done primer from the FanPost section by laxer298 on the basics of the new CBA, or lack thereof.  This will be the football world we live in after the Super Bowl this Sunday, so you may as well take a minute and begin to familiarize yourself with this mess:

So with the Super Bowl being played this weekend and several meetings between negotiators for the NFL and the NFLPA occurring the next few days, the biggest story leading up to the draft will be whether the owners and players hammer out a new CBA. The lack of CBA affects everything from free agency to whether there will even be a season in the fall.

There's a ton of information out there, and not all of it is completely accurate. I thought I'd go through a lot of the issues, the posturing, and the demands of each side, and the implications for the Eagles and the NFL.

I should disclose before I begin that I'm more of a "players" guy than I am an "owners" guy, not because the owners don't have a legitimate point but because, if they do, they're not providing any kind of evidence. Also, my only qualification for writing about this is that I took a Sports Law class last semester and I loved Antitrust law, and I've heard a lot of representatives from the NFLPA speak. I won't be sharing anything you couldn't find on the Internet, just hoping to make sense of it all.

The Basics

The NFL's Collective Bargaining Agreement expired after the NFL owners opted out of the agreement. The players were on board with renewing the CBA, but the owners, citing increasing operating costs, declared that they needed a larger share of the revenue pie. The NFL is an $8 Billion business. Currently, the NFL and owners get $1 billion off the top to pay operational costs. The owners receive 40% of the remaining revenue, and players receive 60% divided 3 ways: Player salaries, pensions for retired players, as well as a fund controlled by each team for education opportunities and post-career opportunities.

The NFL wants to take an additional $1 Billion off the top, essentially reducing the portion of the pie that's split 60/40. To make things even better, the 2 extra games they want to add to the schedule will generate an estimated $500 million per game, or $1 billion. If they add 2 games to the schedule AND get the extra $1 Billion taken off the top, players won't see any of the money for the extra 2 games. EVEN BETTER, the NFL's health care policy only takes effect after 3 years of time on the active roster in the league. That means that, with 2 extra games a season, players have 6 more games to make it to the magic number of years and receive their health care benefits. The average player's career in the NFL is less than 3 years.

The NFLPA's stance is that they would gladly take a pay cut (average of 18% per player) if the clubs would just open their books and prove that they're losing money. After all, prices aren't going down and the 6 or so games I went to this year were packed. The NFL certainly doesn't look like it's hurting.

Now, the NFL teams (with the exception of Green Bay) are private companies, and not many private companies open their books upon request to their employees. Legally, they don't have to unless they say the magic words: that they can't afford to pay wages and benefits, after which the NFLPA can seek an injunction. Until then, they don't have to open their books, and the NFLPA certainly doesn't have to take their word for it that they're losing money.

Leverage: Owners Have It, Players Want It

With the television contracts the owners have signed, basically guaranteeing payment even if they don't play games, the owners got a huge bargaining chip. Sure, some players have been saving money, but some of them have spent rather lavishly over the years, and none of them have the funds to survive a prolonged lockout. Therefore, the NFLPA has very little leverage at the moment.

That may change in the next few weeks. You've been hearing all season about teams voting unanimously to decertify as a union. This is where we get into Antitrust Law, and a short history lesson.

Antitrust is essentially anything that limits competition. For our purposes, we're mostly going to be talking about antitrust in terms of teams negotiating salaries with their players. Anything meant to suppress a player's salary is an antitrust violation. You see tons of blatant antitrust violations, especially pertaining to player salaries, in professional sports. The most obvious is the draft, a group boycott where teams agree not to negotiate with players that have been drafted by other teams, so each player is forced to negotiate with one employer or not play. If there was no draft, and players were allowed to negotiate with anyone they wanted, you'd probably actually see higher salaries for rookies than you do now. Insane, I know.

The NFL and AFL merged in order to limit competition. When players had their choice of league, salaries were much higher than after the merger because the leagues were bidding against each other for a player's services.

Restricted Free Agency is an Antitrust violation. Placing a franchise tag on a player is an Antitrust violation. These are ways of keeping players off of the free market and forcing them to sign for less than they probably could fetch if they were allowed to negotiate freely with anyone they pleased.

Why are these violations allowed to exist? Well, they were bargained upon and agreed to by the players' collective bargaining representative, the NFLPA. Due to a series of court cases involving the NFL and the NFLPA in the 60s and 70s (Mackey v. NFL, Powell v. NFL), the courts have established that, even though the Collective Bargaining Agreement expires, the exemptions still exist and the NFL cannot be sued as long as the Collective Bargaining Representative for the players (the NFLPA) exists.

That brings us to decertification. If the NFLPA decertifies, that allows the players to sue the league and the teams for Antitrust violations. That is, unfortunately, the only leverage they have.

What Does All This Mean?

Roger Goodell announced a couple months ago that he hoped to have a new CBA in place by the Super Bowl. That hasn't happened, and I read in the last couple of days that the meetings between negotiating teams this week and Saturday in Dallas were scheduled with the hope of agreeing to a new CBA by March.

The biggest immediate impact could be on Free Agency. Jason Cole of Yahoo! Sports wrote an article today in which he reported that the Union would fight the Franchise Tag, a clear Antitrust violation. As I previously mentioned, an appellate court determined in Powell v. The National Football League that non-statutory exemption lasts as long as the union does. Before they could fight the franchise tag, they would have to decertify.

Now, I think Michael Vick, who is expected to get tagged, will eventually be paid very handsomely, and probably by the Eagles. But the importance of it happening after a CBA is in place is so that we can structure his contract with the salary cap in mind (if there is one) so we know how much we can afford to spend on DeSean Jackson, (fingers crossed) Nnamdi Asomugha, etc. So the franchise tag is an important piece of the puzzle. It gives us an opportunity to keep Vick from hitting the market until we can give him a lucrative contract that works with our cap. I shudder to think what would happen if the Redskins or Cowboys had an opportunity to bid on Vick.

And it's not just the Eagles. The same Jason Cole article cited an agent as saying Peyton could fetch as much as $200 million if he were an unrestricted free agent and decided to leave Indy LeBron style. That's a bit extreme in my opinion, but if Albert Haynesworth is worth $100 million, it's not out of the realm of possibility. Salaries could get out of hand very quickly.

Fun fact: Quite a few people claimed that the restraint shown by the Dan Snyders and the Jerry Joneses of the world after the salary cap disappeared was an act of collusion, and Jason Cole stated in his article that a small market for Peyton's services should he hit the market would be grounds for a collusion suit. A writer even claimed that collusion was keeping T.O. out of the NFL after he left Buffalo. The problem with collusion (several employers agreeing to fix prices or wages) is that it's almost impossible to prove without a paper trail. If you see a collusion case, it's probably mostly posturing. Don't expect anyone to win it.

What to Look For

It's likely, as long as the NFL has all of the leverage, that a deal won't get done, because they're asking an awful lot of the players without proving their need. There's no reason for the NFL to back off of their demands, and, for the moment, there's no reason for the NFLPA to sign a deal that is disadvantageous to the players.

When the union decertifies, the balance will shift dramatically. We won't know how much until it happens, but decertification and Antitrust lawsuits were the catalyst for the creation of the last CBA. It'll likely be the same here. If/when it happens, looks for negotiations to heat up and a deal to get hammered out.