Chris Carr, a players’ union representative from the Baltimore Ravens, said he’s optimistic that the National Football League and its players union resume efforts will make progress this week toward a new labor contract.
League and union officials -- arguing over how to divide $9 billion in revenue and avoid a work stoppage in the U.S.’s most- watched sport -- on March 4 agreed to a seven-day extension of their current collective bargaining agreement.
Had last week’s deadline had passed without agreement or an extension, the owners could have locked out the players and shut down the sport a month after the Super Bowl championship game drew the biggest audience in U.S. television history. That a lockout hasn’t happened is a sign that an agreement can be reached this week, Carr said.
“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.”
George H. Cohen, head of the Federal Mediation and Conciliation Service, said the extension would end the evening of March 11. Cohen, NFL Players Association Executive Director DeMaurice Smith and NFL Commissioner Roger Goodell all declined to discuss specifics of the talks when they left mediation on March 4.
“There’s a commitment on both sides to engage in another round of negotiations at the request of the mediation service,” Smith told reporters in Washington. “We look forward to a deal coming out of that.”
Antitrust Lawsuits
The union could have abandoned its role in the talks and become a trade association, starting a process that would let individual players file antitrust lawsuits against 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.
It’s a “good sign” that the union hasn’t decertified and the owners haven’t instigated a lockout, Carr said.
“The owners go about their business in a way that’s very conducive to getting a deal done, the players as well,” said Carr, who’s in his seventh NFL season. “I know the union has been doing everything they can to get a deal.”
Asked how he gets opposing sides to agree on issues, Cohen, who brokered a contract agreement last year between Major League Soccer and its players, said it’s not easy.
“The answer is based on longstanding -- look at my gray hair -- experience in collective bargaining negotiations,” he told reporters outside his office.
Negotiating Topics
Along with how to divide the league’s record revenue, negotiation topics include health-care for retirees, extending the regular season to 18 games from 16 and limiting salaries for rookie players.
The week-long extension came three days after U.S. DistrictJudge 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, upheld a union complaint that the NFL improperly negotiated to receive about $4 billion from its most prominent television partners -- CBS Corp. (CBS), News Corp. (NWSA)’s Fox, Comcast Corp.’s NBC, Walt Disney Co. (DIS)’s ESPN and DirecTV (DTV) -- even if a work stoppage cancels games in 2011.
Repaying Stadium Bonds
A day after Doty’s ruling, the rating company Standard & Poor’s halved, to one year, a two-day-old estimate on the impact of a work stoppage on the ability of the NFL to repay stadium bonds.
A lockout that extends into the season, which begins in September, would empty stadiums financed with a combined $7 billion in taxpayer money, interrupt the schedules of the largest U.S. broadcasters and leave fans without the sport that last season was watched by a record 207.7 million viewers.
The league estimates the labor dispute has cost $120 million in ticket sales and sponsorship revenue, and that the total would increase to $1 billion if it takes until the scheduled start of the season in September to reach agreement.
Every week of lost games would diminish revenue by about $400 million, according to Jeff Pash, the league’s chief negotiator, and Eric Grubman, the NFL’s executive vice president of business ventures.
Owners voted in 2008 to opt out of the deal, saying it didn’t account for costs such as those of building stadiums. They want to double the amount of revenue set aside for expenses before paying players, according to the union. Under the current agreement, about $1 billion is deducted before player payrolls are calculated, for costs related to stadiums, marketing, NFL.com and the NFL Network, according to Smith.
Paid Too Much
Grubman, a former executive at Goldman Sachs Group Inc. (GS), said the deal gives players too much money before accounting for costs. New stadiums raise league revenue, for example, thus increasing income for players. Meanwhile, owners bear the finance and operation costs.
The NFL’s popularity historically has bounced back from work stoppages. Paid attendance was about 13.6 million the season before a 57-day strike in 1982 and 13.3 million the season after. It reached a then-record 13.9 million three years after the 1987 strike, the most recent work stoppage.
The possibility of a lockout leaves governments that have subsidized NFL stadiums wondering if those facilities will stand empty during the season. Mayors and city officials of Houston, Miami, Minneapolis, San Diego and Kansas City, Missouri, have written the NFL saying a lockout may cost millions in revenue and wages for workers at stadiums, hotels, restaurants and other businesses that depend on games.
Pash said he wouldn’t be surprised if owners attend talks this week.
“I think there has been enough discussion and enough substance to the discussions that the mediators thought it makes sense to come back and keep at it,” he said.
