7 things to know about the NFL’s labor issues

On March 4, when the new NFL league year turns over, it is most likely that the owners will lock out the players, and what could be an extended labor impasse will begin. You’ll hear a great deal of rhetoric in the next few months, but here are seven major points upon which the current battle is being fought.

1. The proposed 18-game schedule is set up to be a money-grab for the owners.

NFL Commissioner Roger Goodell said the primary reason for the league’s proposal to increase the length of the regular season from 16 to 18 games is because he’s heard from fans who believe the preseason is a rip-off. And while it’s true that asking fans to pay full price for exhibition contests isn’t really fair, the real reason behind the increase in games that count has one motive: Money.

Teams can’t charge more per ticket with more regular-season games (unless they raise prices across the board), but they can certainly ask the networks for more money in TV deals, and get more from potential sponsors based on the NFL’s immense viewership. Let’s just be real about the fan motive – if Goodell cared about the fans, he’d simply keep the season at 16 regular-season games and cut preseason ticket prices.

2. The proposed givebacks would lower player percentages to pre-free-agency levels.

Goodell and the owners are trying to silence the concerns of the players about an expanded season by insisting that there will be increased revenue for everyone. What the NFL doesn’t want you to know is that at the same time it’s espousing the notion of more money to offset health and career length concerns, it’s also looking to ask for an 18 percent give back from the players for cost offsets – to pay for things line stadium expansion, travel, and all the money it takes to run an NFL team.

Sounds reasonable in theory, until you take into account that the players already give the first $1 billion over to the owners out of gross revenue before the pie is split. The NFL took in $9 billion in gross revenue from the 2009 season, and there are reports that the 2010 take may be even higher. But with an additional 18 percent giveback, the percentage of net revenue for the players would be the lowest it’s been since before free agency began in 1993. The fact that there’s so much more to cut up than there ever has been doesn’t erase that concern on the players’ part.

3. The NFL’s idea of a “rookie wage scale” is actually a veteran wage scale.

One thing you’ll hear a lot about from the owners’ side is the need for a rookie wage scale. And again, it’s an idea that seems reasonable on its face. When the Oakland Raiders draft a bust like quarterback JaMarcus Russell, they should not have to give Russell approximately $36 million in guaranteed money to be a failure at the NFL level. But because costs have accelerated beyond all reason for the upper half of the first round, teams are forced to risk tens of millions of dollars every time they take a player that high.

Initially, it was thought that a more reasonable proposal for rookie contracts at that high level would be something the sides could agree on. However, the owners have added constricting conditions to the proposal that make an agreement impossible for any union proposing to represent players. In a nutshell, the owners want every player on a set scale for the first four years of their contracts, with no ability to re-negotiate in the first three years.

So, the stud players like Sam Bradford or Ndamukong Suh would see their guaranteed money (which would now be less than guaranteed) plummet, with no agreed-upon salary dumps to go to possible solutions like a fund for retired players or a reserve for re-negotiated contracts. When Chris Johnson ran for 2,006 yards for the Tennessee Titans in 2009, he was in the second year of a contract that paid him $550,000 on a no-matter-what basis. He eventually came to terms with management on a more equitable deal based on performance, but under the new constraints, there would be no answer for him … or any lower-round player who exceeded expected performance.

Does that sound like a free market to you?

4. The NFL’s supposed concern about the health of the players is an absolute canard.

Goodell has also said that the reason players like Pittsburgh linebacker James Harrison is fined for hits that may or may not be illegal (based on the more restrictive rules, the players have said that they’re more confused than ever about what’s against the grain) is to clear the way for an expanded season in which the players can stay healthier.

However, when the league year turns over and the lockout begins, injured players will not be able to rehab their injuries at team facilities – they’ll have to find their own doctors, and pay for their own care out of game checks that won’t be coming anymore. You can imagine that the more progressive and compassionate owners will find ways to continue health care for the young men who put it on their line for their profit, but the NFL is anticipating a slush fund of more than $300 million in their coffers because they don’t have to fund player health care benefits in 2011. Keep that in mind the next time Goodell tells you that player health is a great concern.

5. The owners already have “lockout insurance” from two sources.

Of course, the first source is the health care money, but the second is a much bigger source. Special Master Stephen Burbank (you’ll remember him as the guy who ruled against the Seattle Seahawks in the Steve Hutchinson “Poison Pill” case) recently ruled that although the current TV deals negotiated with ESPN and NBC were violations of the CBA, the $4 billion the owners were due would not go into an escrow account as the NFLPA requested.

The players got about $6 million from Burbank in what can only be called an appeal decision, and the owners were given the insurance they needed to fund a protracted lockout. The NFLPA is appealing the decision based on its contention that the owners negotiated for a deal that would produce less money up front (thus affecting the revenue pool on both sides) for a provision in which the networks would agree to hand the money over, lockout or not. The appeal decision is expected before March 4, and it the players lose again, it gives the owners a disturbing amount of leverage.

6. The owners are crying poor, but refusing to open their books.

When the NFLPA and the owners met last week for a negotiating session, the NFLPA offered a straight 50-50 revenue split without the need to have the owners open their books and prove that their debt structure is nightmarish enough to require the additional givebacks now demanded. The owners have always refused, with one exception – the Green Bay Packers, who must issue financial statements every year as the NFL’s only publicly held team.

And even as a mid-market team from a revenue perspective, the Packers were averaging more than $20 million after all costs were accounted for every year from 2002-2008. You can imagine how those numbers tick up for the Dallas Cowboys and Washington Redskins. That the Packers’ annual total new revenue has dropped to an average of $4 million in each of the last two season – even after the increase in player costs – tells you that the NFL is as recession-proof as any business in American history.

7. The recent labor claim reveals the truth – expect a long and ugly fight.

On Monday, the owners filed a claim with the National Labor Relations Board in which the NFLPA was accused of refusing to bargain in good faith because the plan all along has been for the NFLPA to decertify. But it’s important to remember that it’s the owners who have made recent negotiations hostile (by acting in a condescending manner with star players like Peyton Manning and Drew Brees, as Carolina Panthers owner Jerry Richardson recently did) and canceling further sessions after orchestrated walkouts. In truth, the NFL does not want the Players’ Association to decertify and dissolve, because the players could then file an antitrust suit as a trade organization that has been locked out against its collective will. When the NFLPA last decertified in 1989, that action led the way for the free agency that came through in 1993 and started an 18-year run that has given the league and the players untold and unimagined prosperity.

Now, the owners are willing to kill the golden goose to exude control, and the players are left without a game that they want to play under an agreement that has actually worked for everyone. This labor battle is already ugly, but it’s about to get a lot worse. Picture a scenario in which the first shots have been fired at Fort Sumter, and think about how long there was to go before those two sides could find any kind of peace. We haven’t even seen the last of the opening histrionics yet; getting everyone on the same page will probably take a good, long time.