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The Inequities of the Proposed CBA

Our former team exec and former (and current) player agent outlines the problems he sees in the proposed CBA, especially as the players give in to a 17th game with little coming back in return.

As the NFL and NFLPA teeter on the precipice of a decade-long Collective Bargaining Agreement (CBA), I have shared my opinion of the proposed deal through various forums, and will now do so here. My goal is not to criticize or disparage either side of the negotiation, nor to serve either of their agendas. Indeed, both sides have appealed to me to frame the deal in a more positive light, a true sign that the NFL knows they are getting a good deal.

Using my perspective as a former (and current) agent, vice president of the Packers for a decade, an analyst on the business of football and a professor of sports law, I can hopefully provide truly unique insight on this proposed 11-year deal with some depth and nuance, devoid of “hot takes.” It is too simple to call out “winners and losers” from this proposed deal. Rather, I call out the inequities in the deal from the Players side, inequities that could be remedied without significant pain from the Owners side.

As of this writing, the 11-member NFLPA Executive Council, charged with steering the union, has been against the proposed deal by both a 6-5 and a 7-4 vote. As for the 32 player representatives from each team, their vote swung mildly in favor of the deal with a 17-14 vote (with one abstention). Now the proposed deal goes to the full population of 1900 or so NFL players, with a simple majority enough for ratification. Under any analysis, the NFLPA leadership is hardly giving this proposed CBA a ringing endorsement. And with good reason.

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Not Enough for 17

I have read the deal points and I have attended a meeting of NFL certified agents (I am one) where NFLPA leadership explained the terms. And I continue to believe that the Players are not getting enough for relenting on giving Owners the extra inventory of a 17th game. The Owners and their broadcast partners would be getting what they want while the product, the Players, would be sacrificing their physical capital for, in my opinion, hardly enough in return.

Ever since the idea of a 17- or 18-game schedule was first broached, there have been no mixed messages from them. Their reaction was (1) they would never agree to play more than 16 regular season games, and (2) it was disingenuous and hypocritical for Owners to suggest it while espousing the priority of player health and safety. Yet … here we are.

Listen, I get it. I have repeatedly stated that no CBA would happen without additional games, as that was the only bargaining chip that the Players have with true value to Owners. However, the Players needed to use that valuable chip for optimal gain. In my opinion, they have not.

Player leadership has said the Owners, in negotiating this deal, made 17 games “non-negotiable.” Of course they did. They want to grow their business, and adding inventory is an easy and efficient way to grow. But if the Owners chose make 17 games non-negotiable, why wouldn’t the Players then pick their issue to make “non-negotiable?”

For example, what if the Players said they were making one of these two issues “non-negotiable”: (1) a 50/50 revenue split to make the Players equal partners, or (2) an opt-out after four years to renegotiate a better deal.

I know and understand that negotiation with the Owners is difficult, but they have locked thousands of players, most not yet in the league, into a contract that gives the Owners more inventory and long-term cost certainty.

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Too Long

We are entering the final season of the ten-year 2011 CBA, the longest time frame of any CBA in any major professional sport at the time. That deal ensued from a 2006 CBA that (1) swung clearly in favor of the Players, and (2) contained an opt-out provision for the Owners, one they exercised to claw back a much better deal for themselves. It now appears the Owners are on the verge of imposing and even longer term—11 years—on the Players, with no semblance of opt-outs that they strategically leveraged in the prior deal.

It is easy to see why NFL owners want a long deal; it is the same reason NFL teams want long-term deals with individual players: cost certainty and continuity. The Owners are intent on commencing negotiations with their broadcast partners (with the added inventory of a 17th game), who will only buy-in knowing the product that is secure with no potential lockouts, strikes or work stoppages ahead. This, of course, gives the Players some leverage that, in my opinion, they have not taken full advantage of.

There is a narrative of fear of what might happen if the Players reject the current CBA; I believe that fear is misplaced. Could the Owners discontinue all negotiations, despite the broadcast partners wanting 17 games and labor peace, and simply lock players out with revisiting this deal a year from now? And could the lockout continue into the regular season 19 months from now? I suppose, but it is far more likely the Owners will not walk away from their most important partner of all, the Players. And, to make a deal, they would put a better one on the table than the one that was rejected now. The fear of Owners abandoning the Players for the next year is hyperbole; the Players have (had) more leverage than they think.

If the Players could only make only one change about the proposed CBA on the table, I would suggest they make it shorter and/or have an opt-out—even if a mutual one with the Owners—after 3-5 years. With these media renegotiations ahead, which will be massive, the economic landscape of the NFL will look quite different after those deals are made. Further, it is unclear the nature and scope of revenues flowing from (1) sports gambling and (2) biometric data (there is loose language in the proposed deal about both). It would certainly behoove the Players to re-assess the economic landscape and renegotiate terms, as the Owners were allowed to do as part of the 2006 CBA.

Of course the Owners don’t want that, even though they received an opt-out in 2006 and it would be fair for both sides. And aren’t both sides interested in being fair?

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Unequal Partners

Of all the dozens of deal points, the key tradeoff for the Players for giving up the 17th game is the Revenue Split (RS).

As background, the Players and Owners, prior to the 2011 CBA, had a RS that was, net/net, roughly a 50/50 partnership. As mentioned above, the Owners were not happy with that arrangement—the Cap spiked in 2006 and ’07—and they renegotiated a 53/47 RS advantage over the Players. Now, in exchange for the Players giving in to a 17th game, the Owners are willing to give back half (1.5%) of what they took away. Yet, in one of the more starkly unfair parts of this deal, the RS would remain the same, 47%, in 2020.

I cannot recall another renegotiation where one side enters into a long-term deal without improvement—even slight—on the key economic issue of the deal. Can you imagine a player contract where a team keeps the player at the same compensation in a renegotiation, only to improve it a year later. Why would the Owners not even offer 47.5% this year?

The RS increases to 48% in 2021 if the 17th game is not implemented or, alternatively, 48.5% if 17 games are implemented (which, of course, it will be). At that point, after two years of this new CBA, the increase in the RS for the Players stops, leaving 9 years remaining in the deal with no improvement on the RS.

Could the Players, for example, have had that percentage rise, say, to 49% after four years, to 49.5% after six years, and to a 50/50 split after eight years, with the NFL only having to equally share revenues for three of the 11 years?

I am sure Player leadership would say: We tried, and they said no. But again, if Owners made the 17th game, which does not serve the Players, a “non-negotiable,” then the Players could have made either (1) a shorter deal, or (2) a 50/50 split “non-negotiable.” Again, the Players had some leverage here, and the Owners are getting what they want.

And here’s a dirty little secret no one likes to share: the 47%—or 48% or 48.5%—is really not that at all. While the “All Revenue” name suggests, well, all revenue, Players do not share in categories like stadium naming rights revenue and some premium seat revenue.

This is the crux of the deal for the Players, who had been universally and adamantly opposed to the playing more than 16 games. Are they getting enough for the imposition of this extra game (and extra playoff game)? My answer would be yes if this CBA (1) ended in a few years with another renegotiation starting at 48.5% or (2) if the Players made this exact same deal without a 17th game as part of it. Otherwise, no.

A final note on 17 games: Does anyone think that the Owners will not, after this ten-year CBA, insist on an 18th game in the next one? Of course they will.

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Early Money, Long Deal

NFL Owners and team negotiators are very strategic in how they negotiate contracts (I know, I did it for ten years). Whether on an individual player contract or the collective CBA, they offer players “early money” to entice them to sign long-term contracts that provide cost certainty at fixed rates, especially in the latter part of the contract. It is a long-held negotiating strategy of management, in the NFL and beyond.

In this proposed CBA, Owners are enticing Players with $100 million in “new money” in 2020, largely through increases in minimum salaries. The Owners’ strategy is to please the majority of players who, they surmise, will find it hard to turn down an extra $100,000 for the uncertainty of a better deal down the road. It is up to Player leadership, however, to look past the early enticements and diffuse, not instill, any fear mongering about turning down this deal.

And that extra $100 million in 2020, which does not include an increase from 47% on the RS? That works out to just over $3 million per team, hardly enough enticement to lock into a ten-year deal with modest gains.

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Minimum Spending, Marginal Increase

Another aspect of a proposed CBA that I had hoped the Players would address is the minimum team spending requirements. As I have discussed here before, I thought the threshold was too low (89% of Cap) and the accountability period too long (four years). I had hoped for annual or even bi-annual inspections, especially with teams regularly carrying over tens of millions of unused Cap room, often in successive years.

In this new proposed CBA, the percentage moves from 89 to 90% and the inspection periods, over the life of the 10-year deal, are now three years, three years and four years. Again, I know there were other priorities, but this is an area that could have made true progress on holding teams accountable. Without it, Cap numbers and increases can ring hollow.

Finally, one area that received zero changed was the Franchise and Transition Tags, management weapons to (1) take the best free agents off of the market, and (2) leverage star players to accept contracts prior to reaching free agency with the specter of the Tag looming. And, of course, with only one team to deal with, the market value for these elite players’ is limited, affecting all players under the top. The Owners were not budging on this deterrent to market value, and the Players acquiesced.

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Owners’ Easy Gives

Owners continued their 2011 CBA strategy in providing Players non-economic “wins” such as a reduced offseason, less padded practices and added a five-day ”acclimation period” at the start of training camp. Players like it and it is good for Owners’ optics in this age of player health and safety. As for the coaches, universally upset with these provisions, they are not a party in this negotiation and are stuck on the outside again.

There are other soft, albeit important, wins for Players including increased pension allowances for former players with three credited seasons (the threshold had been four credited seasons), increases in the Injury Protection Benefit and matching 401K programs, increases in tuition assistance, and a network of hospitals to test and monitor former players. I do not mean to discount these gains made by Players, but in the scheme of things, these are not arm-twisting gives by the Owners.

Another “easy give” in light of societal tolerance is reducing marijuana testing from four months to two weeks and raising the threshold for a positive test. It begs the question: why have marijuana testing at all? I guess the Owners wanted something in there for appearance sake.

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Other Issues

As for discipline from the “Conduct Commissioner,” Roger Goodell is no longer jury but still (appellate) judge. And, in an under-the-radar footnote to this deal, Owners are given added rights with holdout players, from greatly increased daily fines to an ability to withhold Accrued seasons—which count towards free agency—from disgruntled players.

Finally, I think there are two areas especially important for the Players to protect, especially with a deal lasting over a decade: (1) equitable sharing of gambling revenues, and (2) control and usage of biometric data. The term sheet for the proposed deal contains general language on the issues, but I hope—for the Players’ sake—there is true control of these areas by the Players. Owners profess that gambling revenues will be shared as a percentage of Cap, but I am not convinced gambling revenues, such as the NFL’s deal with Caesar’s Palace now in place, are all shared. As for Players’ biometric data, this world is changing by the day and will look a lot different in a couple of years. I hope Players’ control of their data is protected and not for sale.

I know these deals are hard to negotiate and I know the NFLPA and Player leadership worked long and hard to accomplish this deal. And there are some positives and gains from this deal. But … there are inequities, inequities that have the NFLPA Executive Council against the deal and have the 32 player reps giving it lukewarm acceptance. That seems like a suboptimal way to go into an 11-year deal. While some stoke fear of the unknown if the deal is not accepted now, I think that fear is misplaced. The Owners need a labor deal to display to its media partners that they have (1) labor peace, and (2) added inventory of a 17th game. There is no fire; there is no lockout ahead for at least a year; there are no games to be missed for at least 19 months. And the Owners’ need for a deal is not going away.

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