THE GATHERING STORM

October 17, 2010

A war of words over a new labor agreement has already begun, as NFL owners and players stake out their sides and make their cases in the looming battle over how to divvy up billions of dollars. What's at stake? The fate of football in 2011—and for years to come

They wouldn't dare. Would they? Would the players and the owners in the most lucrative league on the planet, with $9 billion in 2011 revenue at stake, play the biggest game of chicken in the history of sports labor? The NFL's collective bargaining agreement, negotiated in 2006 by commissioner Roger Goodell's predecessor, Paul Tagliabue, and former players association head Gene Upshaw, is set to expire in March 2011, and both sides want major changes in the way the sport is played and the money is shared. Football is a game of collisions, and there will be a series of them at bargaining tables on the East Coast over the next few months. If no agreement is reached by March, the owners could lock the players out. Or the union could decertify and file an antitrust suit. In either case there'd be no free-agent moves next spring, no minicamps, no contracts for draft picks—and worst-case scenario, no 2011 season.

Things are not off to a rousing start. Last week one influential NFL executive was bemoaning the state of the talks for a new CBA, acknowledging what he called the "nonexistent" progress in negotiations with the NFLPA, led by Upshaw's successor, DeMaurice Smith. "Nonexistent," he admitted wryly, is probably being optimistic. "We have to find a way to get De to see how good we all have it," the executive said. "We need to fix a few things, but we've got a great thing going."

While labor talk hangs over the 2010 season like a darkening cloud, don't look for an early resolution; these negotiations will be the most complicated in the 91-year history of the NFL, and many expect the real wheeling and dealing to wait until next July, on the verge of the 2011 season. Owners are looking to take $1 billion out of the revenue pool, and the players want more money for postcareer health care and for retired players. Where will that cash come from? Gentlemen, start your arguments.

The issues are manifold, but these are the four most important and difficult ones that the two sides will negotiate:

The billion-dollar giveback.

Because of declining public financial support for sports venues, owners have been borrowing like never before to construct new stadiums. In 1976 the Giants built $78 million Giants Stadium in New Jersey entirely with public funding, much of it from state bonds. The $1.6 billion New Meadowlands Stadium was built by the Giants and the Jets with practically no public funding; each team borrowed $800 million from banks and the league's stadium-financing account. Because personal seat licenses and other revenue sources won't be sufficient for owners to recoup all the money they've sunk into the stadium, they're asking for help from the players in the form of an additional $1 billion exemption from the revenue-sharing pool, estimated at $8 billion annually. That would bring the exempted fund to about $2.4 billion.

Owners are getting nowhere with this request. The players say, in effect, that workers aren't typically asked to help build factories, and they're not going to set a precedent.

The 18-game schedule.

On the surface, adding two games in a sport for which the public has an insatiable appetite doesn't seem like a big sticking point. But there are numerous complicating factors on the players' side—health care most notably.

Players with a minimum of three years' credited service now get five years of postcareer health coverage. The union argues that if the season is expanded, the three-year vesting time needs to be modified because players would be playing six more games in those three seasons. In a league in which the average career is 3.6 seasons, that's an important issue for hundreds of bubble players concerned with health after football. Also, coverage begins upon retirement, and the union says the first five years after retirement aren't when most long-term health issues arise. So it isn't just a case of the league's boosting players' salaries by 15% to account for the increase in games.

Sharing the wealth.

Players see no reason to change the current system of revenue distribution, which gives them, after some excluded fees, 60% of the total football revenue earned. Some owners want to explore a system in which players get a lump sum to divvy up—say, $4 billion a year. Teams will be more motivated to develop new revenue streams, it's argued, if they know they're going to keep that money rather than give 60% of it away.

Look for some of the league's more aggressive owners to advance this cause. Look for it to be a nonstarter. The last thing players want to see is wealthy owners aggressively selling more trinkets and jerseys with no benefit to the players. But some owners may be willing to sacrifice a chunk of the 2011 season to get a system more to their liking.

Life after football.

The first major line item the two sides will amend could be the rookie salary structure, fixing costs for each of the approximately 260 rookies per year by means of a slotting system. The two sides estimate that $200 million per year could be saved by such a system. But where will those savings go? To the veterans who've always been angered by, say, Sam Bradford's making more guaranteed money than Tom Brady before Bradford ever throws an NFL pass? To a so-called Legacy Fund that would dramatically boost pension payouts to players who retired before, say, 1990? To better health care for retirees and indigent former players?

Smith has said he won't ignore the men who made the game great in generations past; Hall of Fame running back Leroy Kelly's monthly pension of $176 is often brought up as an example of the league's poor care for elderly players. Everyone agrees that the pension and postcareer health systems need to be improved with a major infusion of cash. Where the money comes from is the question.

For now the players will throw as many legal challenges as they can think of against the wall and hope one sticks. They're investigating a collusion case, arguing that last off-season's relatively sparse free-agency movement is evidence that owners artificially held down the market. Collusion is always tough to prove: Football owners have never been found guilty of it, and this year they can point to a poor free-agent class and say the best players (Julius Peppers, Karlos Dansby, Dunta Robinson) got big contracts. Players have gone to court to try to prove that the $4 billion in network TV money that the league is guaranteed in 2011, football or no football, is a sham deal. (The league says the money is an advance on existing contracts.)

From the vantage point of mid-October 2010, it's impossible to know the end game. Four years into his term, Goodell has earned a reputation as a dealmaker, a good compromiser. Smith is probably not a players association lifer like Upshaw; he may be willing to take more bullets, and he's already made an ally in hardline former baseball-union boss Marvin Miller.

The players are talking tough now, which is not surprising this far out from a potential job action. But if owners are getting their TV money on schedule in 2011, the financial pressure will be squarely on the guys in the helmets and pads. The contest will turn into one of millionaires who are not getting paid versus billionaires who are. In that case, the smart money says it's probably a matter of time before the players cave.

ONE NFL EXECUTIVE BEMOANED THE STATE OF THE TALKS. "NONEXISTENT," HE SAYS OF PROGRESS, IS BEING OPTIMISTIC.

SMITH ISN'T SEEN AS AN NFL LIFER, SO HE MAY BE WILLING TO TAKE MORE BULLETS THAN UPSHAW WAS.

LEROY KELLY'S $176 MONTHLY PENSION IS OFTEN CITED AS AN EXAMPLE OF THE LEAGUE'S CARE FOR ELDERLY PLAYERS.

NFL POWER GATEFOLD

TURN PAGE

PHOTOHARAZ N. GHANBARI/AP (GOODELL)THE OWNERS' SIDE Goodell will push for an 18-game season and a larger pool exempt from revenue sharing. PHOTOJOSHUA ROBERTS/REUTERS (SMITH)THE PLAYERS' SIDE Among the issues paramount for Smith are better health and pension plans for retirees. PHOTODAVID BERGMANSOMETHING BORROWED Owners have taken out huge loans to build new venues like the Giants and Jets' $1.6 billion stadium. PHOTO

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