A look at the NFL labor mess

Wednesday, February 03 2010

In just over a month, the NFL is planning to remove its salary cap and toss it away like an old frisbee. In just over a year, once the current collective bargaining agreement expires and after more than 20 years of labor peace, this $8 billion a year industry may lock out its players. This article was written by Gary Myers and appeared in The New York Daily News.

It's Super Bowl week - and the posturing is sure to accelerate in south Florida in the coming days. The sand is just about out of the hourglass - the new league year starts on March 5 and the landscape is about to shift with the first uncapped year since the system was instituted in 1994.

The threat of a lockout by the owners in 2011 hangs over negotiations with the NFL Players Association that have gone nowhere, at least not so far, for a league that hasn't lost any games to labor unrest since the 24-day strike in 1987.

One thing is clear: The uncapped year is not going to be a financial bonanza for the players, even if a free-spending owner like Daniel Snyder of the Redskins can whip out his checkbook without worrying about the salary cap. As part of the new rules that go into effect during this final year of the agreement, the unrestricted free agency requirement jumps from four years of service to six. The players who have finished their fourth or fifth year are now restricted free agents.

The scouting report on the UFA market? Slim pickings.

The RFA market? Lots of good players, but the original team owns right of first refusal if it makes a one-year tender offer and receives draft choice compensation if it chooses not to match. That's a big deterrent.

Further, the "Final Eight" teams that made it to the divisional round of the playoffs including the Jets - are prohibited from signing unrestricted free agents until they lose one. The Jets face even more handicaps because they advanced to the Final Four.

The uncapped year was supposed to be incentive for the owners to get a deal done, just as the change on free agent guidelines and a reduction in benefits was supposed to jumpstart the players toward an agreement. Neither side, however, has choked on the poison pills.

The owners opted out of the last two years of the deal they signed in 2006 because they say the fears they had when they reluctantly signed it have come true: Too much of the revenue goes to the players (they currently get 59.9% of revenue) while costs have escalated.

As for the players, they say, "Show us your books."

Of course, there is one obvious question for both sides: How can an $8 billion a year industry have financial issues?
"If you don't manage your business by managing your costs and revenue, you end up in trouble," commissioner Roger Goodell told the Daily News. "There is a big difference between revenue and income. There are many examples of companies with billions in revenue that are not doing very well."

"If we can't get this resolved, we will collectively be the dumbest people on the planet," says agent Neil Schwartz, who represents Jets All-Pro cornerback Darrelle Revis. "No one is losing money."

The ultimate pressure point doesn't come until the summer of 2011, once teams are scheduled to report to training camp. If that date comes and goes and there is no football, then as each day passes, the prospect of the season starting on time or starting at all is jeopardized.

Will the owners actually lock out its players?

"Our attention is focused on getting an agreement," Goodell says. "That is where we are devoting our energies. We will have a new agreement. It's just a matter of when."

Goodell will meet with the league's owners Saturday morning in Fort Lauderdale, one day before the Saints play the Colts in Super Bowl XLIV and one day after he gives his state of the league news conference. DeMaurice Smith, the new executive director of the NFLPA, inherited quite a mess and will answer questions from the media on Thursday.

Here's your guide to the fun and games when labor problems ruin sports:

Capped vs. uncapped?

The 2009 season was the 16th year of the salary cap. This year the cap number was $128 million. Back in '94, the first year of the cap, it was $34.6 million. Business is good. But there is also a minimum that teams are required to spend: This season, for instance, it was almost $108 million.

In an uncapped year, teams can spend as much as they want. Will the Redskins become the Yankees? No cap also means they can spend as little as they want. Will the Bengals become the Pirates? Will the disparity in talent be so great between the haves and have-nots that the "any given Sunday" hope of the underdog will vanish?

"I don't think it will have an effect on the quality of the game," Goodell says.

Teams still share 80% of their revenue, which has kept the small-market teams in business and competitive. Snyder has proven over the years that you can't buy the Super Bowl. The Patriots and Steelers never spend anywhere near the cap and they combined to win five titles in the 2000s.

Who are the big losers in an uncapped year?

There are 207 players who would have been UFAs in a capped year who now are RFAs. Teams can tender offers to their RFAs, which often scares other teams away because of the draft- pick compensation. Lavernaues Coles moved from the Jets to Redskins as an RFA in 2003 for a No. 1 pick, but it doesn't happen often. The higher the tender, the higher the draft-pick compensation.
"I anticipate most restricted guys will be tendered at a number that will allow teams to keep them," one general manager says.

That means teams can sign their RFAs to one-year contracts without the huge signing bonuses that fourth- and fifth-year UFAs have been paid since free agency began in 1993. That's a big savings.

The best RFAs who would have been UFAs: Broncos WR Brandon Marshall, Texans LB DeMeco Ryans, Cowboys WR Miles Austin, Packers S Nick Collins, Chargers WR Vincent Jackson, Jets RB Leon Washington, Jets WR Braylon Edwards, Broncos LB Elvis Dumervil, Patriots G Logan Mankins and Chargers LB Shawne Merriman.

"There's not much I can do," Jackson said on the phone about his downgraded status. "Sitting around and worrying about it is not going to accomplish anything."

He wants to remain with the Chargers, and the labor standoff does not preclude the Chargers from signing him to a long-term deal. "I'm definitely ready for whatever happens," he says.

Will the UFAs cash in with no salary cap?

The class of 2010 UFAs have been in the league at least six years. By the end of the sixth season, the best players are usually in the
middle of their second contract. That is reflected in the small number of quality UFAs who will become available March 5.

The final-year rules allow teams to protect one UFA with the franchise tag and another with the transition tag. That potentially will
take players considered game-changers off the market.

The best of the UFAs are on the defensive line: DE Julius Pepper (Panthers), DE-DT Richard Seymour (Raiders), DT Vince Wilfork (Patriots), DE Kyle Vanden Bosch (Titans), DE Jevon Kearse (Titans), DE Leonard Little (Rams) DT Casey Hampton (Steelers). The best quarterback is Chad Pennington, coming off his third shoulder operation.

"I don't see most teams spending crazy," one NFL source says. "If anything they will spend less. I think you will see more below the minimum. It is a function of the economy we are in. There's not a lot of attractive guys out there anyway."

Agent Alan Herman says he believes "the owners see this as a way to reap huge profits for a year before they settle on a deal. It's calculated. They are looking forward to not having to spend a minimum amount on player salaries. We are heading down a nasty road as far as the players are concerned. An uncapped year really doesn't benefit them. I don't think there will be a lockout. After they generate all these profits, why would they lock the players out?"

Can teams still hand out big signing bonuses and not have to worry about cap ramifications if there is no salary cap in 2010?
Yes and no. If a team wants to frontload a contract and hand out a $40 million signing bonus, it won't have to worry about fitting it under the cap this year. But several NFL sources anticipate that as part of a new CBA, there will be transition rules that will pro-rate 2010 signing bonuses into future cap years. This will prevent teams from coming down with Snyder Syndrome.

"We need to make an agreement that is simple so everyone understands it and there are not all these loopholes," one source says.

Is this a good year to dump players with big contracts?

The line starts right here. In capped years, you often heard "it's cheaper to keep him." That meant the salary cap hit was so exorbitant because of pro-rated signing bonus money that teams were forced to hold onto players they no longer wanted.

But an uncapped year gives teams the opportunity to free themselves from bad players with big contracts. They don't get money back, but they can dump all the pro-rated portion into the uncapped year and not have to worry about it any more. Still, it will be tough for teams to rationalize cutting players who had huge signing bonuses, even if they have underachieved. That's why the Jets will probably keep Vernhon Golston.

The late Gene Upshaw, the former head of the NFLPA, often said that once the salary cap was gone it would never come back. If there is no agreement in the next 33 days, has the NFL seen the last of the cap?

The salary cap ensured parity. The Cowboys and Redskins are two of the highest revenue-producing teams in the NFL and in the best position to hand out huge signing bonuses, but nine of the 14 NFC teams made the Super Bowl from the 2000 Giants to the 2009 Saints and none of them were Dallas or Washington. The Giants, a mid-level revenue team because of their stadium, were the only NFC teams to get there twice.

Even though the owners may profit with no cap this year, in the long term they know they need it to achieve cost certainty. "I can't see the owners ever agreeing to a deal that doesn't have a salary cap," one NFL source says. "There will be a cap again."

Will the networks really be running Three Stooges reruns in the fall of 2011 instead of NFL games? Can there really be a lockout?

Each side has so much to lose by the doors being shut that it's still hard to believe the stadiums could be dark even for one Sunday.

"Our direction from the clubs is to get an agreement," says Jeff Pash, the league's lead negotiator. "Our direction is not to shut down the league. Anyone who believes the preferred option of NFL owners is to shut down the league is really divorced from reality."

The NFL protected itself by getting its 2011 network money guaranteed even if there's a lockout. That money is essentially a loan to help with operating expenses and will have to be made up to the networks. The NFL also hired attorney Bob Batterman, who advised the NHL during its lockout six years ago.

The players are protecting themselves, too. Giants player rep Shaun O'Hara says the NFLPA has instituted the "25/25 program," which encouraged players to set aside 25% of their salary last year and 25% this year, "so they have money if there is a lockout," O'Hara says.

The NFLPA has also created a fund to help players in need by increasing dues to $15,000 before the 2009 season, a $5,000 jump. The union is also holding back rebates and royalty checks.

"We want to work," O'Hara says. "We like our job. We love what we do. We want to play football." This article was written by Gary Myers and appeared in The New York Daily News.