Monday, March 1, 2010

Countdown to the Real Kickoff – the NFL Lockout in 2011

Countdown to the Real Kickoff – the NFL Lockout in 2011
By Evan Weiner-The Daily Caller 03/01/10 at 11:56 AM
The National Football League is entering a new phase of the 2010 season, the player recruitment campaign will start on March 5 and there are new rules for this endeavor because the owners have decided to blow up the old collective bargaining agreement, a document that kept both owners and players relatively happy.
The March 5 recruiting season is a prelude to something bigger — a 2011 owners lockout.
The owners and players had a horrible partnership from the 1956 through 1993, and there were various players’ strikes. There was a brief, hardly noticed 1968 walkout by the players which got the players $1.5 million into the pension plan but kept minimum salaries at $9,000 for a rookie, $10,000 for a veteran and $50 per pre-season game for National Football League players. The combined National Football League and American Football League Players Associations struck again briefly in 1970 and the players got some improvements in salaries, pensions and other areas.
In 1974, there was another brief strike but there was no new collective bargaining agreement until 1977. The NFLPA struck in 1982 and 1987 and the 1987 labor dispute lasted until 1993 as the players took their grievances to the National Labor Relations Board and federal court and eventually negotiated a deal before Judge David Doty of the United States District Court for the District of Minnesota imposed a settlement on them.
Former NFL player Dave Meggysey joked that neither side, the owner or players, wanted Justice Doty to tell them what the new collective bargaining agreement should be and the judge kept around a big yellow envelope with his settlement inside but for all Meggysey knew, it could have been the latest issue of Playboy inside of Doty’s envelope.
The players and owners settled with the players getting 58 percent of league generated revenues, a $195 million litigation settlement for bills and free agency.
The free agency was a trade off. The owners will keep a salary cap and the players would become free agents after four years of work instead of six seasons. The final year of the collective bargaining agreement, if either side pulled out of the pact, would see players free agency start at six years while the owners would cede the salary cap. That clause kept labor piece between 1993 and 2009 because neither side wanted to give up a significant piece of leverage as the most players never even get to four years service and the owners could control players costs.
The owners blew up the contract in May 2008 and that has forced both the players and owners to use a different road map to construct teams for 2010 and beyond.
No one knows what will happen in 2011 when the collective bargaining agreement runs out but if there is a lockout or a strike and it is more than likely the owners will lockout the players once the CBA is through after Super Bowl XLV next February, what happens to the incident bystanders? The television networks, the marketing partners, the municipalities that put up money for stadiums and practice facilities, the corporate and fan partnerships for those who put up money for personal seat licenses and the non-football follower who is probably unaware that if they have a cable TV or satellite TV subscription that some of their money will be going to support the owners in a lockout.
The players and owners will eventually resolve their dispute although it may take a while. There is an usual circumstance here, the owners are not on the same page as large revenue producing teams don’t want to share all of their in-market revenue with the Buffalo, Cincinnati, Kansas City, Jacksonville and others. There may be a total of 15 franchises that don’t have the financial machines of Washington, Dallas, Philadelphia, Houston, New England and the two New York teams and want to keep revenue sharing strong. However, the money making machines in Washington, Dallas, Philadelphia, Houston, New England and in the New York area have huge bills that Ralph Wilson in Buffalo doesn’t have.
Dallas’ Jerry Jones has not sold naming rights to his new Cowboys Stadium in Arlington, Texas, Houston’s Robert McNair paid over $700 million for his franchise in 1999, Bob Kraft built the stadium for his New England Patriots in Foxboro, the combined Jets-Giants East Rutherford, New Jersey franchise has some public funding behind it in that New Jersey picked up infrastructure costs and the combined Jets-Giants entity is not fully paying property taxes to East Rutherford and is instead using payments in lieu of taxes to throw some money East Rutherford’s way.
So there are bills that need to be paid that Wilson or Cincinnati’s Mike Brown do on have. Wilson paid $25,000 to buy the Buffalo franchise in 1959 from American Football League founder Lamar Hunt. Brown’s family paid about $7.5 million to get a Cincinnati franchise in the American Football League back in 1967. Neither Wilson’s market nor Brown’s market can generate revenues like the big cities and that is a problem for old line NFL owners who perfected as sports socialism or as the former Cleveland Browns and Baltimore Ravens owner Art Modell, a proud Republican, once said, 32 Republicans who love socialism. For the record, not every NFL owner is a Republican.
It is unclear if the players have a war chest to last if there is a labor action, but the owners certainly do. And this is where the public gets involved. The owners will get their television rights fees from Sumner Redstone’s CBS ($622.5 million annually), from Rupert Murdoch’s FOX ($732 million annually), from General Electric’s NBC, from Disney’s ESPN along with John Malone’s DirecTV. Redstone, Murdoch and Jeffrey Immelt from General Electric ($600 million annually for Sunday night games) have guaranteed the NFL will get money whether there is a season, a truncated schedule or a full schedule for 2011. CBS, NBC and FOX are over-the-air networks, free TV but ESPN and DirecTV are subscriber supported and that is a problem for non football fans.
Will ESPN refund subscribers money for missed games? Will DirecTV also provide a refund for those who buy the NFL Sunday Ticket? Based on various labor actions in 1994 and 1995 with the Major League Baseball strike and the National Hockey League lockout, the 1998-99 National Basketball Association lockout and the 204-05 National Hockey League lockout, the answer is no.
Not one cable system operator or regional or national sports cable TV network returned one nickel to one subscriber despite not showing the product that subscribers were suppose to receive.
Fans always claim there is nothing they can do about sports labor actions. Little do they realize that they are being used in a labor action. Their money along with the other 93 percent who never watch ESPN or regional sports cable TV networks is going into an owners fund. DirecTV is paying over $700 million a year for the rights for NFL Sunday Ticket. ESPN gives the NFL $1.1 billion deal annually for Monday Night Football. A great percentage of ESPN’s money comes from 95 million subscribers, not advertisers, who have to take the channel whether they like sports or not because ESPN is part of a basic expanded tier and Congress refuses to even consider changing cable TV laws that would allow customers to opt out of taking ESPN or CNN or MSNBC or FOX News Channel or the Home and Garden Network or others who get basic expanded carriage from Comcast, Time Warner, Cablevision and the rest of the cable multiple system operators.
Will the NFL Network give rebates if there are no games?
There are so many other questions that will arise. How the league will deal with marketing partners if there is a lockout or strike and will the league push the NFL shield logo as a substitute for players and speaking of that, will the NFL use replacement players as the league did back in 1987 in an attempt to keep the game going and lure players across the picket line?
Will municipalities get paid after putting up enormous amounts of money to build new facilities or will owners try like Chris Cohan did in Oakland during the 1998-99 NBA lockout to not pay rent? Cohan eventually had to pay Oakland for the dates not used at the Oakland Coliseum Arena because the NBA initiated the lockout.
What happens to people who pay for personal seat licenses and tickets? Do they get refunds if there are no games or does the money that would go for refunds get applied to future games in say the 2012 or 2013 season?
A couple of other questions that also will rise. There is a theory that the 1994-95 Major League Baseball strike finished off the Montreal Expos as a franchise and that the Quebec Nordiques and Winnipeg Jets were irrevocably harmed by the 1994-95 NHL lockout and settlement. Will the Jacksonville Jaguars survive an NFL work stoppage and what happens in Orchard Park with the Buffalo Bills when Wilson’s lease with the various municipal entities in western New York State runs out after the 2012 season?
Finally, will Congress step in and attempt to force a settlement if there is a labor dispute. New York In October 2006, New York Senator Charles Schumer decided to “help” NFL owners break their logjam over how to redistribute revenues so comparatively smaller market teams — like Wilson’s Bills and Brown’s Bengals — have a chance to keep up with the big boys; among them Washington’s Snyder, Dallas’s Jones, Philadelphia’s Jeffrey Lurie, Houston’s McNair, and New England’s Kraft. Schumer was hoping the weight of his office, along with his effort to gather the bipartisan support of colleagues from several states that NFL teams call home, would pressure NFL owners into coming up with a revenue-sharing formula that satisfies owners from both the high and low-revenue end.
The Democrat Schumer and his fellow Senators — including Senator John McCain, a Republican of Arizona, and others from Florida, Georgia, Indiana, Louisiana, Maryland, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee, Washington, and Wisconsin tried to put the heat on the league’s owners to get on the same page.
They failed.
In the absolute extreme, the Senate could attempt to undo the 1966 AFL–NFL merger which combined the leagues by 1970 (retaining the name of the latter). Or they could unravel the 1961 Sports Broadcasting Act, which made legal a team’s sale of television and broadcasting rights packages to the networks. Both measures helped fuel the NFL’s popularity and owner profitability; a move to disrupt them would be the equivalent of throwing a Hail Mary pass with seconds left on the clock.
The new NFL player recruitment season starts next Monday but the real Super Bowl for the NFL owners, players, fans, non-fans and others connected with the NFL is still a year away.
Evan Weiner is a columnist, radio-TV commentator, author and lecturer on “the politics and business of sports.”

No comments: