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Lockout primer: Inside the issues and where they stand

by | Special to CBSSports.com

After receiving a 24-hour extension Thursday, the collective bargaining agreement that governs the relationship between the NFL and its players will expire at 11:59 p.m. ET Friday. Before then, it is very likely that the NFL Players Association will decertify itself as a union and, for legal purposes, cease to exist. At that point, the relationship between the players and the owners, and the future of the league as a whole, will be entering uncharted waters. Thus, a simple primer on the dispute, and where it is potentially headed, is in order:

The dispute

As in all collective bargaining disputes in professional sports, there are a myriad of issues in which the players and the owners have different positions. However most are on the periphery and will quickly become completed if a resolution is reached on the major differences. What really governs this dispute then, are these three major sticking points between the two sides:

Roger Goodell and the NFL's lawyers try to sort out a confusing legal picture. (AP)  
Roger Goodell and the NFL's lawyers try to sort out a confusing legal picture. (AP)  
Revenue sharing: The last labor deal between the players and owners was the 2006 labor agreement extension that set a high mark for percentage of overall revenue going to player compensation. Unlike in other businesses, pro football players' wages are tied to overall revenues, not simply market forces. Thus as part of every collective bargaining agreement, the two sides determine how much of the overall revenues will go to players' salaries. In the 2006 agreement, the players received 59.5 percent of the league's $9 billion overall revenue after $1 billion was taken off the top by the owners for "cost credits." These cost credits refer to business expenses such as stadium construction and improvement, marketing of the product and branding of the various teams.

The owners want to add an additional $1 billion in "cost credits" to the amount of money that is taken off the top before the players' percentage of revenue is distributed. The effect would be to take the overall amount of revenue that the players receive down from 59.5 percent to around 50 percent.

The 18-game season: The owners have expressed an interest for some time in expanding the season to add two extra regular-season games. The move would of course generate more revenue for the league through its television deals and would potentially add more to the overall pot of revenues that are to be shared with the players. However, the players association has concerns about players' health and worries that the added games would cause shortened careers and long-term health effects for its members.

The rookie wage scale: The current rookie wage scale in the NFL is skewed toward the top of the first round of the draft, leading new players in the league to be paid increasingly large amounts of guaranteed money. The owners would like to alter the scale to change that division of money and potentially lower the overall rookie cap. The players are against a change in the current system.

Where we are now

As of now, the two sides are reported to be far apart in the negotiations with little movement on any of these issues. When the current CBA expires, there will be no agreement governing the relationship between the owners and the players.

The dynamics between the two sides changed dramatically this week, however, thanks to Tuesday's ruling by U.S. District Judge David Doty. The judge ruled on a case brought by the players, that the NFL violated its duty to bargain in good faith when it renegotiated a series of television contracts in 2008. Doty held that the NFL changed a number of the key provisions to the deals in order to plan for the contingency of a lockout. By changing the amount of payments due by some of its television partners and the penalties it would have had to pay to them in case of a lockout, the judge ruled that the NFL was shielding the owners for a potential work stoppage. Because the collective bargaining agreement requires the NFL to negotiate television rights deals not just for its own benefit, but for the betterment of the players as well, the judge ruled these agreements violated its provisions.

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The judge's ruling takes away a potentially substantial amount of money that the owners were counting on in order to survive through a 2011 lockout. With amounts estimated to be close to $4 billion in revenue now lost, owners no longer have this financial leverage they attempted to create to sustain the league during a prolonged work stoppage. The decision was a huge win for the players and now gives owners an even stronger financial incentive to come to a resolution before any actual games are missed.

Players union decertification

Before the Friday night deadline expires, the NFLPA is likely to decertify, which will result in its dissolution. According to the league's collective bargaining agreement, a decertification must be initiated by the deadline or the union will be unable to decertify for at least six months. In addition, a decertification decision before the deadline steers all future litigation brought by the players over the former agreement back in front of Judge Doty. The judge is the assigned decision maker for all litigation stemming from the collective bargaining agreement, but once it expires, so does his reign. Doty ruled favorably for the players this week on the television revenues and the players feel comfortable with him going forward.

The next step for players

If the NFLPA decertifies before the CBA expires, the entire dynamics of the process change. The players at that point will not be officially represented by a union and a number of different avenues of litigation against the NFL open up for the first time. Most importantly, individual players can come together and file an antitrust suit against the NFL, claiming it is acting in violation of federal law by engaging in monopolistic behavior. Workers that are represented by unions are unable to file such suits, but once the union is decertified, those claims become available.

An antitrust suit against the NFL could have dramatic consequences. Recently, the U.S. Supreme Court ruled 9-0 in American Needle Inc. v. NFL that the NFL was not exempt from charges of operating as a monopoly and antitrust claims. Just as in the 1980s, when NFL players decertified and sued the league individually, a new suit could have a wide-ranging scope. The original player suits brought about modern free agency, and new litigation might alter the way the business of football is operated. The salary cap, teams' use of the franchise tag, rookie scale limitations and other systematic features of the league would all be challenged and the likelihood of success for the players is high.

Decertification is not a strategy without risks. The players would have no say in terms of salary, benefits or any real ability to have an impact as to how the league operates. The NFL could make a number of changes to its structure and its relationship with the players, with no union with which to bargain or prevent such decisions. Changes in areas such as disciplinary conduct standards or drug-testing provisions could be instituted with no barrier from a union, creating a new status quo going forward.

The next step for owners

The owners have long assumed that decertification was likely. On Feb. 11, the owners filed a complaint with the National Labor Relations Board, alleging that the NFLPA had not entered negotiations in good faith. The NFL argued that the players' plan was to decertify from the beginning, in violation of federal labor law. The league claims that the players engaged only in "surface bargaining," with the intent of going through the motions in order to get to a stage in which an antitrust lawsuit could be instituted.

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The NLRB has not yet reached a decision on the NFL's complaint. Even if the players decertify, owners are still likely to lock them out at the midnight deadline. Then the owners must make the decision as to whether they want to continue to allow league operations to continue. They could choose to go forward with games without a player's union or simply shut down the league in total. If the NFL chooses to continue with the games, it opens itself up to harsh provisions in the likely antitrust litigation and the prospect of huge damages if it attempts to enforce any of its monopoly qualities (and there are many).

The future

If events happen as we expect, the future is murky. But here is the best guess to how events will proceed:

1. The NFLPA will decertify as a union: This must take place before 11:59 p.m. ET Friday or it cannot happen until September.

2. The owners will choose to lock out the players: This is actually not a certainty as it opens up the league to an undecided legal issue, mainly whether one can lock out a group not represented by a union. The law is unsettled in this area, as it is rare for a union to decertify due to a potential antitrust case. But if the owners choose this path, then a lockout of workers that aren't unionized could be seen by a court as an employer boycott, a potential violation of federal law.

3. The players will file an injunction with Judge Doty: Within a couple of days, the players will likely ask the judge for an injunction preventing the NFL from locking out the players. The decision might take some time and negotiation will likely remain ongoing during the process.

What happens after that is anyone's guess. This situation is uncharted legal territory in many ways and the uniqueness of the situation, with a union seeking to decertify for litigation purposes and the potential presence of a monopolistic employer, makes the next step unpredictable. What is predictable is this: If the union decertifies by Friday night, then the likelihood of a long, protracted fight continues to increase.


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