NFL Owners Opt Out of Labor Contract

The NFL Owners today exercised a little reported provision of the collective bargaining agreement reached in March, 2006 that allows them to opt out of the agreement. That deal increased the salary cap and the amount of "qualified revenues" the league earns. This revenue is things such as ticket prices, etc., but not stadium naming rights and the like.

At the time, the agreement was ratified by ownership 30-2. This move was unanimous.

Opting out forces both NFL Ownership and the NFL Players Association back to the bargaining table to renegotiate an extension to avoid a 2010 season without a salary cap and to determine how much money the NFLPA will receive from the league. Back in February, I suggested that ownership was more interested in maintaining the salary cap, than in pushing for a renegotiation and put that cap in jeopardy.

What I failed to consider was that the deal as originally struck was a last ditch effort to avoid a work stoppage, and had to be cobbled together by representatives of several teams. The union leadership was in a position that they grew stronger by virtue of the ownership weakening themselves with infighting. So rather than allow that to continue, the ownership reached an agreement they could live with for the time being while they got their own house in order outside of the spotlight of collective bargaining negotiations. Last month, I suggested that the Players Association had some of their own house in disorder, and it would seem this is a calculated move by ownership to capitalize on the situation.

Ownership is in really no worse a position than they would have been had they not reached an agreement at the time, and really, they're probably in a much better one in that they have had the time to recenter their positions.

What will be at play will be the definition of "qualified revenues" and the percentage of which the NFLPA receives a cut. I believe the owners are interested in a salary cap, so it will be interesting to see if the owners can come up with a creative way to address the demands of the NFLPA without breaking their solidarity.

The Players Association received some $4.5 BILLION from the NFL this year, so the league is healthy. The owners rationale for opting out is the increasing costs of generating revenues and the Union states that they will not agree to a salary cap if this one expires and will not accept a deal that gives them an "average of 60 percent of revenue." This means that the definition of revenue and the actual percentage will be at play, but will have to address the current amount the players are receiving. The challenge for the owners will be creating a system to which the Union can agree that would increase much more slowly than the one currently in place.