Public discussion of the looming labor war in the National Football League has all but conceded that NFL owners will lock out players if there is not a new collective bargaining agreement by March 2011. Owners will not lock out players in 2011. Instead, NFL owners will employ a tactic that enhances their leverage in CBA negotiations, increases their share revenues over what they retain under the current CBA, and avoids the wrath of fans, which would surely follow a lockout.
Our labor laws are designed to encourage labor and management to work out their differences in a private contract (collective bargaining agreement). Labor law provides labor and management with swords and shields that enable each side to pressure the other to get a deal. The most significant shield is the non-statutory exemption to the antitrust laws, which insulates both labor and management from antitrust challenges. While lockouts and strikes are among the swords provided by labor law, impasse and decertification (and the rules relating to them) are more likely to be the weapons of choice for the NFL and the NFLPA as the current NFL labor dispute unfolds.
Work stoppages (strikes and lockouts) are the least desirable tactic in sports’ labor disputes because, as Commissioner Goodell noted in his recent Super Bowl press conference, both sides lose. When NFL players went on strike in 1987 (the last work stoppage in the NFL), owners compromised the integrity of the game by playing with replacement players and, after three weeks, players ended their strike because they could not endure the economic impact of a strike — no work means no paycheck. In the end, both sides lost. It does not matter which side initiates a work stoppage, each side ends up hurting itself as much as the other side. NFL owners will not lockout players in 2011 because there is a better option.
In March 2011, once the NFL and the NFLPA have negotiated to impasse, the NFL will invoke a rule relating to impasse and unilaterally impose new rules for wages, hours and other terms and conditions of employment that will be, as required by labor law, substantially similar to the last proposal made to the NFLPA prior to negotiations reaching impasse. The NFL used this tactic in 1987.
In response, in 1987 Gene Upshaw decertified the NFLPA as the collective bargaining representative of NFL players and, invoking a labor law rule relating to decertification, stripped the NFL of the antitrust exemption and opened the door for a wave of antitrust lawsuits against the NFL’s then unilaterally imposed system.
Without the antitrust exemption between 1987 and 1993, the NFL’s draft, free agency rules, and certain rules regarding player compensation were ultimately declared unlawful. Since 1993, each collective bargaining agreement in the NFL is a variation, in one form or another, of the settlement agreement that resolved the antitrust lawsuits that began with the NFLPA’s decertification in 1987.
In 2011, a unilaterally imposed post-impasse system will inure to NFL owners’ economic benefit. Commissioner Goodell recently reported that under the 2006 CBA, owners have generated $3.6 billion in incremental revenues and paid $2.6 billion of that “new money” to players. Owners will not be required to share a fixed percentage of revenue with players or fund collectively bargained benefits when the current CBA expires in March 2011. On purely economic terms, owners will conclude that unilaterally imposing a new system after impasse will cost them less than the $2.6 billion paid to players over the last four years. Some of the revenues that owners will retain without a CBA will be spent on litigation and other costs, tangible and intangible, incurred from the absence of labor peace, but by retaining a substantially higher percentage of revenues through a unilaterally imposed post-impasse system, owners achieve their primary objective in the current CBA negotiations. Impasse will shift the dynamic in collective bargaining negotiations in the owners’ favor.
As negotiations progress closer to March 2011, expect the NFL to tailor its collective bargaining proposals so that its final, pre-impasse proposal will have two features: (1) owners will make more money than they do under the current CBA and; (2) when converted into a post-impasse system, a reasonable chance of surviving years of challenges under the antitrust laws.
The NFLPA will face a tough choice if the owners press collective bargaining to impasse in 2011. Confronting a smaller piece of the pie under a new system will force the NFLPA to either strike or decertify. The NFLPA cannot strike, sacrifice players’ paychecks, and expose players to public ridicule. In response to an impasse, players will play and the NFLPA will decertify and file antitrust lawsuits attacking each element of the owners’ post-impasse system. This may be a risky, expensive, and time-consuming course for players.
The NFLPA’s antitrust successes between 1987 and 1993 were won on a different playing field. Then, the NFLPA attacked a draft that was 12 rounds (not seven), free agency that excluded players most likely to benefit from an open market for their services (Plan B), and fixed salaries that looked like a price fixing sitting duck (practice squad). The NFLPA’s successes in these lawsuits resulted in negotiated free agency for players and “cost certainty” for owners in the form of a salary cap. The result has been over 20 years of labor peace, which ushered in explosive growth in player salaries, the popularity of the game, and the value of NFL franchises. The current dispute over revenue sharing is not as dramatic as the 1987 dispute over free agency and cost certainty. In 2011, NFL owners’ downside may not be as great as it was in 1987.
Regardless of the outcome of the NFLPA’s antitrust challenges, it will likely take at least five years to obtain final rulings. In the interim, owners will save billions in player costs and fans will enjoy NFL football in 2011 and beyond. The open question is whether the ultimate benefit to players will be greater than the cost.