MARCO ISLAND, Fla. -- Members of the NFL Players Association's executive team said Friday that the failure of the NFL to include players in projected revenue growth was critical to the breakdown in talks in Washington, D.C. a week ago, with the union then opting to decertify and the league subsequently locking out players.
NFLPA representatives addressed the media from their annual meeting here and implied they also remain open to having their legal counsel begin a dialogue with NFL officials before the April 6 hearing in Minnesota on the players' request for an injunction against the lockout.
Commissioner Roger Goodell and owners have made public statements urging more negotiations following the breakdown in federal mediation March 11, when both sides opted for other courses. With the NFLPA decertified, the trade association says it no longer is empowered to collectively bargain, but its lawyers still can seek a settlement with NFL lawyers. (The NFL has filed a claim with the National Labor Relations Board challenging the union's decertification). Judge Susan Nelson will hear a motion on the Brady v. NFL case in less than three weeks, and the NFLPA maintains that the NFL must send a letter seeking to renew good-faith negotiations before lawyers from the sides could confer.
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"Let's not kid ourselves," NFLPA executive director DeMaurice Smith said, "(NFL counsel) Jeff Pash was one of the lawyers who worked for the league in 1993 (during a lawsuit against the NFL). He knows that class counsel can always engage in discussions with counsel for the National Football League to have discussions relating to a settlement. He knows what letter should have been sent."
When asked if the letter Goodell sent to all players this week, asking the "Union" to get back to negotiating, was sent in good faith, Smith said: "No," later adding: "They know the proper way to engage in the discussion." Chiefs linebacker Mike Vrabel, a member of the NFLPA executive committee, said the NFLPA would be open to such talks.
"Provided with the right information," Vrabel said, "I don't see why it couldn't happen."
Numerous NFLPA officials objected to Goodell's letter. Linebacker Brady James, a Cowboys player rep, said he believed the intent of the letter was "to divide us," and James, Vrabel and other team reps took umbrage with Goodell continuing to refer to them as a "union" in the final sentence of that letter.
Pete Kendall, a permanent player representative for the NFLPA in negotiations with the NFL dating back to the opening of talks in 2009, spoke at length about the economic factors that led to talks breaking off last week. Kendall, one of more than 100 players and NFLPA officials meeting here, said the NFL in its final offer to players last Friday suddenly altered the parameters of how revenues would be split. According to Kendall, previous offers included a mechanism that, if revenue grew beyond the NFL's projections, enabled the players to share in that additional windfall. However, in the league's final offer, Kendall said, those "true-ups," were eliminated, effectively making players "a fixed cost."
"The better the league does going forward under its last proposal, the lower the percentage of revenue player costs would be," said Kendall in explaining why players declined to present a counter offer to the league's proposal last week.
Kendall said under the league's final proposal, the cap would have been $141 million, with "no upside" for players to share in revenue that exceeded projections, with 90 percent of it guaranteed. The NFLPA's offer would have included a $141 million cap, with the players sharing in revenues above 5.5 percent growth.
NFL spokesman Greg Aiello responded to that characterization via email:
"If the union had a problem, the best course of action would have been to make a counter-proposal, continue to discuss the issue, or explain the problem. They were in such a hurry to get out of the room last Friday and file their lawsuit that they never mentioned this so-called 'true-up' issue. The facts are that our proposal was for a fixed sum for both sides for four years with the clubs taking the financial risk that revenue might decrease or not grow as much as we thought.
"That is a real risk and happened in just the past couple of years. The 'true-up' concept was designed to occur after the league received credit for a range of expenses. But we were not asking for those credits from 2011-14 in the proposal. Also, we made it clear that there WOULD be a 'true-up' beginning in 2015 to reflect revenue growth generated from new stadiums, new television contracts, a possible shift to an 18-game season, and other potential opportunities."
As Kendall explained it, the model the sides were operating under during mediation, up until last Friday, started with the league projecting revenue growth of 4 percent for 2011 and 2012 and 2.5 percent for 2013 and 2014. If growth exceeded those projections, the owners would keep all revenue up to 1.5 percent above projections, with any revenue beyond that being split in a manner that would favor the players or be no worse than a 50/50 split, with an increased deduction for stadiums, as well.
With that mechanism removed from the league's final proposal, Kendall said the NFLPA had no interest in a deal in which cap numbers were fixed and which allowed players no ability to share in growth. Safety Ryan Clark, the Steelers' player rep, characterized the offer today as "the worst deal in the history of professional sports."
According to Kendall, the league's revenues have grown on average about 7.5 percent per year, well above the figures the sides were using in these proposals. With TV contracts set to expire in 2014, the NFLPA believes that in 2014, for instance, growth will well exceed the 4 percent threshold (the point at which players could begin getting their share of the additional revenue). Kendall, Smith and others also have pointed to Goodell's stated goal of $25 billion in revenue by 2027 as reason to anticipate continued steady growth.
"Those internal revenue projections, which we see as almost artificially low, hadn't served as a wedge issue all that time (through mediation)," Kendall said. As long as the possibility existed "of players participating on the back end through true-ups, it didn't really matter."
Last Friday, when those true-ups no longer were included and the league proposed the deal run for 10 years instead of the seven-year models the sides had been discussing, the NFLPA was surprised and disappointed, Kendall said.
"Friday was kind of the old switcheroo," he said.
The NFL generated approximately $9 billion in revenue in 2010, so Kendall used a hypothetical model of $10 billion in revenue for 2011, with 7.5-percent in growth. In that scenario, anything over 5.5 percent would be split by the sides. A 50/50 split of that additional 2 percent in revenue would amount to splitting $200 million; in the players' proposal, $100 million would go to the players in "deferred compensation," with everyone who played in the league in 2011 beginning to accrue payments they would receive "as players transition out of the game."
The NFLPA's concern with the league's offer is heightened by the role of television extensions, with negotiations likely to take place in 2013 during a time of what would be labor peace, and the amounts of those deals likely to greatly expand. Under the league's proposal, Kendall said, the players would have been cut out of any additional growth. Thus the NFLPA rejected the offer without a counter.
Aiello said: "What the union is saying now is that the cap didn't go UP by enough. There is no question (a) that we offered an amount equal to or more than actual cash spending in 2009 or 2010; (b) that we offered to increase that amount by $20 million per club over the next three seasons; (c) that every club would spend at least 90 percent of that amount in cash; and (d) that we would commit somewhere between $19 [billion] and $20 billion to the players in four years. In the face of that proposal, the union is now saying that instead of further negotiations the best thing to do was walk out of mediation, pretend to no longer be a union, and file a lawsuit. Those actions simply make no sense."
Kendall, like other players and former players here in Florida, also spoke about the NFLPA's request to see more financial data. He said the five-year data the league was willing to show was aggregate and surface-level, with players unable to see, for instance, how much family members and certain team employees, including the owners themselves, are paid by the clubs in salary each year.
To understand those numbers, Kendall said, the players must be able "to ask questions" and get more information on certain line items, which would not have been the case under the NFL's proposal. Thus players continue to ask owners to "prove" why they are asking to reduce the percentage of costs that go to players in the next labor deal.