View Full Version : Judge rules NFL violated agreement with union in TV deals

03-02-2011, 02:22 AM
Can you say "deal-breaker"? I think Greg Aiello's on drugs if he really believes this will have "no effect"..

A federal judge in Minneapolis handed NFL players a key ruling Tuesday in their fight to strip the league of $4 billion in television revenue they contend was unfairly and illegally secured as a way for owners to survive a lockout that could begin by the end of the week.
U.S. District Judge David Doty backed the NFL Players Association in its closely watched fight over the so-called "war chest" of broadcast revenue that the union contends is leverage the NFL is wielding against it in the labor fight.
The NFL's current collective bargaining agreement expires at midnight ET Thursday.
In his 28-page ruling, Doty criticized special master Stephen Burbank for legal errors and erroneously concluding earlier this month that the NFL can act like a self-interested conglomerate when in fact it is bound by legal agreements to make deals that benefit both the league and its players.
Doty instead declared the NFL violated its agreement with the union, which had asked that the TV money be placed in escrow until the end of any lockout. A hearing, yet to be scheduled, will be held to determine potential damages for the players as well as an injunction involving the TV contracts.
NFL spokesman Greg Aiello downplayed the significance of the ruling, saying the 32 teams were "prepared for any contingency."
"Today's ruling will have no effect on our efforts to negotiate a new, balanced labor agreement," Aiello said. He told The Associated Press that the NFL hadn't immediately determined whether or not it would appeal.
The case, however, has billions at stake.
The union accused the NFL of failing to secure the maximum revenue possible when it restructured broadcast contracts in 2009 and 2010, and claimed the deals were designed to guarantee owners enough money to survive a lockout. The union argued this violated an agreement between the sides that says the NFL must make good-faith efforts to maximize revenue for players.
Doty agreed.
"The record shows that the NFL undertook contract renegotiations to advance its own interests and harm the interests of the players," wrote the judge, who has overseen NFL labor issues since he presided over the 1993 decision that cleared the way for the current free-agency system.
Doty cited an NFL "Decision Tree" as a "glaring example" of the league's intent, and quoted from it: "Moving forward with a deal depended on the answer to the questions: 'Does Deal Completion Advance CBA Negotiating Dynamics?' If yes, the NFL should 'Do Deal Now'; if no, the NFL should 'Deal When Opportune.'"
Said George Atallah, the NFLPA's assistant executive director for external affairs: "This ruling means there is irrefutable evidence that owners had a premeditated plan to lockout players and fans for more than two years. The players want to play football. That is the only goal we are focused on."
The NFL has described the $4 billion as a loan that the league eventually would need to repay -- or make up to -- the networks, with interest. Doty said $421 million of the total would have been guaranteed without repayment.
In his ruling, the judge also revealed previously confidential details of league TV contracts and said the NFL "consistently characterized gaining control over labor as a short-term objective and maximizing revenue as a long-term objective ... advancing its negotiating position at the expense of using best efforts to maximize total revenues for the joint benefit of the NFL and the Players."
Doty suggested that the NFL had acquired vast negotiating power and pointed to an unidentified network executive's comment from the case.
"(Y)ou know you've reached the absolute limits of your power as a major network ... (when) the commissioner of the National Football League calls you ... and says ... (w)e're done, pay this or move on .... (the NFL has) market power like no one else, and at a certain point in time, they'll tell you to pack it up or pay the piper," the executive said.
Doty said at least three networks expressed "some degree of resistance to the lockout payments"; that the NFL "characterized network opposition to lockout provisions to be a deal breaker"; and that DirecTV "would have considered paying more in 2009 and 2010 'to have (the work-stoppage provision) go away.'"
The decision revealed that DirecTV, in fact, would pay up to 9 percent more to the NFL if no games are played in 2011. And of the total amount payable if there is a canceled season, 42 percent of DirecTV's fee is nonrefundable.
Under the CBS and Fox contracts set to expire at the end of the 2011 season, the NFL would have been required to repay CBS and Fox that same year if there were a work stoppage. Under the contracts extended to the 2013 season, the NFL will repay the funds, plus money-market interest, over the term of the contract, Doty wrote. And if the season is canceled, the contracts would be extended another season.
NBC's contract through the 2011 season contained the same work-stoppage provisions as the CBS and Fox contracts, according to Doty.
The judge wrote that during extension negotiations, NBC believed the NFL was "hosing" the network by its demands. To "bridge the gap," the league agreed to award NBC an additional regular-season game for the 2010 through 2013 seasons. The NFL didn't seek additional rights fees for the 2009, 2010 and 2011 seasons, and NBC agreed to pay increased rights fees for 2012 and 2013.
Although ESPN's contract wasn't set to expire until 2013, the work-stoppage provision was amended. In the negotiations, ESPN requested that the rights fee not be payable if there is a work stoppage, but the NFL rejected the request. Doty wrote: "The NFL stated that the digital deal and the work-stoppage provisions were 'linked,' ... To secure ESPN's agreement to the work-stoppage provision, the NFL granted the right to a Monday Night Football simulator via the wireless partner."
NFL lawyers that argued the league used sound business judgment to maximize revenue for both sides to share, but Doty wrote in his ruling that the NFL enhanced "long-term interests at the expense of its present obligations."
Indianapolis Colts (http://www.nfl.com/teams/indianapoliscolts/profile?team=IND) center Jeff Saturday (http://www.nfl.com/players/jeffsaturday/profile?id=SAT652599), a member of the NFLPA's executive committee, said the ruling was a "really good reversal."
"I'm not sure what all that means, as of yet," Saturday told The Associated Press as he left Tuesday's mediation session in Washington (http://www.nfl.com/goto?id=09000d5d81e8c973). "We haven't been debriefed. We just got the news when we were in the meeting, so I'm sure we'll hear more tonight. But it sounds very favorable."
Denver Broncos (http://www.nfl.com/teams/denverbroncos/profile?team=DEN) safety Brian Dawkins (http://www.nfl.com/players/briandawkins/profile?id=DAW041411), who also attended Tuesday's mediation session, told NFL Network's Albert Breer that the judge's decision was "huge."
"We want to get a deal done, and we're all for anything that helps that process along," Dawkins said.
When Breer asked Tennessee Titans (http://www.nfl.com/teams/tennesseetitans/profile?team=TEN) guard Jake Scott how significant Doty's ruling was, he said, "Very, I would imagine."
The Associated Press contributed to this report.


03-02-2011, 07:12 AM
My first thought is that without this $4 billion, the owners may make a few more compromises in the upcoming negotiations.

Atlanta Dan
03-02-2011, 08:09 AM
FYI is a link to Judge Doty's decision - the discussion of how the NFL renegotiated the TV contracts to try and buy a lockout war chest confirms some serious $$ being tossed around here

The NFL’s “Decision Tree” is one glaring example of the 4 NFL’s intent and consideration of its own interests above the interests of the Players. See Ex. 216, at 00081969. Moving forward with a deal depended on the answer to the question: “Does Deal Completion Advance CBA Negotiating Dynamics?” If yes, the NFL should “Do Deal Now”; if no, the NFL should “Deal When Opportune.”...

The NFL rankles under the restriction to its enormous market power imposed by the White settlement after the jury in McNeil found that the NFL had abused its power in unlawful restraint of trade. The facts underlying this proceeding illustrate another abuse of that market power wherein various broadcasters of NFL games were “convinced” to grant lucrative work-stoppage payments to the NFL if the NFL decides to institute a lockout. Typical workstoppage provisions anticipate a strike by players, not a work stoppage created by the NFL itself. Whether the contract provisions insuring these payments might ultimately be deemed unenforceable because of their potentially collusive nature is not an issue before this court, but the court does consider the abuse of the NFL’s market power when finding that it did not act in good faith to benefit both itself and the Players, as required by the SSA.


The order presents a good overview of how the owners are still ticked off about free agency being implemented after the NFL lost an antitrust trial (the McNeil case) in the early 1990s. I was unaware that, as noted in the decision, the late Dave Duerson was one of the plaintiffs, along with Reggie White who filed the lawsuit in the early 1990s to force free agency through the settlement agreement (SSA) to resolve that case.

03-02-2011, 04:11 PM
As I pointed out elsewhere, not even a day after the judge's decision they are talking about extending the CBA. Classic. Goodell is a complete nincompoop, and in this case, thankfully so.

03-02-2011, 07:13 PM
so what do you think is gonna happen now
$4 billion is a lot of money even for wealthy people
you still think there's gonna be a lockout
money can make you do strange things:chuckle:

03-03-2011, 04:02 AM
so what do you think is gonna happen now
$4 billion is a lot of money even for wealthy people
you still think there's gonna be a lockout
money can make you do strange things:chuckle:
You've been hanging out with thumper, haven't you?
Although maybe there's something to this and I'm just afraid...

03-03-2011, 10:45 AM
so what do you think is gonna happen now
$4 billion is a lot of money even for wealthy people
you still think there's gonna be a lockout
money can make you do strange things:chuckle:

My initial understanding is that no one gets it and it sits in escrow until they figure out a deal. Then it will be divided according to that deal.

Atlanta Dan
03-03-2011, 10:59 AM
My initial understanding is that no one gets it and it sits in escrow until they figure out a deal. Then it will be divided according to that deal.

Judge could award damages or enter an injunction while the lockout proceeds - the end of his order lays out the alternatives - of course a new CBA will include some sort of deal to resolve the matters covered by Judge Doty's decision

03-03-2011, 11:06 AM
I didn't read it, but good looking out.

03-03-2011, 03:42 PM
I find it ironic in the extreme that Goodell & Co. were trying to build a lockout nest egg with these TV contracts, and now the penalties and compensations they may wind up paying to the union will wind up supplying the NFLPA a strike fund. Hysterical.

Atlanta Dan
03-04-2011, 01:05 PM
I find it ironic in the extreme that Goodell & Co. were trying to build a lockout nest egg with these TV contracts, and now the penalties and compensations they may wind up paying to the union will wind up supplying the NFLPA a strike fund. Hysterical.

Yep - according to this story by Peter King today, a driving force that is keeping the owners at the table is a compelling interest to keep the dispute away from Judge Doty

The league has one more reason to want to make a deal now, two sources close to the talks say. The owners are desperate to not have U.S. District Judge David Doty supervise this bargaining agreement any longer -- and if the CBA expires, Doty retains control of the legal issues surrounding it. So Doty, unwittingly, has become the fourth major issue in the talks between players and owners. For months, the big three issues have been the owners' desire to have an additional $1 billion exempted from the revenue they share with players, the owners pushing a rookie wage scale, and the owners wanting an 18-game regular-season schedule to boost revenues for both sides.

Clearly now, Doty has emerged as a fourth key point of the talks. And that means it's highly likely the two sides will extend the deadline so talks can continue.

It was one thing for Doty, on Tuesday, to rule that the owners could not use their $4-billion pool of revenue to subsidize a lockout, which players had been chafing against for months. But the hidden meaning, and one not discussed nearly enough this week, came in the last paragraph of Doty's 28-page ruling.

"The court orders that a hearing be held concerning relief to be granted to the Players arising from the NFL's breach of the agreement,'' Doty ruled. "The hearing shall consider the award of both money damages and equitable relief, including injunction.''

That means Doty could hold the broadcast revenue in escrow for a full year, or until there's an agreement between the two sides. That would keep owners with annual debt-service payments of $50 million or more on their stadiums -- Daniel Snyder in Washington and Bob McNair in Houston are two owners with major mortgages on their facilities -- from accessing the TV money to pay for expenses during any prolonged labor dispute. How much could Doty sanction the owners? What could the damages be? No one knows, but he's issued so many rulings the owners loathe that they obviously are scared of finding out. And even though they could appeal Doty's ruling on damages to a three-judge Eighth Circuit panel, there's no guarantee that panel would be any friendlier to them than a widely respected jurist like Doty.


03-04-2011, 04:13 PM
Classic. Like I said before, after Doty's ruling, I fully expect them to continue extending the current CBA... for about another ten years. I also fully expect this to be Goodell's final year as Comish. Yay for everyone!