Top NFL business stories of 2009
As the NFL regular season has ended, with an eventful offseason ahead -- we already have our first announced holdout, the Browns’ Joshua Cribbs -- we are less than two months away from a very different-looking NFL. With that said, it’s time to look back at the biggest stories in the business of football for the 2009-10 season, which are many of the same stories that will big in 2010-11. Let’s take a look:
1. The impending end of the salary cap
Despite several recent meetings between the NFL and its labor counterpart, the NFL Players Association, regarding the extension of the labor agreement ratified in March of 2006, it appears we’re headed for a different system come March.
The amazing thing about this negotiation, unlike any other in modern professional sports, is that ownership is ready and willing to embrace a system without a Cap and the players are arguing in earnest for continued operation with a Cap.
In looking more closely, one can see two reasons: (1) Among the poison pills built into a system without a cap are two more years required for free agency, meaning 212 players – including top players such as Logan Mankins, Elvis Dumervil and Vincent Jackson – who would be free to negotiate with any team in the league now cannot; and (2) the lack of a spending floor that will permit (encourage) teams to roll back player costs and gear up for the next system, with or without a cap.
2. The end of parity
The gap between good and bad appears to be widening. The successful teams of recent years – Patriots, Colts, Chargers, Eagles, Packers, etc. – continue to have success. The unsuccessful teams of recent years – Lions, Raiders, Browns, Rams, Bills, etc. – continue to have challenges (the Rams and Lions will draft in the first two slots in consecutive years). The games appeared less competitive, especially early in the season.
3. Big noise in March, little noise in January
Recession or not, the funny money spending on free agents and free agents-to-be continued in March, with mega-contracts setting new standards for the following players and positions: Albert Haynesworth (defensive tackle), Nnamdi Asomugha (cornerback), Jason Brown (center), Jordan Gross (tackle) and Shane Lechler (punter) and more big splashes near the top of the market for T.J. Houshmanzadah and Terrell Owens (wide receiver) and Matt Cassel (quarterback). None of the teams making big expenditures reached the playoffs.
4. Megadeals for some, waiting for others
Substantial contract extensions for quarterbacks Eli Manning and Philip Rivers happened prior to the season. The deals were strikingly similar, with Manning receiving a bit more in total value – $97.5 million in new money compared to $91.8 million for Rivers – and Rivers receiving a bit more in guaranteed money – $38.2M to $35M for Manning. In the key category of three-year value, Manning’s average over the first three years is $16.95M compared to $16.75M for Rivers. Large extensions were also given to the Bears’ Jay Cutler – $29.4M in new money, $9M guaranteed in 2009 and $20M in overall guarantees – and the Cowboys’ DeMarcus Ware -- $74.7M in new money with $39.4M guaranteed and a first three-year average of $15.9M.
Notable by their omission, however, were extensions for A-listers Tom Brady and Peyton Manning, both now with one season remaining on their deals, and Drew Brees, with two years remaining. In light of the uncertain bargaining situation, these contracts bear watching.
5. More rookie contract madness
Matthew Stafford became this year's poster child for the well-publicized insanity that is rookie compensation, inking the (still) largest amount of guaranteed money ($41.7M) in an NFL contract before, of course, having ever played an NFL game. Michael Crabtree joined the discussion by staging a holdout into late October before finally bartering a deal – with the aid of MC Hammer -- for more money from the 49ers over the first three years in exchange for adding a sixth year to his contract. This issue has also been used strategically by the NFL in its bargaining with the union to divide and conquer veteran and rookie players. Whenever a new labor deal is reached, there will be a different system of compensation for top rookies. Both sides want that.
6. Growing revenue gap between haves and have-nots
While Jerry Jones debuted his private Taj Mahal in Dallas this season and the embarrassment of revenue streams associated with it -- although minus a naming-rights sponsor -- other owners around the league watch and wait as the revenue gap between the high- and low-revenue teams widens. With the timing gone to seek public funding for new stadiums, ownership in Jacksonville, Buffalo, San Diego, Minnesota and Oakland can only watch while casting a hopeful eye toward Los Angeles.
7. The dropping of the supplemental revenue sharing program (SRS)
The league informed the union that with bargaining in flux, SRS funding will cease following the distribution of those funds from the 2009 season into 2010, meaning no SRS funds for lower-revenue teams in 2011. The league says this is no big deal, merely a tiny slice of the $6.5 billion in shared revenues among the teams and that there will be a new deal in place in 2011 anyway. The union is livid, noting that teams prepare their budgets based on expected revenue sharing and it will have a negative effect on spending by lower-revenue teams (among them the ones listed above looking for new stadiums). It’s unclear exactly how much money the SRS represents. The league has maintained the number is around $100M; the union says the figure is closer to $200M. The union has filed a grievance.
8. Potential lockout in 2011
Here’s what you need to know about 2011: All bets are off. The labor agreement expires following the 2010 season and there appears to be no resolution in sight. True, we are a long way from March 2011, but it will be here before we know it. The question becomes whether the NFL will be here with it.
Toward that end, preparations are being made on both sides of the labor dispute to prepare for the “lockout year.” The union has set up a lockout fund. The NFL has extended current broadcast deals that pay even in the event of the lockout. The league is also advising NFL front offices on a potential lockout with the legal assistance of Bob Batterman, the attorney who guided the NHL through its lockout in 2004-5, so there’s some history behind these decisions.
9. The concussion conundrum
This has become "the" issue in the NFL. Why now as opposed to earlier? A few reasons: (1) A study showing a greater incidence of brain injury later in life for NFL players, (2) a survey showing NFL players "playing through" concussions, (3) high-profile players such as Brian Westbrook, Kurt Warner and Ben Roethlisberger affected this season, and (4) Congressional hearings that have put the league and the union on the defensive, even comparing them to the tobacco industry. This has spurred action, including parting ways with the doctor who once led the NFL’s efforts and instituting new guidelines and empowerment of neutral specialists to determine the health of players independent from the team (we hope).
10. The StarCaps madness
Two of the top defensive playe rs for each of the two top seeds in the NFC playoffs – the Saints and Vikings -- were suspended for four games by the NFL over a year ago for violation of the Policy and Program for Substances of Abuse. However, the two Vikings players, Pat and Kevin Williams, sought refuge from the Minnesota state court and, despite the labor agreement dealing with this issue, were afforded protection due to the employee-friendly testing laws there. Since the two Saints – Will Smith and Charles Grant – tested positive for the same banned substance, Bumetanide, Commissioner Roger Goodell held up their suspensions in the interests of competitive balance. Although other players – Joselio Hanson of the Eagles and Dwayne Bowe of the Chiefs to name a couple -- received four-game suspensions for what we presume to be other substances, the sanctity of the policy is at issue with the Minnesota judicial decision. The union has joined the league in expressing a need for one uniform policy, yet this appears to be another issue teed up for bargaining.
And for a quick look at the coming business/legal issue of the new year:
American Needle vs. NFL is coming
It’s exceedingly rare for the U.S. Supreme Court to hear a sports case, let alone one involving football. Next week, however, the Court will hear arguments in the case of American Needle v. NFL, a case involving headwear on NFL players. The core issue, beyond the issue of apparel, is whether the NFL is deemed a “Single Entity” – essentially one company with 32 satellite offices -- and therefore immune from antitrust attack by NFL players.
Although the NFL has what amounts to an antitrust exemption in its negotiations or broadcast agreements, a broader decision from this case could give the league overriding leverage in its player negotiations. The union has before, and could again, use the tactic of decertification as a union to take advantage of antitrust law in suing the NFL for restraints of trade on players. Without status as a union, however, players could sue in antitrust court, as happened in 1992 and 1993 with name plaintiffs such as Freeman McNeil and Reggie White.
A decision in American Needle declaring the NFL to be a Single Entity would immunize the NFL from antitrust attack even in the event of decertification by the NFLPA, delivering a knockout blow to the union in its efforts to wrangle a better deal for players.
In noting the importance of the case, supporting briefs have been filed for the NFL by the NCAA, the NBA, NHL, ATP, NASCAR, MLS, MasterCard, Visa, Electronic Arts, etc. The NFLPA, MLBPA, NBPA, NHLPA and the NFL Coaches Association have filed supporting briefs on behalf of American Needle.
My sense is that the Court will deal with only the American Needle headwear issue rather than a broad game-changing ruling on an antitrust exemption, leaving that monumental decision to Congress if it chooses.
Quite a season in the business of football, although nothing compared to the offseason ahead.
Follow me on Twitter: adbrandt