With a potential NFL lockout looming, a federal judge in Minneapolis gave a key ruling in favor of the players that could strip what the union has been calling unfair leverage for the owners in labor negotiations.
U.S. District Judge David Doty backed the NFL Players Association on Tuesday in a dispute with the league over $4 billion in TV revenue, money that players argue owners collected for a war chest to fund a lockout.
The league’s agreement with players expires at midnight ET Thursday.
Doty overruled a special master, declaring 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 damages for the players.
The union accused the NFL of structuring TV contracts agreed to in 2009 and 2010 so owners would be guaranteed money even if there were a work stoppage in 2011 — while not receiving the most revenue possible in other seasons, when income would need to be shared with players. The union argued this violated an agreement between the sides that says the NFL must make good-faith efforts to maximize revenue for players.
“The record shows that the NFL undertook contract renegotiations to advance its own interests and harm the interests of the players,” Doty wrote in the ruling.
Doty cited the NFL’s “Decision Tree” as a “glaring example” of the league’s intent. “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.
In his ruling, Doty revealed previously confidential details of league TV contracts and said that 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 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.'”
In the ruling, Doty revealed that DirecTV would pay up to 9 percent more to the NFL if no games are played in 2011 than if there were a season. 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 the 2012 and 2013 seasons.
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 spokesman Greg Aiello downplayed the significance of the ruling, saying that teams were “prepared for any contingency.”
“Today’s ruling will have no effect on our efforts to negotiate a new, balanced labor agreement,” he said.
Aiello told The Associated Press that the NFL hadn’t immediately determined whether or not it would appeal Doty’s ruling.
NFL lawyers have argued the league used sound business judgment to maximize revenues 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 center Jeff Saturday, 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 AP as he left Tuesday’s mediation session in Washington. “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 safety Brian Dawkins, 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 guard Jake Scott how significant Doty’s ruling was, he said, “Very, I would imagine.”
At a hearing last week, NFL attorney Gregg Levy argued it would be “repugnant to federal labor law” for Doty to intervene in the broadcast rights fees issue. Union attorney Jeffrey Kessler countered that the billions in leverage is part of a long-devised lockout plan and that the NFL didn’t act in good faith.
Doty said at the hearing that he didn’t want to put his “thumb on the scale of the collective bargaining” process.