Huge win for the players. Owners will not have access to TV money during a lockout. That’s gonna put the squeeze on some owners with lots of debt payments coming due.
I find this quote particularly interesting…
Also in his brief to the court – which Doty unsealed last Thursday – Kessler presented a memo obtained from a league broadcast committee meeting. In it Cowboys owner Jerry Jones is quoted as saying the owners “need to realistically assume [we are] locking out in 2011” to get a deal that works for the owners.
Hoisted on his own petard? Bet Jerry Jones is a real popular fellow around the league today…
Perhaps Jerry is the goat, but this access to TV money has been a extremely well known part of the negotiations. It’s also inconceivable that the networks would have agreed to pay billions of dollars for a nonexistent product without the NFL negotiating hard to get it. I cannot see this situation without believing it was a deliberate effort by the NFL to get protection during a work stoppage, and put themselves in a favorable position.
What I didn’t know was that this could be considered a breach of their existing agreement, I just thought it was clever negotiating.
Seems like the players would be best suited to let this thing play out in court. Also seems like they’re nowhere close to an agreement, so I doubt the current CBA gets an extension.
I was thinking about that myself…but then I thought, after the current CBA runs out and there is no existing agreement, how can anything be considered a breach?
IANAL, so take this for what it’s worth (just a shade more than zero would be my estimate).
I would guess that the Stipulation and Settlement Agreement includes some kind of clause in which the NFLPA authorizes the league to bargain for TV rights without the players’ input, provided that the NFL consider the interests of both the owners and the players when negotiating those contracts. If that’s true, it seems pretty clear to me that the lockout payout would violate that clause.
As for the expiring agreement, the argument would be that the owners must have accepted less money for the last few years in order to get the networks to agree to pay up even if there’s a lockout. Leaving that money on the table would have hurt the NFLPA, because the salary cap is based on league revenue - the players lost the fraction of that money that would normally have been paid out in salary.
Again, I’m not a lawyer, and I don’t really know what I’m talking about - just making some guesses.
IANAL either, but it sounds like breach of fiduciary duty to me. The owners had an obligation to the League & players to get as much money for them as possible. T.V. isn’t going to let the owners get a free X month float on the T.V. money without getting a concession elsewhere, probably a decrease in the money paid to the league for the T.V. rights. That decrease in money from what TV would have paid, absent the agreement to pay the owners without actually televising games, is coming out of everyone’s pocket. The player’s share of that decrease would be the damages from the owners’ breach.
Pretty much what Enginerd said.
What I don’t know is what’s going to be the remedies in the judge’s order. Will the existing TV deal be rescinded? Do the owners have to pay damages out of pocket to the players right now, or only when the games actually start? Disgorgement is one of the traditional remedies for breach of fiduciary duty; how will that apply here? Will the order be stayed pending appeal?
This is huge, despite the League’s protestations to the contrary, and I imagine will be promptly appealed. Not that the owners are going to lose now, but if the owners were allowed to keep the pre-paid TV money, I couldn’t see how the players could win. Now, if this order stands, I think you’ll see some of the more cash-strapped owners start to reconsider the wisdom of a lockout. Certainly, the owners are going to have to get creative in acquiring bridge financing, to service their stadium/facilities debt if nothing else.
I keep trying to understand the agreement from the TV networks’ point of view, and failing to see what’s in it for them. “In the event of of work stoppage, we’re going to pay the NFL HOW MUCH NOT TO PLAY NON EXISTENT GAMES THAT WE CAN’T TELEVISE OR SELL ADVERTISING FOR?!?!? WTF?!?”
*While talks continued into Tuesday night in D.C., one development early in the evening has the potential to have a significant impact on the negotiations: Federal Judge David Doty ruled that the NFL violated the CBA by agreeing to $4 billion worth of network TV rights fees that would be payable even in the event of a work stoppage in 2011.
Doty, however, did not yet rule whether the league owes the players financial damages due to the TV agreements, or specify whether the funds will be placed into an escrow account and kept off-limits to owners during a lockout, as the players have sought. Doty has ordered a hearing with the league and the players union to settle those issues.*
So more litigation is coming. Banks goes on to cite a Standard & Poors report saying the league could go at least a year into a lockout without needing the TV money…
The NFL contract is a money-maker for the networks. They sell billions of dollars of ad space during the games, and use the games to promote their other programming.
The networks likely felt that the risk of an extended period of no games to televise (i.e., a full season) was fairly low, and the money which they made from televising NFL games was worth that risk. There have only been two regular-season work stoppages in NFL history, lasting 7 games (1982) and 1 game* (1987).
one week was lost entirely to the 1987 strike; three weeks were played with strike-replacement players.
All of which is of course, continent upon there being games to televise. As per the Jerry Jones quote cited above, the owners are contemplating not playing the 2011 season, which means no games to televise, which means the TV networks are agreeing to “take a bath”, assuming that comes to pass. At the very least it amounts to an interest free loan from the networks to the owners, which isn’t a good deal for the networks, IMHO, YMMV.
The NFL set up their agreements to give them money during a lockout. They negotiated the agreements with a lockout in mind. That would indicate they intended to force a work stoppage. They were lying about trying to get a contract that would benefit the players too. They had every intention of busting the union and getting more games scheduled and cutting salaries. They are making boatloads of money. They just want more.