NFL Owners Unanimously Vote to Opt-Out of Labor Agreement

[Hooch]

On Tuesday, all 32 NFL owners voted to end their agreement with the Player's Association in 2011. The deal was set to expire in 2013 with two "escape clauses" during that time period. The two sides will continue to negotiate and have assured us that there will be no stoppage in play within the next three years.

The current deal was signed in 2006 and the owners' had a November 2008 deadline to opt out. They made the decision now so the issue would not interfere with the start of the 2008 football season.

In an appearance on Sirius NFL Radio, executive director of the NFLPA, Gene Upshaw expressed no surprise at this action taken by the owners. "When we negotiated this deal we had two stop points that you could decide to terminate, either side," he said. "Obviously, the owners have decided to take this termination early. We expected it. But it means that there is football through 2010, not through 2012."

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The owners commented that this year, they are paying $4.5 billion to players. That figure is just under the 60 percent of their total revenues as was specified in the 2006 agreement.

It took the two sides right up to the deadline to finally agree to the current deal, do not expect anything different in 2011.

NFL STATEMENT ON CBA EARLY TERMINATION DECISION

What happened?

The current Collective Bargaining Agreement, initially negotiated in 1993, has been extended on several occasions, most recently in March 2006. The 2006 extension, which could have continued through the 2012 season, gave both the NFL and the NFLPA an option to shorten the deal by one or two years.

NFL clubs today voted unanimously to exercise that option and to continue negotiating a new agreement for the 2011 season and beyond that will work better for both the clubs and the players.

What does this mean to fans and games on the field?

Even without another agreement, NFL football will be played without threat of interruption for at least the next three seasons. The 2008 and 2009 seasons will be played with a salary cap. If there is no new agreement before the 2010 season, that season will be played without a salary cap under rules that also limit the free agency rights of the players. If not extended, the agreement would expire at the end of the 2010 league year.

We are resolved to do our best to achieve a fair agreement that will allow labor peace to continue through and beyond the 2011 season.

What are the issues?

A collective bargaining agreement has to work for both sides. If the agreement provides inadequate incentives to invest in the future, it will not work for management or labor. And, in the context of a professional sports league, if the agreement does not afford all clubs an opportunity to be competitive, the league can lose its appeal.

The NFL earns very substantial revenues. But the clubs are obligated by the CBA to spend substantially more than half their revenues – almost $4.5 billion this year alone -- on player costs. In addition, as we have explained to the union, the clubs must spend significant and growing amounts on stadium construction, operations and improvements to respond to the interests and demands of our fans. The current labor agreement does not adequately recognize the costs of generating the revenues of which the players receive the largest share; nor does the agreement recognize that those costs have increased substantially -- and at an ever increasing rate -- in recent years during a difficult economic climate in our country. As a result, under the terms of the current agreement, the clubs’ incentive to invest in the game is threatened.

There are substantial other elements of the deal that simply are not working. For example, as interpreted by the courts, the current CBA effectively prohibits the clubs from recouping bonuses paid to players who subsequently breach their player contacts or refuse to perform. That is simply irrational and unfair to both fans and players who honor their contracts. Also irrational is that in the current system some rookies are able to secure contracts that pay them more than top proven veterans.

Our objective is to fix these problems in a new CBA, one that will provide adequate incentives to grow the game, ensure the unparalleled competitive balance that has sustained our fans’ interest, and afford the players fair and increasing compensation and benefits.