A little confused about all the legal jargon on Judge Doty's ruling on the reversal of the NFL TV's contracts? Me too. I'm pretty sure I understand what it means, but I've gotten a lot of questions as to what it all means. Click the jump, as I've found two people who've put words to it better than I can.
The NFL had previously negotiated contracts with the TV networks that would pay the league even in the event of a lockout or work stoppage. It was dubbed "lockout insurance" because it meant the league would have a stream of TV money coming in -- and no player costs -- in a lockout or work stoppage.
Sure, they'd have to pay it back but these negotiations are about leverage and part of that is who can survive a lockout the longest. The NFL's deal with the networks greatly helped their cause.
So, the news: Judge David Doty has ruled that the NFL's agreement with the TV networks violates the CBA. There will be a hearing to determine whether there will be financial damages and to determine whether the league will have access to the money in the event of a lockout. As of today, the league doesn't have access to the money and we're not sure when the hearing will be.
On the ruling, the NFL said in a statement: "As we have frequently said, our clubs are prepared for any contingency, this decision included. Today's ruling will have no effect on our efforts to negotiate a new, balanced labor agreement."
This has the possibility of being a bit of a game-changer in the negotiations. I doubt this has any affect on whether a deal gets done by the end of March 3rd when the current CBA expires. But maybe this is the kick the two sides needed to get moving.
Andrew Brandt of the National Football Post, who's been on both sides of CBA negotiations also explained exactly what it meant going forward and why it matters.
To review, the NFL negotiated television contracts in recent years that provided payment to the league in spite of games lost due to a 2011 lockout. Although all of these contracts – except for that of DirecTV – have setoffs in future years against payments made in a locked-out 2011, the money served as leverage for the owners to have a $4 billion war chest in the event of a work stoppage.
The NFLPA argued that the NFL breached its duty to its major partner – the players – to exploit revenues in its broadcast contracts. The NFL, the union argued, chose to negotiate "lockout insurance" at the expense of getting the most possible revenue from the deals, revenue shared by the players. After an earlier ruling allowed the NFL access to those funds, tonight’s ruling reversed that decision. The next step will be a hearing to determine the remedy to the players: financial damages (that will add to the NFLPA’s war chest) and/or an injunction preventing the NFL entry into that vault of money during a lockout.
Both sides have acted predictably to news of the ruling. The NFLPA is celebrating a victory towards shifting the leverage from an NFL ownership that they feel has stonewalled them in bargaining. The union has also declared victory in their assertion that the NFL has been in lockout preparations for years.
The NFL will naturally appeal, as they will take their chances at the appellate level. The league has also stated that negotiations would proceed with no variation: "Today’s ruling will have no effect on our efforts to negotiate a new, balanced labor agreement."
The biggest deal in the loss of this $4 billion is the fact that quite a few owners, and it's the big guns, are in massive debts because of their stadiums. Owners like Jerry Jones and Dan Snyder are paying massive stadium notes that have to be paid, lock out or not. This "insurance" is now gone, and it puts the owners in a bind. Even if Judge Doty rules that the NFL has to split this $4 billion with the players, that adds more money to the players union. If it's simply frozen, it still weakens the NFL's stance. The lock out is essentially which side can last the longest without being hurt. It's a game of chicken.