Friday, March 16, 2012
NFL Rulings make Strange Bedfellows
I am talking about the Cowboys and Indians, er, Redskins, and the latest NFL management decision, which actually demonstrates the kind of illegal, price fixing collusion that the NFL, in its court filings, swore up and down that it didn't engage in.
It's not really news here in Chicago because it affects teams outside the NFC North, but the League’s action in penalizing two clubs for providing huge payouts to players in the 2010 football season should raise some red flags. The 2010 season was unique – it was a so-called “uncapped year”, during which clubs can theoretically pay players as much (or as little) as they wanted without being in violation of the collective bargaining agreement. In case you are asking why clubs would ever agree to allow such a situation to exist (uncapped player compensation means that large market, cash-rich teams like, say, Dallas, or even Chicago – if it wasn’t run by such cheap bast, uh executives – could outspend other clubs and bring in talent that would rapidly destabilize the competitive balance), the system was designed to provide a significant disincentive for owners to allow the collective bargaining agreement to lapse.
Of course, a lapse is exactly what happened. The owners voted in 2007 to terminate the collective bargaining agreement, and then their negotiating intransigence allowed the uncapped year to occur. Washington and Dallas took full advantage of it, rewriting several existing contracts and dumping more than $50 million into player compensation that did not affect their ability to sign players in the future years. All perfectly legal, in fact the League approved the contracts in question when they arrived at League headquarters.
But apparently the NFL put out some “guidance” that clubs should not do this, even though it was perfectly proper to do so. In other words, the NFL told its owners that they should engage in price fixing and collude on player compensation, even though there was no contract in place that required them to do so. And this “guidance” was issued at the same time the NFL was denying that it engaged in exactly this kind of conduct as it defended itself against anti-trust charges from the union.
Even more interesting is the fact that clubs that did not spend up to the minimum salary floor (yes, Virginia there is a salary cap for clubs but there is also a salary floor, to prevent some teams from putting virtually no money into their player development and compensation) were not penalized.
By penalizing the Cowboys and Redskins, the NFL sends a direct message to the other clubs-- when it provides “guidance” on an issue, it expects everyone to follow suit, or else. This clear evidence of compensation collusion is likely to go unchallenged, at least by the union. That’s because the penalty against the Redskins and Cowboys translates into increased salary cap space for everyone else in the NFL, meaning more money for the players. So the union gets bought off here by having its membership get more money, while it turns a blind eye to the NFL’s deliberately and illegally restricting compensation.
I imagine people at the NFL offices on Park Avenue in New York are lighting cigars and saying “I love it when a plan comes together.”
UPDATE: No real news, other than the two teams will appeal the salary cap hits via the NFL's mandatory arbitration process. Good luck with that.