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.


  1. I don't know why this story is going away so quietly. Even if Dallas and Washington are choosing not to fight this, the reasons why they'd make such a choice would surely be fascinating to learn.

    Even if the NFLPA isn't inclined to fight this, isn't each team a party to the CBA? If so, doesn't that mean that each team has the right to claim CBA benefits and enforce its terms? That means that Dallas and Washington, in the old CBA, had a contractual agreement that said that in 2010, they could spend whatever they wanted. If they wanted to buy every free agent in the league with a contract for a hundred million in 2010 and a dollar a year for ten years after, that was their contractual right, wasn't it?

    If they have that contractual right, then league "warnings" not to exercise that right should be legally meaningless, right? "I told you not to do what your contract gives you the explicit right to do" generally doesn't stand up in court, I wouldn't think.

    Which the league seems to understand, because its statements seem to be carefully couched to avoid saying that the two teams are being penalized for any legal breach or rule violation. Instead, they seem to just say that adjustments are being made to ensure competitive balance.

    I gather that this is an attempt to keep the penalties within the framework of the stuff that everybody agrees that the commissioner can do -- managing the competitive aspects of the game for the overall good of the league. But I would also think that there's some sort of general provision that prevents this commissioner exercise of discretion from singling out franchises for disparate treatment. The league, in the interest of "competitive balance," couldn't just decide that the Patriots needed to go a few years with 45 man rosters and no first round draft choices, right? There has to be something in the league charter that says that the other teams can't just vote to make the Pats play offense with three downs instead of four. So I've got to think that there's no catchall authority to allow the league to vote to penalize franchises without there having been some violation of the rules. Which all parties say did not happen in this situation.

    Is there something in the new CBA that permitted this? Was it explicit enough that the Cowboys and Redskins knew they were subjecting themselves to this when they signed on? Was it implicit, and did their lawyers just not realize the impact of something that they agreed to but didn't see the endgame for?

    It seems to me that there are only a few possiblities here. Maybe the penalized teams signed on to this. But if they didn't, and the new CBA didn't authoirize this, they have a breach of contract claim. If they didn't agree to this and the new CBA did allow this to happen, then the agreement of the other owners to do this to them surely looks like a combination in restraint of trade.

    Maybe it's only a small cross-section of folks who are such legal nerds and football geeks who would care about this. But as somebody in that little cross section, it's killing me that this story is apparently just going to go away without anybody paying it any more attention.

  2. Great comment, thanks for the time and effort. I suspect that the reason this isn't getting more play in the media is that the League would likely play hardball with any sportswriter or organization that kept the focus on this thing, faster than you can say "ESPN". The collusion regulations for the NFL owners are more limited than you might think--as far as I can tell from reading the open sources, the only relief for either club is to file an anti-trust action against the League and the other clubs. That's not likely to happen, and it's clear that the other clubs and the union are perfectly happy to let the 'Skins and Cowboys take the fall. It's not like the two clubs' owners are the most popular people in the room, anyway.