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Will The NFL And Its Union Kill The Golden Hen?

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It didn’t come as much of a surprise that the NFL owners earlier this week opted out of the collective bargaining agreement. After all, the owners have never been shy about doing whatever it takes to maximize their profit margins. What is somewhat surprising, however, is that the NFL Players Association seems nonplussed by the whole matter.

Maybe that’s due to the fact that any impact of the owners’ action is still a few years out. What’s also emerging is that the union, while perhaps not encouraging the owners action, aren’t all that unhappy about it either and you can thank the latest overpaid unproven rookie, Matt Ryan, for that.

In an interview on ESPN Radio earlier this week, Players Association president Kevin Mawae, a center with the Tennessee Titans, sounded like anything but a union representative when discussing what’s been a lingering hard spot for players and owners alike: the skyrocketing value of first year contracts for NFL rookies, particularly those of the marquee variety.

Mawae told ESPN’s Colin Cowherd, “as a guy who has been in the league for 14 now going on 15 years and being around other veteran guys, for a young guy to get paid that kind of money and never steps foot on an NFL football field, it’s a little disheartening to think of. It makes it tough for a guy who’s proven himself to say ‘I want that kind of money’ when the owners, all they’re going to say is, ‘Well, you weren’t a first-round pick.’ ”

That may sound like sour grapes, but there was more: “And I know there is sentiment around the league amongst the players like, ‘Let’s do something to control these salaries and control these signing bonuses’ and things like that, and I know that’s something that the owners are talking about and I’m sure that’s going to play into this round of negotiations for this collective bargaining agreement.”

If you just substitute “owners” for “players” and “players” for “owners” in that last comment, you’d swear it was NFL commissioner Roger Goodell talking. But coming from Mawae, you get the strong sense that the Union sees some opportunity themselves with the recent turn of events.

To be sure, this is an owners’ initiated re-opener of the labor agreement even though either side could have pulled the trigger. Despite the problem the players have with rookie salaries, it would have been political suicide for Gene Upshaw, the union’s executive director, to even suggest opting out of a contract that guaranteed 60% of gross revenues just to make a point about the Matt Ryans of the world.

But Upshaw also knew it would never come to that because the owners all along planned on doing the dirty work. When the latest contract was signed in 2006, it literally had to be rammed down the throats of many of the owners. In fact, it’s not all that inaccurate to suggest that the only reason the owners actually approved the deal was in deference to former commissioner Paul Tagliabue who already had announced he would be retiring. Many owners didn’t like the new deal mainly because of the increase in revenues guaranteed to the players, but with a re-opener they were willing to swallow hard in order not to embarrass Tagliabue or otherwise tarnish what was shaping up to be an impressive legacy. It was Tagliabue, after all, who brought labor peace the last time the players struck. He also brought unprecedented growth and the attendant riches. He deserved the bone the owners threw him, even if they would have rather aimed it at his head.

The problems owners identified with the current contract at its inception have only grown worse, at least in their minds, and in no small part have been exacerbated by the economy. Their own costs are rising, like everyone else’s, and while 40% of consistently increasing overall revenues is an impressive amount, it’s not as good as, say 50%. The owners now estimate their labor costs at $4.5 billion, which is pretty serious money in any language. If they could shave even 5% of that back, it would mean another $225 million or so in their pocket. It’s certainly enough money to fight about.

Of course, scaling back even at a seemingly modest 5% isn’t an easy ask and absent compelling circumstances there really isn’t a reason for the union to consider it. And right now, the fact that the owners aren’t making even more, as opposed to actually losing money, isn’t likely to move the “compelling circumstances” needle much for the players. But here’s where the interests do converge: rookie salaries.

The owners have said for years that they favor a rookie salary scale, which the union has mostly resisted. Smartly, the owners haven’t pushed it and instead have just gone about letting agents drive up rookie salaries while at the same time decreasing the available salary cap space for every one else. Over the last several years players have watched time and again teams cut veteran players in order to free up cap space and now, finally, they are starting to see the light, as Mawae acknowledged.

In other words, you can start to see the makings of a deal. Of course, it will take more than just this redistribution of the salary cap space to make the players willing to cut back their share of the revenues. Another idea being floated already is the elimination of one or two preseason games and the concurrent expansion of the regular season. This benefits the players because they get a salary check for regular season games but only a small per diem of around $1,000 for preseason games. Even if the salary is divided up over 17 or 18 games rather than 16, that’s still far more money than what they get now for a meaningless preseason game.

When it comes to union matters, the average player is like the average auto worker. The only bottom line is the bottom line. The issue to them isn’t the share of revenues as much as it is what their paychecks look like. Of course the two are inextricably linked, but how the money gets to them isn’t nearly as big of a concern as the fact that it got to them.

For the near term, don’t expect much to happen. Though the union and the NFL claim that there is still three years of uninterrupted football on the horizon, it’s really two. There’s enough incentive on both sides to get a deal done and not get to that third year because while it will lack a salary cap, it also will lack a minimum salary. Anyone who thinks one of the owners will go off the reservation and spend frivolously that third year isn’t much of a student of the business side of this game. Far more likely is that spending will go precipitously.

In the interim, expect a muted amount of saber rattling and posturing. Also expect clear thinking to prevail. The one thing the owners and the players in the NFL have always understood far better than the counterparts in the NHL, for example, is that in their sport they really do have a hen that lays golden eggs. Far better to feed it then kill it and start from scratch.

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About Gary D. Benz