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The End of the NFL Lockout

By Sylvia Chen

On July 25th, after 135 days of lockout and following the owners' approval, the players' representatives voted unanimously to approve a new collective bargaining agreement. The players voted to re-certify as a union (the National Football League Players Association, "NFLPA"), and the NFLPA is negotiating the last terms of a new collective bargaining agreement ("CBA"). The final negations between the union and the NFL concern drug testing, player conduct, grievances policies, disability issues, and pension programs. The NFL players voted to fully ratify the new 10-year CBA on August 4th.

What Led to the Lockout?

As the negotiations dragged on into mid-March, the players and the owners could not agree on how to divide the billions of dollars in revenues and other key issues. The NFL earns an estimated nine billion dollars annually.(1) The owners initially demanded an 18 percent decrease in players' compensation and an expansion of the season from 16 games to 18 games for at least two years.(2) The players wanted higher minimum levels of compensation. At the early stage of the negotiations, the players agreed on the 50-50 split after the first billion dollars. They also demanded full financial disclosure from all NFL clubs.

With regard to health and safety issues, the NFL intended to create new year-round rules. It offered to establish a fund for retired players, with $82 million contributed by the owners over the next two years. The players, however, demanded better protections for those whose careers are interrupted by injuries.


The Lockout

On March 12, 2011, the NFL announced a lockout of players hours before the old CBA expired.(3) The lockout, the first NFL work stoppage since 1987, suspended the negotiations. It barred the players from entering into practice or stadium facilities; players could not communicate with team officials; no players could be signed; and teams would not pay for health insurance for players.

Brady v. NFL

In response to the lockout, the NFLPA decertified itself as a labor union in order to allow the players to be heard in court. Tom Brady, Drew Brees, Peyton Manning, and seven other players filed a class action complaint alleging that the lockout would violate federal antitrust and state contract and tort laws. The players also sought a preliminary injunction that would prohibit the NFL from imposing or continuing the lockout.

The district court rejected the NFL's argument that the Norris-LaGuardia Act prevented the court from granting injunctive relief. The district court held that this particular scenario was not a case "involving or growing out of a labor dispute" - as defined by the federal statute. The district court entered an order to enjoin the lockout.

On appeal, the Eighth Circuit reasoned that the Congress drafted the Norris-LaGuardia Act in broad language, and that the definition of a labor dispute is expansive. The Eighth Circuit referenced the statutory language, that "labor dispute includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in . . . seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee."(4) The Circuit court held that the dispute between the players and the league over the CBA was a case 'growing out of a labor dispute' between employers and employees.

The Eighth Circuit reversed the district court's decision and ruled in favor of the NFL to allow it to continue the lockout. However, the court also permitted the players' antitrust lawsuit to move forward.

The New CBA

The end of the lockout introduced a new CBA. The players and the owners have agreed on the key issues, including how to divide the revenues, from which the players will receive 47 percent of the NFL's revenues over the next 10 years, as opposed to 51 percent in the previous agreement.(5)

Furthermore, the owners will have to guarantee that 89 percent of the money set aside goes towards compensation. For the players, the new agreement improved upon the previous guarantee at 87 percent, which also included several loopholes that allowed owners to spend less.

The new deal provides players whose careers are interrupted by injury up to 1.5 million dollars in compensation during the two years after injuries occur. The retired players as a group will receive up to one billion dollars more in benefits during the next 10 years. (6)

The Outlook

At the end of the day, both the players and the owners win. While the latter will receive a higher share of revenues, the real dollars for the formers' incomes have increased. The NFL is a profitable enterprise. Billions of dollars are at stake. Both the players' and the owners' need to benefit from a football season this year outweighs their underlying demands.

References:
(1) Russell Arch, 2011 NFL Lockout: Why the Players' Side Is Right, Bleacher Report, March 13, 2011. < http://bleacherreport.com/articles/634383-the-2011-nfl-lockout-why-the-players-side-is-right) (accessed on July 23, 2011).
(2) Matthew Futterman, The NFL's More Perfect Union, The Wall Street Journal, July 26, 2011.
(3) Simon Evans, NFL Announces Lockout of Players, Reuters, March 12, 2011. www.reuters.com/article/2011/03/12/us-nfl-lockout-idUSTRE72B25I20110312> (accessed on July 23, 2011).
(4) 29 U.S.C. ยง 113(c).
(5) Matthew Futterman & Lauren Schuker, NFL and Players Agree on New Deal, The Wall Street Journal, July 26, 2011.
(6) Id.

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This page contains a single entry from the blog posted on August 6, 2011 8:46 AM.

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