Several of you have asked for an explanation regarding the next steps in the lockout insurance case. The easy answer (for us) is to tell you that you should have watched the opening segment of today’s ProFootballTalk Live, and that you still can.
The harder answer (for us, since it requires typing) is to spell it out right here.
Judge Doty has ordered another hearing because the two sides previously had been focused on the question of whether the CBA was violated by the league’s renegotiation of the broadcast deals to include and/or beef up language ensuring that the billions in rights fees would flow in the absence of football games being played. With a violation established, the question becomes how to fix the situation.
In most pieces of civil litigation, a prevailing plaintiff gets an award of money. In this case, the monetary damages would be calculated by determining the amount of money that the league left on the table when insisting on “lockout insurance,” and then by giving the players 59.6 percent of it.
Another related possibility would be to determine the actual cash value of the lockout insurance, and to require the league to give the players 59.6 percent of it.
The union will prefer an order preventing the money from being paid, or alternatively paying the money into escrow. If the league won’t be getting the use of the money during a lockout, the better approach would be to not have the money paid out at all, in order to avoid the requirement to pay interest on it later.
It’s also possible that Judge Doty will both block the TV money and order payment of 59.6 percent of the money that the league left on the table. Judge Doty’s ruling illustrates a wilful and deliberate violation of the league’s duty to use good faith and best efforts to maximize shared revenue, with the league securing instead of the highest possible rights fees a term aimed at helping the owners and hurting the players. Judge Doty reasonably could conclude that the NFL won’t be permitted to reap the rewards of its strategy — and that the players should be compensated for the league’s failure to get top dollar for the bundle of rights.
The league would contend that such an approach represents something more than compensation, since the penalty would include paying the union for obtaining lockout insurance in lieu of maxing out revenue and then preventing the league from having the benefit of the lockout insurance. It’s possible, however, for Judge Doty to tie two remedies to arguably separate aspects of the CBA violation.
First, Judge Doty could find that the NFL violated the CBA by failing to get the most money possible in rights fees. Second, Judge Doty could find that the NFL violated the CBA by using its cooperative relationship with the union to finagle a term that helped the owners at the expense of the players. Thus, it possibly makes sense both to make the players whole and to prevent the league from receiving the money.
The union would likely be (and should definitely be) happy to get only an injunction against the payment of the TV money, since that would keep $4.3 billion out of the league’s war chest.
Of course, and as Albert Breer of NFL Network pointed out in his Wednesday visit to ProFootballTalk Live, the league undoubtedly will appeal Judge Doty’s decision to the federal appeals court with jurisdiction over Minnesota. That process could take months; surely, the money from the networks at a minimum will be held in escrow until the appeal is resolved.
Bottom line? Once the league processes the impact of the ruling, the league should get serious about working out a fair compromise, taking into account the diminished leverage resulting from Tuesday’s ruling.