Though it widely was believed that the NFLPA (pre-asterisk) challenged the network contracts that were extended in 2009 to provide ongoing payments to the NFL in 2011 even if no games are played (i.e., “lockout insurance”) in order to block the payments, the players’ strategy has apparently shifted to the generation of cash.
On March 1, Judge David Doty ruled that the NFL violated the labor deal by failing to maximize the revenue that would be shared with players via the lucrative network contracts. Instead of getting the most money for the owners and the players, the owners lined up payments that would be made only to the teams during a lockout, to the tune of $4.3 billion. (Though much of the money would have to be paid back, $420 million from DirecTV contained no repayment obligation.) Judge Doty did not apply a remedy to the ruling, opting instead for further proceedings to determine whether the payments should be blocked or damages should be paid.
Daniel Kaplan of SportsBusiness Journal reports that the players will be asking Judge Doty for a “substantial” award of damages. The specific formula that the players will use remains to be seen. Under the prior labor deal, the players received 59.6 cents of every dollar, after the owners take $1 billion off the top for certain types of expenses. At a minimum, then, the players seem to be entitled to 59.6 cents of every dollar that the NFL left on the table for 2009 and 2010 in order to finagle money for nothing in 2011.
If the lockout goes forward and wipes out the entire season, the players should receive 59.6 cents of the $420 million that DirecTV would pay during a lockout that wipes out the 2011 season, along with 59.6 percent of the cash value of nearly $4 billion in other loans the NFL will receive.
The players also could try to secure an award of damages for failing to maximize the rights fees in 2009 and 2010 and block the payments to be made in 2011. Given that the NFL, per Judge Doty, deliberately violated their duty to maximize the revenues in order to cut their own deal for lockout leverage, Judge Doty could decide that there were two violations — failing to max out the money and self-dealing. Thus, Judge Doty could order the NFL to pay to the players 59.6 percent of the money left on the table in order to secure lockout insurance and Judge Doty could block the NFL from enjoying the fruits of a scheme aimed at helping the teams and hurting the players during a lockout.
Either way, it’s yet another front in a labor battle that seems to be getting more hostile and entrenched by the day. Unfortunately.