The union’s effort to block the league from collecting so-called “lockout insurance” -- i.e., ongoing network payments in the event of a work stoppage -- has proceeded exclusively in secrecy.
Until today.
As part of the federal court hearing regarding whether Special Master Stephen Burbank’s decision to allow the NFL to collect the money if a lockout occurs, Judge David Doty made public the NFLPA’s legal brief in support of the position that the payments instead should be held in escrow.
According to Daniel Kaplan of SportsBusiness Journal, the brief includes excerpts of testimony from Commissioner Roger Goodell and NFL executive V.P. of media Steve Bornstein admitting that the contested term was a “critical element” of the contracts that the league renewed in 2009.
The union’s brief includes a slide shown at the league meetings in March 2009 regarding the effort to extend the TV contracts. Said the slide: “Current structure of broadcast contracts prevent NFL from collecting payments if work stoppage in 2011.”
Oops.
Though it remains to be seen whether Judge Doty will agree with the NFLPA’s position that the league violated the CBA by seeking a term that benefited only the league (and thus necessarily required the NFL to take less money that could have been shared by the owners and the players), the development undercuts the notion that the “lockout insurance” hadn’t specifically been inserted into the 2009 network contracts.
Which in turn supports the notion that the league sought in the 2009 network contracts a term that benefited only the league.
The union’s brief, per Kaplan, contends that the Special Master concluded the league used “sound business judgment” when deciding that having a revenue stream during a lockout justified the decision not to maximize the revenue that the league shares with the players. Indeed, it was “sound business judgment,” since it gives the league leverage against the players in a lockout. But since the NFL and the players have agreed to a system of compensation based on total football revenue, the league arguably has a duty to max out the money to be shared by the league and the players.
Under a different model, it wouldn’t matter. If, for example, the league paid the players a flat rate, the league could decide to give up some revenue in exchange for terms that benefit only the owners -- and that, in the case of the “lockout insurance” provision, actually hurts the players. When the league decided to share revenues with the players, the league assumed a duty to take reasonable steps to get as much revenue for the two sides as possible.
And, at a minimum, to not engineer contracts in a way that gives one party to the supposed partnership leverage against the other.