Federal Judge Favors NFL Union Over Owners In TV Dispute
MINNEAPOLIS — Just as a fourth-quarter turnover can swing the momentum of a game, NFL players got a big gain at a key point in their labor fight with the league.
Writing that the NFL enhanced "long-term interests at the expense of its present obligations," U.S. District Judge David Doty overturned a special master's ruling and backed the NFL Players Associaton's claim that the league illegally secured a potential $4 billion revenue stream for 2011 to wield against the union as lockout protection.
NFL lawyers have argued that sound business judgment was used in the last round of television contracts to maximize money for owners and players to share, but Doty disagreed.
The union's contention is that the league left money on the table for broadcast rights to the last two seasons in those negotiations with the networks to create a war chest for this year.
The current collective bargaining agreement expires at midnight Eastern time Thursday night, and a lockout could come next.
Doty criticized special master Stephen Burbank for legal errors and erroneously concluding earlier this month that the NFL can act like a self-interested conglomerate when in fact it is bound by legal agreements to make deals that benefit both owners and players.
"The record shows that the NFL undertook contract renegotiations to advance its own interests and harm the interests of the players," wrote the judge, who has overseen NFL labor issues since he presided over a 1993 settlement that cleared the way for the current free agency system.
Doty cited a chart-style NFL "Decision Tree" memo as a "glaring example" of the league's intent, and quoted from it in his 28-page ruling: "Moving forward with a deal depended on the answer to the questions: 'Does Deal Completion Advance CBA Negotiating Dynamics?' If yes, the NFL should 'Do Deal Now'; if no, the NFL should 'Deal When Opportune.'"
The union had asked that the TV money be placed in escrow until the end of any lockout, so the owners can't use it as a safety net, thus equalizing the risk level for both sides during a protracted work stoppage. Doty will preside over a hearing, yet to be scheduled, to determine potential damages for the players as well as an injunction involving the TV contracts.
NFL spokesman Greg Aiello downplayed the significance of the ruling, saying the 32 teams were "prepared for any contingency."
"Today's ruling will have no effect on our efforts to negotiate a new, balanced labor agreement," Aiello said. He told The Associated Press the NFL had not immediately determined whether it would appeal.
The case, however, has billions at stake.
The union accused the NFL of failing to secure the maximum revenue possible when it restructured broadcast contracts in 2009 and 2010, claiming the deals were designed to guarantee owners enough money to survive a lockout. The union argued this violated that 1993 agreement between the sides that orders the NFL to make good-faith efforts to maximize revenue for players.
George Atallah, the NFLPA's assistant executive director for external affairs, said Doty's ruling "means there is irrefutable evidence that owners had a premeditated plan to lockout players and fans for more than two years. The players want to play football. That is the only goal we are focused on."
The NFL has described the $4 billion as a loan that the league eventually would need to repay – or make up to – the networks, with interest. But Doty said $421 million of the total would have been guaranteed without repayment.
In his ruling, the judge also revealed previously confidential details of NFL TV contracts and said that the league "consistently characterized gaining control over labor as a short-term objective and maximizing revenue as a long-term objective ... advancing its negotiating position at the expense of using best efforts to maximize total revenues for the joint benefit of the NFL and the Players."
Doty said at least three networks expressed "some degree of resistance to the lockout payments" and that the NFL "characterized network opposition to lockout provisions to be a deal breaker." He also wrote that DirecTV would have considered paying more in 2009 and 2010 to make the lockout provision disappear.
His decision revealed that DirecTV, in fact, would pay up to 9 percent more to the NFL if no games are played in 2011 than if they go on as scheduled. Of the total amount payable if there is a canceled season, 42 percent of DirecTV's fee is nonrefundable.
Under the CBS and Fox contracts set to expire at the end of the 2011 season, the NFL would have been required to repay those networks that same year if there were a work stoppage. Under the contracts extended to the 2013 season, the NFL will repay the funds, plus money-market interest, over the term of the contract, Doty wrote. If the season is canceled, the contracts would be extended another season.
NBC's contract through the 2011 season contained the same work-stoppage provisions as the CBS and Fox contracts, according to Doty. Citing Burbank's opinion, Doty wrote that during extension negotiations, NBC felt the NFL was "hosing" the network by its demands.
To "bridge the gap," the league agreed to award NBC an additional regular-season game for the 2010-2013 seasons. The NFL did not seek additional rights fees for the 2009, 2010 and 2011 seasons, and NBC agreed to pay increased rights fees for 2012 and 2013.
Although ESPN's contract was not set to expire until 2013, the work-stoppage provision was amended. In the negotiations, ESPN requested that the rights fee not be payable if there is a work stoppage, but the NFL rejected the request.
Doty wrote: "The NFL stated that the digital deal and the work-stoppage provisions were 'linked.' ... To secure ESPN's agreement to the work-stoppage provision, the NFL granted the right to a Monday Night Football simulator via the wireless partner."
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AP Sports Writer Howard Fendrich in Washington contributed to this report.
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DAVE CAMPBELL 03/ 2/11 03:16 AM ET Associated Press