CBA For Dummies

After the last piece of confetti dropped onto the field at Cowboys Stadium earlier this month in celebration of the Green Bay Packers‘ victory in Super Bowl XLV, the 2010 football season officially came to an end. With no more games to draw attention from the National Football League’s ongoing labor dispute, all eyes are fixed on NFL commissioner Roger Goodell and NFL Players’ Association executive director DeMaurice Smith, awaiting word that a new Collective Bargaining Agreement between the two sides has been reached.

Fans have yet to hear any good news regarding a new deal being made, and the way things are looking, it will be a while before anything positive is released. Whatever reports have been released have been far from encouraging, but that hasn’t stopped sports news outlets from giving us the gloomy details. I don’t have a problem with this, because they have to do their jobs, regardless of how dreadful things look. I have taken issue however with the fact that I personally have yet to really see or hear a good explanation of what is actually going on behind those meeting room doors in simple, easy to understand, layman’s terms. I may have missed the explanation when talks first started, but even if I did, I doubt any reporter that told it did so in a way that I truly would have understood. I’m pretty knowledgeable when it comes to football, but when it comes to issues related to contracts and money and things of that nature, I can easily get lost.

So, I have done my homework and have tried to get a grasp of all of the CBA information and have attempted to translate it into easier to understand words for any casual football fan or any fan like me that knows the sport, but doesn’t know a lot about the business side of it. Therefore, here is a brief overview of the biggest issues being raised regarding the CBA:

Collective bargaining is what happens when two parties (usually a company or employer and the union that represent the employees) meet to find common ground to help reach an agreement that will help keep the workers working. In this case, the NFL (the company) is meeting with the NFLPA (the union that represents the workers) to hash out a new deal that will keep the upcoming 2011 season scheduled as planned. The current CBA contract, which expires just before midnight on March 3, consists of information regarding:

• NFL salaries (including minimum salary and salary cap)
• NFL Draft
• Free Agency rules
• Waiver rules

Player salaries consist of any money, property, investments, and/or loans that a specific player is given or earned, but it does not include any benefits such as insurance and pension. The minimum salary a player earns is stepped-up as a player is in the league more years, and this salary can be negotiated. The salary cap, which is the maximum amount of money a team can spend on the total number of players on the roster each season, includes annual pay and a one-time “signing bonus” that is paid in full when the player signs the contract. The signing bonus is a set amount of money that a player is guaranteed just for signing the contract.

The 2011 NFL Draft is the final event to take place under the current CBA. Other normal occurrences that happen during the off-season, including free agency and player trades, are not allowed until a new CBA is reached. Teams can still trade draft picks during the NFL Draft, but they cannot trade players for picks.

Changes were made to free agency rules in 2010, with players not being able to be labeled “Unrestricted Free Agents” until they have at least six years of experience in the league. Before, a player only had to have four years experience to be eligible to become unrestricted. When a player becomes “unrestricted”, he is free to sign with any franchise with no compensation owed to him from his old team. “Restricted Free Agents” can accept an offer from another team, but his old team can match that offer and retain the player. Restricted Free Agents are players with three-five years of league experience. These changes were put into place with hopes that the NFL and the NFLPA would negotiate a new CBA.

As for changes in the new CBA, both sides must come to terms on these key issues:

• Revenue
• 18-game season
• Rookie wage scale

In 2010, the NFL revenue was $9.3 billion and was split up like this:

As you can see, $1.3 billion of the revenue was for expenses associated with the growth of the game (including such things as stadium construction and the NFL Network); $3.35 billion for the owners; and $4.65 billion for the players. For the new CBA, owners are requesting to take an additional $1 billion out of the revenue pool to balance financial risks and rewards, which is a ratio used to compare the expected profits of an investment to the amount of risk taken to secure those profits. The players want to split the money right down the middle 50-50, and they also want the owners to reveal what they believe the risks will be, which they have declined to do so far.

To make more money and expand the revenue, the NFL wants to eliminate two pre-season games and add two regular-season games, making the 16 game regular season an 18 game one. Players have stated that 16 games is plenty and they want to keep it that way. If the regular season is extended, players are asking for limited hitting in off-season workouts and in-season practices. They are also asking for improved health care and insurance after retirement.

Regarding a new rookie wage scale, the NFLPA suggested to cut all rookie contracts from six years to three years, pulling $200 million out of the draft. It was then proposed to split that money, giving $100 million to retired players to improve their pensions and the other $100 million to current veteran players. The owners nixed that idea, saying they weren’t willing to guarantee that kind of money to veterans.

Both sides are far apart in agreement on these matters and it appears that the discussions will carry on for quite some time, maybe even into the 2011 football schedule. If this happens, it will shorten the season or, God forbid, cancel it entirely. This is a worse case scenario and one that everyone involved will desperately try to avoid. Unfortunately, a long-term lockout is possible. A lockout means that no games will be played and players will not be allowed to go to team facilities for training or for any other reason. If a new CBA is not reached by March 4, which is likely, a lockout will take place and team owners will figuratively, and literally, lock the doors.

This is just the beginning of what the NFL, NFLPA, and the fans can look forward to in the immediate future. Things look bleak right now, but both sides are working toward a solution.  They know that if a new deal is not reached, it will be a lose-lose situation for everyone, and that the biggest people at a loss will be the fans.

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