Businessweek Archives

The Nfl Decides It's Finally Time To Punt


Top of the News

THE NFL DECIDES IT'S FINALLY TIME TO PUNT

In mid-September, Harold Henderson put in a phone call to the lawyers representing National Football League players. Henderson, chief negotiator for the NFL, has spoken with lawyers for the National Football League Players Assn. plenty of times. But this time he had something new to say. After four years of deadlock, team owners are ready to settle the sport's toughest issue: its labor dispute.

The breakthrough is coming because NFL Commissioner Paul Tagliabue has finally forged a consensus among the league's 28 contentious owners about how to come to terms with players. The consensus is, in turn, the product of the players' record in pursuing a battery of lawsuits. The suits accuse the NFL of violating antitrust law by restricting the players' right to sell their services to the highest bidder as free agents. If the players win--as they have in most of the initial courtroom skirmishes--owners face unrestricted free agency, plus several hundred million dollars in potential damages. "With trial scheduled for Feb. 17, we don't have the luxury of time," says Henderson.

BIZARRE TURN. The NFL's dispute with its 1,600 players dates to a 1987 midseason strike aimed at attaining free agency. After the walkout failed, the union began filing the antitrust lawsuits. Their argument: Antitrust law permits employers within a given industry to adopt restrictive labor practices, but only if a union agrees. And the football union decided to withdraw its agreement after the strike.

The central case took a bizarre turn when the courts ruled that the union couldn't just end its agreement at the drop of a hat. Instead, the courts said, the agreement lapses only if the bargaining relationship does. So in late 1989, the union simply ceased functioning as a union. The rather ridiculous result: Players association Executive Director Eugene Upshaw Jr. can't talk to owners about a new labor contract, since that would constitute bargaining and put him back in business as a union. So the NFL must negotiate with the association's lawyers.

The league vigorously resisted Upshaw's strategy prior to Henderson's phone call. The owners argued that the players association is simply pretending not to be a union anymore. The association, they pointed out, has continued to direct--and fund--cases it has brought on behalf of various players. But the owners lost a crucial battle in May, when Minneapolis District Court Judge David S. Doty ruled that the association was, indeed, no longer a union. The Eighth Circuit Court of Appeals refused to hear the owners' appeal. With a trial now looming, they face the grim prospect of convincing jurors that the league can't function without its restrictions on player movement--even though free agency manifestly hasn't killed baseball and basketball.

Tagliabue has been preparing for such a setback all along. He's well-acquainted with the issues, since before becoming commissioner he was the NFL's primary outside counsel. Soon after he took office, he set out to stop the fighting among owners that has been a major obstacle to a labor deal. He kicked out Jack Donlan, the league's hard-line labor negotiator, and gave the job to Henderson, a management attorney brought in to strike a more conciliatory stance.Tagliabue also wrested away the authority over labor contracts from a group of teams led by another hard-liner, Tampa Bay Buccaneers owner Hugh F. Culverhouse. In 1990, Tagliabue created a second committee, dominated by less-confrontational owners, to help him solve the labor problem. It finally has hammered out a position. "There is a consensus on the owner's side," says Bill Polian, the Buffalo Bills' general manager and a member of the new committee. "The NFL is ready to move on free agency."

SALARY CAP. The owners could find that agreeing with players is even more elusive than agreeing with each other. Henderson says he will offer players free agency after six or seven years in the game. This concession, similar to baseball's basic agreement, has been one of Upshaw's key aims. It would almost certainly push up salaries, which now average about $430,000 a year (chart). The biggest winners: battle-tested performers such as Green Bay Packers quarterback Don Majkowski, who, association officials argue, could greatly improve his $1.7 million-a-year salary if teams had to bid competitively for his skills.

In return, Henderson wants several concessions, including a cap on team salaries at a fixed percentage of league revenues, a la the National Basketball Assn. But Upshaw is likely to seek a cap higher than the owners want. "If you look at the ideas they've thrown out so far, it's just changing one bad system for another," says Doug Allen, Upshaw's chief assistant.

Eventually, the owners may have to give ground. "Tagliabue has bought the NFL a remarkable amount of time, allowing it to hold down salaries much longer than basketball or baseball," says Gary R. Roberts, who helped Tagliabue defend the NFL before joining Tulane University as a law professor. "But I think he knows deep down that the dam will crack." When it does, the results may be unavoidable: bigger salaries for players and skimpier profits for owners.Aaron Bernstein in New York


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus