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NFL Improperly Negotiated $4 Billion Broadcast Fees, Judge Says

The National Football League improperly negotiated to receive $4 billion in income from television networks even if a work stoppage cancels games in the 2011 season, a federal judge ruled.

U.S. District Judge David Doty in Minneapolis yesterday upheld a complaint from the players’ union, overruling an earlier decision on the matter by a special master, or arbitrator. Doty, who has overseen the NFL labor contract since 1993, ordered a hearing to consider the award of money damages and equitable relief to the players.

The judge agreed with the union that, in extending the contracts into the 2011 season, the league failed to get the best terms available to maximize revenue in 2009 and 2010.

“This ruling means there is irrefutable evidence that owners had a premeditated plan to lock out players and fans for more than two years,” George Atallah, an NFL Players Association spokesman, said in an e-mail.

The union and NFL are in talks in Washington to try to reach an agreement on a new labor deal before the current one expires tomorrow at midnight. The sides are arguing over how to distribute about $9 billion in league revenue. Other areas of dispute include the addition of two games to the regular season, a cap on rookie pay and health care for players.

Federal Mediator

The sides agreed last month to hold negotiations along with George Cohen, the director of the Federal Mediation and Conciliation Service.

The union is seeking to have the $4 billion placed in escrow during any lockout, rather than allowing the NFL to use it to fund operations. The NFL said the money is a loan that will have to be repaid if no games are played.

“The NFL negotiated access to over $4 billion in rights fees in 2011 if it locks out the players,” the judge said in his decision. “Of that sum, it has no obligation to repay $421 million to the broadcasters.”

The NFL extended contracts and altered lock out provisions with DirecTV, CBS Corp., News Corp.’s Fox, Comcast Corp.’s NBC and Walt Disney Co.’s ESPN Inc.

Special Master Stephen Burbank had earlier given the NFL access to the money and awarded the players $6.9 million in damages, about 10 percent of the $60 million they were seeking.

“Our clubs are prepared for any contingency, this decision included,” Greg Aiello, a spokesman for the NFL, said in an e-mail. The “ruling will have no effect on our efforts to negotiate a new, balanced labor agreement.”

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