NFL Union, Owners Meet as Deadline for Labor Accord Nears

The National Football League and its players’ union are continuing negotiations to avoid a shutdown of the U.S.’s most-watched television sport a month after the Super Bowl drew the biggest audience in U.S. television history.

With little more than a day remaining until the existing collective bargaining agreement expires, league executives, team owners and players’ representatives gathered in Washington with a federal mediator for talks on a new labor accord.

Owners met in Chantilly, Virginia, for about three hours to discuss the status of talks in advance of the deal’s expiration at midnight tomorrow. Negotiations with the union over how to divide about $9 billion in revenue, the most of any sports league, continued into the afternoon.

“No decisions were made, no actions were taken,” Greg Aiello, a spokesman for the NFL, told reporters after team owners met. “We will continue to go through the mediation process.”

NFL Commissioner Roger Goodell, the league’s chief negotiator Jeff Pash, New York Giants owner John Mara and Green Bay Packers President and Chief Executive Officer Mark Murphy returned to the mediator’s building at about 8 p.m. after talks with the players’ representatives ended.

Negotiators for both sides met yesterday for an ninth set of talks under the supervision of George H. Cohen, head of the Federal Mediation and Conciliation Service, who last year helped broker a deal between Major League Soccer and its players.

Media Silence

Cohen asked that the league not comment on the discussions, Aiello said. Most owners left the area after their meeting, although the labor committee remained for about an hour after the general assembly.

Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert Kraft, both members of the committee, said afterward they were going home.

The meeting updated owners on the talks, Indianapolis Colts owners Jim Irsay said.

“I never have expectations,” Irsay told reporters. “It’s a chessboard that moves around and things change.”

The union has said owners intend to lock out players when the deal expires. A work stoppage, which would end 24 years of labor peace, may empty stadiums financed with a combined $7 billion in taxpayer money, interrupt the schedules of the largest U.S. broadcasters and leave fans without a sport that last season was watched by a record 207.7 million people.

Doty’s Ruling

The union yesterday won a complaint against the league when federal judge David Doty in Minneapolis ruled that the NFL improperly negotiated television contracts to receive $4 billion in revenue if a work stoppage cancels games during the 2011 season. Doty ordered a hearing to consider damage payments to the players, who asked the $4 billion be placed in escrow.

The union said in a statement that the ruling provided “irrefutable evidence that owners had a premeditated plan to lock out players and fans for more than two years.”

Clubs were prepared for the ruling, which “will have no effect on our efforts to negotiate a new, balanced labor agreement,” Aiello said.

DeMaurice Smith, the union’s executive director, has demanded financial information from teams that demonstrate the need for a new deal. Goodell has rejected the request as a “negotiating ploy.”

Temporary Extension

Owners want an agreement that helps the league grow, Goodell has said. Both sides may agree to a temporary extension of the existing deal to keep negotiating, Pash said before the Super Bowl.

“If you’re making progress, you can stop the clock,” he told reporters.

The union says it may also abandon its role in the negotiation, or “disclaim interest,” allowing players to seek a court order that may block owners from shutting down the league.

Owners voted in 2008 to opt out of the collective bargaining agreement with players, saying it didn’t account for costs such as those of building stadiums. Along with what share of revenue players should get, talks have included topics such as expanding the regular season to 18 games from 16, a rookie salary cap and health care.

$2 Billion

Owners want to double the amount of revenue set aside for expenses before paying players, according to the union. Under the expiring agreement, about $1 billion is deducted before player payrolls are calculated, for costs related to stadiums, marketing, and NFL Network, according to Smith.

The old labor deal gave players too much money before accounting for costs, Eric Grubman, the NFL’s executive vice president for business ventures, said before the Super Bowl. New stadiums, for example, increase league revenue and salaries for players, while owners bear the finance and maintenance costs, he said.

Grubman, a former executive at Goldman Sachs Group Inc., said paying players from the ledger’s top line also hurts incentives to build new businesses.

If an NFL team were to sell stadium food itself, rather than hiring an outside contractor, the club would increase revenue and would have to pay players more. At the same time, the team would have to hire workers and buy supplies, increasing costs. In the end, the club may triple concessions revenue while realizing less profit, he said.

Pay Cut

Since the 2006 deal, the league has made $5.5 billion in new revenue, with $3.8 billion going to players, Grubman said.

According to the union, players accepted an $800 million payroll cut over 15 years to alleviate concerns about the cost of the Giants’ and Jets’ new stadium in East Rutherford, New Jersey.

The labor dispute has already cost $120 million in ticket sales and sponsorship revenue, the league estimates, and the total will increase to $1 billion if it takes until the scheduled September season-opener to reach an agreement.

Every week of lost games would diminish revenue by about $400 million, according to Grubman and Pash.

Standard & Poor’s today said teams can make debt payments on stadiums for as long as a year during a work stoppage. The ratings agency cut its forecast of two years made two days ago after Doty’s ruling on the $4 billion of TV contracts.

As the deadline approaches, bonds issued by Arlington, Texas, in 2009 to help build a new stadium for the Dallas Cowboys -- the most valuable NFL team in Forbes magazine’s rankings at $1.8 billion -- have risen, according to data compiled by Bloomberg.

On March 1, the bonds, which mature in August 2028, traded at an average of 100.5 cents on the dollar, up from 92.6 cents on Jan. 13.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE