UPDATE (2): Added statement from NFL
UPDATED: Added Doty's ruling
This is breaking news….
U.S. District Judge David Doty has ruled in favor of the NFLPA regarding claims that the NFL negotiated television contract extensions that were designed as “lockout insurance” as opposed to growing Total Revenues – revenues that determine the salary cap for the league (read the entire filing by the NFLPA). Those extensions were designed to pay owners over $4 billion in rights fees, even if games were not played. The league had claimed that those provisions were within the agreements before the extensions were released.
Doty decision reads, in part (see the entire ruling):
The record shows that the NFL undertook contract renegotiations to advance its own interests and harm the interests of the players. The NFL argues that the SSA 4 does not require it to act in good faith in 2011 or subsequent seasons, that lockouts are recognized bargaining tools and that it is entitled to maximize its post-SSA leverage. The court agrees.
However, under the terms of the SSA, the NFL is not entitled to obtain leverage by renegotiating shared revenue contracts, during the SSA, to generate post-SSA leverage and revenue to advance its own interests and harm the interests of the Players. Here, the NFL renegotiated the broadcast contracts to benefit its exclusive interest at the expense of, and contrary to, the joint interests of the NFL and the Players. This conduct constitutes “a design ... to seek an unconscionable advantage” and is inconsistent with good faith. See Ashokan Water Servs., 807 N.Y.S.2d at 554 (citation and internal quotation marks omitted).
Doty said, it is hereby ordered that:
1. The court adopts the special master's "recommendations for relief" paragraphs 1 and 2, see Op. 47, as there is no objection to these findings and recommendations before the court;
2. The court overrules the special master's findings as to the NFL's breach of the SSA relating to its contracts with DirecTV, CBS, FOX, NBC, and ESPN, and holds that the NFL breached the SSA as to those contracts; and
3. The court orders that a hearing be held concerning relief to be granted to the Players arising from the NFL's breach of the SSA. The hearing shall consider the award of both money damages and equitable relief, including injunction. District of Minnesota Local Rule 7.1(b)
The NFLPA said in a statement, "This 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, through spokesman Greg Aiello said, "As we have frequently said, our clubs are prepared for any contingency, this decision included. Today's ruling will have no effect on our efforts to negotiate a new, balanced labor agreement."
The ruling by Judge Doty overturns a Special Master Stephen Burbank’s ruling on the case that sided with the owners saying that they did not use best efforts to grow revenues “in good faith” but rather were using “sound business judgment” in negotiating the extensions during a poor economy.
However, in an NFLPA filing, redacted images of a Powerpoint presentation to NFL owners showed several slides in which negotiating favorable “pay for no play” provisions would act as “lockout insurance”. Commissioner Goodell also outlined reasons for wanting the provisions within sworn testimony.
The key excerpts from the filing include:
- pgs. 13-14 “Defendants concluded that ‘in order for [them] to be able to get a [new labor] deal that worked for the owners, [they need to be able to sustain a lockout, which requires financing and proper planning,’ In the words of Dallas Cowboys’ owner Jerry Jones, Defendants ‘need[ed] to realistically assume [they we]re lockout out in 2011’ to get a CBA that worked for them.”
- pg. 14 “in the words of the NFL, the omission of Lockout Provisions would have been a ‘deal breaker’ and ‘clearly a deal we would never do.’”
- pgs. 15-20: Monetary figures in the charts are blacked out. However terms on the slides like “leverage,” “labor positioning” “strategic considerations,” “financial flexibility in the event of potential work stoppage,” “no “hold-up value for union” are the NFL’s own.
- pg. 23: “In a nutshell, Defendant’s contention … is that their desire to gain greater leverage over (and harm) the Players through the acquisition of a $4B war chest was a more ‘important business purpose’ than maximizing Total Revenues for the benefit of the Players in 2009 and 2010, and therefore this purely self-interested objective justified Defendants’ decision not to fulfill their ‘best efforts’ or ‘good faith’ SSA obligations.”
- pgs. 29-30: (Goodell’s testimony)
Q: And similarly, you didn’t ask FOX or any of the other broadcasters how much more they would pay if you dropped your insistence on these work stoppage payment provisions?
A: We did not, because we did not think it was in the best interest of the NFL.
- pg. 46: “The Master also disregarded uncontroverted evidence establishing that Defendants used the 2009-2010 “Additional Rights” granted to FOX as part of their negotiated exchange to obtain ‘Lockout Protection.’ When FOX demanded that there be no Lockout Provisions in the extension, the NFL negotiator, Mr. Rolaapp, admitted at trial that he told FOX that to get the ‘right term’ [REDACTED] and ‘the work stoppage protection in’ the deal, Defendants would, inter alia, ‘give’ FOX new [REDACTED].”
If Judge Doty were to rule in favor of an injunction, it may thwart a protracted work stoppage after the current CBA in the NFL expires at midnight on Thurs. Still, the owners have an additional $900 million on top of the more than $4 billion in rights fee money within their war chest.
SELECT READ MORE TO SEE IMAGES FROM THE PRESENTATION
The following from the NFLPA filing that Doty ruled on show the slides from the Powerpoint presentation that was given in on March 5, 2009 to the Broadcast Committee of the NFL. A slide (“Short Term Extension: Concept View”) was part of a March 22, 2009 Broadcast Committee meeting
Planning slide [partially redacted] :"Key Current NFL Media Objective" reads in part,
"Greater leverage in upcoming labor negotiations"... "Secures accress to revenues in
2011 if a work stoppage occurs"... "Accomplished as part of any likely extension...
optional timing ASAP"
Another slide [partially redacted] regarding CBS and FOX extenstions for Sunday
packages, reads in part, "Shifts leverage in labor negotiations away from Union... ability
to pull money into Work Stoppage year."
Bottom of slide reads, "Is this structure attractive to NFL? Should it be explored further?"
Slide [partially redacted] from DirecTV presentation, reads in part, "Current structure of
broadcast contracts prevent NFL from collecting payments if work stoppage in 2011... no
deal in 2012 for 'rebate'"adds, "Leverage in negotiations... no 'hold up' value for union"
Slide from presentation on deal DTV on March 23, 2009 entitled "Why Now?... NFL
Perspective" where owners voted 32-0 to approve deal reads under "Labor" - "Current
structure of broadcast contracts prevent NFL from collecting payments if work stoppage
in 2011... no deal in 2012 for 'rebate'" adds, "Strengthed position in labor negotiations"
Slide from May 19, 2009 presentation [partially redacted] where owners voted
unanimously to approve FOX/CBS extensions, reads under "Key Observations" -
"Labor: Current structure of broadcast contracts prevent NFL from collecting payments
if work stoppage in 2011... no deal in 2012 for'rebate'", adds in box at bottom,
"Combination of market conditions and strategic considerations make it prudent to
consider extension alternatives today."
Slide from May 19, 2009 presentation [partially redacted] where owners voted
unanimously to approve FOX/CBS extensions, reads, "NFL received financial flexibility in
the event of potential work stoppage"
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