The NFL has approved a new labor deal that will carry it through 2011.
NFL owners approved a collective bargaining agreement that keeps a salary cap and assures six more years of labor peace for the league. NFL spokesman Greg Aiello said owners voted to accept a contract extension that commits 59.5% of total football revenue to a pool for player salaries and maintains a limit on team payrolls. Thirty of the league’s 32 teams, including the Lions, voted in favor of the proposal, which the players’ union said this week was its final offer after more than a year of negotiations. The Buffalo Bills and Cincinnati Bengals were the only teams to vote against the deal, which required 24 votes to be ratified.
“It was a tremendous effort by owners across the entire spectrum of the league,” NFL commissioner Paul Tagliabue said at a news conference after the vote, which was held near Dallas. “Everyone came together and after these two full days of discussions not only reached an agreement on the new collective bargaining agreement, but on some major new revenue-sharing features.”
Rejection would have meant the end to the league’s 12-year-old salary cap when the current contract expires in 2007.
“We are pleased that this process has finally concluded with an agreement,” Gene Upshaw, the head of the NFL Players Association, said in a statement. “This agreement is not about one side winning and losing. Ultimately, it is about what is best for the players, the owners and the fans.”
With the contract in place, the payroll limit jumps to $102 million from an anticipated $94.5 million. The salary cap will increase to $109 million in 2007. Free agency was originally scheduled to start at 12:01 a.m. today. That deadline has been pushed back 24 hours.
The NFL’s salary cap was $85.5 million in 2005 and players received 65.5% of the league’s designated gross revenue. The percentage is lower in the new agreement because it comes from a larger revenue pool. While teams shared revenue from the league’s television contract, ticket sales and sponsorship deals in the previous agreement, the new one adds a portion of teams’ locally generated revenue. The amount wasn’t immediately announced.
Bills owner Ralph Wilson Jr. said he voted against the deal because he didn’t understand it. “To have to vote in 45 minutes on a very complex proposal — I didn’t think it was the right way to handle things,” Wilson said in a televised interview. “It’s a very complex proposal, and I didn’t really understand it. I didn’t think I was a drop-out, but maybe I am.”
ESPN’s John Clayton adds,
Fortunately, 30 other owners and a wily commissioner did understand as the NFL agreed to a six-year CBA extension that brings labor peace to the league through 2011. The league was staring at an economic black hole — and loss of the salary cap — that only 16 remaining owners from the pre-labor peace days understood. For two years, the parties failed to reach a deal in part because of the revenue-sharing issue that created a greater gap between high and low-revenue teams.
NFLPA executive director Gene Upshaw gave commissioner Paul Tagliabue the hammer to put in place a revenue-sharing agreement Wednesday night, imposing an 8 p.m. ET deadline on accepting a CBA extension that gobbled up 59.5 percent of teams total revenues. Literally 25 minutes before the bewitching hour of potential labor unrest and an uncapped 2007, Tagliabue brought together three diverse factions of owners to craft a revenue-sharing deal that passed 30-2.
The final three hours of owner negotiations were so fast and furious that everyone’s heads were spinning. Tagliabue and Upshaw couldn’t even finalize a start to free agency. Scheduled to start at 12:01 a.m. Thursday, free agency was pushed back a day upon acceptance of the union proposal. Because of the complications of the deal, Upshaw is expected to agree to push it back again until 12:01 a.m. Saturday.
Terms sheets weren’t readily available for general managers, agents and players Wednesday night. This much was known: The cap in 2006 will be $102 million, an increase of $7.5 million over the projected $94.5 million cap for 2006. That’s a $16.5 million increase from the $85.5 million cap of 2005. The 2007 cap will be $109 million.
Tagliabue was asked about the proration of signing bonuses, but he joked that he couldn’t remember if his granddaughter was six years old or if the proration for signing bonuses was four. Proration will be five years in 2006 instead of the current four. The proration will be six years in 2007 and five in 2008. What that means is it will be easier for teams to structure bigger deals for top five draft choices and the highest paid free agents.
Also confusing is the bottom line figure on the revenue sharing. Tagliabue said $500 million of local team revenue will be put in a pool for the lower-revenue teams in the first four years of the six-year agreement. The incremental revenue-sharing plan, as it is called, will cost high-revenue teams between $850 million and $900 million over the six years. The top five revenue teams will pay the most; teams between six through 10 in revenue will pay the second most and 11 through 15 will pay the lowest third of that revenue-sharing pool.
What all this means for the league, the owners and the players is labor peace. For fans, it means roster peace. The Colts now have extra cap room to try to keep linebacker David Thornton and possibly halfback Edgerrin James. The Seahawks won’t lose transition tagged Pro Bowl guard Steve Hutchinson to a team trying to squeeze the Seahawks, who already had ample space under the cap. For close to three dozen players scheduled to be cut Wednesday night, they get a temporary reprieve.
I have to agree with Wilson that this is a rather odd way to run a railroad. Fortunately, the NFL has built itself into a money making machine and a few million here and a few million there amounts to a rounding error.
This is interesting, too:
“I wanted it, and we had to have it,” Raiders owner Al Davis said of the deal. “We do have the greatest game in the world, and we got what we wanted.”
Davis had an interesting theory about the vulnerability of the NFL had it not reached a deal and had an uncapped 2007 and no CBA in 2008. Understand Davis’ background. He was the former commissioner of the American Football League who orchestrated a merger with the NFL after years of fighting to steal their players. Davis feared the NFL could have been challenged by a new league in 2008. “There’s always the possibility of a new league,” Davis said. “You have to understand it. I do. I lived it. I coached and was a commissioner of a new league that forced a merger. I know how to do it. I really believe the numbers are there where it would be very simple to have a 10-team league. You see with no cap and no draft and no agreement with the players. They had a problem, too, because they would have anarchy. Gene [Upshaw] would be out eventually and the whole group would have been disbanded eventually because people would go their own way.”
Another maverick owner was apparently the catalyst for making it all happen:
By mid afternoon, things got hot. Tension built and egos started to flair. Jerry Jones of the Cowboys came out and said things were going backwards. One of the reasons high-echelon clubs generate so much revenue is because they have owners such as Jones, Dan Snyder, Bob McNair and others who wait for deadlines to make the best deals.
Jones worked with Arthur Blank of the Falcons to get sides together. Jerry Richardson of the Panthers, Pat Bowlen of the Broncos and John Mara of the Giants tried to find ways to come up concepts that would fit within the Steelers-Ravens model and the Jets-Patriots model. Tagliabue kept everyone focused on the deal during the final two hours.
Accountants and lawyers sat outside meeting rooms reviewing concepts. Finally, the sides came together and the high-revenue clubs worked out the compromises with the moderates to blend a deal that works.
Considering that Jones’ Cowboys would have benefitted from the end of a salary cap and that he is going to be a loser in the redistribution of local revenues, his leadership in this is all the more remarkable.
WaPo’s Mark Maske:
The revenue-sharing plan came together during an afternoon meeting Wednesday in which three owners — the Denver Broncos’ Pat Bowlen, the New York Giants’ John Mara and the Carolina Panthers’ Jerry Richardson — met with Tagliabue to blend two proposals that were under consideration, one by the New York Jets and New England Patriots and another by the Pittsburgh Steelers and Baltimore Ravens.
The result was a plan that will transfer an average of about $150 million per season from high-revenue teams to low-revenue clubs. The top 15 revenue-generating clubs will have to pay, and the burden will be particularly heavy for top-five franchises such as the Redskins.
The twin labor and revenue-sharing disputes arose from the fact that a group of about eight teams has far surpassed the other clubs in revenue-generating capabilities in recent years. All 32 teams share national revenue equally. But Snyder and the owners of the other high-revenue franchises tapped into revenue streams — from sources that include stadium naming rights, luxury boxes and local sponsorships — that didn’t have to be shared with the other clubs. Owners of low-revenue teams expressed concerns that the growing disparity eventually could lead to a competitive imbalance and sought to overhaul the revenue-sharing system to have more local revenue shared. Owners of high-revenue teams resisted, arguing that they had paid premium prices for their franchises and should not have to further subsidize other clubs that might be, in some cases, mismanaged.
“We all know that deadlines are critical to making decisions,” said Dallas Cowboys owner Jerry Jones, whose team also will be a major revenue-sharing contributor. “If I’m going to get my fanny kicked, I can put that off until another day. . . . You had to have your league hat on to make this work. And then you had to go one step further than that and think about the fans.”
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