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Paying The Price: The NFL Collective Bargaining Agreement

In March 2006, NFL Owners voted almost unanimously, 30-2, to accept the NFLPA’s final proposal to extend its collective bargaining agreement (CBA). On May 20, 2008, NFL Owners unanimously voted to opt of that same agreement, meaning the current collective bargaining agreement will expire in 2011 instead of 2013. Now, many questions linger about the future of the league and what will happen in the battle between player’s rights and owner’s desires. The NFLPA and the Owner’s Association are at different ends of the spectrum on many issues; let’s look at a few of them.

The Salary Cap

NBC Sports’ Tom Curran explains that the impact of this decision will begin to be felt much sooner than we think, starting with the 2009 Free Agent class. I know what you are thinking, I just said the CBA will expire in 2011, how will the effects be felt next off season? Most agents already know the answer.

One major issue is that when the CBA expires, so does the salary cap. When free agents are signing contracts in March 2009, how do the agents structure contracts to conform to the salary cap when there may not be one the following year? Do you advise your players to look for a one year deal and wait to see if they can strike gold in the next off season? What about rookie contracts? Many questions arise from this issue alone.

Along with the removal of the salary cap, the salary floor would also be removed. Last season, the salary cap was $116 million dollars, a figure almost everyone knew. What there was almost no talk about was the salary floor of $100 million dollars. If a new salary cap and salary floor are not implemented, we could see the rise of an MLB-type NFL. Major money market teams with free wheeling owners like Dallas’ Jerry Jones or Washington’s Dan Snyder would hit free agency like the Yankees and Red Sox, bidding it out for top free agents, while smaller markets, such as Cincinnati and Jacksonville, might have to employ frugal spending habits.

Right now, most players can figure out a certain range their salaries are supposed to be in based on the top salaries at their positions when testing free agent markets. If the salary cap is removed, then the contract prices will vary so much that it will be hard to figure out the true value of a free agent. Many agree that this would probably make the league much less competitive as a whole.

Head of the NFLPA Gene Upshaw has said that if an agreement is not reached and the salary cap is removed, the players will refuse to re-institute one, which the owners do not want to see.

Free Agency

Free agency is another area where the effects of the CBA’s early expiration will be felt heavily. First, the free agency eligibility time requirement will be extended from 4 to 6 years. Basically if a player signed a contract in 2006 that expired in 2009, his 4th year, he would be a free agent at the end of that season. Under the expired CBA, that player would have to remain with his team for another 2 years, the end of his 6th year, until the end of the 2011 season, in order to become a free agent.

The expired CBA also gives the each team three tags (one franchise AND two transitional tags) instead of the one tag (one franchise OR one transitional) it currently has. A franchise tag restricts a free agent from negotiations with other teams and pays him the average of the top five salaries at his position. A transitional tag restricts a free agent from negotiations with other teams and pays him the average of the top ten salaries at his position. Basically, instead of a franchise having to choose just one player who they might lose to free agency and slapping the franchise tag on him, they would be able to choose up to three. This, in turn, could potentially take up to 96 quality players off the free agent market if every team used all their tags in one off season.

To prevent any team from turning into the Yankees of the NFL, there would be a Top 8 provision instated. The provision would be to restrict the top eight teams from signing all the best free agent available. It would go something like this. Say the Bears finish in the top 8 teams and want to sign a key free agent to a 6 year, $40 million dollar contract. The Bears would then have to clear $40 million of cap space by releasing a player or players whose contracts totaled that amount. It would conceptually work like this, but the details are not clear yet.

Rookie Salaries

This is one of the largest issues that NFL Owners want to address in the next CBA.

David Diehl, picked in the 5th round of the 2003 draft, has played and started every single game of his career on a New York Giants team that won the Super Bowl this year. The first pick in this year’s NFL Draft, Jake Long, has never played a down on NFL football in his life. David Diehl received a 6 year, $31 million dollar contract extension with under half of the money guaranteed. Long, however, received a 5 year, $57.5 million contract with $30 million guaranteed. Long is now the highest paid lineman in NFL history.

Tom Brady, who is arguably one of the greatest quarterbacks in NFL history, three time Super Bowl winner, two time Super Bowl MVP, four time Pro Bowler, 2007 MVP and Offensive Player of the Year, and he threw for an NFL record 50 touchdowns in 2007. Brady was the 199th pick in the 6th round of the 2000 draft. The third pick of the 2007 draft was Quarterback Matt Ryan from Boston College. Ryan has never played an NFL snap and plays one of the most hit-or-miss positions in football when it comes to drafting. Tom Brady signed a contract extension in 2005 for 5 years worth $60 million. Matt Ryan signed a 6 year, $72 million contract with $34.75 million guaranteed, making him the 3rd highest paid player in all of the NFL.

See the trend? Both owners and veteran players have taken notice and are worried. Rookie contracts are now topping those of proven veteran players and even players of legendary status. The Owner’s Association has argued it want to reduce the salaries given to rookies and redistribute that money to proven veteran players.

NFLPA President Kevin Mawae has said that these big rookie contracts are “disheartening” and knows it will be a big topic in the upcoming negotiation. This is a topic that both veteran players and owners agree on. Most players agree saying that rookies should get a fair salary their first few years, and be eligible for the big money extensions after they prove themselves as dependable and consistent players in the league.

One idea has been to use a pay scale like the NBA does for its rookies. In the NBA system, the league pre-sets the salary for the first two years, gives a team option on the third and fourth year, also at pre-set salaries. The salaries increase every year and each pick’s salary is slightly higher than the player picked behind him. Although this system has been brought up, Mawae has said that if the NFL wants to implement a system like this, they would have to give the players something substantial in return.

Revenue Sharing

One of the major, if not the biggest, topics of next CBA will be revenue sharing between the league and its players. In the last CBA that was signed, the owners agreed to give the players up to 60% of league revenues every year, which was about $4.5 billion last year alone. The NFL Owners feel the current labor agreement does not recognize the costs of generating the revenues of which the players receive the largest share. It is also argued that the CBA does not recognize that those costs have increased substantially in recent years due to difficult economic times. There are also growing costs for stadium construction, operations and improvements.

Also the G-3 Funding plan will be up for debate. The G-3 Plan, which is a revenue sharing plan, consists of the top 15 grossing teams assisting the teams in the bottom 17 by funding a pool of money to help with the increasing player costs, which not only include the ever-rising salary cap, but the players’ medical benefits and possible G-3 Funding for new stadiums.

Upshaw commented on this too saying that, “The owners’ attitude has been the players have too good of a deal, that the deal that we bargained and agreed to gives the players too much. I can’t convince the players that they should take less so the owner can make more. I can’t sell that.”

Wrap Up

Along with these four cornerstone topics, many other issues will be up for debate at the same time. The NFL Owners and NFLPA have a long way to go before they can find an agreement that satisfies both sides. It will be an uphill battle, but you can be sure that whatever the outcome, agents that represent NFL players will be most probably be learning to negotiate and structure contracts in much different ways in the coming years.

By Darren Heitner

Darren Heitner created Sports Agent Blog as a New Year's Resolution on December 31, 2005. Originally titled, "I Want To Be A Sports Agent," the website was founded with the intention of causing Heitner to learn more about the profession that he wanted to join, meet reputable individuals in the space and force himself to stay on top of the latest news and trends.

Heitner now runs Heitner Legal, P.L.L.C., which is a law firm with many practice areas, including sports law and contract law. Heitner has represented numerous athletes and sports agents as legal counsel. He has also served as an Adjunct Professor at Indiana University Bloomington from 2011-2014, where he created and taught a course titled, Sport Agency Management, which included subjects ranging from NCAA regulations to athlete agent certification and the rules governing the profession. Heitner serves as an Adjunct Professor at the University of Florida Levin College of Law, where he teaches a Sports Law class that includes case law surrounding athlete agents and the NCAA rules.