NFL players, owners could be in for long labor dispute

By PAUL DOMOWITCH

pdomo@aol.com
WASHINGTON - Gene Upshaw isn't looking for a fight, but by God, he's not going to run from one, either.

The Hall of Fame guard made that clear last year when he went toe-to-toe with a group of retired players, led by fellow Canton residents Joe DeLamielleure and Mike Ditka, who came after him with clubs and pitchforks over the league's pension and disability system, and he's making it clear again now, in the wake of last month's decision by the NFL owners to opt out of their collective bargaining agreement with the players 2 years early.

The owners' 32-0 vote might turn out to be nothing or it might turn out to be the first shot in a long, bloody labor war. Either way, the 62-year-old leader of the NFL Players Association intends to see it through to the end.

"I'm staying until this battle is over," Upshaw said in a recent interview with the Daily News. "I have to. We're not changing generals in the middle of the war. That's what they do over in Iraq. Every other week, there's a new damn general over there.

"We're going to be here and we're going to see this through, and then we'll see where the chips fall. But I'm not leaving until we have a deal."

Upshaw has been at the helm of the NFLPA for a quarter century. Took it over when it was a powerless, apathetic organization that couldn't even afford office furniture. Steered it through the rough seas of a 6-year court battle that eventually brought true free agency to the league. Since 1993, he has overseen a decade-and-a-half of labor peace that has made lots and lots of money for both the players and owners.

League revenues, which hit $7.6 billion in 2007, are rising at the unfathomable rate of $500 million per year. The average value of an NFL franchise right now is $957 million and climbing. The league's salary cap has more than tripled in the last 15 years.

Just 27 months ago, faced with the threat of losing the cap that has been in place since '93, the owners, at the urging of outgoing commissioner Paul Tagliabue, approved by a 30-2 vote a CBA extension that, among other things, gave the players 60 percent of the league's revenue pie. Now, the owners say the deal isn't working for them and needs to be modified.

"Clearly, the economics are not working for the owners," Tagliabue's successor, Roger Goodell, said last month after the opt-out vote. "We have been investing more in stadiums, and the cost of generating revenue is becoming more significant. And it's not a secret what we're going through from an economic standpoint that creates more risk in the marketplace."

There's no reason for football fans to panic yet. All the early opt-out vote did was shave the final 2 years off the CBA, which will expire in March 2011 now rather than 2013, with the final year of the deal being uncapped if a new agreement isn't reached by March 2010.

That still leaves a lot of time for the two sides to work out their differences. But there already is an ominous, getting-ready-for-war tone in the rhetoric coming out of both camps.

"Until we went to Atlanta [for the opt-out vote], I would've said that [a work stoppage] was possible but very unlikely," said a high-ranking executive for one NFL club. "But after going to Atlanta, I'd put it at least 50-50 right now. Because the reality from our side is, most teams are doing very mediocre [profitwise]."

No one other than Upshaw and Goodell are identified in this story because owners and management have been told not to comment on the negotiations.

"We're not trying to hit a grand slam home run here," the executive added. "We're just trying to get things back in line. If Gene is willing to work with us and help move the pendulum back closer to the middle, it'll get settled. If Gene takes the attitude that, 'This is bullbleep. They're making money and I'm not going to give up a penny,' this will be a big war. It won't be a little war, it will be a big war."

Said Upshaw: "The easiest thing for them to say right now is that the player costs are too much and that they're paying the players too much. But let me make one thing crystal clear. We're not going backward."


A quick change of heart

How is it that a deal the owners overwhelmingly approved just 2 years ago suddenly has become so onerous that they're willing to risk the league's first work stoppage since 1987? Well, Upshaw has been wondering the same thing.
How is it that a deal the owners overwhelmingly approved just 2 years ago suddenly has become so onerous that they're willing to risk the league's first work stoppage since 1987? Well, Upshaw has been wondering the same thing.

"All of the economic arguments they're making now [about why the deal is bad], where were these 32 billionaires when it came time for the CBA to be approved [in '06]?" he said. "Did they all go out to lunch? They approved this deal, and now they're saying the deal's not working."

The truth is, the owners hardly were in love with the deal in '06. But if they rejected it, there would have been no salary cap in '06, and they weren't ready to deal with that scenario then.

So they agreed to a player-friendly deal that included increasing the players' share of the league's total football revenue to 60 percent. They also reluctantly acquiesced to Upshaw's insistence on a club revenue-sharing plan by which the league's higher-revenue teams would supplement the lower-revenue teams.

"We should have realized the deal wasn't very good," one owner told the Daily News. "But we were facing the cap deadline and people thought, 'Listen, it's not a good deal. It's not nearly as good as where we were. But can we live with it as opposed to having a huge mess?'

"Once we fully understood the full impact of what went into the deal, we concluded it didn't work at all. Which some people realized fairly quickly and others just got their arms around in the last few months."

Many owners and executives blame Tagliabue for urging them to approve the deal. He was getting set to retire and clearly wanted to get a new labor extension done before he rode off into the sunset.

"All of us were guided by the commissioner and the CEC [NFL Management Council Executive Committee], and they said we think this is appropriate," one AFC executive said. "Everybody raised their hand and said yes. But it was too fast. Paul just wanted to get it done."

Said another league executive: "I wouldn't put it solely on [Tagliabue]. All of us voted for it. Nobody held a gun to our heads. But he was sailing the ship."


G3 is cornerstone issue

An even bigger concern right now for the owners than the players' 60 percent cut of the revenue loot and club revenue sharing is the rising cost of building and operating the league's stadiums.
An even bigger concern right now for the owners than the players' 60 percent cut of the revenue loot and club revenue sharing is the rising cost of building and operating the league's stadiums.

Nineteen of the league's 32 teams are playing in stadiums that have been built or have undergone major renovations since 1995. Four more clubs - the Giants, Jets, Cowboys and Colts - have new stadiums under construction. A fifth, the Kansas City Chiefs, is spending nearly $400 million to renovate their 36-year-old stadium.

The new stadium in the Meadowlands that will house the Giants and Jets is expected to cost slightly less than $2 billion, which is about $1.5 billion more than the total cost of construction for Lincoln Financial Field ($540 million), which opened in 2003.

When the league first began its stadium-building spree in the mid-1990s, Upshaw and the NFLPA agreed to collaborate with teams on a stadium-funding program called G3.

The program allowed teams such as the Eagles to borrow a maximum of $150 million from the G3 fund, depending on their market size, which would be repaid with the visiting teams' share of club-seat revenue once the construction project was finished. The league also received a salary-cap credit from the union, which basically shaved a percentage off the cap total, based on the loan amounts, to help with the burden of stadium construction.

With stadium construction now costing much more, and other stadiums needing capital improvements, the league wants to increase funding help in the G3 program. But Upshaw has thus far shown little interest in expanding the union's role in the program, pointing out that the players association already has committed $2.3 billion over the next 15 years toward stadium construction.

"We're not going to approve [more G3 funding] just because they want us to," Upshaw said. "They're the ones building these billion-dollar stadiums, not us. They never asked our opinion.

"This past year, we took 2.3 percent of the total [from the players' 60 percent share of league revenue] and put it into stadium construction. Which is anywhere from $175 million to $180 million. That's money that would be going to the players. But it's not. It's going to stadium construction.

"There's not one other sports union - not baseball, not basketball, not hockey - that pays for fields or arenas that they play in except us. Now they're complaining that we're not giving them enough."

The owners don't understand why Upshaw would be reluctant to expand the union's role in stadium construction, since much of the increased revenue that new stadiums bring in increases the cap, and consequently, player salaries.

"Gene already has gone down the path of realizing that it's in the players' best interest to participate in the G3 program and continue to build new stadiums and push up the revenues," one league executive said. "It seems logical to me that if you buy that, that when the stadiums become more expensive, you just expand the scope of that program and the [cap] credits that go with it. It's a no-brainer. But he either doesn't see that or doesn't want to acknowledge it yet."

Upshaw isn't completely opposed to expanding the union's role in the G3 program. His biggest problem is that, in addition to wanting larger cap credits because of the construction cost increases, the owners also want the union to help them fund capital improvements to the stadiums as they get older.

He said the Falcons want cap credit to paint the roof of the 16-year-old Georgia Dome and the Carolina Panthers want cap credit to replace the scoreboard at 12-year-old Bank of America Stadium.

"That's the issue," Upshaw said. "We agreed it had to be revenue-producing [to get cap credit from the union]. They can't just do stuff because they want to do it and think we're going to help pay for it. That's not going to happen. Because, at the end of the day, they still own the stadium, not us."


Revenue vs. debt

The NFL's skyrocketing revenues would seem to indicate that the league is rolling in dough. But the owners say the revenue numbers are a bit misleading.
The NFL's skyrocketing revenues would seem to indicate that the league is rolling in dough. But the owners say the revenue numbers are a bit misleading.

While the new stadiums are producing a lot of revenue, which is driving up the salary cap, the owners say their profits are being eaten up by the rising player costs and the debt service from the stadium-construction loans, as well as the operating costs of the new stadiums.

"Smaller-market teams aren't doing great because they've got lower revenues [from older stadiums] and high player costs," a league executive said. "Then you've got the bigger markets where the team overwhelmingly had to pay for the stadium. They got some public contribution, but it wasn't much. They have the higher payroll plus all that debt and stadium operating expenses. Plus, in Gene's world, a bill for revenue-sharing. So you end up with a deal that works for neither [small-market or big-market teams]."

Upshaw has asked the league to show the union proof that the current CBA isn't working. The union is privy to all of the league's revenue numbers, which are used to calculate the salary cap. But it isn't able to audit teams' costs, such as their stadium loans and other financial information.

"We're not taking their word and their reporting system as a means to determine how well they're doing," Upshaw said. "There's a lot we would need to see and digest and believe. It can't just be the same reporting package that [each team] sends to the league. Because they lie."

The one team that the union can get accurate cost data on is the Green Bay Packers, who are publicly owned. And Upshaw said the Packers' financial numbers hardly show a team on the verge of economic peril.

"If you look at the Packers' financials from a year ago, they made $18 million," Upshaw said. "The league says, 'Well, that's an anomaly. They're different.' Yeah, they're different. But $18 million is $18 million. Any company would love to make $18 million.

"You've got a stadium and franchise increasing in value every year. You've got your payroll pretty much set. And you're able to make $18 million in profit? Not a bad deal."

Said Goodell late last month: "We are not in financial straits. We've never indicated that. We've never stated that. But it's very clear that the owners don't believe this deal is working. And it's important for us all to sit down at the table and try to address the matters that aren't working for the ownership."


Impact of a new commish

One of the most significant reasons for the league's 15 years of labor peace was the unique relationship between Upshaw and Goodell's predecessor, Tagliabue. They became good friends who viewed each other more as partners than union-management adversaries.
One of the most significant reasons for the league's 15 years of labor peace was the unique relationship between Upshaw and Goodell's predecessor, Tagliabue. They became good friends who viewed each other more as partners than union-management adversaries.

They collaborated on the historic '93 CBA, as well as four more extensions after that. "Probably the most important thing Paul has done is kept us out of the courtroom," Upshaw told the Daily News 2 years ago. "He knew and I knew that if we stayed out of the courtroom and used the league's assets, which is the players, we could grow the game in a way that is unbelievable. And that's what happened."

Upshaw doesn't have the same kind of relationship with Goodell that he had with Tagliabue. Only time will tell how that will affect the negotiations for a new CBA.

"[Roger] has to be able to do what Paul was able to do all those years, which was build a consensus," Upshaw said. "Paul never walked into a room and took a vote. It took him time. That was the way he worked. But there are a lot of new owners now that Roger's dealing with that Paul didn't have to deal with. That makes the dynamics a little different.

"But Roger and I have been able to work together on all of the issues so far. This will be the test. This will definitely be the test. Because the thing about what we both do, I have to deliver the players and he has to deliver the owners. If either one of us can't do that, we can't make a deal. There won't be a deal. I need him to be strong and he needs me to be strong."

Goodell, a senator's son who worked his way up the NFL ladder from a public relations intern to its top boss, has a different personality and a different style than Tagliabue, a former anti-trust lawyer.

"Paul had an amazing ability to persuade people without you feeling like he was arguing with you," a league executive said. "He could drive consensus and it just felt like he was making sense whenever he talked.

"Roger has a completely different style. He's much more aggressive. He has somewhat of a temper. He just doesn't have the type of personality that's going to lend itself to having the kind of relationship with somebody on the opposite side of the table from him as Paul had with Gene.

"The key right now is that neither side get emotional. Because if you stay calm and rational and fair about this thing, you should be able to figure this thing out. The problem will be if either side gets too emotional, too intense, and gets itself too hyped up. Roger is more capable of personally getting a little bit hyped up and getting his back up against the wall than Paul ever would have been."

Goodell isn't the only wild card in these negotiations. There also is concern on the owners' side about what they perceive as the growing influence of union attorney Jeffrey Kessler on Upshaw.

"If you asked anybody on our side why Gene seems to have changed from a let's-figure-out-a-solution-to-the-problem guy to the way he's been acting lately, everybody would tell you it's Kessler," one owner said.

Kessler, a partner in the New York law firm Dewey & LeBoeuf, is one of the union's two main out-of-house lawyers, along with James Quinn. League executives view Quinn as a reasonable man with a similar personality to Tagliabue's, while Kessler is viewed as much more confrontational and tougher to deal with.

"Quinn kept Gene in the mind-set of, 'There's a lot of things that the teams and the players should be on the same page with and some things we need to fight about. So let's pick our spots,' " a league executive said. "Kessler's one of those guys who just likes to fight about everything. He's just a pugnacious guy."

Upshaw is amused that anyone in the league might be worried about someone else influencing him. Maybe because he's an ex-player, maybe because he's black, maybe because he doesn't have a law degree, people have been suggesting for years that others have been pulling his strings.

"That's what always amazing about Gene Upshaw," he said, purposely referring to himself in the third person. "I'm never my own man. Everyone influences me. I'm not smart enough to figure all of this out by myself.

"The fact of the matter is, at the end of the day, it's my call. It's not Kessler's call. It's not Jim Quinn's call. It's my call because I'm the one who has to go into the locker rooms and tell the players."


No cap? No problem

The owners ultimately approved the '06 labor extension because they were afraid of losing the salary cap. Upshaw has repeatedly said that if the two sides ever get to an uncapped year, you can kiss the cap goodbye. "I won't try to convince the players again that they need to have these [cap] constraints," he said.
The owners ultimately approved the '06 labor extension because they were afraid of losing the salary cap. Upshaw has repeatedly said that if the two sides ever get to an uncapped year, you can kiss the cap goodbye. "I won't try to convince the players again that they need to have these [cap] constraints," he said.

But according to one league executive, a growing number of teams are starting to think life without a salary cap might not be all that cataclysmic.

"I don't think it's a majority yet, but a lot of teams are becoming increasingly comfortable with the idea of not having a cap," he said. "I don't know if [the number of teams] is going to flatten out or keep going in that direction."

Another executive said that while a salary cap is good for the whole league collectively, it's not necessarily the best thing for the teams that are most profitable.

"Gene would be shocked if he ever knew the mixture of teams that are moving toward being very comfortable with an uncapped year," the executive said. "He probably assumes it's teams that are in the top five in revenue in the league, when in fact, that's not necessarily the case.

"It's also teams with more modest revenues, but because of the nature of their stadium deals are doing quite well and feel, if there's not a cap, they'd do just fine."

Upshaw said that decision is totally up to the owners.

"They are essentially renting a system from us," he said. "We agreed to give them a salary cap for a specific period of time. They agreed to pay us 60 percent of the revenues for that cap. When they decide not to do that anymore, that's fine.

"But if they ever decide they don't want a salary cap, and then wake up one day and change their mind and decide, 'You know what, maybe we need that,' guess what? The price is going to be a lot higher than it is now. And they're not going to want that." *