Memo I received today on status of NFL CBA negotiations

To: NFL Players and Contract Advisors
From: DeMaurice Smith
Date: February 23, 2010
Subject: CBA Negotiations/Restricted Free Agency

As we quickly approach the beginning of the uncapped year, I wanted to take this opportunity to update you on the NFLPA’s efforts to reach agreement on an extension of the CBA before the beginning of the uncapped year on March 5, 2010. It is our view that obtaining an extension to the CBA prior to the uncapped year is in the best interest of both the players and the owners. However, the terms of any CBA extension must allow for players to get their fair share of NFL revenues while at the same time address the owner’s issues in such a way as to allow them to continue to grow the game of football. All of the NFLPA’s proposals have been crafted with that in mind. The Player Representatives have also been advised of the NFL’s request that players take a pay cut that would move players back to the 1980’s in terms of their share of NFL revenues.

CBA Bargaining There have been 12 general bargaining sessions with the NFL discussing issues relating to the proposed terms of a new CBA. Comprehensive written proposals and counter proposals have been presented to meaningfully address issues such as the overall player cost/free agency system, revenue sharing, rookie salaries, forfeiture clauses in player contracts, and off-season/pre-season work rules. In addition to NFLPA staff and outside counsel, NFLPA player leadership has been present at all of the sessions. Players attending at least one session include NFLPA President Kevin Mawae, Mark Bruener, Kevin Carter, Tony Richardson, Domonique Foxworth, Chester Pitts, Sean O’Hara, Jay Feely, Pete Kendall and Donovin Darius. These players have contributed valuable insight and perspective in support of NFLPA positions at the bargaining table. On the NFL side, owner representatives in attendance have included John Mara (New York Giants), Mark Murphy (Green Bay Packers), Robert Kraft (New England Patriots), and Ozzie Newsome (Baltimore Ravens). The most recent session was held on February 6, 2010, just prior the Super Bowl, and was attended by the NFL Management Council’s Executive Committee, which is comprised of 10 owners, and chaired by Carolina Panthers owner Jerry Richardson. In addition to the general bargaining sessions, six sub-committees were created to address very specific areas of the CBA. Those sub-committees are as follows: Benefits, Drug Policies, Grievance Procedures, Working Conditions, Injury Data and Licensing/Intellectual Property Rights. The NFLPA has prepared detailed written proposals for each of the areas addressed by these sub-committees and each committee has held no less than three meetings to discuss their respective proposals. In total, we have held more than 30 overall bargaining sessions with the NFL in the past six months. And while we have made progress in some areas, we continue to have significant disagreement with the NFL over their desire to have players take an 18% reduction in their share of revenues given the NFL’s failure to provide meaningful financial data to support the assertion that their costs have increased significantly since the capped system was put into place in 1993. Their demand that the players take such an historic pay cut is even more disturbing given the NFL’s continuing economic growth despite the worst recession in recent history. The NFL has made it clear that the league and its clubs remain profitable. There has not been any statement, affirmative or suggested, by the NFL that any team is losing money. Moreover, the league has rejected any offer to discuss their profit margins, team profitability or any of their teams’ individual financial statements. Players have always been willing to create incentives for NFL owners to develop new revenue streams for their clubs. The G-3 program contained in the existing CBA which provides salary cap credits for new stadiums provides a good example of our commitment to this philosophy. Our current proposal would allow NFL clubs to obtain substantially increased deductions for costs incurred to generate new revenue streams. Another general bargaining session is scheduled for Thursday, February 25, 2010, at the NFL Combine in Indianapolis.

Uncapped Year While we are doing all that we can to reach a fair agreement with the NFL before the start of the 2010 league year, it appears likely that no new CBA will be reached and the 2010 season will be uncapped. For some players this means that they will be Restricted Free Agents instead of Unrestricted Free Agents since unrestricted free agency in the uncapped year increases from four (4) to six (6) Accrued Seasons. We are sensitive to the impact that this change in the free agency rules will have on these players. Because of this, our most recent proposal to the NFL contains an offer to continue the current capped system for an additional year which would allow the parties ample time to complete work on a long-term CBA.

The NFLPA just recently won a Special Master decision against the NFL and its clubs which will force the high revenue clubs to share millions of additional dollars with the low revenue, small market clubs during the 2010 season. The decision to pursue this action was based upon our belief that we had to make more money available to sign players in the uncapped year.

Remember also that the uncapped year provides just that -- no cap or limit on the amount of money a club may spend on player salaries. The last time there was an uncapped season in the NFL was in 1993, and in that season clubs spent collectively over 70% of league revenue on player costs. While we cannot predict what will happen in 2010, we suspect that it will be dependent on the individual player and team. Given the projected increases in NFL revenues for 2010, more money should be available for player salaries than ever before. In addition, keep in mind that each NFL club will be saving approximately $10 million in benefit costs as a result of their not having to fund certain benefits in the uncapped year. That money can and should be used for player salaries. For those players negotiating new contracts in 2010, please keep the NFLPA updated on the status of your negotiations as it will allow us to be informed of the trends in the market for player services. With that information, we can then help all players maximize their ability to get the best contracts possible. In the meantime, the NFLPA will continue its efforts to reach agreement with the league on a new CBA.