Eye on the Needle

The state of the NFL is an uneasy one these days.  Strange things are happening.  Most of us can barely remember the last time a Colts’ veteran held out or missed an OTA.  Now Indy has two veteran defenders not showing up for basically the same reason:  they want more money.  Neither situation is particularly distressing.  Voluntary OTAs are just that: voluntary.  Until players start missing mandatory workouts or camp, none of us should be overly worried about Bethea or Mathis.

Still, their absences are small shivers in the larger tremors of labor unrest.  Players feel desperate.  The Union has publicly stated that they believe a lockout is eminent.  Many players are looking at their bank accounts and wondering how they’ll get through a year without a paycheck.  This is leading to a lot of guys holding out for more money now (during an uncapped year), knowing they possibly won’t be getting paid in 2011.

Part of the hold up in the labor negotiations was that the NFL was waiting to see the outcome of a law suit.  A small apparel company had it’s contract with a team terminated because the league decided it wanted to have just one exclusive apparel deal for all 32 teams.  Long story short, the NFL saw this case as an opportunity to petition the Supreme Court to declare it to be a single economic entity exempt from anti-trust laws rather than as a collection of 32 competitive teams.

If you want a more detailed and scholarly breakdown of the case and its implications, I suggest you check out this.  Here’s my understanding of what this case means to the league and the Colts:

1.  Revenue Sharing-Revenue sharing is the single most important economic issue that affects competitive balance (not the salary cap).  As long as teams have similar revenue streams, they will remain competitive with one another.  On the surface, this ruling against the NFL changes nothing.  The NFL is still free to sharing merchandising revenue.  However, there have been rumblings that the revenue sharing system might be in jeopardy.  Had the NFL won the case, the revenue sharing bonds between teams would have been essentially codified into law.  Instead, the NFL got trounced (at least on the first pass).  The lawsuit is still largely unresolved, despite the ruling.  The end result could be that the league is prohibited from acting as a single entity in the negotiation of apparel rights.  I don’t necessarily expect that, but let’s say that it happens.  The Cowboys and the Jaguars would have to negotiate independent contracts for team licensed clothing.  Which do you think will get a bigger deal?  Do you think the Cowboys will really be keen on sharing their cash with a team that deals heavily in sparkles?

2.  The CBA-The Union claimed victory here even though the ruling didn’t have that much of an impact on the labor situation.  A most unlikely outcome of the case could have been a broad anti-trust exemption for the NFL.  Had the NFL won that exemption, they would have had a major card to play in the event of labor Armageddon.  Essentially, as long as the NFL is 32 independent teams, they legally have to compete fairly for players in a market style system.  The NFLPA wants this because demand raises price.  Had the NFL won their claim, the players union essentially would have had no leverage to demand that teams bid against each other for players.  The NFL has been dragging their feet in the CBA talks because they wanted to see if the Supreme Court would grant them a magic bullet.  Instead, they got horse whipped.  While not changing the status quo dramatically, the ruling did take away one avenue the league could have employed to deliver a kill shot to the players’ union.

The labor fight is still likely to be long and bloody.  Guys like Bethea and Mathis are understandably worried.  Jim Irsay is an a difficult position.  On one hand, he wants to get a deal done with Manning while there’s no cap, knowing that he can squeeze in more money that doesn’t have to be accounted for later.  On the other hand, the more cash he expends now for a guy who might not play in 2011 the more difficult his life will be.

There is no team in football that wants a lockout less than the Colts.  Indy is in a strong middle position financially.  They have a top flight team with an aging QB and the Super Bowl coming to town after the 2011 season.  American Needle moderately raises hopes for a settlement, but is far from a decisive blow against the owners.

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