What I Learned From My Conversation with George Atallah

Yesterday, I posted the transcript of my conversation with George Atallah, Assistant Executive Director of External Affairs for the NFLPA.  In the conversation, he replied to comments that NFL Commissioner Roger Goodell made to me on Monday

In the same way that I investigated and analyzed the Commissioner’s claims, I have looked into the comments made by Mr. Atallah. 

The first point we discussed was the Commissioner’s comments about the television case originally decided by a Special Master and later overturned by a federal judge.

Like Mr. Goodell, Mr. Atallah made accurate claims about the case.  While Mr. Goodell obviously wants fans to focus on the initial ruling, Mr. Atallah believes Judge David Doty’s forceful overturn was correct.  Mr. Atallah is technically correct with his claims that the Special Master ruled in part for the players.  He certainly did, and that knowledge drove one of my questions to the Commissioner.  However, while he’s technically correct that the Special Master’s decision was originally split, Mr. Goodell’s ‘claim of victory’ in that decision is more functionally accurate. Put simply, the Special Master’s originally ruling was a significant win for the owners.  The damages awarded were insignificant compared with what the players wanted.

Ultimately, it doesn’t matter what the Special Master decided, however.  On the larger point, Mr. Atallah is correct. A federal judge overturned that ruling.  There’s little point in arguing who the first ruling truly favored because the first ruling was declared to be in error and invalid.  Ultimately, Mr. Goodell’s defense to my question rests upon ignoring the conclusions of Judge Doty, something I am frankly unwilling to do.

The television contracts have been found to be illegal.  The Commissioner at present is not willing to admit that they were a mistake.

The second point we discussed was the issue of whether conduct by the owners in the negotiations contributed to the break down of the talks.

Mr. Atallah did not specifically address the comments because he wasn’t present.  Instead, he pointed to the owners general conduct as being offensive, referring back to the television contract as well as the lethargic pace with which negotiations were conducted that lead players to believe the owners weren’t serious about reaching an agreement.

These claims are no more verifiable that Mr. Goodell’s were.  Mr. Goodell’s assertion that players were not offended by the ‘antics’ of the owners was not contradicted.  Without the opportunity to personally interview the players actually involved, I’m willing to accept Mr. Goodell’s point.  Mr. Atallah seemed to support the notion that what was off-putting was the owners’ strategies and general conduct more so than any one particular outburst.  I now suspect that stories of harsh words across the table make for good copy, but neither side in this dispute threw away a multi-billion dollar deal over a few insults. My thanks to Mr. Goodell for clearing up that point.  I’d be willing to revisit it if any of the players personally offended were willing to tell me so on the record.

 

We discussed whether or not Mr. Atallah felt the owners had drug their feet in getting to the bargaining table.

Mr. Atallah confirmed for me something the Commissioner had told me that I could not previously verify.  The owners did in fact offer a deal to the players in 2009, as Mr. Goodell had said.  Mr. Atallah’s argument was that the lack of disclosure of the financial statements represented evidence that the owners were unwilling to negotiate seriously. 

I don’t believe that’s the best evidence for the claim, though there is in fact other evidence that illustrates the owners were lethargic in their preparations.  One of the most interesting and overlooked developments of the mediated negotiations was the disclosure that one of the key arguments by the owners to show the old CBA was a bad deal was riddled with flaws.  The NFL had claimed that as the league made more money from year to year, the players got 70% of the ‘incremental revenue’. That claim formed the backbone of their belief that old CBA was unfair.  However, an independent audit showed that in fact the players got only 53% of that revenue.  In other words, one of the primary claims by ownership was hastily thrown together and lacked financial data behind it.

Ultimately, however, the two sides both admit they met for dozens of sessions spanning more than a year.

As for the failure to disclose audited financials, while I do believe they should have been disclosed, I don’t necessarily take that as evidence the league was slow to negotiate.  It seems to me to be to be evidence the league has internal issues related to the issue of revenue sharing between teams that they are reluctant to address.  I believe the league is trying to negotiate a CBA that will shield them from having to have the difficult internal fights necessary to ensure a level playing field between teams of all market sizes.  Ultimately, if the league solves its revenue sharing process, it will be better able to negotiate with the players. However, at present the NFL owners’ failure to disclose financials seems to have more to do with shielding the data from one another than it does a desire to stall negotiations.

I asked Mr. Atallah if the players’ side had any regrets or if they wished they would have done anything differently.

Mr. Atallah said, “No.”  He claims the players’ side has done everything possible to prevent the impasse, and that they behaved appropriately.  This is essentially the same message Mr. Goodell had about the owners’ side.  Neither side is willing to admit any degree of culpability or regret.  As I’ve said before, I don’t see how such a situation will ever result in a deal without court intervention. 

The NFLPA is unwilling to take any blame or admit any fault.

The NFL is unwilling to take any blame or admit any fault.

Mr. Atallah did follow up his comments by arguing that the NFLPA wasn’t seeking to “ruin football”.  They aren’t “suing and litigating to change” the game.  Yesterday, the NFL jumped on this statement.

Here is what the lawsuit says about the draft: “The College Draft is one of the longest-running restraints on competition for player services in the NFL…The imposition of the Draft with ‘Entering Player Pool’ is an anti-competitive, horizontal agreement between competing NFL teams…The restrictions imposed by the NFL completely eliminate and prevent any competition for the services of rookie NFL players and are not necessary to achieve any pro-competitive objective.”

The lawsuit also seeks elimination of the collectively bargained free agency system. Says Brady v. NFL: The NFL’s “imposition of restrictions on competition for player services, such as the Salary Cap, the ‘Franchise Player’ restriction, the ‘Transition Player’ restriction, or other restrictions on player free agency, are part of an overall combination and conspiracy by the NFL to suppress competition in the United States market for the services of major league professional football players…The restrictions which they seek to impose are intended to suppress competition in that market and are not necessary to achieve any pro-competitive objective.”

This is where things get lawyer-y, so bear with me.

The NFL is correct. The lawsuit does in fact say all the things they say it does.

However, what we have from Mr. Atallah is a promise and an admission that the charges in the suit are not the real aim of the players.  It is common in civil suits for the plaintiffs to ‘load-up’ against the defendant, mounting as many legal challenges as possible in order to gain leverage.  Mr. Atallah is telling us directly that this is what this suit has done.

His admission is that the point of law suit is singular: to force an end to the lockout.  The players are not actually seeking any of the changes the suit would force. In other words, the NFL doesn’t have to acquiesce to all the scary things in the suit. If they fear those outcomes, they can prevent them by simply lifting the lockout.

This is a fascinating set of statements by Mr. Atallah, because for the first time in these conversations, we have one side making a promise, rather than a fact claim:

Sometimes things are really that simple. We are only in court to get this lockout lifted. If they lift the lockout and impose some set of reasonable rules, we’d be playing football and we’d be out of court.

His promise is that if the owners lift the lockout, the players will drop the suit, and go back to work. 

In other words, the NFL is technically correct. The players’ lawsuit does in fact threaten the fabric of the game. The players’ response is simple: it should never get that far, and that’s not really what we want.  The lockout rests firmly in the hands of the owners.  They can put an end to this any time they choose.

This is a promise to the fans that cannot be verified now, but obviously the NFLPA must be held accountable to in the future. If the lockout is lifted by the owners, and the players insist on radical new rules to address the charges made in the law suit, then we’ll know these statements were a lie and a broken promise. However, if the lockout is lifted and the players drop the extreme stance necessitated by litigation, then Mr. Atallah will have kept his word.

I asked Mr. Atallah about what right employees have to ask for more money and see financial statements.

His point was exactly correct and one that I have made here many times. There is nothing similar about the structure of the NFL and ‘real world’ businesses.  The fact is that employees do ask for raises ‘in the real world’ all the time.  The fact is that every non-profit and publicly traded company already has to release audited financials.  The idea that NFL players should shut up and do what they are told, accepting whatever deal they are offered has no roots in fairness or logic.  The fact is that the NFL is exempt from the rules of most normal businesses because they bargain collectively with the players.  Most people already have most of the same rights they feel the players don’t deserve.

I asked Mr. Atallah what evidence he had that the players had negotiated in good faith.

Mr. Atallah responded that the players had agreed to “give back the league $600 million without seeing audited financial statements”. This is a fact claim that required verification.

My research showed that on March 21st, 2011, Liz Mullen reported the NFLPA had agreed to $550 million in credits to the NFL. I asked the NFLPA if this was the number Mr. Atallah referred to.  They confirmed that it was, and that Mr. Atallah was making, “a rough estimate”.

What exactly does this number mean?

Essentially, the NFL proposed a revenue split with the players.  Each side would receive a percentage of the total revenues.  However, the NFL wanted to take $1.66 billion off the top over four years that wouldn’t be shared with the players.  That meant that every season, the players would let the NFL have the first $415 million dollars without subjecting that money to the 60-40 split the sides had agreed upon.  What that really meant was that the NFL was asking the players to give them back 60% of $415 million every season. That’s $249 million dollars the players would have received that the NFL didn’t want to give them. Per club, per year, that comes out to about $7.9 million.

The players responded with a new credit of $550 million over four years.  Normally, they would have gotten nearly 60% of that money.  That means the real give back was about $330 million total or $82.5 million a year or roughly $2.6 million per club, per year.

So, in summary, the real credit was $550 million, not $600 million. The effect of that credit comes out to roughly $330 million the players agreed to take from their own pocket and give to the owners. Mr. Atallah’s number was imprecise but not incorrect, and of more importance is the point he was making.

$600 million obviously sounds like a massive give back, but frankly so does $330 million. The fact is that the players did indeed offer the owners a better deal than the owners got previously. Mr. Atallah’s point that the players made a good faith offer is verified.  Moreover, if anything is clear in all this, it’s that the two sides talked for more than a year and had a great many sessions. While the merits of the owners’ offer can be debated, it’s clear the players did in fact offer the owners more than what they previously had.  The actual impact number isn’t as big as $600 million, but it’s still large and significant. 

I asked Mr. Atallah about the role of the government in the process.

His answer was simple: lawsuits were necessary because laws have been broken.  Because I believe the TV deal was in fact a breach of contract and that the lockout is illegal, I’m inclined to agree with his logic.

It’s fine to suggest that Jeff Saturday and Roger Goodell hash out a CBA over a beer some night, but that’s just not the way complex $9 billion deals are done, and to suggest otherwise is silly.

Ultimately, both of these conversations have convinced me that this process is not solvable via negotiation.  The sides have talked for more than a year without a resolution in sight. I view both sides as completely intractable and negotiation would be fruitless until one side or the other or both suffered so much financial damage as to threaten the future of football.  Litigation is the fastest and only means to a resolution. One side will win. One side will lose. After that, a deal will be possible. 

My thanks to Mr. Atallah for his time and his candor.

Tomorrow, I’ll summarize my thoughts on the week.

Quantcast