Revenue Sharing Ruling

A ruling on Monday prevents the NFL from getting rid of a supplemental revenue sharing pool that would pay teams approximately $220 million in 2010. It’s another omen pointing to potential league labor strife. Document

The league notified its member clubs and the NFLPA in December that the supplemental program which funded approximately eight to 12 lower-revenue clubs would no longer be in effect in 2010, the final and uncapped year of the labor agreement that was reached between owners and players in 2006.

“We find no explicit distinction between capped and uncapped years or between capped years and The Final League Year,” Burbank wrote in his ruling, which ESPN acquired Monday night.

Burbank agreed that the labor agreement required the union’s approval of any changes made to the supplemental revenue sharing pool.

“The Special Master basically rejected every single argument that management made and regardless of how the league characterizes the decision, this is a victory for players, for low-revenue clubs and the fans,” said Jeffrey Kessler, the lead counsel for the union in the case.

The league said it would appeal Burbank’s decision to presiding U.S. District Court Judge David Doty.

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NFL spokesman Greg Aiello said, “Today’s decision involves a small sliver of the NFL’s overall commitment to revenue sharing. The NFL for decades has shared more than 80 percent of league and club revenues. In the 2006 collective bargaining agreement that expires in 2011, the NFL clubs also agreed to a small percentage of additional revenue sharing because of the new CBA’s significantly increased salary cap. The agreement calls for no salary cap in 2010 and that additional piece of revenue sharing to which the clubs had agreed in 2006 is therefore no longer required in our view. Although the Special Master disagreed with our interpretation on that issue, we are hopeful that Judge Doty, who will look at the issue anew, will see it differently.”

Kessler said that the ruling, if upheld, should motivate low-revenue clubs to participate in spending on their own players and potential free agents, regardless of whether those free agents are restricted by any means allowed in an uncapped year.

“These clubs can now budget for beyond 2010,” said Kessler. “The union was concerned about their incentive to spend with an uncapped year and a looming lockout by the owners in 2011. [Management] can try to diminish the value of the supplemental pool but it represents a significant dollar amount for those affected clubs. This means a more vibrant outlook for players, teams and fans and now we’ll monitor how the market behaves.”

The New York Times reported that another negotiating session between management and the union is scheduled to be held this week in an effort to reach a new labor agreement. However, NFL commissioner Roger Goodell conceded in an interview Sunday with the NFL Network that he expects the league to operate in 2010 with an uncapped year.

Asked if the ruling would only further exacerbate the union’s dealings with management, Kessler replied, “I think my view and the view of the union is we hope the parties can come together on a new CBA. If this ruling helps, that’s great. If not, we hopefully can find something else that is agreeable. Everyone wants to make a deal. We just have to figure out how to get there.”

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