NFL Owners Approve Labor Pact, Raising Salary Cap

"It's great for the league," Redskins owner Daniel Snyder said. "I'm happy for the NFL and for all our fans and the players. We can keep building on what's been created. We are a top-five team contributing the most [but] we're believers in the competitive balance."

Bills owner Ralph Wilson said he voted against the proposal because its revenue-sharing component was so complicated.

"It's a very complex proposal, and I didn't really understand," Wilson said. "I didn't think I was a dropout, but maybe I am."

The recent labor difficulties had been unusual for the NFL, which had benefited from a cooperative relationship between the owners and the union since the early '90s while cementing its status as the nation's most prosperous sports league. Now the league has labor peace to go with a set of new national television contracts that will be worth almost $4 billion annually beginning next season.

The twin labor and revenue-sharing disputes arose from the fact that a group of about eight teams has far surpassed the other clubs in revenue-generating capabilities in recent years. All 32 teams share national revenue equally. But Snyder and the owners of the other high-revenue franchises tapped into revenue streams -- from sources that include stadium naming rights, luxury boxes and local sponsorships -- that didn't have to be shared with the other clubs. Owners of low-revenue teams expressed concerns that the growing disparity eventually could lead to a competitive imbalance and sought to overhaul the revenue-sharing system to have more local revenue shared. Owners of high-revenue teams resisted, arguing that they had paid premium prices for their franchises and should not have to further subsidize other clubs that might be, in some cases, mismanaged.

Upshaw, meantime, sought to have the new revenue included in the pool from which the players are paid. Before this settlement, the players received about 65 percent of a smaller revenue pool known as defined gross revenue. The new, larger revenue pool is called total football revenue, and the players are to receive approximately 59.5 percent of it.

The new deal contains a mechanism to adjust the salary cap based on how much the teams collectively spend on player compensation. If the teams collectively spend more than the salary cap in a season -- which is possible since the cap is a flexible spending limit -- the cap would be automatically adjusted downward in subsequent seasons. If the teams collectively spend less than the salary cap in a season, the cap would be automatically adjusted upward in the future.

The previous labor deal would have kept the salary cap in place through the 2006 season, then there would have been a season without a salary cap in 2007 before the agreement expired. Upshaw had said that if this proposal was rejected by the owners, he would begin discussing with the players the possibility of decertifying the union as a tactic to prevent a lockout by the owners in 2008.

"We all know that deadlines are critical to making decisions," said Dallas Cowboys owner Jerry Jones, whose team also will be a major revenue-sharing contributor. "If I'm going to get my fanny kicked, I can put that off until another day. . . . You had to have your league hat on to make this work. And then you had to go one step further than that and think about the fans."

Negotiations broke down several times in recent weeks but the two sides repeatedly pushed back the opening of free agency. Upshaw had said that once free agency began, he was done bargaining because the players would have been that much closer to a season without a salary cap.