Clouds in the Forecast
Kickoff Darkened By Labor Issues, Economic Woes

By Mark Maske
Washington Post Staff Writer
Thursday, September 10, 2009

The NFL rarely is about understatement, and its season opens Thursday night in Pittsburgh with all the fanfare that normally accompanies a signature event for the country's most popular sports league. There will be a pregame concert with Tim McGraw and the Black Eyed Peas, a capacity crowd at Heinz Field and a national television audience for the NBC broadcast of the game between the defending Super Bowl champion Steelers and the Tennessee Titans.

But as the new season begins, a number of significant challenges are confronting a league that for years has enjoyed an unprecedented run of growth and prosperity. About a dozen of the 32 NFL franchises have had problems selling tickets in the uncertain economy, to the point that one out of every five games -- 50 or more in all -- could be blacked out on television in the local market of the home team this season. Last season only nine games were blacked out.

There has been little apparent progress in labor negotiations between franchise owners and the NFL Players Association, leaving Commissioner Roger Goodell to say there is a strong possibility that next season will be played without a salary cap. Players are preparing for what they say could be a lockout by the owners in 2011.

"Believe me, you don't take for granted the prosperity," Indianapolis Colts owner Jim Irsay said recently. "Against the backdrop of the way the economy's been and the other sports leagues, you're very thankful for that and you don't take it for granted."

The NFL has not had a work stoppage since 1987, but there have been rumblings of labor unrest since Paul Tagliabue and Gene Upshaw -- respectively, the league's commissioner and executive director of the players' union at the time -- shepherded through an extension of the collective bargaining agreement in 2006.

Just about everyone in the sport has thrived under the free agency and salary cap system in place since 1993. League revenue has increased to approximately $8 billion per season and the players' share of that revenue has been upped to about 60 percent. But owners say the deal struck in 2006 has been too expensive. They voted last year to end the agreement two years ahead of schedule, leaving this season as the final one with a salary cap, which sets a ceiling on how much money each team can pay in players' salaries.

The owners want the players to accept a smaller slice of the revenue pie and focus on finding ways to work with the owners to increase total revenue to help make up the difference. Players have said they won't agree to take a smaller percentage of revenue.

The dispute puts DeMaurice Smith, the D.C. lawyer elected by the players in March to succeed Upshaw, in a difficult position. Unless the owners back down, Smith might have to choose between being the players' union chief who agreed to financial givebacks or the one who presided over the end of the league's labor peace. It's all part of a new dynamic, with Goodell and Smith leading their first set of labor negotiations after Tagliabue's retirement in the fall of 2006 and Upshaw's death from pancreatic cancer last year.

Smith met last week with economists, lawyers and other advisers to discuss strategies to counteract a prospective lockout -- the union in the past has vowed to decertify before any lockout, potentially exposing the owners to antitrust damages -- and players were told to save at least 25 percent of their salaries in each of the next two seasons to protect themselves.

"If you can save more, all the better," New York Giants center Shaun O'Hara, his team's union representative, said in a written statement on the union's Web site. "It's a good opportunity to give guys direction and a tool to better serve them in the future. Having the ability to plan two years in advance will alleviate a lot of stress down the road."

Goodell met with Smith over lunch last week in Washington. But there have been only two formal bargaining sessions, and Goodell said on Sept. 3 that the "minimal" progress in negotiations thus far makes it "a strong reality" that the 2010 season will be played minus a salary cap.

"I'm not much for a lot of rhetoric, and to me this has to be said at the table and let's start negotiating," Goodell said. "And that was my clear message to [Smith last] week. That's our intent is to get him to start negotiating and dealing with these issues privately and in a constructive way that will lead to an agreement. And the owners' intent here is to get to an agreement. The idea that the owners are looking for a lockout and that would be their objective is foolish. That's really not a practical outcome for them in the sense of being beneficial to the league."

Smith said in an interview Wednesday with ESPN Radio: "The way to move the ball forward is to first explain why you opted out of an agreement that generated $8 billion in revenue. . . . It's an $8 billion entity that's formed as a nonprofit that gets antitrust exemption. I guess there is some information we're just not entitled to know."

The two sides are divided over the impact of a demise of the salary cap. Players envision soaring salaries for the bigger stars as the most aggressive owners try to buy their way to a Super Bowl title. But owners and league officials point out that player-payroll minimums for teams would disappear along with payroll maximums. They also warn that teams' collective spending on players could be curbed by a different set of rules that would go into effect restricting players' eligibility for free agency and certain teams' eligibility to sign free agents.

"I do think that the owners have overcome whatever concern or reluctance they may have had in the past to go into an uncapped year," league counsel Jeff Pash said last week. "I think they recognize that an uncapped year is likely, from an economic perspective and a competitive perspective, to not be worse than what they're dealing with now. And if it is a necessary step to get to a new agreement that has an economic system that is more balanced and better for the long-term health of the game, it's one that they're prepared to take."

Other significant issues have been bundled into the labor talks, including the owners' desire to shorten the preseason and expand the regular season to 17 or 18 games; the league's push for a rookie salary cap; and the union's desire to add a mechanism by which players' appeals of disciplinary decisions by the commissioner could be heard by an independent arbitrator. The NFL also continues to have big plans for the future that include possible expansion overseas. Goodell said he could envision a franchise eventually being placed in London.

But first, the league and its teams must deal with the immediate effects of the national economic downturn. There were cutbacks and layoffs last year by the league, which reduced its staff by more than 10 percent, and individual teams. Goodell took a voluntary pay cut of at least 20 percent.

But teams already had sold tickets and sponsorships for last season before economic conditions deteriorated, so the overall impact of the national financial crisis is only now becoming clear.

As of Wednesday, 19 of the 32 franchises had sold out their tickets for the season, with hopes that it soon would be 20. That's the same number of teams that were sold out entering last season, according to the league. NFL officials said that overall ticket sales for the season will be down a percentage from last season that's in the low single digits.

But the ticket-selling difficulties for some teams are significant. People within the league said recently that the list of teams experiencing ticket-selling difficulties and potentially facing regular season blackouts included the Jacksonville Jaguars, San Diego Chargers, Minnesota Vikings, Oakland Raiders, San Francisco 49ers, Detroit Lions and possibly the St. Louis Rams and Cincinnati Bengals. The Jaguars have indicated they expect all their home games this season to be blacked out.

According to Goodell, the NFL projects that at least 80 percent of the 256 regular season games league-wide will be sold out the required 72 hours in advance to be shown on local TV this season. That figure was at least 95 percent in each of the last four seasons, and had been climbing since the annual percentages were in the 60s in the early to mid-1990s.

New England Patriots owner Robert Kraft said at an owners' meeting last month in Chicago: "We've had some uncertainty. So we're trying to stay flexible."

The league has managed, even in the down economy, to negotiate extensions of most of its national TV contracts. The NFL's deals with NBC, Fox, CBS, ESPN and DirecTV are worth, in total, about $4 billion per season. That's approximately $125 million annually per NFL team, providing a sizable revenue buffer against the ticket-selling problems that exist in some markets.

The NFL reportedly received rights fee increases of approximately 2 percent in the NBC, CBS and Fox extensions, not in line with the mammoth increases of some past deals, but still a testament to the sport's strength as a TV product.

"We've been able to have our exposure, remain on free TV, and it says a lot," Irsay said at last month's owners' meeting. "There's no question our game has been built for television. . . . There's a great appetite out there for it."

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