The arbitration case in which the Washington Redskins are challenging their salary cap reduction by the NFL raises complicated legal questions about the scope of the league’s authority to promote competitive balance among its teams, according to experts.
Gabriel Feldman, the director of the sports law program at Tulane University, said that “it’s certainly not clear-cut” which way the arbitrator will rule in the case. The Redskins and Dallas Cowboys are contesting the salary cap cuts imposed on them last month for the way the teams structured players’ contracts in the sport’s season without a salary cap in 2010.
“I think there are good arguments on both sides,” Feldman said in a telephone interview. “You can certainly see each side’s point. The league certainly has an interest in maintaining competitive balance. But this was the risk that came with this 2010 [uncapped] year.”
The Redskins were penalized with a $36 million salary cap reduction over two years, at least half of which must be absorbed this season, under an agreement between the league and the NFL Players Association. The Cowboys were given a $10 million salary cap subtraction over two years.
The league found that the two teams reworked the contracts of players to pay money to them during the 2010 season that would have been owed them in future seasons, presumably when a salary cap was in effect, according to people familiar with the case. That tactic enabled the Redskins and Cowboys to free up salary cap space, and the league concluded this gave them an unfair competitive advantage when the cap returned.
To some observers, that is nothing more than clever cap maneuvering. Peter Schaffer, an attorney and veteran NFL agent, said he thinks the arbitrator, Stephen Burbank, will rule in favor of the Redskins and Cowboys.
“If you have an uncapped year, you can’t have cap penalties,” Schaffer said. “The definition of uncapped is no cap . . . I believe [Burbank] will do the right thing here and say, ‘You can’t do that. You can’t have an uncapped year with a cap.’ ”
The teams have denied wrongdoing and have pointed out that the contracts were approved by the league at the time.
“The issue. . . was did any teams gain a competitive advantage,” NFL Commissioner Roger Goodell said late last month. “That was the focus that the NFLPA and we had going forward. That is why we reached an agreement [with the union on the salary cap reductions]. We wanted to make sure coming out of this agreement that no one had a long-term competitive advantage.”
One person familiar with the case has said teams were warned during the uncapped year not to do anything to attempt to gain a competitive edge in future seasons. Schaffer said he believes it’s possible Burbank will find that the owners improperly colluded.
“The salary cap is a per-se violation of the antitrust laws,” Schaffer said. “There can be no greater example, unless labor agrees to it . . . To me, this is collusion. They’re saying, wink-wink, nobody can spend money. That’s a violation.”
But that contention could be problematic, Feldman said, because the union, the watchdog of collusion, agreed to the salary cap reductions. In addition, the salary cap space taken from the Redskins and Cowboys was redistributed to other teams, seemingly making it more difficult to contend that players’ salaries were suppressed.
“The players obviously signed off on that part of the deal,” Feldman said. “I don’t know if they waived any rights in doing that or not. The collusion argument, and whether or not the Redskins and Cowboys violated what may have been an illegal agreement to begin with, certainly adds a layer of complexity to this. [But] I think the NFL can make a claim that what they did was right, absent any collusion by the teams, that what the Redskins and Cowboys did was violate the spirit of the terms of an inevitably returning salary cap.”
According to Feldman, Burbank will be charged, in part, with determining how much leeway the league has to go beyond the written rules to try to ensure there is fair competition among the teams.
“You can say the Redskins and the Cowboys manipulated the rules, and violated the spirit of the rules to achieve competitive balance,” Feldman said. “But you could also say the league violated the spirit of the rules of the uncapped year. That’s a tough call.”
The NFL has the support of other teams. The teams voted, 29-2, at the league meeting in Palm Beach to affirm the salary cap reductions. The Redskins and Cowboys voted against that affirmation, and the Tampa Bay Buccaneers abstained from the vote.