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Old 03-02-2011, 08:20 AM   #1
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If this ruling stands, it takes away the nest egg the owners had created to get them through a lock-out. Let's see how long they last when the money starts drying up.
http://www.huffingtonpost.com/2011/0..._n_830154.html
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Old 03-02-2011, 08:41 AM   #2
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So 42% of Direct TV's TV rights are non refundable. I bet that is a big reason they gave them the exclusive deal on non regional games again. I hope this blows up in the owners face.
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Old 03-02-2011, 08:44 AM   #3
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Can't the owners just continue appealing the ruling through Sept anyways?
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Old 03-02-2011, 08:48 AM   #4
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Can't the owners just continue appealing the ruling through Sept anyways?
They can, but the financial risk of an eventual loss could be pretty substantial, in terms of paying back the money with interest, paying damages to the players, if all this happens with no football being played they could be facing some huge bills in top of their normal debt payments.
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Old 03-02-2011, 09:10 AM   #5
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This will almost certainly make a lockout inevitable. Until now, the players had no reason to think they could ruin the owners via a long work-stoppage. Now they do have that leverage.

There is a big legal problem that will be exposed with Doty's work as soon as it is out of the most labor-friendly court in the nation. Simply put, he is acting as if the 2011/2012 and 2013 seasons are governed by a CBA that expired in 2010. He makes the hypothetical argument that the NFL might have retroactively gotten more money in 2010 if they hadn't taken lockout insurance. But the language in the contract is specific - the CBA requires that the NFL maximize the players profit on a season to season basis, not some hypothetical future date.

Doty also slams the NFL for not asking more for digital rights, and links it to the lock-out provisions. I think that's a classic old media view. In reality, digital rights are pretty much mandatory at this point, to incentivize old media viewings.



I don't think that particular line of thought will work on appeal.

Last edited by lostknight; 03-02-2011 at 09:16 AM..
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Old 03-02-2011, 09:11 AM   #6
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They can, but the financial risk of an eventual loss could be pretty substantial, in terms of paying back the money with interest, paying damages to the players, if all this happens with no football being played they could be facing some huge bills in top of their normal debt payments.
We know what that additional protection was worth - the NFL granted television rights to a single additional late game to CBS in 2014. That's a baseline.
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Old 03-02-2011, 09:20 AM   #7
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Well, I don't know what to make of all this, but I'm hoping this gets a deal done sooner, rather than later.
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Old 03-02-2011, 09:27 AM   #8
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Originally Posted by Rohirrim View Post
If this ruling stands, it takes away the nest egg the owners had created to get them through a lock-out. Let's see how long they last when the money starts drying up.
http://www.huffingtonpost.com/2011/0..._n_830154.html
while this sucks for the owners it isn't going to break them. sure it is a huge some of money they are losing, but it isn't like they were going from living large with this money to being flat broke. most owners are worth tens and hundreds of millions of dollars if not more already.

they are still in a better position than most players. so many of these players went out and did the celebrity living crap and have no money at all saved. the owners have groups of people making sure their bank accounts stay fat.

players are still in a much worse place than the owners and the owners still hold most of the cards
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Old 03-02-2011, 10:04 AM   #9
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while this sucks for the owners it isn't going to break them. sure it is a huge some of money they are losing, but it isn't like they were going from living large with this money to being flat broke. most owners are worth tens and hundreds of millions of dollars if not more already.
That's not the issue. Almost all of these owners have funded some percentage of their stadiums. The most successful ones own their stadiums outright, which is about the only difference between a team Dallas (worth well over a billion) and Denver. The problem is to pull that off, they have to do what all of us have to do - get a mortgage. The terms of that mortgage are protected by covenants. That usually includes a covenant about the owner being in default if anything causes a material drop in their earnings. The stadiums are the backbone for about 50% of the local revenue, and to grow that revenue, they needed to expand them.

Loosing the stadiums, having to put up more revenue, or a interest rate hike can do huge massive issues.

That could put them in a world of hurt really quickly.
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Old 03-02-2011, 10:09 AM   #10
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That's not the issue. Almost all of these owners have funded some percentage of their stadiums. The most successful ones own their stadiums outright, which is about the only difference between a team Dallas (worth well over a billion) and Denver. The problem is to pull that off, they have to do what all of us have to do - get a mortgage. The terms of that mortgage are protected by covenants. That usually includes a covenant about the owner being in default if anything causes a material drop in their earnings. The stadiums are the backbone for about 50% of the local revenue, and to grow that revenue, they needed to expand them.

Loosing the stadiums, having to put up more revenue, or a interest rate hike can do huge massive issues.

That could put them in a world of hurt really quickly.
that makes more sense. the way i had been hearing it was that the owners had stockpiled money thinking we better save up for when we lockout the players so we can keep living our normal lifestyles without the NFL revenues for a time.
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Old 03-02-2011, 10:18 AM   #11
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They can, but the financial risk of an eventual loss could be pretty substantial, in terms of paying back the money with interest, paying damages to the players, if all this happens with no football being played they could be facing some huge bills in top of their normal debt payments.
Except it's probably all covered under their billion dollar insurance policy. Besides, that's a short term investment if it means dragging things out for a better long term deal. They'll stir the pot knowing it will bleed the players dry.
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Old 03-02-2011, 10:19 AM   #12
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I guess Carson Palmer isn't worried.
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Old 03-02-2011, 10:22 AM   #13
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That's not the issue. Almost all of these owners have funded some percentage of their stadiums. The most successful ones own their stadiums outright, which is about the only difference between a team Dallas (worth well over a billion) and Denver. The problem is to pull that off, they have to do what all of us have to do - get a mortgage. The terms of that mortgage are protected by covenants. That usually includes a covenant about the owner being in default if anything causes a material drop in their earnings. The stadiums are the backbone for about 50% of the local revenue, and to grow that revenue, they needed to expand them.

Loosing the stadiums, having to put up more revenue, or a interest rate hike can do huge massive issues.

Some of these reasons can be the issues as to why the Owners need to win this-
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Old 03-02-2011, 10:39 AM   #14
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Regardless of what the actual implications are, this takes some bargaining power away from the owners, which is a good thing for the chances of a CBA getting hammered out.

This particularly impacts the smaller market teams who live on TV money anyway. For them, a lockout where they're still getting that money is almost better than having to put on games and pay players. They're motivated to get into a lockout.

Without that TV money, there are now some owners who will be much more uncomfortable about going into a lockout.
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Old 03-02-2011, 10:45 AM   #15
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Regardless of what the actual implications are, this takes some bargaining power away from the owners, which is a good thing for the chances of a CBA getting hammered out.
Increasing leverage for the other side doesn't necessarily make things better. It just means both sides have trenches instead of just one.

Quote:
This particularly impacts the smaller market teams who live on TV money anyway. For them, a lockout where they're still getting that money is almost better than having to put on games and pay players. They're motivated to get into a lockout.
The smaller market teams are looking at what's occuring the NBA and MLB right now, and are very determined to make sure that they can eek out some profit. The only way that happens is if salary costs are reduced, significantly.

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Without that TV money, there are now some owners who will be much more uncomfortable about going into a lockout.
True, but a CBA that locks in the current percentages will basically reduce the value of their franchises in half. Take a look at It's All Over fatman's writeup. It's exceptionally good on explaining this.

The owners have the option - and perhaps the fiduciary duty - to lock up emergency capital flows now. That will cost more then these agreements would have, but the option is still there.

Also, it's not clear that Doty has the authority to change the contracts with the NFL. It's far more likely that Doty will end up multiplying the penalties by four (coming out to around 36-50 million dollars). The NFL will immediately appeal that - it's hard to argue that a CBA not in legal force for a year somehow should mandate terms in years not governed by that CBA - and my guess is that it won't get sorted until after this entire process is done.
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Old 03-02-2011, 11:05 AM   #16
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I love how some here think they know more than any judge, let alone think they know more then doty. in the end you guys may be right that she gets overruled but until then her ruling stands.
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Old 03-02-2011, 11:10 AM   #17
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So if there is a lockout, Denver gets the 2nd pick again in the 2012 draft?
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Old 03-02-2011, 11:32 AM   #18
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smaller market did just fine so long as the nfl shared all the revenue.
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Old 03-02-2011, 11:59 AM   #19
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I don't purport to understand any of it. But if this goes the way of 90% of management-labor disputes, it won't get resolved until someone is actually bleeding because neither side wants to blink.
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Old 03-02-2011, 12:02 PM   #20
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I don't purport to understand any of it. But if this goes the way of 90% of management-labor disputes, it won't get resolved until someone is actually bleeding because neither side wants to blink.
yep. The players will lose their houses, but now, perhaps, some owners will face defaut over their stadium loans, or at least face refinancing at more expensive terms, so perhaps the owners will have some motivation to actually reach some compromise.
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Old 03-02-2011, 03:18 PM   #21
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Doty could block TV payments and award money damages

Posted by Mike Florio on March 2, 2011, 3:42 PM EST
Several of you have asked for an explanation regarding the next steps in the lockout insurance case. The easy answer (for us) is to tell you that you should have watched the opening segment of today’s ProFootballTalk Live, and that you still can.

The harder answer (for us, since it requires typing) is to spell it out right here.

Judge Doty has ordered another hearing because the two sides previously had been focused on the question of whether the CBA was violated by the league’s renegotiation of the broadcast deals to include and/or beef up language ensuring that the billions in rights fees would flow in the absence of football games being played. With a violation established, the question becomes how to fix the situation.

In most pieces of civil litigation, a prevailing plaintiff gets an award of money. In this case, the monetary damages would be calculated by determining the amount of money that the league left on the table when insisting on “lockout insurance,” and then by giving the players 59.6 percent of it.

Another related possibility would be to determine the actual cash value of the lockout insurance, and to require the league to give the players 59.6 percent of it.

The union will prefer an order preventing the money from being paid, or alternatively paying the money into escrow. If the league won’t be getting the use of the money during a lockout, the better approach would be to not have the money paid out at all, in order to avoid the requirement to pay interest on it later.

It’s also possible that Judge Doty will both block the TV money and order payment of 59.6 percent of the money that the league left on the table. Judge Doty’s ruling illustrates a wilful and deliberate violation of the league’s duty to use good faith and best efforts to maximize shared revenue, with the league securing instead of the highest possible rights fees a term aimed at helping the owners and hurting the players. Judge Doty reasonably could conclude that the NFL won’t be permitted to reap the rewards of its strategy — and that the players should be compensated for the league’s failure to get top dollar for the bundle of rights.

The league would contend that such an approach represents something more than compensation, since the penalty would include paying the union for obtaining lockout insurance in lieu of maxing out revenue and then preventing the league from having the benefit of the lockout insurance. It’s possible, however, for Judge Doty to tie two remedies to arguably separate aspects of the CBA violation.

First, Judge Doty could find that the NFL violated the CBA by failing to get the most money possible in rights fees. Second, Judge Doty could find that the NFL violated the CBA by using its cooperative relationship with the union to finagle a term that helped the owners at the expense of the players. Thus, it possibly makes sense both to make the players whole and to prevent the league from receiving the money.

The union would likely be (and should definitely be) happy to get only an injunction against the payment of the TV money, since that would keep $4.3 billion out of the league’s war chest.

Of course, and as Albert Breer of NFL Network pointed out in his Wednesday visit to ProFootballTalk Live, the league undoubtedly will appeal Judge Doty’s decision to the federal appeals court with jurisdiction over Minnesota. That process could take months; surely, the money from the networks at a minimum will be held in escrow until the appeal is resolved.

Bottom line? Once the league processes the impact of the ruling, the league should get serious about working out a fair compromise, taking into account the diminished leverage resulting from Tuesday’s ruling.
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Old 03-02-2011, 03:51 PM   #22
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Without Good Faith: Explaining The Critical Ruling Against The NFL


Barry Petchesky

In briefest terms, a federal judge's ruling found that the NFL's curious broadcast contracts for the 2011 season amount to a "war chest" the league improperly obtained specifically for a lockout. But what does this mean for fans, players and owners, and what happens next? Let's try to make a very complicated situation as simple as possible.

What did the judge say?
It has nothing to do with football, and everything to do with contract legalese. U.S. District Judge David Doty ruled that the NFL was not acting with the interests of the players in mind when it renegotiated its current TV contracts, but rather with an eye toward a lockout. That's impermissible, so those TV contracts — and the billions of dollars that come with them — won't keep the owners rolling in dough if there's a prolonged lockout. An important byproduct of the ruling: proof that the league has been planning for this work stoppage for years.

What's the controversy over the contracts?
There is language in the league's deals with the networks and DirecTV that ensures two things: A) money from rights deals will keep flowing to the league, even if there is no football played, and B) much of that money will not have to be repaid quickly, or at all, if there is a lockout.

How much are we talking about here, and why does it matter?
Somewhere in the neighborhood of $4 billion, which would represent the largest piece of the league's assets in the event of a lockout. The owners were counting on this, because if there's no football, their own revenue streams largely dry up, and they have their own debts and obligations to keep up with.

How exactly did the league stockpile that much cash?
In both 2009 and 2010, the league renegotiated its TV contracts to include language specifically addressing a work stoppage. For example, "of the total amount payable [from DirecTV] in the event of a canceled season, 42% of that fee is nonrefundable and the remainder would be credited to the following season." If there's a lockout, the NFL gets to keep 42 percent of its fees from DirecTV, whether there's football or not. This language did not exist prior to the restructuring of contracts.

Isn't that just good business sense?
That's what the NFL argued. Earlier this month, special master Stephen Burbank (essentially an independent arbiter appointed by the terms of the last CBA) ruled that the league acted "in good faith" and "consistent with sound business judgment" when it renegotiated the contracts. The NFL's argument, which Burbank agreed with, was that it acted out of self interest as a single organization.

What about the players?
That's the crux of Doty's ruling yesterday. He ruled that Burbank misinterpreted the "sound business judgment" clause, because the league is bound by the CBA and legal precedents to also have the interests of the NFLPA in mind. In deciding that the league was not acting in good faith when renegotiating the TV deals, those contracts are unenforceable.

How can someone judge "sound business judgment?"
By pointing out that the league left money on the table. In order to get themselves guaranteed money during a lockout, the NFL took less money than it could have had in the years before and after 2011. One example: DirecTV would have paid more in 2009 and 2010 to have the lockout language removed from the contract; the league declined. Another example: In the event of a lockout, the league is willing to extend its existing contracts another year. Since new contracts are typically more lucrative, the league was willing to pass up an entire year of increased revenue to get its 2011 money.

What happens now?
Nothing, yet. There will be another hearing, yet to be scheduled, to decide what to do with the TV contract money. The NFLPA has been arguing it should be placed in escrow until a labor deal is reached. And even before that's decided, the league may appeal the judge's ruling.

What does this mean?
For the players, leverage. The one thing the NFL has always had over them is its stash of money. The owners could hold out much longer than the players in any work stoppage, the league reasoned, and pry more favorable terms out of a workforce eager to get back on the payroll. Now the two sides are on a slightly more even footing. If the league can't get that TV money, it's more likely to come to the bargaining table to work things out sooner. Without taking sides, Doty's ruling lessens the chance of a prolonged lockout.
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Old 03-02-2011, 03:54 PM   #23
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Maybe because i can be a bit of a populist, but i think this sounds fair. Plus, as i said in another thread, when two children fight over a toy, you take it away until they compromise and play nice.

Take it away. Play nice.

Lets play football
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Old 03-02-2011, 04:25 PM   #24
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I love how some here think they know more than any judge, let alone think they know more then doty. in the end you guys may be right that she gets overruled but until then her ruling stands.
We know enough to know that Doty is a he at least.In this case I actually read the ruling, and have a bit (not a lot I grant you) of background in law (before I saw the light and settled for a CS degree and a History degree instead).

Doty looses jurisdiction on Friday, so it will be irrelevant before long.
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Old 03-02-2011, 07:07 PM   #25
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We know enough to know that Doty is a he at least.In this case I actually read the ruling, and have a bit (not a lot I grant you) of background in law (before I saw the light and settled for a CS degree and a History degree instead).

Doty looses jurisdiction on Friday, so it will be irrelevant before long.
Yes unless the Union decertified before then, which will keep it in Doty's jurisdiction. But if Mike Florio is right, that the union still thinks Doty will remain post tomorrow midnight, the NFL players will cave just like the NHL union did several years ago.


Union doesn’t agree that expiration of CBA ends Judge Doty’s role
Posted by Mike Florio on February 17, 2011, 7:02 AM EST
doty1

And the inability of the NFL and the players’ union to agree on anything continues.

The league believes that, when clock strikes 12 on the early morning of March 4 and the current Collective Bargaining Agreement expires, the NFL will forever escape what it believes to be the biased rulings of Judge David Doty.

As to any lingering claims or issues, such as collusion and “lockout insurance,” the expiration of the labor deal doesn’t provide the league a silver bullet. Beyond that, however, we’re told that the union believes the mere expiration of the agreement won’t terminate Doty’s role when it comes to interpreting the next deal.

It’s yet another attempted pressure point for an organization that doesn’t currently have much leverage. And it’s not clear how this skirmish will play out.

The current labor deal actually was the settlement agreement of the antitrust lawsuit filed by the players after the failed 1987 strike and decertification of the union. With the league sufficiently chagrined by Doty’s rulings to try to have him removed for leaning too far toward the players’ interests, it’s no surprise that the league believes/hopes that with the agreement expiring they’ll be able to finally get him off the case. But the union easily can claim that the settlement agreement governs the relationship between the parties not until any one version of the agreement expires, but until the two sides agree that the settlement agreement no longer governs the relationship.

So, basically, it’s yet another area on which the two sides will agree to disagree.
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