DeMaurice Smith on the economics of the NFL's offer

NFLPA executive director DeMaurice Smith and player representative Takeo Spikes just wrapped up a call with SBNation's football bloggers. Smith walked through the players' perspective on the CBA negotiations and offered more insight, from their perspective, as to why the NFLPA opted for decertification and sending the whole to court. Needless to say there is a plenty of acrimony and spin to cut through after today's call and yesterday having listened to NFL commissioner Roger Goodell and NFL VP and lead negotiator Jeff Pash. To sum it all up in one sentence, I don't think the two sides are close enough on a deal to get anything done without the assistance of the courts. 

Let's truck through DeMaurice Smith's remarks today, which do shed light on the failure of mediation from the vantage point of the union. 

The timing and nature of deal and the economic impact after the jump.

Good Faith Negotiations 

As you know, the NFL made an offer to the players on the last day of mediation, the deadline for the NFLPA to decertify and file suit in federal court. Here's Smith on the timing of the league's offer:

Jeff [Pash] only has a causal relationship with the truth. He knows that the NFL deal was an all or nothing deal.

After two years of negotiations, after making multiple requests for financial info, we came down to the last day where we had to let the court know by 5:30 p.m. They came at us with a deal that wasn't good in the first place after two years of negotiations.

Essentially, Smith is contending that the owners sabotaged the process, forcing the union's hand by making an unacceptable offer at the final minute of negotiations.  Extending the mediation process was an option, but the two sides were much further apart than some of the optimistic Friday reports would have had us believe. Smith also took issue with the nature of the NFL's multi-faceted offer, pointing out that it was an all or nothing deal. There was no option to keep parts that agreed to both sides, such as some of the health care proposals, the 18-game season, etc. and continue negotiating over the other parts of the deal, i.e. the money. 

Smith pointed to an official league document prepared prior to owners' decision to scrap the CBA which included details about "cash needs" during a lockout with regards to the league's television deals. It was this document that figured heavily in Judge Doty's decision to take away that lockout insurance. Smith:

At the same time we're trying to engage in good faith negotiations, they're trying to figure out how to get cash during a lockout. 

The Money

Let's move to the economic impact of the deal, the central issue that thwarted mediation and got us to where we are now. The NFL's proposal was for ten years. Players took issue with the league's unwillingness to open the books completely in part because of the long-term nature of the offer that would decrease the players' share of NFL revenues by an estimated $1.36 billion. 

Get your left brain out, because these are some big numbers.

Under the old labor deal, which the players contend split revenue on a 50-50 basis by including a $1 billion credit for owners, total NFL revenue was projected to be $10.2 billion. That uses a conservative 5 percent growth rate, conservative actual growth rates of between 8-9 percent in recent years. 

Under that system, the 2011 salary cap would have been $155 million (the cap representing players' share of team & league revenues). The 2011 cap under the league's proposal would have been $141 million. Multiplied by 32 teams, that's a decrease of $448 million in player salaries. 

For 2012, the cap under the old deal would have been $163 million. The cap under the NFL's proposal would have gone up to $147 million in 2012, for a difference of $512 million. Smith argued that that figure would drop the players' share of total revenues from 50 to 45.3 percent. 

There's another data point to include to arrive at the $1.36 billion. And it's money already lost to players from owners not paying health benefits to players during the uncapped 2010 league year, to the tune of $10 million per team for a total of $320 million. 

Add it all up to get to the $1.36 billion, "a check that the players are writing to owners," as Smith called it. 

Those numbers, according to Smith, do not factor in the stadium credits proposed under the NFL's last-minute deal. That would reduce the cap numbers to $133 million in 2011 and $140 million in 2012, making the players' overall share of the revenues 42 percent for the first two years of the ten year deal. Back to Smith:

With all due respect ot Jeff [Pash], we may have been born at night, but not last night.

When you take the first two years of the deal alone, it's the worst deal in the history of sport.

Summing It Up

It's an ugly battle and I'm not comfortable taking sides in the whole thing. However, players - and I won't deny even the lowest paid guy gets a helluva lot more than me - are being asked to take a pay cut at a time when the league is more profitable than ever. That's hard to stomach no matter what the business is.

Smith and Pash and everyone in between can talk about the bad faith all they want. But no negotiating maneuver is going to change the fact of just how far apart both sides are. That much has been readily apparent in calls with the NFL and the NFLPA over these last two days. A court room is the only way this thing can get settled, and that means you and I better hope and pray that the court grants an injunction against the lockout, allowing football to be played this year, because it might take a long, long time to settle this thing. 

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