The Uncapped Season, Collective Bargaining, and You

In what I hope is more an indictment of the Arkansas public education system than the state's legal system, there's currently a local attorney running a commercial for people who have been in an auto accident with a "big rig" (his term, not mine).  This would not be noteworthy at all were it not for the commercial starting with this little gem:

Weight plus speed equals force.

I was reading and just using the TV as background noise when this nugget of genius aired.  I snapped to attention -- I have radar for this kind of stuff -- and rewound the DVR.  I had to make sure I'd heard correctly.  Once I stopped laughing, I decided I would email the offending attorney.  My email read:

Subject: Physics fail

Unless the laws of physics are different in Arkansas, which would actually not surprise me, weight plus speed doesn't equal force.  In fact, it doesn't equal anything other than the sum of two numbers. (Though I suppose you call this sum "weightspeed" if you really wanted to.)  Force is mass times acceleration, chief.  I would hope that, at the very least, the significance of multiplication versus addition in this equation would be evident.

Maybe next time, you could take three seconds and Google "formula for Force" before you go on camera.  Or you could just wing it, I suppose.  I look forward to hearing how the Law of Conservation of Linear Momentum means that people are sure to die if a tractor-trailer hits their automobile in a straight line.

Yours,

MDC

$$

Shockingly, I did not receive a reply.

Anyway, I mention all of this because that attorney's failure to do some very basic research before putting himself out there as an authority on the issue reminds me to a large degree of some of the stuff I am reading about the potentially uncapped 2010 season.  It's one thing to speculate about potential consequences of not having a cap.  It's quite another thing, however, to make statements that are verifiably incorrect.  So, after the jump, we'll tackle the erroneous statements one by one and try to sort some stuff out.

Myth #1--2010 is definitely going to be uncapped.

This is by far the most common misconception I've heard/read.  While it is exceedingly likely that there won't be a cap in 2010, the two sides have until the March 5, 2010 deadline to reach a new deal.  (March 5 is the beginning of the NFL's fiscal year.)  What's more, when the issue of getting a new CBA done last reared its head in 2006, the two sides agreed to a 72-hour extension of the deadline, pushing the drop-dead date three days beyond the start of the new fiscal year.  Point being, while I would still bet heavily on there not being a cap this season, we've got 10 days (as of this writing) plus whatever extension, if any, the sides agree to before that becomes a reality.

Myth #2--2010 is uncapped because the owners opted out and now there's no collective bargaining agreement in place.

This is one of those "kinda sorta partially true" statements that gets bent through retelling and eventually turns out false.  In 2006, the players and the league agreed to extend the then-existing CBA for six years, through 2012.  In 2008, pursuant to a clause in that agreement, the owners opted-out of the last two years of the CBA.  This made 2010 the Final League Year.  Under the CBA, the Final League Year, whether it be in 2010 or 2012, was never going to have a salary cap.  This was inserted as a theoretical incentive to get the sides to negotiate earlier and thereby avoid a last-minute scramble like was seen in 2006.  Obviously, this didn't work, but whatever.

Anyway, 2010 is uncapped because the owners exercised their opt-out rights.  It is not uncapped because there is no CBA,  but because the terms of the still-in-place CBA call for it to be uncapped.  All the opt-out provision did was bump the Final League Year provisions up by 24 months.

Myth #3--Teams will have two transition tags and a franchise tag in 2010.

Full disclosure: I actually said this one a few months back because I believed what I heard from Pat Kirwan.  The moral being "don't ever listen to Pat Kirwan."

Normally, teams have the option of using either a franchise tag or a transition tag.  (See here for a rundown of the salary differences between the two tags.)  Per the CBA, in a Final League Year, a team is allowed to use both tags.  When combined with the changed requirement of six league years for a player to earn RFA status rather than four, the functional impact of the additional tag is obviously going to be an even smaller FA pool.  The upside, at least for a team like Houston, is that you can tag someone and still have the ability to protect, for instance, Chester Pitts via the transition tag if you want to hedge your bets and monitor his recovery before giving him a multi-year deal.

Teams have until 4:00PM on Thursday, February 25, 2010, to designate tagged players.

Myth #4--Teams can cut players this year without paying them anything.

I haven't seen this written, but I've heard it on sports radio at least ten times.  Shocking, I know.  Obviously, it's false.  Assuming an uncapped year, teams can, by definition, cut players without having cap implications.  The teams are still on the hook for any guaranteed money.  The lack of an overall team salary cap does not remove the individual player salary minimums, though those minimums rise at a slower rate in an uncapped year than they would in a capped year.

Also, as an aside, one thing that keeps getting overlooked when people talk about the lack of a cap is the corresponding lack of a salary floor.  I'm going to assume that Bob McNair is far too classy to field a 53-man roster costing only the guaranteed player minimums, but I'd be pretty scared if I were a Bucs fan subject to the cheapskate whims of the Glazers.

Myth #5--There is nothing to stop Jerry Jones (or Dan Snyder, etc.) from buying whatever talent he wants.

Actually, there are a few things to stop Jerrehgeddon from descending upon the league.  For one, because the Cowboys advanced to the divisional round of the playoffs this year, they are subject to the Final-Eight Rule in the CBA, which limits their ability to sign FAs.  (Oh, sweet irony, how I love you.  The year the Cowboys finally manage to win a playoff game, that win operates to thwart their odds of improving the following season.)  Because the explanation of the Final-Eight Rule is somewhat convoluted, I'll let the NFL explain:

During the Final League Year, the eight clubs that make the Divisional Playoffs in the previous season have additional restrictions that limit their ability to sign unrestricted free agents from other clubs.  In general, the four clubs participating in the championship games are limited in the number of free agents that they may sign; the limit is determined by the number of their own free agents signing with other clubs.  They cannot sign any UFAs unless one of theirs is signed by another team.

For the four clubs that lost in the Divisional Playoffs, in addition to having the ability to sign free agents based on the number of their own free agents signing with other clubs, they may also sign players based on specific financial parameters.  Those four only will be permitted to sign one unrestricted free agent for $5.5 million (estimated) or more in year one of the contract, plus the number of their UFAs who sign with another team. They also can sign any unrestricted free agents for less than $3.7 (estimated) million in year one of the contract with limitations on the per year increases.
           
In the case of all final eight teams, the first year salary of UFAs they sign to replace those lost cannot exceed the first year salary of the player lost with limitations on the per year increases

As for Snyder and other deep-pocket owners who are not affected by the Final-Eight rule?  There are still limitations as to how they can structure new contracts (see the next myth), as well as the simple fact that there just aren't that many big name unrestricted free agents available this year.

Myth #6--Teams should just sign players to front-loaded deals now to take advantage of the uncapped year.

This would be a good plan if it weren't nearly impossible.  Under the CBA, any salary decrease of greater than 50% from one year to the next becomes a signing bonus and is then spread out over the life of the deal. For example, if the Texans signed DeMeco Ryans to a deal with a $30M salary in 2010 and a $5M salary in 2011 (capped), that $25M difference would become a signing bonus and be prorated over the life of the deal.  I suppose a team could always roll the dice and bet on that rule being abrogated in the new CBA, but I don't see it happening.

What teams COULD do, however, is use the lack of cap implications to pull trades that would otherwise be impossible.

Myth #7--The league has no real incentive, or at least far less incentive than the players, to make a deal that is less-than-favorable.

I can only explain the prevalence of this myth by assuming that most people, lawyers included, have no concept of the nonstatuory antitrust exemption under which the NFL operates or the potential consequences of letting a CBA lapse.

The class action settlement agreement in White v. National Football League addressed the application of the nonstatutory labor exemption. In the event that a majority of the players choose union representation and the NFL and the players' union execute a CBA embodying terms of the settlement agreement, the labor exemption would cover those terms. After CBA expiration, the settlement agreement prohibits asserting claims of antitrust violations until after the parties have either bargained to impasse or six months have elapsed since expiration of a CBA, whichever is later. At that time, "the Parties shall be free to make any available argument that any provision or practice authorized by this Agreement . . . is or is not then entitled to any labor exemption." (emphasis added)

This provision basically imposes general principles of contract law in an effort to settle the otherwise confusing issue of when the protections of the nonstatutory exemption cease. The labor exemption provision essentially delays -- either for six months or until the parties reach impasse -- the need to raise the issue of the exemption's proper length. During this period, presumably the parties may be able to resolve their differences on their own.

Translation: If the CBA expires and a new one is not reached within six months, if the negotiations fall apart, the league becomes theoretically vulnerable to antitrust lawsuits.  There is also an issue of labor laws allowing the NFL to set new payscales, etc., on their own if they claim impasse prior to the six-month deadline, but that's a whole separate can of worms.  (Tangent: American Needle could have huge implications here, and I've been wondering if the NFL's attempt to get single-entity status does not have more to do with avoiding post-CBA liability than with peddling their logoed wares however they wish.)

Myth #8--If no deal is reached and 2010 is uncapped, 2011 will be locked out.

Simply put, one has nothing to do with the other, at least not in a cause-effect sense.  2010 is uncapped because the owners opted out of the final year of the CBA. If 2011 is locked-out, it will be because a new deal has not been reached by early March 2011.  Thus, it's entirely possible (and, I hope, likely) that everyone will come to their senses in time to save 2011, regardless of what happens in 2010.  Additionally, as sorta mentioned above, U.S. labor law technically allows the NFL to claim impasse prior to the six-month drop-dead date, at which time the NFL could set new rules for payment, etc.  That would avert a lockout and would force the players' hand possibly to the point of a strike.

Aside (and somewhat related to Myth #7, too): If there is a lockout, there will not be games with replacement players, as it would be illegal for the NFL to do so.  The replacement-player games were done in reaction to a strike by the players, not following a league-imposed lockout.

Myth #9--There might not even be a rookie draft in 2011.

There will definitely be a draft.  That much we know.  The current CBA specifically provides for a draft following the Final League Year, though it apparently moves the draft up to February (i.e. before the CBA technically expires).  What we don't know is how those players will be paid (i.e. will there be a new rookie cap in the new CBA), how a lockout could impact contract negotiations for the draftees, etc.

***

via thegurglingcod.typepad.com

Sources:

http://prod.www.vikings.clubs.nfl.com/news/article-1/Basics-of-the-Uncapped-Year/bb018b51-07ee-4e05-8ec1-e98ea779be1d

http://nfllabor.com/

http://www.cleveland.com/browns/index.ssf/2010/02/uncapping_some_knowledge_about.html

http://www.askthecommish.com/salarycap/faq.asp

http://espn.go.com/blog/afcnorth/post/_/id/8755/nfl-explains-final-eight-plan

http://min.scout.com/2/947299.html

61 Fordham L. Rev. 1203 (1993)

88 N.C. L. Rev. 212 (2009)