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NFLPA Says NFL is Colluding

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

Last November, the NFLPA launched an investigation into whether the NFL?s decision to lower the debt ceiling of its 32 clubs constitutes collusion to reduce competition for players or players? salaries (which I previously posted on the blog). In October, NFL owners voted to lower the debt ceiling (how much money a team can borrow) by $30 million, which reduces the debt ceiling to $120 million from $150 million, and to cut $1 billion of league and team debt over the next three years. This morning, Street & Smith's SportsBusiness Daily reports that the NFLPA plans to announce later today that it is has asked Special Master Stephen Burbank to overturn the NFL?s decision last fall to lower teams? debt cap, which the the union contends is designed to dry up the cash teams need to spend on players' salaries, charging that the league violated the anti-collusion provisions of the CBA.

The league takes the position that reducing the debt cap was essentially a "business decision" in light of the current turmoil in the economy. As I noted in my November post, the NFLPA takes the position that lowering the debt ceiling could have a chilling effect on team spending for players because clubs frequently finance player compensation and signing bonuses with debt. Essentially, the union views the debt limitation as a restriction on free agency.

The NFLPA has two very strong claims in support of its position. First, the union can argue that imposing the debt limitation constitutes a breach of the anti-collusion provision in the CBA. The anti-collusion provision, which essentially prohibits the teams from acting in concert with each other with respect to the players' exercise of their free agency rights, is a necessary prerequisite in order for free agency to work properly (i.e. player salaries determined by an uninhibited free market). There is precedent that collusion does not require a "common agreement" among teams to suppress player salaries. Therefore, if, as a result of the agreement among the teams to lower the debt ceiling, teams are not able or willing to spend as much on salaries as they otherwise would in the absence of such an agreement, then the agreement violates the anti-collusion provision.

The second argument the union can make here is what I mentioned in the comments within my November post. It can be argued that lowering the debt cap constitutes a mandatory subject of collective bargaining that must be negotiated with the union and can't be unilaterally implemented by the league. Based on precedent interpreting what constitutes "wages" for purposes of mandatory subjects of collective bargaining, I don't see how the NLRB or any court could conclude that lowering the debt cap does not impact players' wages. But even if it's a permissive subject, then the league could be exposed to an antitrust lawsuit here. As a side note, MLB negotiated, and agreed to, its debt service rules with the MLBPA.

Full post as published by Sports Law Blog on February 21, 2008 (boomark / email).