DeMaurice Smith, NFLPA Counsel Detail Complaint Regarding NFL TV Contracts

DeMaurice Smith and NFLPA counsel Jeffrey Kessler held a conference call on Wednesday afternoon to discuss the NFLPA's recent complaint to the Special Master regarding the NFL's TV contracts.

Smith set the tone from the start explaining the complaint from the union's perspective.

It is critical for everyone to understand that that settlement agreement created a fiduciary agreement on behalf of the owners to the players on certain obligations. It will not be enough, according to the players, for any party or owner to say, 'Yes we maximized revenue'. If that was the only obligation they had under the settlement agreement we would not be here. I would urge everyone to take a look at what obligations flowed from the years of litigation and the settlement. It continues to be the settlement under which our CBA currently operates. Jeffrey Kessler was there for that settlement and he negotiated that settlement. We are aware of what our obligations are under that settlement as well as under the league.

The NFLPA is basically asking the Special Master to confirm that the NFL did or did not act in good faith to maximize revenues in the latest round of TV contracts. The NFLPA's complaint alleges that the NFL "left money on the table" in 2009 and 2010 in order to guarantee payment from the TV companies -- a/k/a "lockout insurance".

Kessler was then asked more about the 1993 ruling that is essentially governing the current TV contracts.

I was there when the [Reggie] White settlement agreement was being negotiated, which was an agreemnt that came after years of anti-trust litigation on a whole variety of subjects. And entering into that settlement, there were a variety of different obligations that were placed upon the owners in order to protect the players from what might happen going forward.

Those obligations consisted of the following: First, there was a duty to use their best efforts to maximize revenues during the term of the agreement -- not in general -- but during the term of the agreement. To make sure that the players would benefit from those revenues during the term fo the agreement. One of the fundamental problems we have with what shpapened is that it appears that the owners have traded revenues during the rerms of the agreement to maximize their own welfare at the expense of the players once the term is over.

Kessler's translation: The NFL negotiated their TV contracts to provide the "lockout insurance" in 2011, which implicitly means that it was benefiting the owners thus coming at the expense of the players -- a violation of the agreement.

There is a specific expressed duty to operate in good faith, to carry out the terms of the CBA, and there is also an obligation of specific duty not to engage in transactions to circumvent the terms of the CBA as set forth in the CBA. Those obligations of good faith and non-circumvention, has required that the NFL not engage in the negotiations in which for example they gave the rights -- take DirecTV for example -- to broadcast over the internet, NFL Sunday Ticket, to sell it to mobile phones, to carry the NFL REDZONE, for which the NFL received no revenues during the terms of the CBA and instead they got this lockout insurance protection. Those are the types of obligations that they violated and that's really what we set out to protect against back in 1993.

Smith went on to say that throughout the course of this process, they may compare the NFL's TV contracts to other leagues, presumably in order to demonstrate that these are not standard contracts.

Kessler added:

I would just add that it would be hard pressed for the NFL to stay it's standard even for the NFL or other sports leagues, to convey substantial digital rights and get no compensation during those years...

Kessler also went on to say that this is the first case of its kind with respect to other professional sports leagues.

The only two agreements that have this type of set of duties upon the leagues that I'm aware of are in the NFL and the NBA. While there have been questions raised by players before in both those sports, with the league as to whether something was being done in good faith to maximize revenues, this is the first time I believe that a case has actually been filed as opposed to the matter being settled informally.

Smith also confirmed that, despite the recent complaint, negotiations with the NFL on a new CBA would continue in June.

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