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Wednesday, November 07, 2007
This Week's Union News

This week's edition of Street & Smith's Sports Business Journal contains two interesting developments on the labor front:

First, Liz Mullen (11/05/07, NHL players give approval to new union constitution) reports that NHLPA members last week approved a new union constitution that eliminates the executive committee of players, which had so much power during the 2004-05 NHL lockout. The union will now be governed by 30 player representatives and each team will have an equal vote. According to NHL player Eric Lindros, “This new document ensures that the players have control over their union and have the full ability to govern themselves.”

Second, Dan Kaplan and Mullen (11/5/07, Debt vote prompts union collusion inquiry) report that last week 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. Last month, 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. At the same time the debt ceiling is being lowered, the league says it is planning to cut $1 billion of league and team debt over the next three years. Commissioner Roger Goodell characterized the move as a prudent business decision in reaction to turbulent credit markets. According to NFL spokesman Brian McCarthy, “The decision was motivated by several factors, principally relating to current credit market conditions, the uncertain economic environment, the prospect of slower growth and recent significant increases in leaguewide debt levels. It’s consistent with our generally conservative approach to debt and debt policy.” However, NFLPA executive director Gene Upshaw and union outside counsel Jeffrey Kessler expressed concern that lowering the debt ceiling could have a chilling effect on team spending for players. Kessler noted that clubs frequently finance player compensation and signing bonuses with debt.


Is there a spending floor for NFL teams under the current CBA?

Anonymous Anonymous -- 11/08/2007 9:26 PM  

Yes, it's something like 85% of the cap number if I'm not mistaken.

Blogger Rick Karcher -- 11/09/2007 8:33 AM  

Based on Saints owner Tom Benson's comments in the 10/29/07 article "Benson: Lower debt limit designed to curb spending" vs. Goodell's comments in the same article, it seems the NFL's talking heads put a better spin on this than Benson. Benson's comments seem to overtly convey teams are colluding to cut spending on players; a direct violation of the settlement to the antitrust litigation in '93.

Something isn't right here and it goes deeper than the issue on the surface.

Anonymous Anonymous -- 11/10/2007 1:08 AM  

I think an argument could be made that debt service rules constitute a mandatory subject of collective bargaining that must be negotiated with the union, because caps on team borrowing impact how much they can spend on player salaries.

Blogger Rick Karcher -- 11/10/2007 8:18 AM  

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