Tactics for Contracts Negotiation in the NFL: How a New Collective Bargain Agreement Can Lead to More Collaborative Negotiations.
I. Introduction
Most people negotiate everyday, whether they are aware of it or not, but these negotiations often get little attention from others. Other negotiations receive much attention and examples of negotiations that do are ones regarding sports. Of the negotiations in sports, the ones that stand out are the contract negotiations between athletes and their teams, and one reason for this is that sports seem to be our favorite pastime. Another is the amount of money that these contracts entail.[1]
The most popular spectator sport in the United States is football.[2] It is played in three major forums, well two really, High School is big, but the two major ones are College and Professional. This article will focus on the National Football League (NFL), the professional forum, because this is where the negotiations are most public, and the only forum where players negotiate and earn a salary. The NFL makes a substantial amount of money and “is the riches and most popular sports league in the United States.”[3] In the NFL there are 32 teams with about 70 players on each team.[4] All the players are under contract which means that there are about 2,240 contracts that are negotiated, and this is without considering the players who come and go, get hurt, and so forth. In other words, there is a lot of negotiation going on, and much of it is publicly played out on the sports and news networks.[5] Usually what gets the most attention is the size of the individual contracts, but lately the tactics used during the contract negotiation has captured some of that attention.[6]
II. Negotiation Tactics
The negation tactic that is used ranges widely from player to player, and much of that has to do with the position in which the player was drafted and whether he free-agent.[7] It also has to do with the position that the player plays.[8] Out of about 400 players each year who played college football and are trying to make it into the NFL, only 255 get drafted.[9] This is a very small percentage, and add to this the fact that the National Football League Players Association (NFLPA) is relatively weak, and the owners are “razor-sharp business people who carefully crafted their labor relationship with their employees.”[10] Because of this it is not difficult to understand why many players simply take what they are offered. This can be thought of as the accommodating tactic, but in reality they have little choice because of their relatively weak bargaining power. “The less powerful negotiator . . . can attempt to change the perceived balance of negotiating power . . . or . . . use either cooperative or problem-solving negotiation tactics.”[11]
A. Compromising/Cooperating[12]
Take for example a player picked in the 5th round of the NFL Draft.[13] When he (there are no female football players in the NFL) gets drafted he does not really have any leverage. He has proved he can play college level football, but now he must compete with NFL veterans, as well as other rookies. If he refuses to sign for an amount that is reasonable for a player drafted in the same position, the team will simply sign another player that come after him. Besides, getting drafted is never a guarantee for making the team.
Once the preseason starts, of the 80 of players who begin the season, only 53 makes the final roster.[14] Even if he signs a contract there is no guarantee he will play out that contract, so the player will use an cooperating tactic to try and get his foot in the door. This is an important point because his interest is to play in the NFL, and by building a relationship with the team it shows he is a team player who is easy to deal with, and he is in a better position to build leverage and have more to negotiate with when his current contract expires.[15] For his first contract though, he must be very accommodating in his negotiations in order to secure a contract at all, as well as having to make the team. This is also true for the veteran players who are at the end of their career.
B. Competitive[16]
The problem with the cooperating and accommodating tactics is that for many players there is no second contract. An average NFL playing career is about four years, and it’s therefore important to get a good first contract.[17] If no second contract will occur, it is important to have something upfront from the first one. For players who are picked at the beginning of the NFL draft, especially the first 5 to 10 players picked, the negotiation tactic can therefore change a bit. These players show huge potential and have proven themselves during their college football career, and therefore have much more leverage than the later picks.[18] The impact that these players can have on a team are great, because in most instances the team that selects to draft them are the teams that did poorly the previous season.[19] They can also turn out to be disasters, and this leads to a much more competitive negotiation because the owners take a great risk.[20]
Because of the competitive nature of contract negotiations in the NFL there are a few tactics within the competitive tactic. One of these tactics is “holding out.”[21] Negotiating players use this tactic in mainly two circumstances. The first one is when the player is drafted, usually only by the top draft selections, and the teams and the player are far from agreeing on terms and amount. The other is when a player already has a contract, but that contract is about to expire, or the player is under contract, but has performed on a level the same or higher than other players playing the same position who are much better compensated.
1. Holding Out
One example of the draft hold out is Philip Rivers.[22] During the 2004 draft, the San Diego Chargers selected the much-hyped Eli Manning,[23] who had publicly refused to play for San Diego if they selected him as their draft choice. San Diego picked Manning, but traded him to the New York Giants for Philip Rivers. In negotiating his contract, “Rivers held out for 25 days . . . ending up with a marginally better deal.”[24] The competitive strategy works in cases such as this because when the player holds out the team is put in a tough position. When the team drafts a player, the team gives up a huge amount in opportunity cost. Instead of trying to sign the unproven rookie, they could have gone after a proven veteran, or two mid level players, but now they are forced to make a move on the draft pick. Another reason is that the draft picks does not always work out. Several top picks last only a few years if they fail to deliver.[25]
While Rivers got a better deal, Gregg Easterbrook, Senior Editor of The New Republic and weekly columnist for NFL.com, argues that players like Rivers hurt themselves in the long run by diminishing their chance to play, and therefore reducing their potential leverage in future negotiations.[26] It also puts a huge amount of pressure on the player to perform to the level expected because of the greater contract value. Of course this argument is true, but it fails to consider the player’s interest in being secure would he be injured and released from his contract. Matthew Levine argues that the main reason for holding out is because of the relatively small amount of guaranteed money.[27]
Terrell Owens (T.O.) is an example of how the competitive tactic backfired. His situation was one in which he already had a contract, but according to his agent has outperformed a contract that was agreed to under poor circumstances.[28] In this case T.O. did not hold out, but he threatened to do so which eventually led to that the team held him out instead.[29] To be fair, for T.O. the tactic did not completely backfire, because after he was released from the Eagles, he has since signed a contract with the Dallas Cowboys.[30] T.O. received much bad press for his antics, but by using the competitive tactic, T.O. shed light on the problem of guaranteed money for the athletes.[31]
C. Collaborating
One of the reasons for the competitive tactics being used is because of agents. “Often holdouts result from players choosing bad-news agents.”[32] Many seem to have forgotten that it is their duty to act in the client’s best interest.[33] Instead, it seems that many agents “rather get their commission on a slightly higher sum today, and who cares what happens to the client five years down the road. Some agents actually seem to like holdouts, because at the end they can claim to have brought an NFL team to its knees, though the client's interest is harmed in the process.”[34] These facts make collaborative negotiation difficult, but it should not make it impossible.
Further, owners and players have in common that neither side wants the player to get injured, but this is inevitable. Maybe not for the specific player, but on a team there are several players who need to be replaced each year due to injury.[35] The player need a guarantee of money because the risk of injury and the team want to give more incentive and as little guarantee as possible because of the risk of injury. This is the main reason why the collaborative tactic is so difficult to use. Also, the player has an interest of a long relationship, but the team wants one only as long as the player is healthy and producing results.[36] Could collaborative be used? Of course, but not as it stands at this moment.
From a player’s perspective, it is very difficult to be collaborative because even if terms are agreed upon and a contract is signed, “standard contract provisions permit NFL owners to prematurely cut an underperforming or injured player.”[37] This means that it is very important to get as much guaranteed money as possible, especially in case of injury.
Richard T. Karcher, argues that the NFLPA and the owners could, by using a collaborating tactic, change the culture of contract negotiations in the NFL, something he believes is desperately needed. [38] He believes that sports agent have gone out of control and it making it harder for the players to get a fair deal. A fair deal in relative terms means that he would be paid about the same as comparative players in the league, and his reputation would not be tarnished based on his agent’s antics.[39] The reason for this is the large percentage-based commission that the agents receive.[40]
Karcher believes that the solution to the problems with holdouts and agents not acting in the client’s best interest is to have a unionized agent pool under the NFLPA.[41] He further believes that the NFLPA can learn from the success of The Professional Footballers’ Association,[42] which has “established an internal ‘Player Management Agency’ . . . [that perform] services includ[ing] individual contract negotiation, legal, financial and commercial (endorsements) services, as well as media training, post-football career advice and lifestyle management courses”[43] “As the legally authorized exclusive representative of the players with respect to negotiating terms and conditions of employment, it makes all the more sense for the players unions to seriously consider an internal player management agency similar to the model used by the PFA, by offering players the option of retaining a union-hired agent to represent them in contract negotiations with the clubs”[44]
This type of structure would allow for a better opportunity to collaborative negotiation. If there is a pool of attorneys who are available as agents, then for the owners and union to be on good terms with one another increases, almost becoming essential. The need for a continuing relationship induces the need for collaborative negotiations. Competitive negotiation would not work if there is a relatively small pool of attorneys negotiating for the players because this tactic often builds resentment as one party often has to fold to the other party’s demands.[45]
The problem with only having a small group of qualified lawyers to choose from takes away from the client’s right to choose his own representation, and having the same lawyers representing individual clients zealously, trying to get the best deal possible for his client, will be impossible. The structure would be better for the greater good of the players as a group, but that is not always true for the individual player. However, by implementing this structure, the owners and the NFLPA would be able to, by collaborating, agree to a better base structure that allows for the player to receive better guaranteed compensation, and allow the owners to save upfront payments because of the elimination of destructive agents.
The players, if collaborating with each other and the NFLPA, in signing a new collective bargaining agreement with the owners has the opportunity to allow for more problem-solving tactics in future contract negotiation regarding their individual contracts.[46] Surely the NFLPA and the owners need to use a collaborative effort in order to come up with a new collective bargaining agreement. Hopefully, the two sides will have learned from what happened between the National Hockey League (NHL) and its player association. When they renegotiated their collective bargaining agreement in 2004 the two sides used a very hard-core competitive strategy, which ended up in a cancelled season and loss of millions of dollars.[47]
[1] See Shaq Makes Long-Term Plans in Miami, http://sports.espn.go.com/nba/news/story?id=2122716 (last visited Dec. 1, 2006) (Shaquille O’Neal’s $100,000,000, 5 year contract); A-Rod Deal: Rich Getting Poorer, http://money.cnn.com/2004/02/18/commentary/column_sportsbiz/sportsbiz/index.htm (last visited Dec. 1, 2006) (Alex Rodriquez’s $252,000,000 10 year contract.)
[2] See Michael MacCambridge, America's Game: The Epic Story of How Pro Football Captured a Nation, Random House, 2004. (MacCambridge also talks about how the Super Bowl, the championship game, has basically become a national holiday.)
[3] See Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 440 (2006) (citing Clay Latimer, American Evolution: The NFL Has Become ‘America’s Game,’ A Title It Is Not About to Give Up, Rocky Mountain News, Sept. 8, 2005, at 10C (the NFL has franchises worth a billion dollars, its own cable television network and several billion in television contracts.))
[4] NFL Internet Network, http://www.nfl.com (follow “Players” hyperlink; then follow “Buffalo Bills” hyperlink) (last visited Dec. 1, 2006) (the Buffalo Bills have 66 players on their active roster, and 32 teams with roughly 70 players each, makes 2,240).
[5] ESPN news is a cable channel dedicated to sports news 24 hours a day. The national networks have a sports segment during the network news.
[6] See Supra note 1.
[7] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605.
[8] See USA TODAY Salaries Database, Football, http://asp.usatoday.com/sports/football/nfl/salaries/playersbyposition.aspx?pos=17 (2005) (last visited Dec. 2, 2006). (comparing positions reveals that the top free safety in 2005 was paid $5,000,000, and the top quarterback $9,500,000).
[9] NFL Draft, Draft Procedures and Rules, http://en.wikipedia.org/wiki/2006_NFL_Draft (last visited Dec. 1, 2006).
[10] Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 440 (2006).
[11] Donald G. Gifford, Legal Negotiation, Theory and Applications 37 (West Group 1989) (2003).
[12] Id. at 16.
[13] NFL Draft, Draft Procedures and Rules, http://en.wikipedia.org/wiki/2006_NFL_Draft (last visited Dec. 1, 2006) (there are 7 rounds, where each team is assigned a selection in a predetermined order based on the previous year’s position in the league. The worst team gets the top pic, second worst the second pick and so on).
[14] See Howie Long, John Czarnecki, Football For Dummies (Wiley Publishing, Inc. (2d ed. 2003) (the team is only allowed to have 45 players on the active roster, and 8 inactive).
[15] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605. “It's not the rookie contract where the big money is in the NFL, it's the free-agency contract for which players become eligible in their fourth or fifth years.” Id.
[16] Donald G. Gifford, Legal Negotiation, Theory and Applications 15-16 (West Group 1989) (2003) (when using this tactic, the other side is the opponent, and this tactic “include extreme initial demands, hiding information from the other party, threats, arguments and conceding reluctantly.”) Id.
[17] Richard T. Karcher, Solving Problems in the Player Representation Business: Unions Should be the “Exclusive” Representatives of the Players, 42 Willamatte L. Rev. 737, 763 (2006).
[18] Dave Goldberg, Rookies Making Significant Impact on NFL, http://www.msnbc.msn.com/id/15754968 (last visited Dec. 1, 2006) (Orleans was the second worst team last season and are now poised to win their division and make the playoffs, much because of their rookie and 2nd overall pick in last year’s draft).
[19] See Supra, note 13.
[20] List of Sports Flops, American Football, http://en.wikipedia.org/wiki/List_of_sports_flops (last visited Dec 3, 2006) (this site lists players picked early in the draft, but did not have a successful career). This shows the risk of owners paying huge contracts and opportunity cost for high draft choices.
[21] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605. (Holding out means not showing up to camp and practice until a deal is reached).
[22] Philip Rivers, http://www.chargers.com (follow “Roster” hyperlink under “Team” hyperlink; then follow “Philip Rivers” hyperlink) (Quarterback for San Diego Chargers).
[23] Eli Manning, http://www.giants.com (follow “Roster” hyperlink under “Team” hyperlink; then follow “Eli Manning” hyperlink) (Quarterback for NY Giants, son of Hall of Fame Quarterback Archie, and brother of Payton).
[24] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605.
[25] See Supra. Note 20.
[26] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605.
[27] Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 428 (2006). (contracts where the money is at the end often end up in renegotiations or the player being cut).
[28] See Id.
[29] Richard T. Karcher, Solving Problems in the Player Representation Business: Unions Should be the “Exclusive” Representatives of the Players, 42 Willamatte L. Rev. 737, 769 (2006).
[30] A Star is Born: Ownens Signs With The Cowboys (2006), http://sports.espn.go.com/nfl/news/story?id=2374189
[31] Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 428 (2006).
[32] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605.
[33] Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 428 (2006).
[34] See Gregg Easterbrook, AFC Preview, and Why Only Jackson Browne Should Hold Out (2005), http://www.nfl.com/features/tmq/081605.
[35] Mike Reiss, NFL: How Hurt is He? The List Don’t Tell, The Boston Globe, Nov. 8, 2006.
[36] Matthew Levine, Despite His Antics, T.O. Has a Valid Point: Why NFL Players Deserve a Bigger Piece of The Pie, 13 Vill. Sports & Ent L.J. 425, 452 (2006)
[37] Id. at 438.
[38] See Richard T. Karcher, Solving Problems in the Player Representation Business: Unions Should be the “Exclusive” Representatives of the Players, 42 Willamatte L. Rev. 737 (2006).
[39] Id.
[40] Id. at 742-745.
[41] Id.
[42] Id. at 774.
[43] Id. at 774-75
[44] Id. at 775.
[45] Donald G. Gifford, Legal Negotiation, Theory and Applications 37-38 (West Group 1989) (2003).
[46] See Richard T. Karcher, Solving Problems in the Player Representation Business: Unions Should be the “Exclusive” Representatives of the Players, 42 Willamatte L. Rev. 737, 776-79 (2006).
[47] See Public Interest in Hockey During the NHL Strike: A Report to CanWest Newspapers (2005), http://www.queensu.ca/cora/polls/2005/February3-public_interest_in_hockey.pdf; 2004-05 NHL Lockout, Issues, http://en.wikipedia.org/wiki/2004-05_NHL_lockout (last visited Dec. 1, 2006).
Talk about a bizarre pic. It looks like someone loved their dog a little too much, and this is the result. Let this be a warning to all dog lover out there.
