NFL Lockout: Economics of Deal Done, Rookie Wage Scale Set; Major Hurdles Cleared - End of Lockout Appears Close

ST. LOUIS, MO - JUNE 3: Executive Director of the National Football League Players' Association (NFLPA) DeMaurice Smith leaves the Thomas F. Eagleton U.S. Federal Courthouse after the NFL lockout hearing on June 3, 2011 in St. Louis, Missouri. NFL players and the league met in court today for a federal appeals hearing on the legality of the three-month-old lockout. (Photo by Dilip Vishwanat/Getty Images)

This will be the most optimistic NFL Lockout Update yet, so prepare yourselves. The internets are going wild right now with optimism, and the basis for the optimism is two-fold. First, as we reported on yesterday, the rookie wage scale has been agreed upon in principal, and this represented one of the major sticking points for sides to come together on. Secondly, today it's been reported that the major economics, namely the revenue split and salary cap for the new CBA, have been agreed upon. This is huge news, as the final issues, - the retired players' pension fund, player safety, insurance questions, and the recertification of the NFLPA -are likely 'easy' hurdles to clear (don't quote me on that 'easy').

These few remaining issues are not expected to be real obstacles and thus it seems to be a matter of formality to finalize the new deal, dot the i's, cross the t's, and end the lockout. If this happens within the next few days, possibly early next week, it looks like the preseason could go on as scheduled and no games will be missed. The free agency period could soon be upon us, and I'll have something real to write about, finally. 

Here is an aggregation of information I've found from respected sources that update on the major issues; I've quoted several of them below for a basic outline, but follow the links to get much more detailed information on each point:

Rookie Wage Scale:

According to ESPN, the new CBA stipulates these terms for rookie contracts:

• Five-year contracts, with a team option for the fifth year.
• If the team option is exercised, in the fifth year the top 10 picks would receive a salary equal to the average of the top 10 player salaries at their respective positions. That money would be guaranteed if the option is exercised after the third year of the contract.
• If the team option is exercised, in the fifth year picks 11-32 would receive a salary equal to the average of the Nos. 3-25 salaries at their respective positions. That money would be guaranteed if the option is exercised after the third year of the contract.

Salary Cap:

The tentative number that everyone is hearing right now is $120-123 million, with another $21-22 million allocated to player benefits. The cash minimum of that $120-123 million is still being massaged, with owners pushing for a 90% cash minimum, and players obviously hoping for closer to 100%. 

Albert Breer notes that,

"The 2011 projected cap will be roughly $123 million, according to sources, but as a practical matter will "feel" more like $130 million to teams when cap credits and new cap exceptions are factored. Teams will have to spend, in cash, 90 percent to the cap minimum and league-wide spending will be pegged at 99 percent to the cap."

Andrew Brandt elaborates:

"In 2009, the last capped year, the salary cap stood at $123 million, later adjusted to $128 million after a unique CAM (Cash Adjustment Mechanism) addition - once it was clear 2009 would be the last capped year of the CBA. A salary cap of $120 million in 2011 would create a predicament for some teams that routinely spend above and beyond that amount. To remedy this situation, the sides have discussed the idea of a one-player cap exemption for each team, taking the form of a $3 million credit, vaguely similar to the "Mid-level exception" in the NBA."

ESPN's two cents:

"Since February, the players have been willing to accept a $141 million player cost number -- which includes both salaries and benefits paid to players -- per team, multiple sources told Clayton. By agreeing to the $120 million cap, the players allow $21 million per team to be in benefits. Now that a cap number has been formed, teams need to determine the minimum cash payroll number, or what teams will be required to spend.

The guaranteed spend forces every team to put up more than 90 percent of the salary cap in cash each season. A couple of weeks ago, the owners talked about having the guaranteed spend number at close to 100 percent of the salary cap, according to sources. That number and percentage could still be adjusted."

Arbitration, appeals, and judicial oversight:

The NFL's Personal Player Conduct and drug policies are an issue as well. Under the old CBA, players who received fines and suspensions from the NFL could only appeal to Commissioner Goodell himself. The players detest this system and have called for an arbitration system of appeals. While it looks like the players may get their wish for the implementation of a panel of ex-judges in appeals procedures in matters of non-commissioner discipline (drug policy and others), it looks like the Personal Conduct policy will remain the domain of Goodell only.

Per ESPN:

"Although sources had told Mortensen earlier Thursday that commissioner discipline would be subject to arbitrator appeal, sources said late Thursday night that was unlikely. However, other matters of discipline, including drug suspensions, will still be subject to review under the proposed system, the sources said. Terms are still being negotiated, according to sources."

Per Andrew Brandt: 

"This independent appeals process may apply to discipline levied due to violation of the league's drug policy and other discipline. However, it is unclear whether the ex-judges would rule on violations of the Personal Conduct Policy, as that has been a hallmark of the tenure of Goodell and he is personally protective of ruling on the integrity of the game. Knowing how important it is to him, I sense that he will try to hang on to that authority as much as possible."

Revenue Split:

Unchanged from what was reported in previous weeks, the expected revenue split between players and owners is going to be between 47-48%, per Albert Breer. He said, "For those wondering on the revenue split, the macro issue in all this, it will land initially between 47 and 48 percent."

Other Issues at Hand:

Right of first refusal for teams: In essence, teams (owners) want the ROFR on up to three of their own pending free agents. Players are vehemently opposed to this idea. This could be the most sticky of the remaining issues.

Others: workmens' comp, or in other words, better and more clear insurance policies for players; drug and steroid testing; application of the Personal Conduct Policy during the lockout; bonus recovery for bad behavior; reduced offseason schedules; the pending Brady v NFL antitrust case; and retiree benefits.

Hopefully none of these represent major problems that slow up the process.

Finally, as Jim Trotter reported, the players have disclosed to the ownership group that they took out an insurance policy that would pay out $200k to each player in the event of a lost season. This gives the players some leverage in the talks, and may have sparked the recent breakthroughs.

Trotter noted, 

"More than a year ago he received approval from the executive committee to secure insurance that would pay each player roughly $200,000 if there were no football in 2011. Smith disclosed the fund to only a handful of people outside of the executive committee. However with negotiations seemingly at a standstill late Wednesday night, the decision was made to play one of their aces in the hole. So in the relative quiet of the sides' New York City bargaining room the next morning, Baltimore Ravens cornerback Domonique Foxworth informed the owners of the previously secret lockout fund.

Was that the shove in the back that moved the sides closer to a potential agreement? Only the owners know for sure, but a source close to one of them said the disclosure definitely got that side's attention. Perhaps for good reason."

More updates forthcoming I'm sure. Right now though, from most accounts, it's looking like a agreement in principal could come next week. There are, of course, reports that it could all happen today, but I wouldn't get your hopes up.

Regardless of whether it's today or next week though, things are looking up. Albert Breer has been the major player in the NFL Lockout reporting field, and he thinks the deal is close, for what that's worth. He said, about an hour ago, "As for what's remaining on moving this from economic agreement to full settlement/CBA, I'm told it shouldn't fall apart based on the details. Then followed up by noting, "One other thing that's very clear when it comes to these labor negotiations is that the toughest part is done now."

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