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The Effect of Mcneil V. NFL on Contract Negotiation in the NFL - That Was Then, This Is Now, 3 Marq

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The Effect of Mcneil V. NFL on Contract Negotiation in the NFL - That Was Then, This Is Now, 3 Marq Marquette Sports Law Review Volume 3 Article 6 Issue 1 Fall The ffecE t of McNeil v. NFL on Contract Negotiation in the NFL - That Was Then, This is Now Carol T. Rieger Charles J. Lloyd Follow this and additional works at: http://scholarship.law.marquette.edu/sportslaw Part of the Entertainment and Sports Law Commons Repository Citation Carol T. Rieger and Charles J. Lloyd, The Effect of McNeil v. NFL on Contract Negotiation in the NFL - That Was Then, This is Now, 3 Marq. Sports L. J. 45 (1992) Available at: http://scholarship.law.marquette.edu/sportslaw/vol3/iss1/6 This Symposium is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. For more information, please contact [email protected]. THE EFFECT OF MCNEIL v. NFL ON CONTRACT NEGOTIATION IN THE NFL - THAT WAS THEN, THIS IS NOW CAROL T. RIEGER* CHARLES J. LLOYD** I. INTRODUCTION In 1990, the standout quarterback for the New Orleans Saints, Bobby Hebert, was unable to come to terms for a new contract with his team. Despite the fact that Hebert previously led the Saints to their first winning season and first playoff appearance in franchise history, the Saints were un- willing to pay Hebert anything close to what he believed he deserved. Although a "free agent" because his prior contract with the Saints had ex- pired, like virtually all other NFL "free agents" for more than a decade, he attracted no offers from any other club during the two-month period that such offers could have been extended. As time went by and no progress on a new contract was made, Hebert asked the Saints to trade him to a club that would offer him pay more commensurate with his worth. Despite a significant offer from the Los Angeles Raiders to trade for Hebert, the Saints refused to trade him to the Raiders or anyone else. The Saints also became more aggressive in their dealings with Hebert, vilifying him in the media, insulting his wife, and making a "take it or leave it" offer presenting Hebert with a Hobson's choice: Either take a totally unacceptable offer or sit out the season and not be paid. As a matter of principle, he chose the latter. Even though Hebert had no contract with the New Orleans Saints and even though he sat out the entire 1990 season, in 1991 he remained the property of the Saints, unable to negotiate with any other professional foot- ball club in the NFL. 1 In 1992, All-Pro tight end Keith Jackson of the Philadelphia Eagles found himself in the same situation that Hebert was in two years earlier. Jackson was a free agent unable to come to terms for a new contract with * Carol T. Rieger is a partner in the Minneapolis law firm of Lindquist & Vennum and one of the trial lawyers for the players in the recent case of McNeil v. NFL. She and her firm have represented players in a number of cases relating to free agency. ** Charles J. Lloyd is a partner in the law firm of Lindquist & Vennum who has represented the players in a number of recent cases relating to free agency. 1. The above summary is taken from the summary of Bobby Hebert's testimony in McNeil v. National Football League. See Transcript of Record at 3648-3763, McNeil v. National Football League, 790 F. Supp. 871 (D. Minn. 1992) (No. 4-90-476). MARQUETE SPORTS LAW JOURNAL [Vol. 3:45 the Eagles and unable to obtain offers from any competing clubs. As time passed, the Eagles became more aggressive in their negotiations with Jack- son. Jackson missed all of training camp and the first weeks of the season with no indication that he could reach a contract with the Eagles, failing his capitulation to the Eagles' terms.2 However, unlike Hebert, Jackson ulti- mately obtained his freedom and signed a lucrative contract with the Miami Dolphins. This article discusses the reasons for the different outcomes and the prospects for future NFL free agents. One pivotal event separates the endings of Hebert's and Jackson's sto- ries. On September 10, 1992, a jury in Minneapolis, Minnesota, rendered its verdict in McNeil v. NationalFootball League.' After hearing testimony since mid-June, the jury concluded that the restrictions on free agent move- ment in the NFL were unreasonably restrictive and a violation of the anti- trust laws. Within days of that verdict, several players - including Jackson - sought a temporary restraining order (TRO) and preliminary injunction to prevent the NFL from enforcing their restrictions against the players who sought the relief.4 The court granted the TRO and for five days Jackson and the others were given the opportunity to solicit offers from any NFL club without restriction. Thus, instead of sitting out the entire season as the exclusive property of one team, as Hebert had to do, Jackson signed a new contract with the Dolphins and, in doing so, signaled that the jury in McNeil had ushered in a new era in the National Football League. II. MOVING FROM THEN TO Now - THE COURSE OF FREE AGENCY LITIGATION A. Mackey v. NFL and the Demise of the Rozelle Rule Since the 1970s, Minneapolis has been the center of a long course of litigation challenging restrictions on free agency imposed by the National Football League. The seminal case concerning football free agency before this latest string of decisions was Mackey v. NationalFootball League, 5 the lawsuit that successfully challenged the then-existing restraints on player 2. This summary is taken from the complaint and the declaration of Keith Jackson in Jack- son v. National FootballLeague. Transcript of the Record, Jackson v. National Football League, 802 F. Supp. 226 (D. Minn. 1992) (No. 4-92-876). 3. 790 F. Supp. 871 (D. Minn. 1992). 4. Jackson v. National Football League, 802 F. Supp. 226 (D. Minn. 1992). 5. 407 F. Supp. 1000 (D. Minn. 1975), aff'd in part, rev'd in part, 543 F.2d 606 (8th Cir. 1976), cert. dismissed, 434 U.S. 801 (1977). 1992] McNEIL v NFL movement known as the "Rozelle Rule."6 After fifty-six days of trial, Judge Earl Larson found that the restrictions contained in the Rozelle Rule were not immunized from antitrust scrutiny by operation of the nonstatu- tory labor exemption and were both aperse violation and a violation of the Rule of Reason under the antitrust laws.7 On appeal, the United States Court of Appeals for the Eighth Circuit affirmed Judge Larson's labor ex- emption and Rule of Reason analysis, although it rejected the per se find- ing.8 The result was a monumental victory for the players and a monumental decision in sports law. The NFL and its member clubs subsequently sought review by the United States Supreme Court, but withdrew their petition when the parties reached a collective bargaining agreement and settled the litigation in 1977. 9 Although the Rozelle Rule was dead, the 1977 collective bargaining agreement contained a new set of restrictions on player movement - the Right of First Refusal/Compensation system ("RFR/C system"). The RFR/C system was designed to address what at the time were viewed as the primary evils associated with the Rozelle Rule - namely, the contract op- tion provision and the unknown compensation. Under the RFR/C system, veteran players could negotiate to eliminate the option clause from the player contract. If the option clause was included in a player contract, there was to be at least a 10% increase in salary over the previous year. Compensation was specifically defined in the collective bargaining agree- ment based on a grid comprised of a horizontal line representing years of experience in the league, a vertical line representing salary levels, and sev- eral diagonal lines establishing draft choice compensation. In theory, the provisions of the 1977 collective bargaining agreement eliminated the fear associated with the unknown compensation component of the old Rozelle Rule. However, nothing changed in terms of free agent movement. 6. Two components of the Rozelle Rule substantially hindered a player's ability to change clubs. First, in order to become a free agent under the Rozelle Rule, a player had to play out his option - the final year of his contract - at a 10% decrease in salary from the previous year. If a player was willing to make the financial sacrifice and play out the option, making him available to receive offers from other clubs, his former club was entitled to compensation from the new club for the loss of his services. If the two clubs were unable to agree on the appropriate compensation, the NFL Commissioner, Pete Rozelle, would unilaterally determine the compensation. There were no guidelines to restrict his decision. With few players willing to play out their option and even fewer clubs willing to take their chances with the unknown compensation, there was virtually no movement under the Rozelle Rule. Mackey, 407 F. Supp. at 1004-06. 7. Mackey, 407 F. Supp. 1000. 8. Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976). 9. National Football League v. Mackey, 434 U.S. 801 (1977). MARQUETTE SPORTS LAW JOURNAL [Vol. 3:45 In addition to the reforms of the option clause and the compensation scheme, the 1977 collective bargaining agreement provided clubs with a right of first refusal in the event a veteran free agent player received an offer from another club. If the player's former club made a qualifying offer as defined by the collective bargaining agreement, that club would retain a right of first refusal to match any other club's offer or it would receive draft choice compensation pursuant to the grid if the club chose not to exercise the right of first refusal.
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