Normally, NFL commissioner Paul Tagliabue is upbeat when he addresses owners to open the annual spring meeting. On Monday, he was downbeat, saying negotiations for a new collective bargaining agreement have "exhausted themselves" and are "at a dead end."
He also predicted enough time would be spent trying to find a solution for coming to some kind of consensus among the owners to move forward that not a lot of time would be spent in the Maui sun over the next four days. The clock is ticking. The collective bargaining agreement expires in 2008. There is an uncapped year in 2007. Long-term deals are coming more difficult to do because signing bonuses can only be pro-rated for five years, and if another season passes, that term drops to four.
Commissioner Paul Tagliabue needs his owners to get on the same page.
"Today, the entire league faces a critical business challenge -- not unlike others that we have successfully addressed in the past two decades," Tagliabue told the owners. "The challenge is how to restructure our league-wide economics to extend the CBA with the Players Association to ensure the continuing competitive quality of our game and to continue the construction of superb new stadiums. And we must achieve these three critical goals in ways that take account of the escalating costs of club operations and that are within reach of all 32 teams."
Tagliabue sounds concerned and he should be. To get a new agreement, owners first have to restructure their business models. Currently, the players get 64 percent of designated gross revenues. In 2004, the NFL was a $3.07 billion business for designated gross revenues. Players reaped salaries and benefits worth $2.579 billion. But the model is going to change.
Under the current formula, 12 percent of revenues isn't designated to the players. That's roughly $418 million, a huge chunk of money.
The league and the players have agreed in principle to go total revenue formula. In the future, total revenues should grow to $5 billion to $6 billion with new stadium deals and increases in the television packages. But owners can't agree with owners, and there in lies the biggest part of this dead end.
High revenue teams such as the Redskins, Cowboys, Texans, Eagles and Patriots have a huge edge in revenues over the lower end teams such as Arizona and Indianapolis. The differences in total revenues can be more than $100 million in some case, and the NFL has always been a league that shares. Right now, chances of getting a settlement among the owners at this meeting in Maui is bleak.
"It's true because we can't get anything done in here," Steelers owner Dan Rooney said. "We can not get a labor deal without any arrangement in here. It's impossible."
The bad part about this pessimism is Rooney is often the voice of optimism in regards to labor. It was Rooney who worked his positive relationship with union president Gene Upshaw in saving the 1987 season, which could have been canceled because of a lingering strike. It was Rooney who has helped push and reform the salary cap.
Tagliabue's opening statements were pointed and direct. The NFL is rolling in money but major problems are ahead the longer the league can't resolve its future labor issues.
If the league goes into an uncapped year with these types of differences, expect chaos. Competitive balance would fall apart. Threats of a strike could resume. The timing of this CBA extension is coming at a critical time.
"We should be clear about one thing," Tagliabue told the owners. "Our own recent history tells us that a failure to come together now and agree upon solutions -- both internally and with the Players Association -- will produce alternatives that are far more negative for all clubs, all players, the league and the Players Association than the cost of a solution will be to any one club, group of clubs, player or category of players."
The NFL needs 24 owners to pass a CBA extension, and the five richest owners can find enough supporters to block any plan that doesn't meet their needs. The Dan Snyders and Jerry Jones' have succeeded because they've maximized their revenues in new stadium deals or just hustled other owners. They don't want to give it up in a form of a tax of their revenues to share with other teams easily.
Houston Texans owner Bob McNair is considered a moderate but he owns one of the five NFL teams with the most revenue. His debt service is high because of the expansion fee he paid and his contribution in building Reliant Field. He wants to help, but it has to make financial sense to his franchise.
"It's sorta like the old joke about the guy who had the hog and he figured he could live forever by going out and slicing a little bit off his leg each year and the hog would keep living," McNair said. "If he went out there and took too much, he'd kill the hog. You need to take a small enough slice to keep him living."
McNair thinks it would be wrong to take away the incentive for clubs to increase their revenues. He formulated his financial plan when he was awarded the expansion team, but if the Texans are taxed too much, it could be a problem.
"There is a limitation as to what we do and how we do it," McNair said. "It all has to make sense. If demands are so severe it undermines the business model, it jeopardizes the future for everyone."
Two major differences exist between the owners and the union. First, both sides have to agree on the growing amount of debt service being used to fund new stadiums and how that is discounted against the total revenues. Tagliabue estimates that to be three percent of total revenues, which would be $300 million if revenues reach $6 billion. Remember new stadium projects are being developed for Indianapolis, Kansas City, Dallas and the two New York teams, the Jets and Giants.
The second problem is agreeing on a percentage figure with the union. But talks won't go anywhere unless the owners are on the same page and they aren't. Rooney said there isn't 24 votes to pass any kind of a collective bargaining extension, and he sounds frustrated. But he's not surprised things are at a dead end.
"Not in the least," Rooney said about the CBA extension stall. "They (the top revenue owners) don't have a gun to their head. As soon as they put a gun to their heads, maybe it will change. They are not at that position yet. But the clock is ticking. Maybe they will get brains soon."
Stephen Jones of the Cowboys says the league has always been good at working out compromises and he's hopeful the information from this meeting could advance the cause. But nothing is close. The clock is ticking.
Tagliabue was asked about any analogy to the NHL.
"I'm not going to answer any questions that compares the NFL to hockey in terms of labor relations," Tagliabue said. "I said the negotiations have exhausted themselves, not the negotiations. And we're at a dead end."
After those statements, Tagliabue and the others tried to break the road block. Surprisingly, the NFL labor situation has its first building crisis in more than 10 years. A lot of work is going to be needed to get it fixed.
NFL owners seem to like Arizona businessman Reggie Fowler, who has a $625 million bid to buy the Vikings. Though he's not attending these owners meetings, his bid is simple. If he sells his company SATCO, which is valued around $300 million, he will have enough cash to fund the 30 percent investment he needs to buy the Vikings. Until the company is sold and the money is in the bank, the NFL owners can't vote on him. Nothing is expected to happen until May at the earliest. ... The Dolphins will present a proposal to make Miami, Tampa and a couple of California sites as part of a regular rotation of Super Bowls. The Dolphins plan is to build permanent facilities around their stadium that can further develop events surrounding the Super Bowl. The interesting part of their proposal is that New Orleans isn't part of the plan because of the problems in getting a new stadium deal for the Superdome. ... Tagliabue said the league is very aggressive in fining or punishing team employees involved in illegal selling of Super Bowl tickets. He's awaiting a report on Vikings coach Mike Tice, who has admitted to selling Super Bowl tickets for profit.
John Clayton is a senior writer for ESPN.com.