Once again the NFL faces legal challenges from within its own ranks.  See prior blog on player concussion liability.  The NFL may find itself on tenuous legal ground as it faces a grievance filed by the Dallas Cowboys and Washington Redskins over the League’s decision to penalize both teams for salary cap violations in an uncapped season.  In 2008, the owners of the 32 NFL franchises voted to opt out of its collective bargaining agreement with the players’ union and, as a result of the opt-out provision, the 2010-2011 NFL season operated without a salary cap.  Although the NFL warned teams to continue structuring player contracts as though the salary cap had it remained in effect, two teams, the Cowboys and Redskins, signed players to contracts frontloaded with pay in 2010 in order to take advantage of the lack of salary cap and ensure that the teams had room to operate financially after the creation of a new CBA.  See the Sports Law Blog for a more detailed timeline.

The NFL has now decided to penalize the two teams, even though it approved the player contracts in 2010, by taking away a related amount of salary cap space from each this season.  The League claims that the penalties are in the interest of maintaining competitive balance.  However, the Cowboys and Redskins view the penalty as collusion.  See Mark Florio’s post on Pro Football Talk.  In other words, that the NFL’s retroactive penalty imposing a limit on competitive spending in 2010, when no agreement with the players’ union existed imposing a salary cap, is a collusive agreement among the NFL owners to restrain trade.

The grievance filed by the Cowboys and Redskins will be decided by an arbitrator under the collective bargaining agreement.  Peter Schaffer, an attorney and NFL agent, was quoted in the Washington Post attesting to the validity of the teams’ collusion argument, “the salary cap is a per-se violation of the antitrust laws…there can be no greater example [of collusion], unless labor agrees to it…[The League owners are] saying, wink-wink, nobody can spend money.  That’s a violation.”  See Redskins Salary Cap Challenge Raises Complicated Questions for NFL.  However, in the same article, Gabriel Feldman, a professor at Tulane University, contends that the issue is not so black-and-white.  He argues that, the complexity of the collusion argument aside, the NFL has a valid claim that the two teams violated “the spirit and the terms of an inevitably returning salary cap.”  The grievance presents interesting and challenging questions concerning the NFL’s authority to preserve “competitive balance” outside the framework of the collective bargaining agreement.