(Photo by Ryan Kang/Getty Images
It is the general understanding among serious sports fans that NFL player contracts are less guaranteed, i.e., more permissive of unilateral termination by the player’s club, than player contracts in MLB, the NBA, or the NHL. While the details and accuracy of that understanding are complex (see here at ch. 5), it is certainly true that the principal goal in contract negotiations for NFL players is often to maximize the amount of guaranteed compensation. No player achieved that goal more than quarterback DeShaun Watson, when he signed a five-year fully-guaranteed $230 million contract with the Cleveland Browns in March 2022. That contract, and the effects of the COVID-19 pandemic, were the focus of a recent “system arbitration” in which the NFL Players Association (NFLPA) alleged that the NFL and its 32 clubs had illegally colluded to suppress guaranteed compensation to NFL players. In a January 2025 arbitration decision recently released by reporter Pablo Torre, the NFL prevailed, but not without some concerning findings.
A History of Collusion Allegations
To understand the case and its adjudication requires historical context. The NFLPA and its players engaged in extensive litigation between 1987 and 1993 after the expiration of the collective bargaining agreement (CBA) between the NFL and NFLPA in 1987 (see summaries and analysis here and here). The players’ litigation strategy evolved as a result of various court decisions, including the eventual decertification of the NFLPA as the players’ bargaining representative under labor law and a class action antitrust lawsuit against the NFL and its clubs alleging that their salary cap, free agency, and Draft rules amounted to illegal agreements among competitors to suppress pay and other benefits in the labor market for NFL player services. Significantly, because the NFLPA had been decertified, the NFL’s rules were no longer protected by a crucial concept in sports and the law, known as the non-statutory labor exemption.
The litigation was finally settled in a lawsuit led by future Hall of Famer Reggie White. The settlement resolved those core areas of dispute and became the backbone of a new CBA and economic system for the NFL that continues to this day. As is common in class action settlements, the judge presiding over the litigation, retained jurisdiction to resolve disputes over the agreement’s implementation. In the White case, that judge was David Doty of the United States District Court for the District of Minnesota.
System Arbitration
Next, to facilitate the process of resolving disputes under the settlement, according to Rule 53 of the Federal Rules of Civil Procedure, the parties agreed on a well-qualified lawyer, known as a “Special Master,” to adjudicate disputes for potential appeal to Judge Doty. From 2002 until 2021, that role was held by Stephen Burbank, a now emeritus professor at the University of Pennsylvania School of Law.
Burbank’s 20-year run as the arbitrator for the most contentious disputes between the NFL and NFLPA was remarkable, particularly given that sports leagues and unions have regularly dismissed arbitrators after just one disagreeable ruling and some early decisions by Burbank against the NFL concerning signing bonus forfeitures. Indeed, after more than a decade of decisions by Judge Doty that the NFL believed favored the NFLPA, it resolved to end his oversight in the 2011 CBA negotiations. The 1993 CBA (and White settlement) was extended multiple times but, as a result of the 2006 CBA’s expiration in March 2011, Judge Doty’s jurisdiction ended.
Nevertheless, when the parties finally reached a new CBA in July 2011, they retained essentially the same role for Professor Burbank. However, his title changed from Special Master to System Arbitrator, given that his role was now outside the jurisdiction of the federal courts. The System Arbitrator nevertheless retained jurisdiction to hear disputes – called “System Arbitrations” – concerning the same items at issue in the litigation of 1987-93. Today, System Arbitrations cover select Articles of the CBA covering the NFL Player Contract, NFL Draft, rookie compensation, free agency, salary caps, and related concepts among a few others. These items go to the core “system” of NFL operations, hence the title.
The NFLPA’s Collusion Case
Of relevance to the instant case, the System Arbitrator has jurisdiction over Article 17, Anti-Collusion. This makes perfect sense. The players’ principal legal argument in the past litigation was that NFL clubs were in violation of Section 1 of the Sherman Antitrust Act, which prohibits multiple parties from entering into agreements that unreasonably restrain a market. Article 17 is akin to Section 1, as it prohibits clubs from entering into express or implied agreements which restrain the player labor market, including agreements not to offer particular types of contracts.
In October 2022, the NFLPA commenced a System Arbitration alleging exactly that. In the wake of the Watson contract, the NFLPA alleged that NFL teams had impermissibly colluded to prevent three comparable quarterbacks – Russell Wilson, Lamar Jackson, and Kyler Murray – from obtaining fully guaranteed contracts like Watson. After discovery was conducted, the NFLPA broadened the case to seek relief on behalf of 594 veteran players who it claimed had received less guaranteed money in their 2023 contracts because of an agreement among NFL clubs to suppress guaranteed compensation.
Following Burbank’s retirement in 2021, Christopher F. Droney, a former judge of the United States Court of Appeals for the Second Circuit, was selected as the new System Arbitrator. In evaluating the NFLPA’s claims, Droney evaluated three factors: (1) was concerted action contemplated and invited? (2) were clubs aware that they were being invited to participate in a collusive agreement to restrict guaranteed compensation? and (3) did clubs give adherence to and participate in a scheme?
Was Concerted Action Contemplated And Invited?
On the first question, the arbitrator found in the NFLPA’s favor. At a March 2022 owners’ meeting, the NFL’s Management Council, led by then-General Counsel Jeff Pash, led a presentation in which the league highlighted and expressed concern with growth in the amount of guaranteed compensation. Complicating the analysis was the fact that the salary cap in 2021 declined to $182.5 million from $198.2 million in 2020 due to COVID-19 related adjustments. Teams had responded to this reduced salary cap space by converting non-guaranteed player salaries into guaranteed signing bonuses which were prorated over the life of the contract for salary cap purposes, thereby reducing the annual salary cap charge. In so doing, clubs had distorted the system and were paying large amounts of “cash over cap.”
Notably, prior to the meeting, Pash expressed his concerns about the growth in guaranteed compensation to NFL Commissioner Roger Goodell. Goodell responded:
“Agreed but the tip of the market is most of the dollars and if we wait to see how it falls, it will be too late to counter. Agreed with raising [at the owners’ meeting] with a big concern that this will erode a key aspect of our CBA that resisted guaranteed money except as clubs determined on their own.”
Pash, a veteran of the NFL’s historical antitrust battles, included multiple reminders in his presentation that clubs must make their own decisions. Nevertheless, the arbitrator found that “Management Council, with the support of the Commissioner, sought to encourage Clubs to reverse the recent trend in guaranteed compensation, especially that growth that was not attributable to Covid.”
Were Clubs Aware?
On the second factor, the Arbitrator found that the clubs were not aware that they were being invited to participate in collusion. Not all of the owners attended the March 2022 meeting and many of them had little to no memory of the content of Management Council’s presentation, among numerous other topics discussed at the meeting.
At issue on this point was a series of communications between then-NFLPA Executive Director DeMaurice Smith and New England Patriots owner Bob Kraft. Smith testified that Kraft told him that Goodell had asked Kraft to speak to other owners about a problematic rise in guaranteed compensation. Goodell and Kraft denied any such conversation. The arbitrator ultimately found that no such conversation occurred. Notably, the arbitration process included testimony from numerous players, agents, NFL executives, club owners and executives, and others. Smith’s allegations against Kraft was the only instance in which the arbitrator explicitly did not find the testimony credible.
Did Clubs Adhere?
The results of the clubs’ alleged agreement was the most complicated part of the analysis. The sides offered competing analyses from economists. The NFLPA first relied on the expertise of Dr. Roger Noll, an emeritus professor at Stanford with extensive experience in the sports industry. Noll highlighted that teams’ cash over cap and total cash expenditures decreased from 2022 to 2023. Next, Dr. John F. Johnson of Edgeworth Economics, on behalf of the NFLPA, introduced evidence showing a statistically significant decrease in signing bonuses and second-year guarantees after the March 2022 meeting. He estimated the players lost out on $612.21 million in compensation due to the clubs’ collusive scheme. In response, the NFL’s expert, Jonathan L. Walker of Secretariat, introduced evidence showing a “massive increase” in spending in 2024 as compared to 2023.
Ultimately, the arbitrator found that the evidence was not sufficiently consistent to find that the clubs had participated in a scheme to reduce guaranteed compensation. Notably, 14 of the 32 NFL clubs did not have the salary cap room to accommodate the damages Dr. Johnson claimed. Multiple NFL owners also testified that any such admonitions by the NFL would not have changed their spending plans, given the fierce competition within the league. Finally, the arbitrator found it telling that the NFLPA did not have any NFL player testify “that they sought more extensive guarantees and were categorically denied them by team management.”
Stopped At The Goal Line
The NFLPA obtained and produced powerful evidence that the NFL provided information to clubs about guaranteed compensation for purposes of encouraging them to collectively change their spending habits. This is the exact type of information sharing and implicit agreement that the Federal Trade Commission and U.S. Department of Justice have previously warned human resources professionals is illegal. Nevertheless, to the NFL’s benefit, the teams did not seem to fully heed the league’s lessons.
Under the terms of the CBA, the NFLPA had the right to appeal to a three-person panel within ten days of the arbitrator’s order. The NFLPA declined to comment on the decision and whether it had appealed. The NFL did not respond to a request for comment. If the NFLPA did appeal, any award in its favor would be difficult to keep quiet. Either way, the NFL likely learned a lesson in what type of information to convey to clubs moving forward, or at least the manner in which it does so.
