CFL-CFLPA dispute is over a fundamental philosophical divide about revenue sharing

The CFL-CFLPA collective bargaining agreement negotiations took a dramatic turn Wednesday, with the league going public with their CBA proposal and the CFLPA citing that as an "orchestrated attack" and threatening a strike if negotiations didn't move in the direction of their own proposal. What's this potential strike about? Well, there are a whole lot of issues at stake, from player-safety proposals (both the CFL and the CFLPA have made some, but they're drastically different) to playoff performance bonuses to this season's cap number (a substantial divide). However, at its core, this is a philosophical impasse, and it's about whether the salary cap should be a fixed number each year or a percentage of league revenues. That makes it very different from recent labour disputes in the NHL, NBA and NFL, and it also may lead to a long fight that could see training camps, preseason games and perhaps even regular-season games postponed or cancelled.

The biggest popular misconception with this dispute is that it's just about the different cap levels each side has proposed. Yes, the CFLPA has suggested a cap of $6.24 million per team for 2014, while the league favours a cap of $4.8 million; that's a substantial divide (especially on a percentage basis), but if that was the primary issue at play, there would be a lot of hope that negotiations could continue until the sides met somewhere in the middle. The larger problem is that the sides can't agree on whether to use a fixed cap (the CFL's position, which would see the cap at a particular amount per year, increasing over the term of the deal) or one that's a percentage of league revenues (the CFLPA position). Both the league and the players' association appear unwilling to even consider offers using the other side's system, which is why we're seeing such inflammatory comments from both camps. Here's a sampling of those:

"Unfortunately, the union’s bargaining team has rejected this offer, and instead put forward an unrealistic proposal which, if adopted, would threaten the very existence of the CFL." - CFL commissioner Mark Cohon

"The CFLPA proposal would threaten the viability of our league. We didn't feel that message was being heard. ... We don't have a meeting of the minds on what this league should be." - CFL president/COO Michael Copeland

"They stated to us to not tell them how to do their business. ... From our perspective, it's an orchestrated attack." - CFLPA president Scott Flory

"[If] we see a communication that the clubs are willing to tie it in some way to revenue, then we would consider [going to camps/playing pre-season games.] At this point, we certainly don't have any indication from the CFL that they're willing to pursue that." - CFLPA lawyer Ed Molstad

Essentially, this labour dispute is likely to go on until one side cracks and begins negotiating a deal under the other's preferred system. However, neither seems particularly likely to do so right now. Copeland said revenue sharing in any form "doesn't fit with the realities of our business," while Flory said "This is not about a number, it's not about a fixed cap, it's about us sharing in the revenue. We accept where we are, we're in a salary cap world, but it has to be tied to revenue." Both the CFL and CFLPA have some history on their side, too. The most recent CBA involved a flat cap and no revenue sharing, so the CFL wants to maintain that, but some previous CBAs did include revenue sharing, so players feel they deserve a return to that now that the league is becoming much more profitable (the new TV deal expected to give each club $2.7 million in extra revenue this year and beyond is a huge part of that).

Each of these systems could potentially have advantages for owners and players. A flat cap provides the owners with cost certainty, which is big; it guarantees that player salaries (a substantial expense) aren't going to go above a certain level in any given year, allowing for future planning. It also guarantees to players that they'll get a certain amount of money each year regardless of how the league does. By contrast, a revenue-sharing system carries dramatically more upside for players, as they can share in the league's success. However, it also carries potential downsides; if the league goes into a revenue slump, then what players could make drops dramatically. There's also more difficulty in planning for the future under this kind of system if it's calculated year to year. The cap could drastically rise or fall from year to year, but player contracts are multi-year, so those who hit free agency in a boom year could cash in, but those who hit the market in a down year might make far less. Teams could also wind up way over or under the cap from year to year this way. The main downside for the league with a revenue sharing system is that a percentage of whatever revenue boosts they gain goes to the players; under a flat cap, that's all pure profit.

Interestingly, it appears that both the players and owners are gambling on future league revenue increases with their preferred systems. If the players thought CFL revenues weren't going to be great going forward, a flat cap might work out better for them. Similarly, if the league expected a revenue downturn, it would likely prefer to have players receive a percentage rather than a flat sum. Instead, both sides appear bullish on the CFL's future revenues, and that's a big part of why we're seeing this fundamental clash of philosophies.

It's notable that this is very different from the recent labour stoppages in the NHL, NBA and NFL. For one thing, those were all league-imposed lockouts rather than player-led strikes, as the status quo in each league was unacceptable to the owners (who eventually were able to roll back the percentages players got). Here, the status quo is unacceptable to the players (and even the league admits that, as its offer is substantially higher than what players were getting), so they're the ones who have to force the issue with a strike vote. Beyond that, the CFL wants to emphasize how different it is from those leagues (as their caps are based on revenue sharing), with Copeland saying Wednesday that "if you're basing player compensation only on revenue, you're ignoring the realities of our business." By contrast, the CFLPA wants to encourage those comparisons to point out that its players are some of the only pro athletes not sharing in league revenue, with Molstad saying Wednesday "The proposal we made is consistent with every other pro sports league in North America." (Interestingly enough, the labour dispute that bears the most resemblance here is the 2004-05 NHL lockout, which featured a philosophical divide on cap/no cap. The most recent disputes in the NHL, NBA and NFL all already had caps that featured revenue sharing; those were mostly about what percentage of revenue players should receive, not what cap system should be in play.) The CFL fight is obviously about a much smaller pool of money than we saw with those other leagues, but there are some similarities to those disputes. How deep those go probably depends on if you prefer the league's position or the position of the players' association.

Both the CFL and the CFLPA would like to start the season on time, but that seems unlikely without one making a major shift to the other's preferred philosophy. We could potentially see that if each side improved their own proposal while maintaining their system preference, though. For example, although the league's categorically said they won't discuss revenue-sharing systems, they might be more willing to discuss one that gave players 40 per cent of TV/radio/broadcast rights, 35 per cent of sponsorship/licensing fees and 30 per cent of ticket revenues instead of the 55/45/40 the CFLPA proposed earlier. Conversely, although the players have said they don't want to discuss a flat cap only, they might be more willing to discuss a flat cap that's nearer the figure of $6.24 million they suggested for this year than the $4.8 million the league has proposed so far. Somebody's going to have to cross a line to resolve this dispute, but it would certainly be easier to see that happening if each side made a better offer under their own preferred system. Even that wouldn't guarantee resolution, though, as the sides could stay philosophically entrenched in their own positions. Until one side proves willing to accept the other's preferred system, it seems improbable that much progress will be made in these talks.