Employment & Labor Insider

It is the general understanding among serious sports fans that contracts for players in the National Football League are less guaranteed – that is, more vulnerable to unilateral termination by the player’s club – than player contracts in Major League Baseball, the National Basketball Association, or the National Hockey League.  

The details and accuracy of that understanding are complex (see here at ch. 5), but 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 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.

History of collusion allegations

The Players Association and its players engaged in extensive litigation between 1987 and 1993 after the collective bargaining agreement between the NFL and the Players Association expired in 1987 (see summaries and analysis here and here).

The litigation was finally settled in a lawsuit led by future Hall of Famer Reggie White. The settlement became the backbone of a new collective bargaining agreement and economic system for the NFL that continues to this day.

The 2022 collusion case

The person with jurisdiction over the NFL contract is called a “System Arbitrator.” 

In October 2022, the Players Association began a System Arbitration alleging that NFL teams had impermissibly colluded to prevent three comparable quarterbacks – Russell Wilson, Lamar Jackson, and Kyler Murray – from obtaining fully guaranteed contracts like DeShaun Watson had. (Article 17 of the contract has an anti-collusion provision.) The Players Association later broadened the case to seek relief on behalf of 594 veteran players who it claimed were victims of collusion with regard to their compensation.

Christopher F. Droney, a former judge of the U.S. Court of Appeals for the Second Circuit, was selected as the System Arbitrator. In evaluating the collusion claims, Judge Droney considered three issues:

• Was concerted action contemplated and invited?
• Were the clubs aware that they were being invited to collude to restrict guaranteed compensation?
• Did the clubs adhere to and participate in a scheme?

Was concerted action contemplated and invited?

On the first question, the arbitrator found in favor of the Players Association. 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. 

Because of COVID-19 adjustments, the NFL salary cap in 2021 had declined to $182.5 million from $198.2 million in 2020. Teams had responded by converting non-guaranteed player salaries into guaranteed signing bonuses that were prorated over the life of the contract for salary cap purposes. In so doing, the clubs had distorted the system and were paying large amounts of “cash over cap.”

Before the meeting, Mr. Pash expressed his concerns about the growth in guaranteed compensation to NFL Commissioner Roger Goodell. Commissioner 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 [collective bargaining agreement] that resisted guaranteed money except as clubs determined on their own.”

Mr. Pash, a veteran of the NFL’s historical antitrust battles, included multiple reminders in his presentation that clubs had to make their own decisions. Nevertheless, Judge Droney 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 issue, Judge Droney found that the clubs did not realize that they were being invited to participate in collusion. Not all of the owners attended the March 2022 meeting, and many of those who did had little to no memory of this discussion.

Did clubs adhere?

The results of the clubs’ alleged agreement was the most complicated part of the analysis. The Players Association relied on the expertise of Dr. Roger Noll, an emeritus professor at Stanford with extensive experience in the sports industry. Dr. Noll highlighted that teams’ cash over cap and total cash expenditures decreased from 2022 to 2023. Next, Dr. John F. Johnson of Edgeworth Economics 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 alleged scheme. In response, the NFL’s expert, Jonathan L. Walker of Secretariat, introduced evidence showing a “massive increase” in spending in 2024 as contrasted with 2023.

Ultimately, the arbitrator found that the evidence did not support a finding of collusion. Fourteen of the 32 NFL clubs did not have the salary cap room to accommodate the damages that Dr. Johnson claimed. Multiple NFL owners testified that any such admonitions by the NFL would not made a difference to their spending plans, because of the fierce competition within the league.  Finally, Judge Droney found it telling that the Players Association 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

Whether the NFL actually tried to get the clubs to collude on guaranteed compensation, the teams did not seem to willing to collude, which defeated the Players Association case.

The Players Association had the right to appeal to a three-arbitrator panel within ten days of Judge Droney’s order. Whether it did is unknown. If the Players Association did appeal, any award in its favor would be difficult to keep quiet. Either way, the NFL has learned a lesson in what type of information to convey to clubs moving forward, or at least the manner in which it does so.