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Labor tiff puts loan for stadium in limbo: NFL Players Association refusing to back $34 million as fight with owners drags on

February 27, 2006

A $34 million loan from the NFL that the Indianapolis Colts are counting on to fund part of their share of stadium construction could get sacked, at least temporarily, in an NFL labor dispute.

Teams with pending stadium loans-including the Colts, Dallas Cowboys and New York Giants and Jets-hoped to get final approval of their loans at the March owners' meeting. That is now in serious doubt, league sources said.

NFL owners last June approved a $34 million loan for the Colts to put toward the new stadium. But league bylaws state the players' union must approve stadium loans before disbursement.

Officials for the NFL Players Association are refusing to approve any stadium loans until players and owners sign a new collective bargaining agreement.

"[The loan program] is done until a labor deal is done," said Jeffrey Kessler, counsel to the NFLPA.

The state and Colts have no contingencies for covering the $34 million if the loan is scuttled. The Colts would have to come up with the funds themselves to meet their commitment to the project, said officials for the Indiana Stadium and Convention Building Authority.

The Colts are on the hook for $100 million of the $625 million retractable-roof stadium, construction of which started last fall and is to be finished in time for the opening of the 2008 season. According to the team's contract with the ISCBA, the Colts' money isn't due until 15 days after the stadium authority's construction spending reaches $300 million. The contract also stipulates the Colts can't be compelled to contribute until May 2007, which would appear to allow ample time to iron out league and players' association issues.

Team owners and NFLPA leaders are expected to huddle during the league's scouting combine in Indianapolis-which runs through Feb. 28-for what both sides are calling a crucial set of meetings that will determine whether the loan matter is settled quickly or gets overshadowed by other labor issues.

"We expect the league to take [the loan] issue up with the players' union soon," said Pete Ward, Colts senior executive vice president. "We don't have a major concern yet."

The NFL's G3 loan program was created in 1999 to help teams build state-ofthe-art, revenue-generating stadiums. The funds come from a share of each NFL team's media revenue and from visiting teams' share of club-seat revenue generated by new stadiums.

Because the visitors' share otherwise would go into the pool of funds shared with players, the union has to approve each loan. The loans are attractive because there's no out-of-pocket expense for the borrowing team. To satisfy the loan, the NFL merely credits revenuesharing payments the team already makes to the league toward the loan's balance.

The NFL's loan program is unlike anything other major leagues offer.

"It's a unique way the NFL owners have come together in support of one another," said Richard Sheehan, a University of Notre Dame economist and author of "Keeping Score: The Economics of Big-Time Sports." "It shows how much more advanced the NFL is than other professional sports leagues."

Owners and NFLPA officials met throughout February discussing a web of issues, including a collective bargaining agreement with players-which determines how big a cut of the money players get-and the revenue-sharing formula among teams.

In addition to the conflict owners and players are embroiled in, small- and large-market teams are squaring off over revenue-sharing issues. Large-market teams like the Cowboys and Washington Redskins want teams to keep a bigger slice of their income from enterprises such as suite sales, premium seating and in-stadium advertising, while small-market teams like the Colts argue more money should go into the revenue-sharing pot to keep all teams competitive and the league healthy.

The battle between the NFLPA and owners ensnaring the G3 loans has taken on a personal tone. Since Cowboys owner Jerry Jones has been one of the main crusaders for allowing owners to keep more of their locally generated money out of the shared pool, NFLPA President Gene Upshaw has promised to hold up Jones' G3 loan and all others until Jones relents.

The G3 loan issue could sit on the back burner indefinitely while other issues are negotiated, league sources said.

John Mara, Giants' executive vice president, told reporters in February if the G3 loan issue isn't ironed out soon, it could have a serious effect on current and pending stadium projects.

"Stadium building time lines can be tricky," said Marc Ganis, president of Chicago-based Sportscorp Ltd., a consulting firm that works closely with the league, its teams and owners. "I think it benefits everybody involved to get the G3 deals approved and have that money available whenever it is needed."

If the league and players' association can't agree on a collective bargaining agreement, the specter of a season without a salary cap looms, something owners want desperately to avoid.

"A lot of things, including these loans, hinge on getting the collective bargaining agreement done," Ganis said.
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