NFL labor talks extended

NEW YORK (CNNMoney) -- Early March is typically not the most critical time of the year for National Football League teams, players or fans. But this is not a typical year.

Good news for fans came Friday afternoon when the NFL and the NFL Players Association agreed to a one-week contract extension, its second extension in as many days, raising hopes that the two sides that appeared very far apart earlier in the week might be getting closer to an agreement.

Without a new deal or another extension of the current pact, there's a very good chance the union could move to disband itself before the extension ends next Friday evening, which would lay the groundwork for future legal challenges.

Key issues in the labor talks include how teams and players will split an estimated $9 billion in annual income, whether the league will add two additional games, and if there should be limits on salaries for rookies' contracts.

The NFL is so overwhelmingly popular -- this year's Super Bowl was the most watched program in television history -- that the talks have become a major concern for many fans.

President Obama was even asked his view of the labor dispute at a press conference Thursday. NFL-Fan-in-Chief Obama said he believed that billionaire owners and millionaire players "should be able to work it out without the President of the United States intervening."

Here's a quick overview of questions that might be in the minds of many fans.

Why is this a crucial moment for the talks?

The owners have been wanting to get out of the current deal for some time, but they couldn't until it expired. Without a new deal, owners will likely move to lock out the players. In other words, it would be a work stoppage imposed by management rather than the union.

"There's a line of thought [owners] don't want there to be football unless there's a resolution," said Andrew Zimbalist, an economics professor at Smith College and an expert on labor relations in sports.

Even if there is a lockout, there could be a new deal reached between now and August, which would mean business as usual this season.

But few expect a deal any time soon without a new deadline. And the closer to the scheduled start of the season that talks drag on, the better the chance that some games could be cancelled.

A lockout in the National Hockey League wiped out the entire 2004-05 season, while the 1994 strike in baseball that started mid-season cancelled the playoffs and World Series that year. Once labor work stoppages start they can be tough to end.

Why would the union move to disband?

Doing so would open the door for players to sue the 32 teams of the NFL for violating the nation's anti-trust laws by acting together to limit player salaries. The presence of the union and a collective bargaining agreement is the only thing preventing those kinds of legal challenges.

The union used that maneuver in 1989, a move through which the players won the right of free agency -- the ability to sign with the team willing to pay the most money.

There are questions whether such a strategy will work this time, though. The NFL has already filed notice with the National Labor Relations Board that a move by the union to decertify is a sham negotiating ploy.

"It's anyone's guess what would happen," said Gabe Feldman, a law professor at Tulane University and a legal analyst for the NFL Network, a cable channel owned by the league. "We're dealing in uncharted territory here."

If the union does not move to decertify while the current labor agreement is still in force, it would have to wait six months in order to decertify. That's why March 11 is now a critical deadline following the latest extension.

Does decertification make a loss of games more or less likely?

That is not clear.

If it decertifies, the union would be expected to have one of its players sue on anti-trust grounds to prevent owners from shutting down the league. It's not clear if a judge would grant that motion.

Without an injunction, the league could go ahead with its lockout plans, but it wouldn't have a union with which to reach a new labor agreement. That could make restarting games more problematic.

"The two parties have a large difference on economics, but economics are easy to resolve, especially when it's a healthy industry," said Marc Ganis, head of SportsCorp. Ltd., an industry consulting firm. "But a decertified filing increases the possibility that games will be lost because so many legal proceedings have to be resolved."

Feldman said that if the union wins an injunction against a lockout, it could insure fans that the games would proceed as scheduled while the battles are fought in court.

The owners would simply impose the contract terms they want on the players in the absence of any union to oppose them. That's what happened when the union last decertified in 1989.

But Ganis said the legal threat to the owners is too great. If the court found them to be in violation of anti-trust laws they would face paying triple the economic damages. So they would challenge any injunction preventing them from shutting down the game. And Ganis thinks the owners would win.

"Every business group in the country would come out in support of the owners saying 'How can you demand a business operate without knowing its cost and legal exposure?'" said Ganis.

Who would lose during a lockout?

Pretty much everyone involved in the league.

Assistant coaches and non-playing staff with many teams would be laid-off. Stadium staff -- those who sell concessions, take tickets and clean-up after the fans -- would lose those part-time jobs. The players would lose salaries they might never get back since most players only last a few seasons in the league.

Networks and sponsors would have to continue to make about $4 billion in rights fee payments to the league -- even though they don't have any games to broadcast or sell advertising on.

Media companies and advertisers would get that money back after a lockout. But there would be an undeniable ratings hit for CBS (CBS, Fortune 500), News Corp.'s (NWS, Fortune 500) Fox, Comcast's (CMCSA, Fortune 500) NBC and Walt Disney Co.'s (DIS, Fortune 500) ESPN networks.

A judge also ruled earlier this week that the owners won't have access to the rights fees during a lockout. But ratings agency Standard & Poor's said it still believes the league has the financial resources to weather at least a full season without games being played.

The league said the ruling doesn't change its negotiating strategy. "Our clubs are prepared for any contingency, this decision included," the NFL said in a statement.

Some fans, those who buy luxury suites and club seats, would also have to continue to make many of their ticket payments, although once again, they are likely to get refunds for lost games once a work stoppage ends.