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A summary of the book free agency in pro. football.

NFL Free Agency - Overview

A Tutorial - 2018

NFL Free Agency, this is a dream all players have - a day where he can market his services to the highest bidder free of restrictive covenants that lock a player down to a certain team for a definite period of time.

Free agency is the opposite of "restricted agent". "Free Agency" means  a professional athlete who is not under contract and is free to auction off his or her services and sign a contract with the team that offers the most money. (dictionary.com)
A "Restricted Player" means , in the National Football League, a Restricted free agent (RFA) is one with three accrued seasons of service, who has received a "qualifying" offer (a salary level predetermined by the Collective Bargaining Agreement between the league and its players, known as a "tender") from his current club. He can negotiate with any club through a certain date. If the restricted free agent accepts an offer sheet from a new club, his old club has "right of first refusal," a five-day period in which it may match the offer and retain him, or choose not to match the offer, in which case it may receive one or more draft picks for the upcoming draft from the player's new club. If an offer sheet is not executed, the player's rights revert to his old club the day after negotiations must end. (Wikipedia.com)
So a free agent is one who, absent a contract with an NFL team, is free to market his services to the highest bidder. A restricted free agent, to the contrary, cannot market his services to the highest bidder absent player restraints even though he does not have a contract with his current team.
It's hard to explain because it should not exist. There should not be the case where players are locked to a team, absent a contract, for a certain period of time. That is unheard of in today's day and time, and difficult to grapple. But, that is the case in the NFL. Even absent a contract, a player can be locked into a certain team for a period of time. (i.e. a "Restricted Free Agent").

Because this is unheard of, and is the case in the NFL, much litigation has been fought over this issue. In most cases, the players have won. However, because the player restrictions are in the collective bargaining agreement, in some cases the players have lost their pursuit of free agency, in lieu of the collective bargaining agreement.
The players have won the cases in "antitrust" litigation. However, they have lost in labor law decisions. These cases are called the "NFL Free Agency Litigation" and have been going on for over fifty years now. More will be said about each keynote case in the future of this write up, but for now, an overview of antitrust laws and labor relations is required.

What is "antitrust"? Well, that's easy; yet, that's hard to define.
To make it simple, antitrust is the following: A "trust" is an agreement between parties to curtail competition. Thus, to put it simply, it follows that "anti-trust" makes it illegal to impede competition. This is because our country is a capitalist nation that values free competition in the marketplace for services and products. This brings about the best products, prices, and innovations in the marketplace for our one dollar. Henry Ford said, ""Competition is the keen cutting edge of business, always shaving away at costs." Thus, competition is seen as a price saver in a capitalistic society.
This is called "antitrust", or anti-competition laws. (England calls it anti-competition laws.) To put it in the words of John Sherman, the Senator to which the laws are named after (i.e. the "Sherman Laws of 1890"); "If we will not endure a King as a political power, we should not endure a King over the production, transportation, and sale of any necessaries of life." [Senator John Sherman regarding the new antitrust legislation proposed by Congress.]
Some examples of per se violations of antitrust/Sherman Laws are as follows. First, "price fixing" is a per se violation of antitrust laws. Say for example Coca-Cola and Pepsi got together an set a price for their product at .50 cents higher than the industry average that competition between the two promotes. That would be price fixing and is illegal under the Sherman Act.
A second example of per se violations to the antitrust laws are "group boycotts". For example, a local newspaper (the only one in town) creates a rule that it will not accept advertising from people who also advertise in its rival local newspaper. That was found to be illegal in the Court System and is known as a "group boycott". This is also called "refusing to deal" contracts.
So that seems pretty simple, doesn't it? Here's where it gets hard. i.e. the NFL example. Antitrust is simple in theory, but impossible in practice. Take for example simple partnerships. Simple partnerships are obviously contracts that curtail competition, right? So why are these not forbidden under antitrust scrutiny?
This is because of the "Rule of Reason" analysis applied to the case law in antitrust cases. A Rule of Reason analysis asks if the potentially violating rule has a reasonable basis that is consistent with antitrust laws. For example, partnerships have been found to actually foster competition. So even though these are technical violations of antitrust laws on the face of the complaint, in common practice they have been found to be consistent with the tenants of antitrust laws. Thus, partnerships, under a "Rule of Reason" analysis, have been found to be legal in the United States.
Another good example of where antitrust law gets technical is the NFL case law itself. Even though, an agreement amongst 28 to 32 owners of professional football teams to not play a player if he violates an unwritten contract between himself and the team is per se a group boycott and, therefore, a violation of antitrust laws; it has been found to be legal in at least one court case regarding the NFL.
This is because there is another rule in antitrust analysis that states if a market is too new or novel to the typical antitrust marketplace for services, it is given a "Rule of Reason" analysis, even though the violation might technically be a per se one. Thus, in the NFL, the Court found the industry of professional sports to be too novel to apply rigid antitrust market rules and circumstances. (See, Mackey vs. NFL, and McNeil vs. NFL, these cases are highlighted later in this write up.) Consequently, a "Rule of Reason" balancing act was applied instead even though there is no doubt that the act of blocking the professional dealings with a player by team owners in mass is a violation of antitrust laws.
Weird right? It gets worse. Also, in reality, the NFL was also insulated from antitrust law suit by a "non-statutory labor exemption" to antitrust laws. This exemption provides if a collective bargaining agreement contains the potential violation and if the agreement meets certain criteria, then the violating party is exempt from antitrust laws by the "non-statutory labor exemption".
Strange but true, thus in the case of the NFL, in at least one case, (The Powell Decision), the NFL was immune from antitrust scrutiny, despite a technical violation of the laws, because the restraint of trade came up in a collective bargaining agreement agreed to by the players and management, after bona fide, arm's-length negotiations, that involved only the two parties to the antitrust law suit. In that case, the NFL was protected from antitrust scrutiny. (The Powell decision, discussed later in this write up).
So now, the antitrust laws, are not as clear as these seem at first brush. Very frustrating, but this is what you need to know to understand the NFL cases that follows.

Now that you have been thoroughly confused - with the antitrust information provided above - lets throw another wrench into the program: "Labor Relations". Labor law is important because that is the arena or field for which the NFL and Players are always fighting to gain more or less ground in the free agency issue.
Simply put, the NFL and Players are negotiating collective bargaining agreements when the passionate issue of free agency rears its ugly head. They are "at the table" in talks about better wages, hours, and terms and conditions of employment. i.e. "Labor Relations".
Labor Relations is a specific term that governs the relationship between employees (usually represented by a "Union") and "management", in this case the "NFL". Both parties agree to meet to discuss wages, hours, and terms and conditions of employment in a structured setting. This setting, "the negotiations table", comes into play sporadically in the relationship between management and employees as their collective bargaining agreement expires.
A "collective bargaining agreement" is an agreement between Union and Management regarding the terms and conditions, wages, and hours of employment. Essentially, the terms and agreements made at the table are codified into a "Memorandum of Understanding" or an "Agreement" between the parties. This is called the "Collective Bargaining Agreement".
Take for example the NFL. The NFL is the "Management". The NFLPA (National Football League Players' Association) is the players' representative, or "Union". The NFL and NFLPA get together periodically to discuss wages, hours, and terms and conditions of employment. This usually happens every 1 to 3 years. However, in the case of the NFL, the contracts tend to be ten year agreements.
This is called "Labor Relations". It's codified in the 1935 National Labor Relations Act (N.L.R.A.) It's a specific function undertaking by Union and Management to "get to resolve". It usually involves wages, hours, benefits, time off, and terms and conditions of employment.
So, when, in antitrust litigation, the Court refers to labor relations exempting the NFL from antitrust scrutiny, it refers to the above-specific negotiations and relationship between the parties.
Thus, you must understand "labor relations" to truly understand the Free Agency Issue. This is because the issue of free agency is a very passionate one for the Union. The Union raises it at every contract negotiations. Basically, in every case of negotiations since the start of the Union in the late 60's, the parties (the NFL and NFLPA) have reached "impasse" regarding the free agency issue.
Impasse means a situation in which no progress is possible, especially because of disagreement; a deadlock. That happens all the time in the case of the NFL/Players negotiations. The issue of free agency is a very passionate one for the players. The right to restrict the players is a very loyal one for the management. There is "no meeting of the minds" regarding this issue.
So many times, the Players or Union has had to sue Management/the NFL in the court system to ask for help in resolving the impasse. (The Mackey Decision, McNeil Decision, Powell Case, and others are examples of this in past 50 years.)
This is unheard of in the field of labor relations. But, like stated above in the antitrust insights, the NFL is a novel industry. Built on the legs of a monopoly, the NFL is a giant to contend with. One that the Union cannot contend with on equal grounds. So, unlike typical Union negotiations, to which I have been a part of many of these, in the case of the NFL, these almost always have ended up in protracted court case disputes.
The key case the Union/players have relied upon in the past, has been antitrust violations. Hence, the above information on antitrust. These cases are very expensive, paperwork intensive, and time consuming. (It can take up to 5 years to resolve a contract dispute in the NFL. In normal practice, it takes six months and is usually resolved quickly with a strike or mediation resolution.)

The second reason you must be familiar with labor relations is it comes up in the course of the free agency antitrust litigation, as already mentioned above. In at least one case, the NFL has won because the court concluded since the parties have a valid collective bargaining agreement that covers the scope of player restrictions, the NFL is protected or shielded from antitrust laws by this agreement.
This is called the "Non-statutory Labor Exemption" to antitrust laws. It shields the violating party from antitrust recourse because the court has found that the NLRA trumps Antitrust Laws, or the Sherman Act of 1890. It has concluded that the NLRA has mechanisms in place to reach resolve on the antitrust issues via contract negotiations. Thus, in the case of a collective bargaining agreement, no avenue is available to pursue antitrust violations within that contract. Strange, but true, it is the current status of the law today.
So, when the respective antitrust parties have a collective bargaining agreement in place that explicitly covers the terms of the conflicting agreement, that agreement prevails over antitrust laws, and the violator is immune from prosecution.
That's the gest of the federal labor laws and how these impact the NFL sports arena for free agency.
Now that you know a little bit about antitrust and labor laws, let's take a deeper look at the relevant case law surrounding the free agency issue.

The Radovich decision is important because it paved the way for players to sue in antitrust for free agency rights.
This was a United States Supreme Court decision. It stated, unlike Major League Baseball ("MLB"), in the NFL the players can sue in the Court System for antitrust violations. In MLB, the owners are immune from antitrust case law by the Supreme Court's assessment of the Act in the Federal Base Ball case and Toolson Decision. (This was reinforced in the 1980's with the current Kuhn Supreme Court decision.)
In professional baseball, the court system found there was not interstate market borders crossed to warrant federal intervention. Thus, the Supreme Court carved out a court mandated exception to the antitrust laws for MLB. It did not, however, extend this exception to professional football.
In declining to do so, the US Supreme Court noted that no legislation came out from Congress that exempted pro sports after the Toolson/Federal Base Ball decision. However, it noted four times where Congress reviewed such enactments. Therefore, it found if Congress had intended the Sherman Act to exempt pro sports from it, then Congress would have said so. Thus, it found in favor of the player, Radovich, that he had standing to file a case in the federal court system for antitrust claims against the NFL.
This was called the Radovich decision. It's the crutch from which all cases stand upon in the Court System today regarding the NFL antitrust issues. If the Court had ruled differently, the players would have had no recourse today to pursue their claims.

The next case to appear in Court regarding the NFL Free Agency issue was the Mackey decision. That case began when the Union was new to the players. They appealed for free agency rights in contract negotiations with the NFL but to no avail. They could not get anywhere with the NFL during their negotiations. So, instead of settling the claim, the young NFLPA took the NFL to court for violations of the antitrust laws.
In the case, the young players' union made it clear that they had asked for free agency issues at the table and that nothing had come from it from the NFL side. They sought damages and a ruling that the restriction on players' movement be found to be a violation of antitrust laws. (An unreasonable restraint of trade in violation of section 1 of the Sherman Act of 1890.)
The NFL fought hard to retain their Rule, the Pete Rozelle Rule, which advocates for the reserve of players to a team even after their contract expires, unless adequate compensation could be afforded by the new team to the old team that, in effect, "owned" the player. This was called the Pete Rozelle Rule because it was named after the Commission who oversaw it, "Pete Rozelle".
In the end, the Court ruled in favor of the players, stating the Rozelle Rule was a violation of antitrust law. In doing so, they went through the following analysis.
First, the Court of Appeals ruled that the market for players' services was protected by antitrust laws. i.e. The players had standing to sue. Second, they ruled that the non-statutory labor exemption did apply here, but in the case, the Union clearly did not agree to the Pete Rozelle Rule in bona fide, arm's-length negotiation so the NFL was not afforded the protection of this immunity. Third, the court held that since the NFL was a novel industry, i.e. not a typical situation under the purview of the antitrust laws, it would not be subject to per se findings of antitrust violations like the lower court thought should be the case. It instead would be subject to a Rule of Reason analysis to determine whether the NFL violated the Sherman Act of 1890, or the antitrust laws.
Finally, the Court of Appeals decided that under the Rule of Reason Analysis, the NFL did violate antitrust laws. It found this because it concluded less intrusive means were available to achieve the ends of competitive balance. It also did not find compelling the argument raised by the NFL that free agency led to higher scouting and business costs. The Court stated, unsympathetically, that this was just a standard cost of doing business and did not justify law-breaking measures/extremes. Finally, the Court found the Rozelle Rule to be unreasonable in time and duration and in complexity, finding it to be overly broad and too complex for the situation at hand.
Thus, the Court of Appeals ruled for the players and player restrictions were renounced. This was not questioned by the U.S. Supreme Court when the NFL raised the issue to appeal. (i.e. The Supreme Court denied certiorari.)
So the Players won that case and the young Union got a resounding victory in their first 10 years of representing the players. Strike one for the NFL.
However, even though the players won, they quickly gave away their rights in the Class Action Reynolds Case. That case concluded and ended the Mackey case. It was a class action raised by the players for damages and injunctions based on the Mackey decision.
The NFL made a brilliant move here. It settled the case for substantial money and forced the inclusion of player restrictions into the collective bargaining agreement in concession to that pay. This was brilliant because the NFL would have paid for a settlement anyway. Afterall, they did lose the Mackey decision. Not only did they settle the issue without a final determination against them (of an injunction forbidding them from using player restrictions); they also got new language in the collective bargaining agreement that added a modified version of the Pete Rozelle Rule to the contract.
(This is what the Court said the NFL lacked in the first case.) Strike one for the Players. So back to the table they went to get better work conditions, free from the tyranny of player restrictions.

Back to work went the players. And back to the table went the Union, to get better conditions of employment for the players. This led to the 57 day strike of 1988. The main cause of this strike was - believe it or not - player dignity issues: i.e. total Free Agency for the players.
The strike however failed and the players crossed the picket line and returned to work. (The NFL merely hired "scab" players to play during the time when the players were out. The strike probably would have worked had the players stuck to it, because the fans were not happy with the scab players. But the players caved in, so the Union needed another recourse.
Enters the Powell litigation to the scene. The Powell case was filed upon the players return to the field. It was filed by the Union on behalf of the players. This was done in 1989, after the failure of the 1988 strike. The Union proceeded just like the Mackey case.
But this time, the facts had changed. Now the Union was a mature force to contend with. And, more importantly, the parties had signed a formal collective bargaining agreement that restrained trade.
This time, unlike the Mackey Case, the Court of Appeals held for the NFL, finding against the players and the players' association. It found this solely because there was a collective bargaining agreement in place that shielded the NFL from antitrust litigation.
This was called the "non-statutory labor exemption". It's a court-driven rule that protects parties like the NFL from antitrust suits when the provision or agreement called to question is a bona fide part of a collective bargaining agreement.
This non-statutory labor exemption was applied to the NFL/NFLPA's case, and, despite the fact the NFL was in blatant violation of the antitrust laws, shielded the NFL from trial on the issue of antitrust violations.
The Court reasoned that, because there was agreement on the issue, the parties had to redress any wrongs related to this agreement via the national labor relations system in place in our nation, not through antitrust law suits. The Court, in doing so, found it unfair that the NFLPA/players could use all the weapons available in labor law, then turn around and file an antitrust case when the weapons failed or became ineffective. They reasoned the players were playing from "both sides of the Courts".
This decision came despite the fact the players and management had reached impasse on the issue of Free Agency. This meant they had hit a wall in negotiations that could not be surmounted by either side. They were at a stand-still, and no side could move regarding the issue of free agency.
This controversial decision held even after impasse, the "non-statutory labor exemption" applied. This is hard to accommodate in real life, because the natural question becomes, what is the line in the sand to which the non-statutory rule does not apply, and antitrust law prevails? It seems impasse would be it. In fact, the District Court held precisely that. But the Court of Appeals, in their expertise, concluded as long as the parties were still meeting/negotiating, the non-statutory labor exemption applied.
This was a very controversial decision where the players/Union lost the case, despite a compelling argument for antitrust violations that existed. But, give up? They did not. The players came back with a brand, new weapon.
This weapon was novel to the labor law/sports law industry. It had never been done before as a tactic for antitrust purview. It was Union de-certification. The Union actually de-certified itself as the exclusive union representative for the players. The players voted resoundingly to de-certify the Union. And, de-certified, they were! To the amazement of everyone, including the NFL, the players proceeded to de-certify themselves in the NLRB (National Labor Relations Board) and proceeded to file a law suit, without the mastery of their Union representative.
(The Union still represented the players as an "association", and provided legal counsel thereto.) It's just, there was no other way to proceed. The Judges basically stated in the Powell decision that the Union would have to be de-certified to get around the "non-statutory labor exemption". So that's what they did: de-certify.

THE          MCNEIL CASE OF 1992
This led to the McNeil case of 1992. This case was filed by eight professional football players against the NFL for violations of antitrust laws because of the players' restrictions in the collective bargaining agreement. This case was called the "McNeil case", after the named plaintiff Freeman McNeil. It demanded damages for the perceived antitrust violations and injunctions against the NFL for illegally restraining the trade of players, against the antitrust laws of America.
First, the Court System had to decide whether it was now legal for the players to sue the NFL, based on the Powell decision. It found, that absent a Union, the players had standing to sue the NFL in the court system for antitrust violations, under the Radovich decision.
Second, the court had to determine whether the NFL was in violation of the Sherman Act of 1890, i.e. the antitrust laws. It did this by consulting a trial of its peers to determine whether the facts where a violation of antitrust laws in this case.
The Rule in question was the "Right of First Refusal/Compensation Rule" found in the collective bargaining agreement. This Rule stated, even after a contract had expired, a team could still exercise control over a player by first refusing a new contract proposed by an opposing team or by getting compensation from the new team if they chose not to reject the initial contract. (In rejecting the contract, under the right of first refusal, the former team had to agree to pay the new terms of the contract to the players.)
This was called the Right of First Refusal/Compensation System. It was now in the collective bargaining agreement. Management wanted to make changes to it. The Union wanted it out of the new contract.
This was different from the Pete Rozelle Rule. The Pete Rozelle Rule gave the universal right of teams to perpetually "own" a player, even after their contract expired. It applied to all players for an unspecified duration. If a new team acquired a player under restraints by a former team, the old team would then be compensated by the Commissioner - then Pete Rozelle - for draft picks etc. in the future to pay them back for their loss. This was the dreaded "Pete Rozelle Rule". Except for the fact the players did get paid for their new arrangements, this was akin to "chattel" in the old days of slavery. It's hard to believe such a dynamic and trend-setting company, like the NFL, could be so backwards in their hiring practices.
So in defense of the players/Union, the Right of First Refusal was much better for the players than its former counterpart.
But, this more reasonable approach, did not prevent the jury from ruling in favor of the NFLPA. In fact, it ruled entirely for the players in this regard. It found the Rule to be unreasonable and a violation of antitrust laws. It found damages (which are trebled in antitrust law) on behalf of at least five of the eight players. The only place it found for the NFL to be exact was it did find it was reasonable for the NFL to desire competitive balance in the industry.
The NFL had argued the rationale that made the Right of First Refusal reasonable was that it promoted competitive balance in the league. It argued without this balance, the league would falter and most certainly fail, as big teams, winning teams, and big market teams captured the eyes and wallets of most players, they would gravitate towards the big teams and leave disparity and imbalance in the League. This would lead to fewer and fewer viewers and an eventual demise of the NFL as we know it today. The NFL argued this competitive balance and continuity was critical to its success. The jury agreed. Competitive balance was a "reasonable concern" of the NFL.
The jury just found that the Right of First Refusal was too restrictive a means to bring about this balance within the NFL. Other ways would bring about the same result, but be less intrusive on the player. (Salary Caps, etc.) In the end, the jury found the Right of First Refusal to be too intrusive to meet the purported ends of the NFL.
The Players had once again prevailed. This was followed by the Jackson case of 1994 where the Judge enjoined the NFL from exercising restrictions and granted limited free agency to the players of that suit for four days to obtain new contracts, free from the restrictions from other teams. All four players in this suit received better deal, absent player restrictions.
What happened then shocked the world, the players settled the case. They re-certified the Union, went back to the table, and settled the players' contract. This was done for a substantial pay out, in the Reggie White Class Action decision of 1994. A pay out of over $400 million dollars to the players in damages, settlement, and fees.
In reality, the teams were negotiating the whole time in the settlement meetings to the McNeil case. They finally reached resolve immediately after the McNeil case and head for the table with new language and resolve.
This was at the cost of freedom, but this new language was at the price of the free agency struggle. The players were winning and making headway at the table. They were also getting a lot of money in short term settlements to boot.
But this freedom was quite costly. It takes a typical adversarial, acrimonious union/management environment 6 months to a 1 year to settle their case. This is when conditions are at the worst. Usually, the Union will strike. The parties will bring in a mediator, and the parties will settle the dispute. In some cases by arbitrator, a mandatory binding decision on both parties. In other cases, by mediator, a voluntary settlement where the parties can agree or disagree with the final outcome of the arrangements. This is called federal mediation. It is very typical in business oriented contract negotiations.
But, like the Court wisely said, the NFL is not a typical business. As the court stated, it's a monopoly that has all the time in the world. Plus, sports, by its nature, is different from business. So, what takes one year at the most in reality, takes five in the NFL. That's crazy. To explain how hard that is for the Union to meet, the Union Executive Director, Gene Upshaw, had to mortgage his house during the negotiations regarding the Powell decision to withstand the time period of hold out during the contract talks. An atypical business, and an atypical contract negotiations - that is the NFL for you.
So the players won this round again, but later lost it again in the contract again, as a result of the McNeil Decision.

So now that you know the contentious 50 year history of negotiations regarding free agency, where is it at today? First of all, it should be noted that again the players sued at the end of a contract negotiation for free agency. This is called the Brady Settlement. Brady because the lead plaintiff was "Tom Brady". Settlement because the parties settled it with the new 2012 collective bargaining agreement. (Yea, they finally settled without five years of litigation.)
The Brady case came about in 2011 when Tom Brady and others (including Peyton Manning) sued the NFL for free agency violations and to get the Court to force the NFL to lift the player team lock out that reigned supreme in 2011.
In 2011, the NFL locked the players off the field, so they could get some contract objectives, as per their right under the National Labor Relations Act. (the NLRA). The players then de-certified themselves from the Union and sued the NFL in the Court System for antitrust violations. (i.e. the Brady Case).
This case, unlike the prior cases however, settled out of court with a new collective bargaining agreement that spanned ten years.
In this new contract, players were now only restricted, absent a contract, to 4 seasons in the NFL, then they could freely market their services to any other team in the League. The only exception was the "Franchise Tag" that can be placed on one player per team per year that prohibits player movement of that player for a high price tag. (The cost is the median of the top 5 NFL players in the player's position, or a 120% raise, whatever is higher. If the NFL restrains the player for a third time with the Franchise Tag, the team has to pay 144% of the employee's wages. It's a very expensive cost to pay for player restrictions, but the restrictions still exist to this day.)
There is also a Transition Tag that may be applied, in lieu of the Franchise Tag. I will not go into the details of this but it applies a lesser exception to the Franchise Tag, but it also enables more player mobility within the rule.

So player restrictions still exist but the status is much better than the prior tyranny of the Rozelle Rule. This was all garnered via expensive trial litigation. Every step forward for the players is also one step back. But, they have made progress. So much that a players representative was telling me free agency might not be the biggest issue in the 2021 contract negotiations. But, given the state that the average player plays 3.3 years for the NFL; also, the average quarterback plays only 4.4 years with the NFL; chances are it is still top on the Players' Union's list of complaints.
More can be found regarding the above information at my web site: www.nflfreedom.com.
         17NFL          FREEDOM | c 2018, www.nflfreedom.com

© Copyright 2018 Jodi J. Woodruff (azuriidesigns at Writing.Com). All rights reserved.
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