Labor Relations in Sport Sport Finance

1
Labor Relations in SportSport Finance
2
Some Background on Labor

• 1876 was the first organized professional sports
  league (baseball).
• In 1885 they formed the first real union
  National Brotherhood of Professional Ball
  Players.
• Not till 1954 that the Major League Baseball
  Players Association (MLBPA) was formed.

3
Labor Management in Sport

• Basic Elements
• Leagues (Commissioner / Management)
• Individual Teams (Conflict)
• Players
• Player Unions
• Player Agents

4
The Relationships

• Management vs. Union
• Management vs. Teams
• Union vs. Players

5
The Nature of Professional Sport Three Principle
Elements of Professional Sport

• Labor
• Athletes
• Players Union
• Collective Bargaining
• Management
• Teams
• Owners
• Governance
• Leagues
• Oversees business of the sport
• Directs the play (competition)
• (How is this different from other industries?)

6
The Nature of Professional Sport Unique Aspects

• The Labor-Management Relationship
• Historically Contentious
• Baseball the Antitrust Exemption
• Collective Bargaining Between Leagues Players
  Unions
• Minimum / Maximum Salary (Salary Caps)
• Economic Benefits
• Free Agency
• Player Drafts
• Revenue Sharing / Luxury Taxes

7
Player Revenues

• MLB 34, including luxury tax
• NFL 65, part of salary cap agreement
• NBA 57, part of salary cap agreement
• NHL Specific changing after 2006 season

8
Average Salaries

• MLB 2.56 million
• NFL 1.25 million
• NBA 4.54 million
• NHL 1.81 million

9
Baseball

• MLBPA (Strong, well-organized, well-led)
• Reserve Clause
• Arbitration
• Free-agency
• Salary Cap vs. Luxury Tax

10
Football

• Has not had to deal with a Reserve Clause
• Different versions of free-agency
• 1993 Contract
• -restricted free agency (franchise player)
• -hard salary cap
• -player revenue (64) based upon league
  revenues.
• -non-guaranteed contracts (signing bonuses)

11
Hockey

• Jaded history between labor management
• Rookie salary cap, though bonuses weren't capped.
  
• Players had arbitration rights after five years.
• Players generally gained unrestricted free agency
  at age 31.
• Contracts are guaranteed

12
Basketball

• NBA vs. ABA
• Various CBA versions
• Current agreement has soft cap
• WNBA
• Single entity ownership
• Not subject to anti-trust laws

13
College Athletes

• No legal standing
• Issues of taxation insurance
• Not employees (as judged by the economic reality
  test)
• Right to control the employee
• Right to discipline the employee
• Person dependent upon wages (scholarships are
  wages?)
• Integral part of the business (sports integral?)

14
Problem Areas

• Collective Bargaining Agreement (CBA)
• Standard player contract
• League bylaws and rules

15
Collective Bargaining

• The process of employer-union negotiation for
  the purpose of reaching an agreement/contract for
  a specified period.
• All players have to abide by the contract.

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Collective Bargaining

• Typical Elements
• Contract Length
• Compensation
• Utilization of Labor
• Individual Job Rights
• Rights of the Parties
• Administration Enforcement