Archive for the ‘ Crisis Management ’ Category

The NFL and the NFLPA: The Significance of the Current Collective Bargaining Process and a Collection of Relevant Legal and Ethical Issues (Part 5: Conclusions and Bibliography.)

 

As the lights go out in Cowboys Stadium at the conclusion of Super Bowl XLV, the clock will be ticking for both sides to finalize a new collective bargaining agreement.

Conclusions: A Final Assessment of Each Side’s Arguments and a Second Look through the Legal Lens at the History of Collective Bargaining in the NFL

League revenue reached $4.3 billion in 2001, exceeded $6 billion in 2005, and passed $8 billion at the end of fiscal 2009 (Lee, p. 87).  Certainly, there are signs of growth throughout the league, though the Packers’ arguments regarding rising operational costs and player costs that are growing faster than net income stand as legitimate concerns for team owners.  Since teams – except the publicly owned Green Bay Packers – refuse to open their accounting books for all to see, a lack of transparency prevents analysts from achieving a clear understanding of the debate over a new collective bargaining agreement.  The most valid position – in logical terms, the only side offering enough evidence to form a valid argument – regarding revenue-sharing in the battle between NFL management and players belongs to the NFLPA when we rely on the sources I chose for this project.  Statistical analyses, such as a multiple regression of team revenue, retained earnings, player costs, and net income across the league would help resolve the argument between the NFL and the players’ union, since inferences could be drawn from the entire population of thirty-two teams.  With only one team’s financial data, however, statistical conclusions cannot be drawn with any confidence; in other words, analysts cannot extrapolate figures for the rest of the league from the Green Bay Packers’ financial statements.  Arguments are strong on both sides regarding an 18-game season and a rookie salary cap, but the owners’ position on revenue-sharing forces the union to accept claims of financial hardship without many references to concrete financial data.

At this point, the NFLPA may choose to decertify and use antitrust laws to sue the NFL.  “If the NFLPA were to decertify, it would, in effect, operate as a trade organization but cease to be a union,” writes Liz Mullen of the Sports Business Journal (2010, p. 27).  The union is gaining player support to exercise the option to decertify and impose a firm deadline for owners to act, since it must sue before the CBA expires or it will have to wait six months after 3 March 2010 to pursue legal action (Mullen, 2010, p. 27).

Should the union decertify, though, the NFL could gain the upper hand.  In 1989, the

An artist's rendition of the NFLPA's Demaurice Smith as found on the Sports Illustrated website.

NFLPA decertified “only to become a union again in 1993, after it won a jury trial in the Reggie White v. NFL case,” according to Mullen (2010, p. 27). The NFLPA would also relinquish its ability to collectively bargain and represent players before the league, collect dues, and lose players’ licensing and marketing rights (Mullen, 2010, p. 27).  Nevertheless, decertification would “allow the union to legally challenge any NFL plan to unilaterally implement a new labor system” (Mullen, 2010, p. 27).  If the NFLPA sued and used antitrust laws, the league could defend itself by using the “single entity defense” since the “Supreme Court ruled that a single entity cannot conspire with itself in violation… of the Sherman Act” (Kahn, 2009, p. 860).  Even though the NFL has a defense from antitrust laws, the NFLPA could persist and hope for an outcome similar to the Curt Flood Act, “named after the player who had unsuccessfully sued [Major League Baseball] under antitrust laws in 1972, which removed baseball’s antitrust exemption in labor matters” (Kahn, 2009, p. 862).

The outcome could be even more positive for the players, however.  Kahn’s study shows how the NFLPA could succeed if it took the NFL to court over antitrust laws.  Player payroll rose from 41% of league revenue in 1990 to 67% in 1996: a direct result of the union decertifying and taking the league to court over alleged violations of federal antitrust laws (Kahn, 2009, p. 874).  The NFL argues that union decertification would be a “sham” and would be caused by the union’s efforts to gain access to antitrust laws, but regarding decertification, “the [Supreme] Court left open the possibility of future labor-related antitrust suits” under such circumstances (Kahn, 2009, p. 875).  Therefore, the NFLPA has a strong option in decertification.

In all, the NFLPA has valid and strong arguments regarding revenue-sharing and an 18-game season, especially when the history of NFL collective bargaining is viewed from a legal perspective.  Both sides could benefit from collective bargaining and resolving the matter before 3 March 2011, but if the dispute between the union and team owners goes to federal court, anything could happen.  The NFLPA could win big like in 1993; or, in the event of a loss in court, it could set a precedent that would not allow unions to decertify only to gain access to antitrust laws.  On the other hand, the NFL could be shielded from antitrust laws by the “single entity” defense and defeat the NFLPA in federal court; however, if the NFL cannot win in court, the league could lose its antitrust exemption like Major League Baseball in 1972 with the Curt Flood Act.

Though several other legal and ethical issues define the current collective bargaining process – including the battle between owners involving revenue-sharing among the NFL’s thirty-two teams – over the past five weeks in this five-part report we have taken a broad look at literature that reveals certain intricacies of the debate on the CBA.  Below my signature, please find the bibliography of sources I examined for this analysis.  I hope you now have a clearer understanding of the NFL’s current collective bargaining process, and if there are any questions or comments, please feel free to post them here or send me an email.

Cam Suarez-Bitar.

Bibliography

Aikman, Troy.  (2009, August 31).  Enjoy This Season: Labor Pains Could be Right Around the Corner.  Sporting News, 233(19/20), p. 43. (http://content.ebscohost.com/ContentServer.asp?T=P& P=AN& K=44002287& EbscoContent=dGJyMMvl7ESep7M4zOX0OLCmr0ieqK9Srq%2B4TLeWxWXS& ContentCustomer=dGJyMPGus0mxrLVRuePfgeyx%2BEu3q64A& D=aph )

Associated Press.  Colts’ Bill Polian: NFL’s 18-Game Season is “Fait Accompli.” (2010, September 28) USA Today, Sports, NFL, (http://www.usatoday.com/sports/football/nfl/2010-09-27-bill-polian-18-game-season_N.htm)

Associated Press.  Goodell Pushes for a New Stadium in Atlanta.  (2010, November 11).  ESPN.com, (http://sports.espn.go.com/espn/wire?section=nfl&id=5793484)

Associated Press.  Goodell: Rookie Pay Scale “Ridiculous.”  (2008).  NFL.com, (http://www.nfl.com/news/story?confirm=true&id=09000d5d80909cc9&template=with-video)

Baschnagel, Charles N.  An Analysis of the Effects of the 1993 NFL Salary Cap on Competitive Balance and League Revenue: Has anticompetitive behavior led to better competition? Available from Ebscohost database.

Dividing Line is Drawn.  (2010, March 3).  USA Today, Sports p. 1c.

Green Bay Packers Audit performed by the Wisconsin Legislative Audit Bureau, 1999.  Retrieved from Google.com search for “Green Bay Packers financial statements.”  File found online in .pdf format.

Kahn, Lawrence M.  (2009).  Sports, Antitrust Enforcement, and Collective Bargaining.  The Antitrust Bulletin, 54(4), p. 857-881. (http://proquest.umi.com/pqdweb?did=1973216451& Fmt=6& VInst=PROD& VType=PQD& RQT=309& VName=PQD& )

Kaplan, Daniel.  (2010, November 1).  NFL Pools $900M for Labor Fight.  Sports Business Journal, 13(27), p.1, p. 36.

King, Peter.  (2010, October 18).  The Gathering Storm.  Sports Illustrated, 113(14), p. 44-46.

Kuriloff, Aaron.  (2010, July 14).  Green Bay Packers Net Income Rises 30% in Annual Report Amid Labor Talks. Bloomberg.com, (http://www.bloomberg.com/news/2010-07-14/green-bay-packers-net-income-rises-30-in-annual-report-amid-labor-talks.html)

La Canfora, Jason.  (2010, July 14).  Pack Thriving and Suffering, Depending on Who’s Reading Ledger.  NFL.com, (http://www.nfl.com/news/story/09000d5d8191f3cb/article/pack-thriving-and-suffering-depending-on-whos-reading-ledger)

La Canfora, Jason.  (2010, July 14).  Packers Cite Player Costs in $10.3 Million Drop in Operating Profit. NFL.com, (http://www.nfl.com/news/story/09000d5d8191dcca/article/packers-cite-player-costs-in-drop-in-operating-profit)

Labor is Focus at NFL Meeting. (2009, March 24).  USA Today, p. 10c.

Lee, Travis.  (2010).  Competitive Balance in the National Football League After the 1993 Collective Bargaining Agreement.  Journal of Sports Economics, 11(1), p. 77-88. DOI 10.1177/1527002509336207 545MN

Lobdell, Colin.  (2010, October 23).  Can NFL Players Survive an 18-Game Season? Bleacher Report. (http://bleacherreport.com/articles/499818-can-nfl-players-survive-an-18-game-season)

Mullen, Liz.  (2010, November 1).  Labor Uncertainty, Reluctant Recruits Hampering Agents.  Sports Business Journal, (https://www.sportsbusinessjournal.com/article/67304)

Mullen, Liz.  (2010, September 13).  Union Seeks Authority to Decertify.  Sports Business Journal, 13(20), p. 27.

Murphy, Nick.  (2010, November 4).  Guest Column by Nick Murphy: The Numbers Don’t Lie.  Retrieved November 5, 2010 from NFLPlayers.com.  (http://www.nflplayers.com/Articles/CBA-News/Guest-Column-by-Nick-Murphy-The-Numbers-Dont-Lie/)

NFL.com.  (2006-2010).  NFL Collective Bargaining Agreement 2006-2010. Available from NFL.com database.  Searched Google.com for “current NFL collective bargaining agreement” – results: static.nfl.com/static/content/public/…/cba/nflcba-2006-2012.pdf

NFLPlayers.com.  (2010).  Breaking News: Player Breaks Down Revenue Discrepancy.  Retrieved November 5, 2010 from NFLPA.com database. (http://www.nflplayers.com/Articles/CBA-News/Breaking-News-Player-Breaks-Down-Revenue-Discrepancy/)

NFLPlayers.com.  (2010, June 16).  Lewis, Brady Sound Off on Potential Expanded Season.  Retrieved November 4, 2010, from NFLPA.com database.  (http://www.nflplayers.com/Articles/CBA-News/Lewis-Brady-Sound-Off-on-Potential-Expanded-Season/)

NFLPlayers.com.  (2010). NFLPA Lockout Central. Retrieved November 5, 2010, from NFLPA.com database. (http://www.nflplayers.com/about-us/2011-Lockout-Central/)

NFLPlayers.com.  (2010).  Taxpayer Subsidies for NFL Stadiums.  NFLPA.com, (http://www.nflplayers.com/Articles/CBA-News/Taxpayer-Subsidies-for-NFL-Stadiums/)

NFLPlayers.com.  (2010).  Players’ Workers Compensation Issues.  Retrieved November 5, 2010, from NFLPA.com database. (http://images.nflplayers.com/mediaResources/files/Workers%20Comp_FACTS.pdf)

Players Knock Goodell During Camp Tour. (2010, August 10).  USA Today, Sports p. 3c.

Roberts, Gary R.  (1988).  The Evolving Confusion of Professional Sports Antitrust, the Rule of Reason, and the Doctrine of Ancillary Restraints.  Southern California Law Review, 61 S. Cal. L. Rev. 943.

Schiess, Wayne.  (2010).  Advice for Drafting a New NFL Collective Bargaining Agreement.  Texas Review of Entertainment & Sports Law11(2), p.205-217.  (http://content.ebscohost.com/ContentServer.asp?T=P& P=AN& K=51229487& EbscoContent=dGJyMMvl7ESep7M4zOX0OLCmr0iep7ZSs6e4S7CWxWXS& ContentCustomer=dGJyMPGus0mxrLVRuePfgeyx%2BEu3q64A& D=aph )

Standstill Irks Union Leader.  (2009, September 9).  USA Today, Sports p. 10c.

Trotter, Jim.  (2010, September 20).  Going Digital.  Sports Illustrated, 113(10), p. 14

Walker, Don.  (2010, July 14).  Packers’ Worth, Worries Up.  Wall Street Journal, (http://www.jsonline.com/sports/packers/98472199.html)

Wilner, Barry.  (2010, October 13).  NFL Owners Show Optimism About Reaching a New CBA.  Yahoo! Sports, (http://sports.yahoo.com/nfl/news?slug=ap-nflmeetings)

 

Just under two months remain before the current CBA expires. Negotiations are heating up between the owners and the NFLPA.

The NFL and the NFLPA: The Significance of the Current Collective Bargaining Process and a Collection of Relevant Legal and Ethical Issues (Part 4: The 18-Game Season and Rookie Salaries.)

 

Tom Brady has expressed his concern over an 18 game season.

The 18-Game Schedule and Rookie Salaries

a) The Owners’ Perspective

To football fans anywhere, two more regular season games would sound like a gift from the Almighty.  Owners are well aware of this and hope to grow revenue by expanding the schedule to 18 regular season games.  Indianapolis Colts President Bill Polian considers the 18-game season an inevitable outcome of the collective bargaining process (Associated Press, Colts’ Bill Polian: NFL’s 18-game Season is “Fait Accompli,” 2010).  “I think that the owners, and principally the commissioner, have decided that it’s the way to go, and so the debate, such as it was, is over,” said Bill Polian to the Associated Press (2010).  Both games will be the result of a swap: essentially, two preseason games will be eliminated and two regular season games added to the official schedule.  NFL Spokesman Greg Aiello wrote once that 18-game football seasons are nothing new, since the CFL and USFL played those schedules before, and Goodell agrees (Lobdell, 2010).  The owners’ argument holds well against the union’s contention since players already play four preseason games that do not count in the win/loss column; by making two of those four games count, any resulting player injuries would not seem in vain.

Owners will not argue much with the union over rookie wages, since both sides agree that unproven players do not deserve to be among the highest-paid players in the league without taking their first NFL snap.  Essentially, team owners are pushing for a rookie salary cap without meeting significant union resistance (Labor is Focus at NFL Meeting, 2010).  Packers President and CEO Mark Murphy has seen his fair share of the spotlight since July 2010, since Green Bay is the only publicly owned team and required by law to publish their yearly accounting statements.  He contends that the current system is “unsustainable” and that rookie salaries are “another thing we’d like to address in collective bargaining” (La Canfora, Pack Thriving and Suffering, Depending on Who’s reading Ledger, 2010).  NFL Commissioner Roger Goodell has long believed that rookie wages are “ridiculous… money is going to a player that never makes it in the NFL,” and that “the money should go to people who perform” (Associated Press, Goodell: Rookie Pay Scale “Ridiculous,” 2008).

b)            Perspectives from the Players’ Union

The Miami Dolphins' Jake Long became the league's highest paid offensive lineman before taking his first snap in the NFL.

 

The Green Bay Packers’ net income rose by about 30% to $5.2 million in the fiscal year ending March 31 [2010],” according to Bloomberg.com’s Aaron Kuriloff (2010).  In the same report, however, Kuriloff reveals that operating profit declined by more than half: from $20.1 million to $9.8 million (2010).  Nevertheless, “it’s 1/32nd of the financial information we’ve requested in response to their demand that we give back $1 billion and increase our injury risk by playing two additional games,” according to NFLPA President Kevin Mawae (La Canfora, Pack Thriving and Suffering, Depending on Who’s Reading the Ledger, 2010).  Two more games-worth of added risk of injury and decreased overall pay seems like a difficult proposition despite losses reported by one of thirty-two NFL teams.  Quarterback Tom Brady of the New England Patriots and Linebacker Ray Lewis of the Baltimore Ravens also disagree with a two game extension.

“Don’t get me wrong, I love the game of football.  If fans want to show their love, they should let everyone know that we are not machines,” said Lewis regarding an expanded season (NFLPlayers.com, 2010).  He added, “swapping two preseason games for two end-of-season games – when players already play hurt – comes at a huge cost for the player and the team” (NFLPlayers.com, 2010).  Tom Brady complemented Lewis’ position and stated, “The long-term impact this game has on our bodies is well documented.  Look no further than the players that came before we did” (NFLPlayers.com, 2010).  Brady finished by adding the fact that a player must play three years if he expects to receive post-career health care for just five years (NFLPlayers.com).  In an 18 October 2010 Sports Illustrated article, Peter King points out that the NFLPA wants owners to modify post-career health care plans if the season is extended, since players would play six extra games over three years to earn five years of post-career health care (King, 2010, p. 44-46).  The NFLPA also expects a 15% annual pay increase if the season is expanded to cover wages for two extra games.

Finally, the NFLPA’s position on rookie salaries does not much differ from the owners’ stance.  “They need to do it like the NBA… Get a rookie salary cap, then let a guy play for three or four years and prove himself,” stated Pittsburgh Steelers linebacker James Harrison in March 2010 (Dividing Line is Drawn, 2010).  In 2008, the Miami Dolphins drafted Jake Long from the University of Michigan – the five-year, $30 million deal made him the highest-paid offensive lineman in the league (Dividing Line is Drawn, 2010).

Cam Suarez-Bitar.






 

Happy New Year!!!!

The NFL and the NFLPA: The Significance of the Current Collective Bargaining Process and a Collection of Relevant Legal and Ethical Issues (Part 3: What SI’s Peter King calls “The Billion-Dollar Give Back.”)

The players' union is flexing its muscles as it prepares for a CBA process that most likely will not be resolved until after March 2011.

A Collection of Issues Revolving Around a New Collective Bargaining

Agreement – The Owners vs. The Players’ Union

__________

1 – What Peter King of Sports Illustrated dubs, “The Billion-Dollar Give Back.”

a)            The Owners’ Perspective

Team owners argue that player costs are too high and that revenue-sharing must be rolled back for several reasons.  First, owners state that stadium financing in the NFL has changed drastically over the last thirty years.  According to Peter King, Giants Stadium cost $78 million in 1976 and was paid with public funding (King, 2010, p. 45).  However, the New Meadowlands Stadium hosted its first NFL game during the 2010-2011 season and cost the Giants and Jets $1.6 billion with “practically no public funding” (King, 2010, p. 45).  Since the cost of either new stadiums or renovations have increased while public funding has not climbed at the same rate, owners are asking players to subtract another $1 billion from the revenue-sharing pool and allow the owners to allocate those funds to stadium renovation/construction, thereby increasing the exempt amount to $2.4 billion (King, 2010, p.45).

Players benefit from working in modern facilities, since newer stadiums usually include amenities that help the team generate revenue and improve the fan experience.  With new stadiums in Dallas and New York/New Jersey, team owners in other cities feel pressure to catch up to a new wave of modernization and need help meeting expectations.  Such pressure arrives from a myriad of sources, including the commissioner himself.  “The bar has been raised because you’re getting great facilities around the country in great communities… [Super Bowls] are a tremendous value to the communities, so there’s a lot of competition for [them].  So I think a new stadium with [sic] this great community would be beneficial to bringing another Super Bowl to this community” (Associated Press, 2010).  Though local officials and Atlanta Falcons ownership are currently discussing the costs of modifications to the state-owned, 72,000-seat Georgia Dome, the cost would place added pressure on team owners and taxpayers to raise capital without player assistance.  “That’s one of the reasons we’re focused on restructuring the collective bargaining agreement, to make sure that we have the kind of structure that will allow us to make those kind [sic] of investments in the game and the communities which allow the game to continue to grow… That is good for the players, good for the teams, good for the communities [sic].  That’s something we want to continue to focus on,” added Goodell (Associated Press, 2010).

Without financial support from the players, local governments may be pressured to

Atlanta's Georgia Dome: one of several "outdated" NFL stadiums eclipsed by the new palaces of technology in Dallas and New York.

contribute higher amounts of capital than ever before to stadium construction plans.  After local media plays both sides of the argument over public stadium financing, residents usually side with the owners after local news outlets sympathize with teams.  One example is Norman Braman, a Miami businessman who struggled to prevent the use of public funds to finance construction of the new Florida Marlins’ stadium in an impoverished Miami neighborhood, but failed after local media eventually took a softer stance on team owners and government officials partial to the Marlins’ cause.

b)            Arguments for the Players’ Union

In response to owners’ calls to lower player costs (i.e. players salaries), NFLPA Executive Director DeMaurice Smith asked, “How do I go in front of my players with information from Forbes [stating] that teams average $31 million in profit and justify an 18% pay cut” (Dividing Line is Drawn, p. 1c).  Smaller-market team owners depend on revenue-sharing between teams to maintain viability – this issue is also one of the most heated in the debate over the CBA, according to notes taken at a lecture by Northwestern University Sports Administration Professor Roy Kessel.  Under a new CBA, owners hope to reduce player costs by $1 billion dollars and offset inter-team revenue-sharing costs as much as possible and lessen dependence by smaller-market teams on their more affluent colleagues.  In spite of decreased profits/net income, teams in San Francisco, Minnesota, Oakland, and Atlanta are making overtures for new stadiums or renovations; nevertheless, they claim “financial hardship” as they apparently plan for these elective costs.

Since 1990 and in spite of recent claims of financial hardship and escalating player

Since it is publicly owned, the Green Bay Packers (right) are the only NFL team required by law to disclose its yearly financial statements.

costs, 28 of all NFL teams have either moved into new stadiums, completed renovations, or are currently in the planning stages (NFLPlayers.com, 2010, Taxpayer Subsidies for NFL Stadiums).  The average team “receives 65% of its stadium financing through taxpayer subsidies” as team values continue to rise (NFLPlayers. com, 2010). Increased elective costs, such as stadium renovations or construction, could appear irresponsible in an ailing economy.  Statistics on the NFLPA website suggest that increased dependence on public financing for stadium construction – and other high elective expenses that teams incur – as team operating revenues decrease does not signal responsible fiscal behavior.

Ownership enjoys significant leverage when issues regarding stadium financing arise.  In fact, the Minnesota Vikings’ Vice-President for Public Affairs Lester Bagley stated, “The clock is ticking, and the lease is coming due.  The state can’t afford to have us become free agents” (2010).  If teams cannot afford to build new stadiums or renovate current facilities, they should table the matter until finances improve.  In any case, if players are expected to contribute to stadium construction by taking a $1 billion pay cut, then they should have the power to influence the decision as stakeholders to build or not.  Even though players could benefit from the construction of new stadiums while under the employ of the team with the new facility, long-term benefits would only rest with management and ownership since teams could trade players away.

Essentially, the NFLPA could argue that Commissioner Roger Goodell ought to treat stadiums independently, not comparatively.  The players – and taxpayers – share no responsibility for excessive team spending while owners and the commissioner choose to invest in new facilities and operating costs, allegedly, continue to rise across the league.

President and CEO of the Green Bay Packers Mark Murphy (but I guess you already knew that from looking at the picture!)

Lastly, Chief Executive Officer of the Green Bay Packers, Mark Murphy, claims that the Packers’ “only growth in revenue in recent years has been on the national side,” according to the team’s 2009 financial statements (Kuriloff, 2010).  However, according to the Wisconsin Legislative Audit Bureau’s 1999 audit of the Green Bay Packers’ books between 1995 and 1999, the Packers’ annual net income ranged between $5.4 and $7.1 million, respectively, and retained earnings nearly doubled from 1995 ($40.5 million) to 1999 ($76.2 million) (Wisconsin Legislative Audit Bureau, 1999).  With 2009 net income at $5.2 million – a 30% increase from 2008 – (Kuriloff, 2010) the Green Bay Packers did not appear to be worse off in 2009 than they were 15 years ago.  As Troy Aikman points out, “owners claim they can’t keep up with player salaries.  Yet [sic] the Redskins’ Daniel Snyder reaches into his pockets and gives [Albert] Haynesworth a $100 million deal” (Aikman, 2009).  Former NFL punter Nick Murphy also disagrees with owners and wrote, “player expenses increased only 4 percent in 2009 and only half of that was salary-related.  From 1996 to 2007, the average NFL owner increased a franchise’s value by $693 million (338 percent) [and] according to Forbes magazine, player expenditures have nothing at all to do with the first decrease in NFL club valuations in 12 years” (Murphy, 2010).

Pete Kendall, “permanent player representative” for the NFLPA at CBA bargaining sessions, adds to the union’s argument by stating in a memorandum to NFL players that “the current salary cap system provides a percentage cap on the amount of football related revenue to be spent on player salaries and benefits” and that even though percentages of total revenue shared with players will remain the same, the league’s new definition of “total revenue” would decrease the money in that account and thus lower yearly distributions to players (DiTullio, 2010).

Without financial statements or audits from the other 31 teams, the players’ union has insufficient evidence to determine the league’s “need” – an essential set of details missing from the debate regarding a possible $1 billion pay cut.

Cam Suarez-Bitar.

Read Part 2 at: Part 2

Read Part 1 at: Part 1

 

Indianapolis Colts President Bill Polian, seen here with Peyton Manning (right) and former Colts backup Jim Sorgi (left).

The NFL and the NFLPA: The Significance of the Current Collective Bargaining Process and a Collection of Relevant Legal and Ethical Issues (Part 2: A Brief and General History of the 1993 NFL Collective Bargaining Agreement)

 

Football fans and other unions supported players' calls for fair wages and contracts in the 1987 players' strike. This time, though, team owners (management) are threatening a lockout of the 2011 season in their attempt to rewrite the CBA.

A Concise History of Collective Bargaining in the NFL and a Look Towards the Future

After a players’ strike in 1987, collective bargaining commenced and resulted in the 1993 collective bargaining agreement.  The CBA lasted 17 years, and in 2008, the owners decided to opt out after its expiration in 2010.  “When the collective bargaining agreement was approved in 1993, both sides won big: the players got free agency and the owners got a salary cap.  It seemed like everyone was happy,” according to Troy Aikman, former quarterback of the Dallas Cowboys and recent Hall of Fame inductee (Aikman, 2009).  Aikman adds that “owners found a loophole in the agreement that allowed them to pay big signing bonuses to players” and distribute the uncapped sum over the contract’s duration (2009).  This loophole, exploited by team owners in the years immediately following the CBA’s expiration, contributed to a culture of increasingly high player salaries that apparently caught up to them fifteen years later.  The NFL has enjoyed the longest period without a work stoppage in all of American professional sports – 23 years since 1987, to be exact.  Nevertheless, Aikman remains optimistic that both sides will find enough common ground and continue to enjoy the league’s unprecedented growth in popularity, partnerships, and revenue (2009).

Washington Redskins owner Daniel Snyder is no stranger to controversy and one of the league's most well-known executives.

The 1993 collective bargaining agreement had a significant impact on parity in the NFL that led to two paradigm shifts.  Competitive balance increased throughout the NFL with the creation of free agency: the first major change (Lee, 2010, p. 77).  The second major shift regarded payroll constraints, such as the salary cap, that curtailed excessive team spending – theoretically – on “expensive” talent and kept talent on the market for teams with enough cap room to bid for their services (p. 78-82).  Signing bonuses and their amortized values helped owners circumvent salary cap limits and contributed to large contracts reaching nine figures (such as Albert Haynesworth’s current contract with the Washington Redskins) over their duration.  Also, the old collective bargaining agreement was revolutionary in American sports.  Unlike other leagues that instituted both rules and structural changes in their CBAs, the NFL is the only league that saw a CBA stimulate parity (Lee, p. 86).

As of early October 2010, forecasts for a quick resolution of the collective bargaining process seem bright for some and dismal for others.  New England Patriots owner Robert Kraft expressed confidence in the possibility that a new agreement would be approved by the end of the season, as did Dallas Cowboys owner Jerry Jones, in interviews in early October (Wilner, 2010).  Several owners share in this optimism, yet want to lower the amount of revenue shared with players to pre-free agency numbers, which would be as low as early 1980s figures (DiTullio, 2010).  However, in mid-October, the NFLPA’s DeMaurice Smith considered progress towards a new collective bargaining agreement “nonexistent” (King, 2010, p. 44).  With such conflicting data and inconsistent stories, the future of the current collective bargaining process is difficult to gauge or predict.

Cam Suarez-Bitar.

Read Part 3 at: Part 3!

Read part 1 at: Part 1!

I will post Part 3 next week.  Thank you for your readership and emails regarding the CBA.  Remember that discussions are also possible by posting comments after clicking the “comments” link next to each article.

 

A great picture of Pro Football Hall of Fame wide receiver Jerry Rice - needing a helmet more than ever - on bleacherreport.com. Though this photograph is irrelevant to my article, it could offer a much needed laugh on a Wednesday afternoon at work.

The NFL and the NFLPA: The Significance of the Current Collective Bargaining Process and a Collection of Relevant Legal and Ethical Issues (Part 1: Introduction, Etc.)

 

And so, the dance begins... the NFL and NFLPA open their virtual tango over wages and schedules.

Introduction: A Concise Discussion of the Issues at Hand

In 1993, the NFL and players’ union (NFLPA) finalized the current collective bargaining agreement (CBA) set to expire 3 March 2010 (Kaplan, 2010, p. 36).  The process – initiated by a player strike in 1987 – took approximately six years to produce the 1993 collective bargaining agreement that both sides finally deemed fair.  This time, “We just want to play football… We weren’t the ones who opted out,” according to Patriots linebacker Adalius Thomas, who referred to the league’s threat to lockout the 2011 season if owner demands are not met (Dividing Line is Drawn, p. 1c).  In 2008, team owners chose not to renew and pushed for a new agreement; in fact, as of November 2010, the league has reserved $900 million to survive a lockout if arguments with the NFLPA over escalating player costs and decreased profits/net annual income outlive the current collective bargaining agreement (Kaplan, 2010, p. 36).

Essentially, both entities disagree on the following key points: owners want players to shave $1 billion off the “revenue-sharing pool, estimated at $ 8 billion annually;” an 18-game regular season schedule proposed by owners that high profile players like Tom Brady and Ray Lewis strongly oppose; replacement of the current revenue-sharing system – which allots 60% of total league revenue to players after deductions – for a lump sum over the duration of a new collective bargaining agreement (which ties in with the first point); and revisions of policies regarding rookie salary guarantees (King, 2010, p. 44-46).  Other issues also define the current NFL labor dispute, but will not be covered in this analysis for the sake of brevity and efficiency.

Methodology and Thesis Statement

NFL Commissioner Roger Goodell

This analysis will treat aspects of the current labor battle between the National Football League and the NFLPA.  First, we will look at a brief history of the current collective bargaining agreement signed in 1993 by looking at academic papers and newspaper articles by sources close to the league and players’ union.  An examination of future possibilities/outcomes regarding the new collective bargaining process accompanies our historical review.  Discussions of ethical issues (as perceived by both sides) help determine the strength and validity of both the owners and union’s arguments in the current collective bargaining process and form the basis of my argument in favor of the union’s position.   Finally, a conclusion section includes a look at how the NFLPA could use antitrust laws to counter league obstinacy regarding ethical issues at the core of the current collective bargaining process.

At varying points throughout this study, I will cite an audit of the Green Bay Packers’ financial statements performed by the Wisconsin Legislative Audit Bureau in 1999 as an example of NFL team financial performance in the years immediately following the 1993 collective bargaining agreement.  Unfortunately, for the sake of this study – and, ironically, the union’s purposes – financial information from the other thirty-one NFL teams is unavailable, since the other teams refuse to “open their books” to the public (laws require the publicly-owned Green Bay Packers to disclose annual financial reports).  Nevertheless, by understanding the Green Bay Packers’ financial performance in the years immediately after the 1993 CBA, one may form a basic picture of league and union arguments regarding perceived financial hardship and season expansion.  Lastly, to complement the Wisconsin Legislative Audit Bureau’s study and assess the team’s position relative to the government’s findings, I will count on articles based on the Green Bay Packers’ financial statements published in 2010 (which detail the franchise’s performance through 2009) at different points in my study.

Since a thorough and exhaustive treatment of the entire collective bargaining

NFLPA head DeMaurice Smith

process and all underlying legal and ethical issues would be unfeasible in 10-15 pages, my objective is to provide an assessment of the current CBA’s impact on NFL culture, an overall view of key ethical issues in the current collective bargaining crisis, and an analysis of antitrust cases in sports business in my conclusions, since I recommend that the NFLPA strongly consider decertification if the NFL does not negotiate.   The last few pages contain a deep and carefully assembled bibliography containing over thirty sources I used in my analysis of the legal and ethical issues surrounding the current collective bargaining process.

Basically, I contend that: the NFLPA’s arguments prove both valid and strong when the Green Bay Packers’ financial records and league revenue numbers are considered; the league’s current push to build new stadiums contradicts its claims of “financial hardship;” and the league risks a lapse in ethics should it assert its power and force players to both receive substantial pay cuts and play longer seasons.  The NFLPA should not hesitate to decertify and sue the NFL over violations of federal antitrust laws if both parties do not agree on a deal by 3 March 2011.  The new collective bargaining agreement will, essentially, determine acceptable payment, compensation, and revenue-sharing thresholds for a sport that generated more than $8.83 billion in 2009 (Dividing Line is Drawn, p. 1c).  The results of collective bargaining will shape the league’s culture for years to come.

Cam Suarez-Bitar.

Read Part 3 at: Part 3

Read part 2 at: http://csbcomsportsbiz.com/2010/11/30/the-nfl-and-the-nflpa-the-significance-of-the-current-collective-bargaining-process-and-a-collection-of-relevant-legal-and-ethical-issues-part-2-a-brief-and-general-history-of-the-1993-nfl-collecti/

 

Do the players have enough leverage to negotiate a favorable deal?

Agents’ Panel Considers Available Options Regarding Marketing Agents Etc. and the Josh Luchs Situation (or, “Is There Significant Demand or Need for Revenue Sharing Between the NCAA and Student-Athletes?”)

 

The NCAA and athletic departments/universities around the US are finding it harder to enforce somewhat vague compliance rules. State lawmakers will play an increasingly important role in "policing" agent activity with regards to student-athletes.

In an Associated Press article written by Michael Marot, titled “Agents’ panel not taking anything ‘off the table,’” and published 27 October 2010 on the NFL News online news service available through the mobile Android application dubbed “NFL News,” agents and student-athletes are increasingly targeted over time in a recent probe by the NCAA.  The collegiate athletics sanctioning body commenced an investigation of ever-increasing thoroughness after Reggie Bush was accused of accepting consideration from agents while a student-athlete at the University of Southern California.  More recently, six University of North Carolina student-athletes were suspended from athletic events after allegations were leveled at the latter and coaches who broke NCAA rules by engaging agents and accepting consideration for contact with players and coaches on the football team.

Josh Luchs: the agent industry's Jose Canseco.

Serious issues underline the fact that student-athletes are keeping relationships with agents and coaches – as in UNC’s case – are facilitating the process.  According to Marot’s article, since the late 1980s, student-athletes like Ohio State superstar and prospective Pro Football Hall of Fame wide receiver Chris Carter have either accepted consideration from agents or simply contacted them before their eligibility expires.  It is an old problem that lingers in the student-athlete’s former athletic department (i.e. Reggie Bush sunk USC’s athletic department and football program, though he and the offending agents were the only parties in breach of NCAA rules) and disappears from the athlete’s life upon departure from the university/team.  Therefore, the NCAA has enlisted the help of former agent/whistleblower Josh Luchs in its determined and focused effort to decrease the frequency of such infractions.  By punishing student-athletes who are drafted by the NFL and any agents who violate NCAA and state rules and laws, the sanctioning body hopes to deter engagement in said activities, which affect the university and uninvolved/innocent student-athletes who remain at their institutions in the long run and follow the rules.  In a statement by the NFLPA – a prime stakeholder in the student-athlete/agent controversy – mentioned in Marot’s article, however, the professional players’ union refused to levy penalties on players who violated NCAA rules in spite of any of the probe’s findings.

The NCAA’s investigation extends beyond the USC and UNC football teams.  Currently, student-athletes at the University of Georgia, University of Alabama (defending BCS national champions), and the University of South Carolina have been implicated in the league’s investigation.  The problem of agent/player relationships resulting in an exchange of consideration before the end of the student-athlete’s college playing career is more insidious than originally thought.  Clearly, student-athletes – specifically college football players – are lured by financial gain to break NCAA rules.

It would be interesting to see the results of a decision by the NCAA to share its revenue with student-athletes in a holistic attempt to prevent unethical behavior by the latter and agents.  Since over 90% of college athletic departments operate at a loss, revenue sharing would be accomplished through the NCAA and not on a per-school basis.  Universities with athletic departments sanctioned by the NCAA ought to be audited to ensure that financial statements accurately represent curtailed profits.  In such a case that the statistic is true, then the NCAA ought to create escrow accounts for student-athletes that may be either withdrawn upon graduation to assist with transition to a life outside of professional sports, or give the former student-athlete a head start on a retirement fund.  After all, the NCAA’s assets reach well beyond seven, eight, or even nine figures per year, yet it does not incur the same costs that significantly decrease professional leagues’ retained earnings at the end of the year: player salaries.

All in all, the process has only just begun.

Cam Suarez-Bitar.

For more on the topic of student-athletes and revenue sharing, you can read a related article at http://csbcomsportsbiz.com/2010/08/03/should-college-athletes-be-paid/

 

The fact that student-athletes are willing to accept money from agents or boosters acting unethically may signal a growing demand for revenue sharing between the NCAA and college student-athletes. After all, without the student-athletes, would athletic departments, universities, or the NCAA (i.e. Bowl Championship Series) have a product to market? Depending on your answer, it follows to ask what would constitute fair compensation for the full-time student-athletes who make college football the prime time spectacle the nation follows and marketers exploit. It is a challenging conundrum, to say the least.

The Chicago Sky, Allstate Arena, and Some of the Risks they Face

Introduction

Basketball is not for the squeamish – players recklessly throw elbows, are whistled after hip-checking overly eager opponents on the way to the rim, and have been known to break each other’s faces (just ask the phantom of the Palace at Auburn Hills and Pistons star player Rip Hamilton).  Men and women who play the sport expose themselves to any number of serious injuries for the honor of ending a long season as league champions.  Actions on the court, though, are not the only risks players face nor are the heroes or heroines of sport the only ones subject to a sudden catastrophe.  As I walked into the All State Arena to watch the Chicago Sky’s game versus the talented ladies from the Pacific Coast, I noticed the first of a few major weaknesses in the venue’s security plan.  One risk involves egress, another places the soundness of the ceiling’s structure into question, and the last would send shudders up Monica Seles’ spine.

As we learn in William Crandall, John A. Parnell, and John E. Spillan’s Crisis Management in the New Strategy Landscape (heretofore simply called CMNSL), risks are not merely the result of internal factors; in fact, the external landscape plays as much a key role in determining an entity’s vulnerability (Crandall, Parnell, and Spillan 41-52).  Through this risk assessment of the WNBA’s Chicago Sky’s game at the All State Arena, we will understand how the lack of a well-lit fire escape route, an all-wood ceiling bearing massive weight, and inadequate number of security guards protecting the court and sidelines pose serious threats to all in attendance.

Fire!  Where in the World Do We Go?

As the previews begin and patrons eat popcorn with their mouths open, the lights are dimmed and the only light that remains projects the feature you paid to watch.  Or so it seems since we take the lit walkways in a movie theater for granted.  Darkness poses countless opportunities for folly and accident ranging from a laughable slip to a blazing fire that would create enough lawsuits to bring a company to its knees, so theaters install small LEDs along the aisles to guide moviegoers in the event of an emergency.  The All State Arena could learn from the foresight exhibited by proactive cinemas since the former shuts off all the lights for player introductions – like a vast majority of domed venues – and a crisis involving the loss of power or anything far worse could incite panic and guests could be injured or killed in a stampede in the penumbra.  Even though all exit signs were functional, hazards like tight seating areas and small concrete steps mix well with fright and darkness to create a crisis that the All State Arena ought to plan for lest it is forced to fold in disgrace.

In chapter 4 of CMNSL, Crandall (et. al.) emphasize the value of taking steps to prevent a crisis by stating that a SWOT analysis and study of environmental opportunities and threats should be part of a systematic and practical crisis management plan that could involve postponing other less important initiatives (66).  In the case of the All State Arena, it could mean that they would invest in routing auxiliary power to LED tracks along the aisles before they even think about replacing their scoreboard, for example.  Their SWOT analysis, however, would reveal an opportunity to minimize the cost of installation or even generate revenue.  For instance, the All State Arena could fund their efforts by having Underwriter’s Laboratories, Inc. or General Electric sponsor the lighting system that ensures the public’s safety in times of crisis.

I Can’t See the Scoreboard Clearly… Oh, Now I can since it is About to Fall Right on Top of Me (By the Way, this is HIGHLY Unlikely)

The All State Arena’s architects wanted an all-wood ceiling and the engineers made it mathematically andstructurally possible.  Though crises involving the fall of a gigantic scoreboard are rare, its low probability of incidence and incalculably catastrophic effects make up part of the definition of a crisis according to Professor Dave DeVries of Northwestern University’s Sports Administration program (lecture notes).  Technology – one of the four sources of crises discussed in CMNSL with political, economic, and social variables completing the list (43) – poses both opportunities and risks for the All State Arena since its ceiling suspends large screens that enhance the fan experience but depend on the integrity of the wooden dome to which the metal support beams are anchored.  One would not forego attending a sporting event because there is a remote possibility that the roof would cave-in, but the assumption is that the All State Arena’s wooden ceiling will not fatigue any time soon.  Furthermore, such a crisis could affect both players and fans alike.

Hamburg, Germany 30 April 1993 and Detroit, Michigan 19 November 2004

While the venue is responsible for keeping attendees safe, it must take significant steps to ensure the wellbeing of the athletes and entertainers it hosts.  At the height of her career, Monica Seles squared off with Magdalena Maleeva in a quarterfinal match held 30 April 1993 in Hamburg, Germany.  A lunatic took a short step over the wall that separates the stands from the court and lunged at the unsuspecting Seles with a knife.  Stabbed in the back by the unopposed assailant, Seles stood in shock as she put her hand on the wound and stadium security apprehended the attacker.  Although news of Seles’ frightening tragedy appeared on broadcasts all over the world and the incident left her with an inerasable trauma, sport venues still provide athletes with marginal and inadequate protection from the thousands of variables who patronize these establishments; after all, it takes only one unstable individual to cause such a preventable crisis.  In tables 4.1 through 4.4, Crandall, Parnell, and Spillan argue that while it is impossible to create a crisis management plan that covers every conceivable situation, a crisis management team ought to include risk categories in its strategy that enable the organization to classify a crisis and respond more effectively than if no plan was in place at all (74-77).

The All State Arena ensured the safety of its athletes by posting two guards on each side of the court.  That amounts to about two security guards per 3500 fans at the stadium that day: clearly, that is subpar protection.  Inadequate or insufficient security guards between fans and players could affect the former as well.

On 19 November 2004, a brawl involving players and fans broke out at a game in Detroit between the Pistons and Indiana Pacers.  Indiana’s Ron Artest entered the fan section and attacked several patrons.  When he returned to the court, Artest walked up to a Pistons fan and punched him.  The fan punched back.  Though Artest clearly antagonized him, the fan was subdued and the enraged player was allowed to roam about the court unrestrained.  Apparently, neither the NBA nor the Pistons’ crisis management teams prepared a plan that considered the possibility of such an event.  The Palace at Auburn Hills’ security team did not have a handle on the situation and guards were unable to choke the crisis as it unfolded.  A public relations disaster unlike any the league had ever seen ensued and the sight of Ron Artest, or the mere mention of his name, recalls memories of that terrible day in the league’s history.  Yet, the All State Arena remains vulnerable to crises resembling the Seles stabbing and the Artest brawl due to its lack of security guards along the sidelines.

Conclusion

Risk assessments involve analyses of the entity’s strengths, weaknesses, opportunities, and threats (SWOT analysis) and a thorough knowledge of its external environment.  While it is not feasible to prepare for every specific crisis, such as a crazed fan carrying a kitchen knife or an irate professional basketball player bent on attacking fans in the stands or elsewhere, an entity can prepare for certain types of crises by forming categories (like “dysfunctional customers or other individuals” as seen on table 4.4 on page 77) that encompass peculiar incidents.  Crisis management plans cannot simply aim to resolve a crisis once it begins; rather, a standard must be set that helps the entity prevent a crisis in the first place.

The All State Arena faces three particular risks.  In this list, the first concerns egress in the event of a disaster that leaves the stadium in the dark.  The second and third involve the compromised integrity of load-bearing wooden beams in the ceiling (highly unlikely) and protecting athletes and fans from each other, respectively.  Essentially, each of these crises is preventable as long as the arena’s Crisis Management Team convinces management that it is both responsible and beneficial to the stadium’s longevity to install LED lights that run on auxiliary power along the aisles for egress in the dark (making the arena a pioneer in public safety), regularly inspect the ceiling for structural problems, and improve security along the sidelines for the sake of athletes and fans alike.

Lastly, when I entered the stadium, I discovered that the door I used was unmanned; in fact, I entered unchecked and unaccounted for.  Were I a lesser man, I could have entered for free if I intended to never buy a ticket.  Instead, I just walked up to a ticket staffer who scanned my ticket and welcomed me to the arena: it was my first WNBA game and an impressive outing for the Chicago Sky.

Cam Suarez-Bitar.

There is a future for women’s basketball in America.  Support your local team and go to a few games.  In fact, since they have a smaller draw, they conscientiously increase the value of the ticket you purchase (i.e. you get more for the price of your ticket).  Expect more interaction between players and fans – such as post-game autograph sessions – and fan-centric sponsorships and promotions.  Unlike larger and more famous properties, the Chicago Sky use their creativity to help guests feel welcome and appreciated.  In fact, the lady sitting next to me – who, like me attended her first WNBA game that day – left with a pennant a marketing executive handed her, two prizes she caught when the “McDonald’s Fly-Kids” threw souvenirs into the stands, and a sense of pride in watching women excel in the great sport of basketball.  Indeed, the players as well as the organization itself are excellent role models for young women today.

As of Friday evening, I am certainly a fan.

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