The Irony of Labor Law

In  the 1960s and 1970s, when sports unions ascended, effective use of labor law, especially by the Marvin Miller-led MLBPA, enabled them to make significant strides. For about twenty-five years, through the mid-1990s, nearly every work stoppage in American professional sports leagues was a strike. Since the settlement of the MLB players’ strike in 1995 each and every work stoppage has been a lockout …that is the cancellation of games was motivated by the owners and not the players.  In all cases, three lockouts in the NHL, two for the NBA, and one for the NFL, the owners have rolled back prior concessions and gained a CBA considerably more favorable to their interests.  Primary, the players’ share of revenue has fallen from more than 60% to less than 50% for each league that has locked out its players. The (non-statutory) law stipulates that the terms of a CBA stay in effect after expiration until a new agreement is reached. The satisfied party must be pressed to change the status quo, and the income eliminating work stoppage is the most effective force. Logically the side with the most leverage to shift the terms in their favor will initiate a stoppage…and that’s been entirely a one way street for now fifteen-plus years.  The spirit of the law authorizing lockouts is that it gives management a tool to balance a union’s right to strike. Except it is not balanced in professional sports.  Owners, were once hesitant to force a stoppage. That was until the NHL, under Commissioner Gary Bettman, exposed in 1996 that PR damage from a lockout was minimal and clearly offset by the more beneficial CBA.  The NBA, under the leadership of Bettman’s friend David Stern quickly followed suit, and locked out the players in 1998.  

Modern day ownership is much better suited to weather the storm of a stoppage than their predecessors; they are wealthier, more diversified and with long-term contracts for broadcast rights, luxury suites, sponsorships, less dependent on game specific revenue. The NHL and NBA have locked out the union at the expiration of every CBA since their fist try, and extracted more from the players each time. The NFL, which boasted nearly twenty years of labor peace, jumped on board in 2011, actually accelerating the termination of their CBA, to lockout their players. Only MLB, once the primary labor battleground, has not followed suit, but the different dynamics holding labor peace there may also be changing. 

So where does it go from here? What’s to stop owners from locking out until all the gains for players made by unions and antitrust relief (out of play under labor law) are extracted? In the reserve clause era players earned less than twenty percent of revenues had no mobility rights and were happy to take it.  Labor law allows lockouts and denies antitrust. Lockouts in particular provide owners the means to drive sports right back to those “good ole days”. The solution may be no union, and then no labor law, no lockouts... and antitrust relief back in play.

Missing the Point on Johnny Football

ESPN’s college football headliners Smug and Smugger, aka Herbie Herbstreit and Chris Fowler, parked their bus and set up studio in Athens, GA the first Monday in August. They were joined for the night's LIVE airing by understudy and local chap David Pollock. Athens is sleepy until rush week, so this visit was likely the highlight of the Bulldog nation's late summer. The conversation naturally centered on the news of the day, Johnny Manziel’s crime against the sport of college football. Heisman winner Manziel is alleged to have received payment for autograph signing sessions thus profiting from his reputation as a college football star. As usual the World Wide Leader crew inflated the already well established mainstream media's party line. Smug was indignant as he pointed out that it had been a mere eight months since young Johnny had ascended to the top Mount Virtue. Not only had Manziel been announced and greeted by Smugger as the winner of the football media’s favorite amateur football player trophy, he was humbled in the presence of the heroes who suffered through two and three more years of exploitation than had he, merely a freshman. Wondered Smug,  just removed from the aura of Tebow et al., the gravity of which having been transmitted through the sagacity of Smugger, how did Johnny go amiss? The righteous brothers then recounted the slew of off-season debauchery…guilty plea on a fake ID charge from the year before, kicked out of a frat party, hanging with a rapper, a disparaging tweet on life in College Station, TX, oversleeping on the Mannings, and now this, possibly breaking an NCAA rule! The sullen trio was as outraged as they were disappointed at the disregard for the rules shown by someone given the privilege of playing NCAA football—even worse to them was that he comes from wealth and does not even “need” the money!( At least no more than a well-paid sports talking head "needs" the money from endorsing bath soap...comfortable in his own skin, indeed!) A.J. Green was dead wrong to sell his property, and deserving of his punishment, but at least he was poor, it was pointed out.  

No mention of course that NCAA limits on economic freedom would be illegal in any other context—a blatant and severe restriction on basic liberty.  It’s one thing that athletic services cannot be directly sold to a college program but are permitted only as one side of an in-kind exchange, traded even-up for one of the university’s educational service offerings (but not always the one of the player's choice).  But even if that’s regarded as a fair and mutual exchange (not that an 18 year old football player has many other options), it doesn't begin to stop there. The athlete also sacrifices to his “employer” the property right to his name, image, and reputation, much of it ad infinitum.  It is a peculiar system; so much so that thus far even the wisest of judges cannot help themselves to apply the standard rules of antitrust law. So instead of substantive discussion of this system, most of the sports media “legal talk” will turn on evidence and burden proof in a kangaroo court.

My Journal of Sports Economics article "Efficiency and Managerial Performance in FBS College Football" is now available online.

Abstract and Download link

Data Appendix: Rankings of all FBS coaches 2006-2011

Abstract

This article develops a model of managerial efficiency for National Collegiate Athletic Association’s top division college football coaches. The derived efficiency measures are then linked to the hiring and firing process. The work concludes with an evaluation of the effect of head coach succession on team performance. This study evaluates coaching efficiency in terms of both use of talent and recruiting talent. The constructed efficiency rankings are used to evaluate hiring and firing decisions and determine the degree that each type of efficiency plays in these decisions. Last, the efficiency of the market is assessed by evaluating whether universities are making a good choice and are able on average to improve performance when replacing an under-performing coach. The empirical results indicate that both constructs of efficiency matter. Coaches who exhibit high level of both types of efficiencies regularly move up to the most lucrative jobs. Replacement of a poor performing coach is most often a wise decision.

Data Appendix: College Football Coaches Ranked- Journal of Sport Economics Paper

My article "Efficiency and Managerial Performance in FBS College Football: To the Employment and Succession Decisions, which Matters the Most, Coaching or Recruiting? will be published in 2013 in the Journal of Sports Economics.  I rank all NCAA FBS coaches in terms of their ability to coach (convert their available talent to wins) and to recruit talent. Tests are run to see how each measure influences hiring and firing decisions. The paper's tables lists the 10 best and 10 worst coaches in both categories for the most recent three years. I am posting the appendix here that includes the entire rankings of all FBS coaches from 2005-2011. There are two tables, the first rank coaches in order of efficiency of talent use and table 2 ranks them in order of recruiting efficiency for each year.

 Data Appendix

Supreme Court overturns (9-0) the Seventh Circuit’s ruling in American Needle v. National Football League

This case is important to labor relations because a ruling in favor of the league could not only identify a single entity for NFL apparel contracts, but for all business dealings, including labor issues. As Michael McCann points out in his SI.com column the decision provides NFLPA with relief going forward into labor talks.

Many collective bargaining provisions are, outside of the CBA, violations of antitrust, but off limits to challenges because of the non-statutory labor exemption. Nonetheless the unions’ leverage remains in the antitrust courts, and a decision for the league in this case could seriously tilt the playing field. Simply compare the recently settled MLS CBA to those of the the NFL, NBA, MLB, and NHL. The MLS enjoys legal single entity status, and the MLS players union was able to negotiate little more than reserve era rights and no level of free agency.