Professional Professional SportsSports

LeaguesLeagues

Restrict entryRestrict entry Assign exclusive franchise territoryAssign exclusive franchise territory Collude on revenue sharing formulasCollude on revenue sharing formulas

League ResourcesLeague Resources

Revenue SharingRevenue Sharing Help’s league’s overall economic healthHelp’s league’s overall economic health Network TV contacts are divided equally Network TV contacts are divided equally Ticket sales are divided with visiting teamTicket sales are divided with visiting team

NFL: 40% of regular season; 50% of preseason NFL: 40% of regular season; 50% of preseason MLB: 20%MLB: 20% NBA & NHL: Don’t share gate receipts NBA & NHL: Don’t share gate receipts NBA: Share licensing salesNBA: Share licensing sales

Competitive BalanceCompetitive Balance

Without it fan interest would decrease Without it fan interest would decrease causing team revenues to decreasecausing team revenues to decrease

Rules for:Rules for: Player allocations to new teamsPlayer allocations to new teams Drafts of available playersDrafts of available players Restriction of player movement to new Restriction of player movement to new

clubsclubs Compensation to old clubs for lost players Compensation to old clubs for lost players

Sport Industry Labor Sport Industry Labor RelationsRelations

COMMISSIONER

AGENTS

GOVERNMENT AS REGULATORS

Legislative, executive, and judicial

LABOR

Players and

Unions

MANAGEMENT

Leagues and Teams COLLECTIVE

BARGAINING PROCESS

MEDIATORS

ARBITRATORS

Sport Industry Labor Sport Industry Labor RelationsRelations

ManagementManagement The league itself, and the individual The league itself, and the individual

member clubs, it includes non-player member clubs, it includes non-player employees employees

LaborLabor PlayersPlayers AgentsAgents Player UnionsPlayer Unions

Management: League Management: League OperationsOperations

Negotiate collective bargaining Negotiate collective bargaining agreementsagreements The process of employer-union negotiation The process of employer-union negotiation

for the purpose of reaching agreement as for the purpose of reaching agreement as the terms and conditions of employment for the terms and conditions of employment for a specified period a specified period

Players join together and team owners join Players join together and team owners join togethertogether

National TV contractsNational TV contracts Setting rulesSetting rules

Management: Member Management: Member ClubsClubs

Independent legal entities Independent legal entities Free to make/lose money depending on Free to make/lose money depending on

how they operatehow they operate Abide by league agreementsAbide by league agreements Want the best team as a means to make Want the best team as a means to make

$$$$$$ Negotiate individual player contractsNegotiate individual player contracts Establish rules for player movementEstablish rules for player movement Hire front office employees and coachesHire front office employees and coaches

Labor/PlayersLabor/Players

Direct producers of the main productDirect producers of the main product Players are also the productPlayers are also the product Certain athletes can be considered Certain athletes can be considered

independent contractors as result of free independent contractors as result of free agencyagency Free agency: Ability of players, after Free agency: Ability of players, after

fulfilling an agreed-upon number of years of fulfilling an agreed-upon number of years of service with a team, to sell their services to service with a team, to sell their services to another team with limited or no another team with limited or no compensation to the team losing the players.compensation to the team losing the players.

Player PerspectivesPlayer Perspectives

Fans pay to see them performFans pay to see them perform Compensation should be based on Compensation should be based on

the revenues they generatethe revenues they generate Careers are short, so salaries should Careers are short, so salaries should

be highbe high Oppose rules that suppress salary Oppose rules that suppress salary

levelslevels

Player Player Associations/UnionsAssociations/Unions

1954-NBA & MLB Players 1954-NBA & MLB Players AssociationsAssociations

1956-NFL Players Association1956-NFL Players Association 1966-MLB became union1966-MLB became union 1967-NHL Player Association 1967-NHL Player Association

Player Player Associations/UnionsAssociations/Unions

Promote collective bargainingPromote collective bargaining Establish minimum player salariesEstablish minimum player salaries Pension paymentsPension payments Rookie salary structureRookie salary structure Player’s can use agents to negotiate Player’s can use agents to negotiate

individual contractsindividual contracts Salary, contract length, guaranteed Salary, contract length, guaranteed

payments, and bonusespayments, and bonuses

Collective Bargaining Collective Bargaining AgreementsAgreements

Standard player contractsStandard player contracts Contract length- usually 3-5 yearsContract length- usually 3-5 years CompensationCompensation

Payment for expected performancePayment for expected performance Incentives for performanceIncentives for performance

Mediation and arbitration v. LitigationMediation and arbitration v. Litigation Mediation: Neutral parties who become Mediation: Neutral parties who become

involved with grievance proceduresinvolved with grievance procedures Arbitration: Process where an independent Arbitration: Process where an independent

arbitrator will determine the players salaryarbitrator will determine the players salary Free agency Free agency

Free Agency: MLBFree Agency: MLB

Veteran players: After 6 seasonsVeteran players: After 6 seasons 3 years or more (not on multi-year 3 years or more (not on multi-year

contracts) are eligible for salary contracts) are eligible for salary arbitrationarbitration

Free Agency: NBAFree Agency: NBA

Complete free agency after 4 years Complete free agency after 4 years or expiration of 2or expiration of 2ndnd contract contract

Right of first refusal: Allows old Right of first refusal: Allows old team to resign player by matching team to resign player by matching any offer proposed by a prospective any offer proposed by a prospective teamteam

Free Agency: NFLFree Agency: NFL If player salaries reach 67% of designated league If player salaries reach 67% of designated league

revenues, a salary cap is imposedrevenues, a salary cap is imposed Unrestricted free agent: In a capped year, a Unrestricted free agent: In a capped year, a

player is eligible for free agency after 4 years, player is eligible for free agency after 4 years, rather than 5 in an uncapped year.rather than 5 in an uncapped year.

Restricted free agent: A player with 3 but less Restricted free agent: A player with 3 but less than 4 years (but 5 in an uncapped year) can than 4 years (but 5 in an uncapped year) can seek offers after their contract expires, for 60 seek offers after their contract expires, for 60 daysdays Old club can match offer to keep the playerOld club can match offer to keep the player Release the player in return for a draft pickRelease the player in return for a draft pick

Exclusive Rights: Player with less than 3 years Exclusive Rights: Player with less than 3 years can sign with their old clubcan sign with their old club If old club does not want to sign the player, they If old club does not want to sign the player, they

become an unrestricted free agentbecome an unrestricted free agent

Free Agency: NHLFree Agency: NHL Unrestricted free agent: Must be at least 32 Unrestricted free agent: Must be at least 32

years old, new team does not have to pay years old, new team does not have to pay compensation to the team he is leavingcompensation to the team he is leaving

Restricted free agent-3 different categoriesRestricted free agent-3 different categories Old team may make a qualifying offer/match offersOld team may make a qualifying offer/match offers Old team has first right of refusal and can re-sign Old team has first right of refusal and can re-sign

by matching the offersby matching the offers Less experienced players may only negotiate with Less experienced players may only negotiate with

their old teamtheir old team Salary arbitrator can set a fair salary regardless of Salary arbitrator can set a fair salary regardless of

proposals, owner can set contract’s length and proposals, owner can set contract’s length and refuse to enter into itrefuse to enter into it

CommissionerCommissioner

Serve both management and laborServe both management and labor Spokesperson on league mattersSpokesperson on league matters Guardian of “integrity of the game”Guardian of “integrity of the game” Reality: Selected and paid by, and Reality: Selected and paid by, and

serves at the discretion of serves at the discretion of managementmanagement

AgentsAgents

Responsible for marketing individual Responsible for marketing individual playersplayers

Assist players with maximizing Assist players with maximizing contracts and protecting finances contracts and protecting finances

Few requirements to become an Few requirements to become an agentagent

Their roles can affect an entire team Their roles can affect an entire team and the labor-management relations and the labor-management relations structurestructure