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Labor Negotiations

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Recently, sports labor laws and all that surrounds them have come to the forefront of the media and become a part of our everyday lives. The NFL has made nearly every news and sports channel the stage for each side to play out its own side and story for all to see. The recent NFL lockout and decertification of the NFL Players Association has not only stirred up issues from previous labor disputes, but added new issues to the table as well. The history behind previous labor disputes in the NFL and other sports, and the issues on the table today will lead to the decisions that the commissioner and the players will eventually have to make to save their sport. Prior to the late 1960s, sports players were essentially owned by their teams, and were not given the rights to make careers decisions for themselves. The owners held the rights to players' careers and made the decisions on where and when they played on their own without consulting those that it directly affected, the players. Players could be traded to other teams or released from their current club without warning or notice. It wasnt until Curt Flood challenged the process in 1970 that labor laws and sports would intertwine together. Curt Flood was one of the best players of his day and spent most of his career in the St. Louis Cardinals outfield. He batted over .300 in six seasons and received a Golden Glove Award six separate times. At this time teams had the right to trade players when and how they saw fit. There was no such thing as free agency the time. In 1969, Flood was traded to the Philadelphia Phillies; a decision that he was not happy about. In an attempt to gain free agency he petitioned the commissioner, but his request was denied. Flood then filed suit citing that the MLB had violated the United States Anti-Trust Laws. (Baseballlibrary.com) The case was sent to the Supreme Court where the District Courts ruling was upheld. The ruling backed the MLB and stated that the Cardinals had not violated any Anti-Trust laws. Flood sat out the 1970 season, and then made the decision to sign with the Washington Senators in 1971. He only played 13 games, and retired in April. While Floods suit was unsuccessful in 1970, the reserve clause was eliminated in 1975 after several pitchers played a season without a contract. Playing without a contract meant that they were not tied to the team the same way that Flood was. This allowed them to become free agents and the age of the reserve clause essentially came to a close, and opened the door for new sports labor laws. Another historical event in sports was the first National Football League strike, which began in 1982. Several issues were on the table in 1982 including revenue sharing and player contract information sharing. The Players Association wanted the members to receive 55% of the leagues gross revenues. (LATimes) The owners, for good reason, rejected both of these requests. First, they did not want to share their portion of the revenue when they felt the players were already getting paid enough. Second, they did not want to share the salaries of players with the public. The decision to reject the requests was based on what this would bring about. Releasing the salary information was thought that it would breed competition within organizations and the NFL as a whole. The players wanted to see what everyone was making because they felt that it should be public information, and felt they had the right to see if a third string tackle was making more money than a starting receiver. This is similar situation to what is happening currently, and the outcome of the decision could change the NFL forever. When neither side would budge the players went on strike on September 21st, 1982. The strike lasted 57 days and led to a shortened NFL season. As the owners decided whether or not to release salary information and increase revenue sharing the players waited. During this time, the NFL and its broadcast stations had to do something to keep people interested. The broadcast stations filled the empty time slots with baseball, Division 3 college football, and the Canadian Football League. The NFLPA also set up their own all-star games during the strike after the judge ruled that the NFL could not stop the players from participating in extra games. On November 16, 1982 the strike came to an end. Dick Berthelsen, the union's general counsel, had actually won a North American Soccer League case that concluded its union was entitled to salary data. The NFLPA jumped on the decision, publishing the 1982 NFLPA Base Salary Directory. (LATimes) This decision helped change salary dealings and negotiations in sports forever. While the NFLPA got some of the things they wanted, some issues were left unsettled and the NFL and its players would be back together five years later to strike again. The strike of 1987 between the National Football League and the NFL players union was 24 interesting days that can teach us a thing or two about what might happen if no agreement is made between the NFL and the NFLPA. The strike of 1987 started on September 22, 1987 and lasted until October 15, when the players crossed the picket lines. The 1987 strike was a product of the past, but can tell us a lot about the future. The strike dealt with the idea of free agency, one of the most important labor management disputes in history. Free agency is vital to the players because it gives them an opportunity to sell who they are to several teams rather than just one. In the 1987 strike, the players wanted free agency while the owners wanted the right of first refusal and lower compensation levels for certain free agents (Sabin, 2011).

The owners were well prepared for the strike, quickly replacing the striking players with replacement players. This is very similar to what has happened this year with the labor negotiations. Owners were ready to lockout players in the 2011 season, taking steps as early as a year before. With the labor negotiations going currently, Iwe dont think that the owners could afford to replace current players with replacement players. In the past, these replacement players were eager to play in the NFL, even if it was short-term and for little money, about $1,000.. This was a sound business decision for the owners because they still were able to get fans to attend games and watch them, if the real players were not present. In the NFL, approximately sixty percent of income comes from the television, while the other forty percent comes from gate receipts (Staudohar, pg. 29). During the first week, strike games television ratings were down but surprisingly high for the games being played with replacement players. Fans tuned in to watch the games out of curiosity. Further along in the strike the ratings continued to drop because interest declined. On the other hand, gate receipts were on the rise as people were excited to see different players and how they played. An average of 17,000 fans, 28 percent of usual, attended the first week of the strike games and in the second week it climbed to 25,000 attendees (Staudohar, pg. 29). If the NFL presently, decided to replace their players with current players they would have the same situation. The fans would watch a week or two but then their interest would decline due to the talent level. Even though this strike happened years ago weI think it would still have the same affect on fans. There was major impact on the both the owners and players during this strike. Altogether, the strike lost the NFL approximately $80 million, much of which came from the refund of money to fans who had purchased tickets but did not attend the strike games. The owners saved tremendously on salaries because they paid the replacement players comparatively little. The average owner's profit per game actually rose, from $800,000 before the strike, to $921,000 during the strike. This profit was temporary because the league had to refund money to the networks over the next two seasons for the one missed weekend of play, the reduced ratings, and the decline in advertising revenues (Staudohar, pg. 29-30). The strike ended on October 15, 1987 when the players faced the owners rejection of their proposal. Players were ready to return to work, but to their surprise, the owners refused to allow them to play the October 18 and 19 games. The owners chose to do this because they had established October 14 as the deadline for players to return to be eligible for play and the players ended the strike a day late so the owners refused to allow them to play those games. The strike ended without an immediate resolution. In 1993, the NFLPA and the league came to terms on an agreement that featured unrestricted free agency (Sabin, 2011). The start of the football season in 1987 was interesting for the NFL. Both the players and owners were impacted by the events that happened on September 22 through October 15, 1987. The owners decision to use replacement players was well planned. They were still able to play the games and make some money. Also, the owners were saving money because the replacement players were fine with little pay, they were just excited that they were playing in the NFL. The owners knew that once the real players saw that they were fine without them, they would realized that and want to come back, in which they did. The most important thing here is that the owners had a plan of action from the beginning. They knew what had happened in the past and used that to their advantage. The players on the other hand, should have realized the issues in the past and came up with a plan of action so they were able to benefit from the strike as well. From the beginning, the owners won the war but later the players were able to come back and get what they wanted, free agency. At the center of the battle between players and owners is the looming possibility that this dispute will continue with no real resolution and then be forced even further into the legal system, where a judge will decide the fate of the NFL. With all the legal jargon concerning a lockout, injunctions, and antitrust laws, it is difficult to decipher exactly what decision-making has led us to this point. We are going to analyze the inflection points of this dispute that have made it necessary for legal intervention. Beginning with the strike in 1987, there has been a long line of negotiations and pending litigation that has recently come to a head in 2011. In 2006, the owners agreed by a unanimous vote to extend the leagues current bargaining agreement and continue to play through the 2012 season. In May 2008, though, the owners unanimously agreed to shorten the extension of the current CBA (collective bargaining agreement), to a new date, which was then set to run out in March 2011. A new CBA needed to be negotiated by March 3, 2011, and to help with the process, both sides agreed to the use of a federal mediator. On February 17th, George H. Cohen stepped in as the mediator

Comment [CW1]: You spent all this time to omit the major case that caused this to occur.

and led discussions between the NFL and the NFLPL (National Football League Player Association). At this point, statements from both sides said that they were willing to negotiate a new CBA in which both sides could live with. The owners were skeptical, though, of the intent of the NFLPAL. They believed that the players intent all along was to decertify at the end of the current bargaining agreement and then to pursue further legal action against the owners. Decertification occurs when 30% of the NFL players agree that they no longer want to be represented by the authority of their union. Without the representation of the union, players would then be free to sue the NFL under antitrust laws, which would force the courts to make decisions that would shape the future of the labor negotiations. The courts typically try to stay out of labor negotiations and want to NFL and the NFLPA to try reach an agreement on their own. In the case of antitrust laws, they would be obligated to step in and rule in favor of one of the parties involved in the litigation. The NFLPA already had the signatures of more than 30% of the players and were using this as a bargaining tool with the NFL. The threat of future litigation under antitrust laws was one of the major bargaining tools that the NFLPA used in these negotiations, threatening owners with litigation that could keep them tied up in courts for years to come. On the other hand, the players believed that the NFL was just buying time and going through the motions of negotiations, with no real intent to reach a new CBA by the March 3 deadline. Instead, they believed, the owners were going to pursue a lockout when they reached the deadline, which would cut players off from working and threaten the 2011season because players would lose their ability to participate in the upcoming games. A lockout occurs when an employer stops an employee from being able to return to work. This means that the employee would not get paid, they will lose benefits, and employers can use this as a bargaining chip when negotiating labor contracts. The players believed that the NFL had no real intentions of reaching an agreement, but were simply holding out until the current CBA expired so they could declare a lockout. As it turns out, both sides were correct in the actions of the other party, but it was the decision of the players that sent a series of events into motion. The decision of the NFLPA to decertify left the players in a position where they could now file suit against the owners because of antitrust laws. These laws prevent such litigation when they are being represented by a collective bargaining authority, but now that they had decertified, left the owners open for attack. On March 12, shortly after the current CBA had expired, and the players had decertified, the owners declared a lockout. The players had anticipated the move by the owners to declare the lockout, and the day before had filed litigation under antitrust laws, naming 10 well-known plaintiffs including Peyton Manning and Tom Brady. The decision to file suit in court by the players was to prevent the owners from declaring a lockout by getting an injunction from the court. This dispute was quickly changing venues; turning away from the negotiation table into the courtroom. Did the owners declare the lockout because the players sued? Or did the players sue because they were afraid of a lockout? Regardless, it was clear at this point that neither side was bluffing and the labor dispute was back in the hands of Judge David. S. Doty, who had been overseeing the agreement between owners and players since 1993. On April 25th, Judge Susan Nelson declared that the lockout be lifted, a win for the players. The owners though, in reaction to here ruling, filed an appeal. Judge Nelson denied the request to keep the lockout in place, but now the appeal moved past her courtroom and into another appeals court, where another judge will decide whether to uphold her ruling. As of Friday, though, things are getting somewhat back to normal, and players and fans are excited that it looks like the 2011 season will begin on time. This fight is far from over, though. The owners are still pushing in court to uphold the lockout, so the outcome of this story is still unclear. Past events have given us a preview of the many ways to analyze the current issues brought to light by the labor negotiations. These events have also showed us what may be to come for the future of the NFL. When it comes to the current labor negotiations, there are 5 main issues that each require unique decisions be made, for they heed for important outcomes with major impacts. All of these concerns deal with the current demands from players and owners that lead to a lockout for the NFL, which has now been lifted as of April 25th, 2011. The first concern is money, currency, cash, dinero; whatever you may call it, which the NFL drives in about 9 billion of each year. Of this 9 billion dollars in revenue, the owners receive one billion out of the pot, to put towards things such as stadium upgrades the owners want to up their portion of the pot to two billion off the top, while also increasing their 40% of the remaining seven billion after they receive the two billion. Owners claim the
Comment [CW2]: Avoid euphemisms Comment [CW3]: What pot? Pol pot? Illegal pot? A chicken in every pot?

reason for their increase in their share of revenues is due to newly established debt crafted from over forecasting during the economic downturn (Jonsson). This leads to our first business decision:, why should owners and NFL teams be building or remodeling stadiums that are perfectly fine to play football in? Should owners have spent the money more wisely? The answer is yes, the recent recession didnt happen in just one year and suddenly turn around. Owners should have forecasted more wisely in anticipation of loss of revenue from less discretionary income from fans. Since the division of revenues is the main cause of distress between players and owners, the need for this extra billion from owners could have simply been resolved if they had done their homework. If this had happened, players may not have been so upset about the potential loss in percentage, making negotiations run more smoothly. Players are doing their homework however, by insisting detailed audits of NFL teams to prove that expenses are increasing while revenues are declining. The players view their relationship with the owners as partners and express that they have a right to see financial records, while the owners response is that players wont be able to understand them. This full financial disclosure leads to our second business decision. If owners were to release financial statement this could increase competition, giving information to leagues that want to emerge. The NFL, in short, could turn out to be just another USFL. The most compromising effort could be made through private reveal of financial statement to player, although the reveal to 1,500 players may not be such a private affair. The owners seem to have an answer to the lost wages of players, an increase in the number of games played in the regular season. This increase would augment the current 16 game regular-season to 18 games. Owners see this addition of two games as a catalyst to increase the revenue pot, in-turn making the absence of an additional billion a non-issue when it comes to players pay. The players see this as more work, but not more money. The impact of the decision to play more games effects the players directly, with an increase in games comes an increase of injury. This decision also affects peoples perception of the owners. Are they really just money hungry and not willing to treat players as human beings? In most aspects of the business world, more work equates to more pay. The same rules should apply to any profession. Sure, fans want to see more games for their benefit, but the owners may want to look at what additional games will do to their image if they dont raise players pay congruently to games. Sportsbusiness expert Mike Cramer puts it simply, Theyre playing with fire by going to two more games. The third topic of concern for the NFL and its players is the establishment of a rookie wage scale. The placement of a wage cap for rookies also couples with the issue of a player pay cut. Owners argue that a rookie wage cap will also offset the second billion they are requesting. The players and owners are not in complete disagreement with a rookie wage scale, claiming players who dont even shave yet making tens of millions of dollars is not what is best for the league. The minimum salary for rookies was $320,000 in 2010 (Associated Press). There is, as always, different stipulations desired from each sides of the fence. The NFLPA wishes a minimum contract of three years, which would permit players speedier approach to prospectively larger contracts through free agency. Owners wish for a minimum contract of five years. The decision to have a rookie wage scale in place is wise for the league, in most people eyes the amount a player is paid straight out of a draft can be a little over gifted. This decision, despite all the other key issues, is one for the better of both the players and the owners. All other factors aside, this resolution will save the league money in the long-term. The rookie wage cap will also allow more money to be utilized for benefits for retired players, something players are pushing for. In past agreements, players were more worried about the money they were making today and not as concerned about what their retirement would look like. These benefits go towards thing such as injuries in the long-term. A player in the NFL must play 3.5 years for five years of coverage, players want this minimum lowered. The wisest move for owners would be to provide these benefits for players, the consequences for not giving into players demand could cause issues. A severe public relations debacle of owners seeming uncaring of players health is a result of not dealing with the issue properly. Owners failure to give retroactive pay and instead offer higher retire benefits could set an unfortunate standard for future negotiations. Overall, each and every one of these issues must be resolves before the owners and players reach an agreement. Each critical point has business consequences that come along with how the issue is resolved. Players, as well as owners, need to understand the extent of the impact each individual decision may have on either party, or the league as a whole. There is a big decision that will continue to come to the city of Indianapolis while the NFL negotiations continue. The decision that Indianapolis will face is whether the Super Bowl will come to Indianapolis and what would happen if the NFL doesnt come to a sound Collective Bargaining Agreement (CBA) and Indianapolis loses
Comment [CW4]: There currently is a rookie wage scale. How is this proposal different?

the Super Bowl for 2012. On March 12, 2011, the NFL and the NFLPA couldnt come to an agreement which lead to the NFL Lockout beginning. This NFL Lockout by the NFL owners was the first work stoppage in 24 years. At this point you had a lot of Indianapolis business such as restaurants, hotels, attractions, and bars wondering what was going to happen to the NFL season and what could happen if the Super Bowl didnt happen. On April 25, 2011 U.S. District Judge Susan Richard Nelson lifted the lockout. The NFL appealed that decision and asked her for a stay on her decision, which if that stay is not granted then they will take it to the United States Court of Appeals for the 8th Circuit in St Louis. (Judge Rules, 2011) The NFL appealing that decision by Judge Susan Richard Nelson, could mean that we arent out of the woods yet and we could still see a lockout resume if it goes to the United States Court of Appeal for the 8th Circuit in St Louis. If the Ssuper bBowl doesnt end up being played in 2012 then that is going to cause a lot of problems for the Indianapolis area. According to the Bureau of Business Research at Ball State University, the games cancellations could result in a net loss of as much as $200 million. The city of Indianapolis has gone through a lot of new projects to gain the chance to host the super bowl. They were planning on the amount of people to help pay for the new Marriott, the Conventions Center was expanded, the Weir Cook Terminal at Indianapolis International Airport, and Lucas Oil Stadium. Business owners have a lot relying on the Super Bowl as well and therefore are keeping a close eye on the negotiations between the owners and the players. According to Dave Hornak, a manager at Scottys Brewhouse in downtown Indianapolis, says that each week for a Sunday football game, were up 150-200 percent volume. With that high of a percent volume up for normal Sundays, proves that football in Indianapolis is huge and the Super Bowl would generate a high volume of sales for restaurants in downtown and the surrounding areas such as Scottys Brewhouse. There are more than 87,000 hotel rooms in and around the area already blocked off for the days leading up to and after the Super Bowl. The loss of that revenue could be huge on the hotels in the area and also the city of Indianapolis. (Indianapolis, 2011) Some other things that Indianapolis could do to help raise the money to help cover the costs of those new projects if the super bowl doesnt come to Indianapolis would be to attract new big conventions or a Winter Music Festival in February. A lot of conventions already come to Indianapolis but we could gain a new convention that could help cover the costs that Indianapolis businesses would lose without the super bowl. Another option that Indianapolis could get would be to host a huge Winter Music Festival, kind of like a Bonnaroo. And gain a lot of big name artists as well a few smaller up-incomers. This could be a 3-4 day event within the Lucas Oil Stadium. It could help pay for Lucas Oil and also help the businesses in the area. The best way that Indianapolis needs to look at the whole NFL and NFLPA disagreements is that they need to focus on the fact that they will come to some sort of an agreement or at least that the Super Bowl will be played here in Indianapolis in 2012. With the Lockout ending on April 25, 2011, that brought more confidence to the city of Indianapolis, as well as the business focusing on revenue being gained by the Super Bowl, that there will be an NFL season and that the Super Bowl will in fact be played as it has been scheduled here in Indianapolis. With all of the improvements and enhancements to the city of Indianapolis and with the amount of revenue that the Super Bowl could bring into the city of Indianapolis. In recent years is has become a common requirement that the NFL officials have blocked out two weekends in February for the Super Bowl to be played on. The two weekends are February 5, and February 12. When Indianapolis put the bid in for the 2012 Super Bowl, they had the NFL league officials asking for Indianapolis to block out more than 18,000 hotel rooms for those two weekends. (Indianapolis, 2011) The recommendations that we have for the NFL are that they should offer an increased benefits health care package for the players and their families. The average NFL players in 2010 ranged from 25.00 to 27.33 with average of all teams being 26.04. They should be able to have a great health care package because they are playing a sport that is dependent on tackles and hard hits. This is giving them an increased chance of getting hurt and they should be able to have a package that will compensate them for an injury. Another recommendation would be that the NFL should not have to disclose their financial statements because that is just going to bring on competition with other organizations that could take over the NFL if they are given the heads up on what everyone is being paid. The teams should be able to keep that confidential. If they were to disclose their financial statements to the public then that would just cause teams and others to be able to buy out each other and disrupt the NFL as a whole. A final recommendation that we have is that they shouldnt increase the revenue sharing since each player is just an employee of that organization. In 2000, Peyton Manning the quarterback for the Indianapolis Colts got a salary of $6,702,500 and in 2009 he was still the Indianapolis Colts quarterback, was being paid a salary of $14,005,720. Just

for him that is an increase in salary of $7,303,220 in 10 years. That is an average increase in salary of $730,322 per year. An average employee doesnt get anywhere near that big of a jump in salary from year to year as the NFL does. Since these players are just employees of the organization/team, we dont see the need for them to get that huge of an increase in salary from year to year.

You obviously did a lot of work pulling together your facts concerning your case. However, the construction of this paper leaves much to be desired. First, there isnt any clarity as to the purpose of the paper. Are you presenting labor negotiations (per the title), an overview of the NFL lockout, decision points for NFL owners, decision points for the NFLPA, the decisions Indianapolis must make to mitigate the risk, etc? It is very difficult to ascertain the analysis of decisions from the variety of entities that obviously are engaged in making them. Likewise, there isnt any clear structure to the paper; it is also unevenly written with grammar, punctuation, and spelling errors throughout it. In closing, this paper lacks the focus necessary to present a coherent story. Your grade reflects this: 76%.

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