Monday, September 21, 2009

Labor Clouds Loom Large

Professional football is in full swing, the NHL preseason is underway, and fans of both sports are elated. There are clouds on the horizon that should cause all fans of their respective sports to take notice of the potential impending storm that is brewing. That storm that is building is potential labor unrest in 2011, when the collective bargaining agreements for all professional sports expire. Fans of their favorite sport would be wise to pay attention to moves that players unions and management are making today for an indication of what may occur in the very near future.

There are signs of contentiousness in every sport. The NBA has entered into strident negotiations with the the union representing the referees, and there is a great probability that the officials may be locked out at the start of the season, necessitating the use of replacements. Liz Mullen, writing in the latest edition of Street and Smith's Sports Business Journal, indicates that many NFL clubs are placing clauses in upper level executive contracts that are up for renewal that could either: reduce or terminate the contract with 20 days notice; reduce salary by 50% if a lockout continues for more than 90 days; or extend any retained executive's contract for another year at these terms if at least 8 NFL games are cancelled in 2011. You wonder why? The NFLPA has already been making noises about getting a bigger slice of the revenue pie and their posture toward the league has become more militant. Apparently, the NFL has a sense that the 2011 season could be in jeopardy.

The NHL Players Association recently fired Paul Kelly, their Director, for ostensibly reading private communications of the union. The unofficial complaint about Kelly was that he was to close to league management- too "comfortable" with Gary Bettman and others in the league office. I wasn't aware that being the Director of a Players Association in any sport required a combative and confrontational nature, but apparently it does for the NHLPA. Into the union vacuum has been thrust Buzz Hargrove, the former leader of the Canadian Auto Workers Union and a proponent of the "social unionism" movement. Social unionism is a movement that integrates workers, trade unions, and the labor movement into coalitions for social and economic justice (according to a paper published by the American Sociological Association). Proponents of social unionism have organized labor and initiated labor actions around certain social issues, such as fair housing and adequate wages, and used labor actions to move toward their goals. While it is unknown if Hargrove will get the Director's job (he has initially said he doesn't want it), I am certain that he and his philosophical leanings will exert significant influence on the direction of the NHLPA.

The NHLPA, as will player's unions in all sports, will be seeking a larger slice of revenue as well as some other significant changes. For the NHL, I would expect that Olympic participation will continue to be a point of contention and negotiation. While most owners worry about the risk to their athletes from participating in the Olympics and would rather avoid it altogether, most NHL players decidedly want the opportunity to represent their country. The salary escrow will be another point of negotiation between labor and management, and there are others. These are legitimate issues to be negotiated but it appears the tenor of the negotiations will trend toward confrontational.

Negotiations in all of these sports will be framed against a weak economy and potentially declining sponsorship and ticket revenue. Will management in all the sports be inclined to lock out the players and risk a season- or more? Will the players become strident in their demands and be willing to walk out? Hockey fans have seen how that scenario has played out, and it's not fun or pretty. Management in all sports are starting to stake out their positions; players and their unions are doing the same. The storm clouds are on the horizon. The question is, how severe will this storm be?

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