Law Tips: Collective Bargaining in Professional Sports

Summertime, baseball and CLE – a great combo! Occasionally the opportunity arises for ICLEF to offer this blend. Our recent Torts, Sports & All Sorts CLE at Victory Field in Indianapolis was one of those informative and exciting days. Attendees gathered relevant legal updates and then enjoyed the Indianapolis Indians vs. Buffalo Bisons game. Since these programs are a rarity, I’m especially pleased to have the following Law Tips contributions from Lee Christie, of Cline, Farrell, Christie & Lee; Indianapolis. Fresh from that day at the ballpark, Mr. Christie shares his rundown on collective bargaining in pro sports.

Collective bargaining is the primary means by which Club owners and players coexist in pro sports. In many ways, disputes between members of the sports industry are resolved in the same manner as they are in the steel industry. As such, agents within Players Associations (unions) represent players in labor-management disputes with their superiors. Collective bargaining agreements essentially govern all league operations. They generally include constitutions and bylaws, as well as rules and procedures for dealing with divisions in revenue (trend toward owners making more), salary caps, free agency, arbitration, draft restrictions, disciplinary rules, etc. The following is a breakdown of the current CB agreements in the three major pro sports.

In Major League Baseball (MLB), there are minimum salary requirements but no salary caps. Unlike in other major sports, the MLB does not recognize restricted and unrestricted free agents. Instead, when a player reaches free agency, the team can make him a qualifying offer. If the player declines the offer and elects to pursue the open market, the player’s former team is compensated with a draft pick. Players who seek salary arbitration sit before a three-person panel selected jointly by the MLB Labor Relations Department and the MLB Players Association (PA). The process is known as final offer arbitration, because both the player and the owner submit a single offer, or bid, and the panel chooses one or the other.

Player grievances outside of salary disputes are decided by the “Club’s representative” and may be appealed up to the Chairman of the three-member panel. The National Basketball Association (NBA) has what is called a “soft” salary cap, meaning that teams are generally permitted to exceed the salary cap and/or luxury tax without much consequence. Unrestricted free agents may sign with any team they choose, but restricted free agents are subject to limitations placed upon them by their current teams. To restrict players, team owners must establish their “right of first refusal” by making a qualifying offer. If the player accepts, he becomes an unrestricted free agent the following year. If the player refuses, other teams may extend an offer sheet with an amount exceeding the qualifying offer. The current team then has 7 days to match. Players who seek system arbitration sit before a single arbiter, jointly selected by the NBA and NBA PA. The aggrieved party may appeal to a three-person panel.

The National Football League (NFL) has what is called a “hard” salary cap, meaning that there are no exceptions to the cap and stiff penalties will be allocated to teams who exceed it. Like in the NBA, the NFL recognizes restricted and unrestricted free agents. However, the NFL also recognizes certain subcategories of free agents, including transitional and franchise players. Although somewhat more complicated, restricted and unrestricted free agency in the NFL works much like it does in the NBA. The transitional and franchise player aspects are essentially just methods of locking up players and preventing excess player mobility. Players who seek system arbitration sit before a single arbiter, jointly selected by the NFL and NFL PA. The aggrieved party may then appeal.

Collective bargaining has had a major effect on the competitive balance within each sport. In the MLB, for example, because there is not a salary cap and the free agency process is especially appealing to players, big market teams are generally the best teams year after year. The same holds true for the NBA, largely because of the “soft” salary cap. In the NFL, however, because of the “hard” salary cap and the free agency rules that allow teams to restrict player mobility, small market franchises are generally more capable of competing.

**All of my findings on collective bargaining are from the articles entitled (1) Beyond the Box Score: A Look at Collective Bargaining Agreements in Professional Sports and Their Effect on Competition, by Ryan T. Dryer, Missouri Law and (2) Collective Bargaining and the Professional Team Sport Industry by Cym H. Lowell, Duke Law**


Thank you to Lee Christie for this interesting overview of collective bargaining in pro sports. Since the Sports, Torts & All Sorts CLE is what we call a Live In-Person Only Seminar, I can’t offer you the video replay, or even an epub. But I hope you’ll keep your eyes open for the next time a similar event makes our schedule. While your waiting for the next play, practice up with an On Demand offering in your arena of choice. Plus, right until Aug. 31, 2015 All On Demand Seminars are 50% Off. Use Coupon Code:  DX7Y9 


About our Law Tips faculty participant:
Lee C. Christie is a partner with Cline Farrell Christie & Lee, PC; Indianapolis. His practice focuses on Trucking Collision cases, wrongful death and alternative dispute resolution. Lee is committed to maximizing tort recoveries for accident affected victims. He has extensive trial experience in both federal and state court and is a frequent lecturer on trial, mediation, personal injury, medical malpractice, trucking accidents, and settlement issues.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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