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Environmental, Company and Competition Analysis
As the popularity and influence of professional sports leagues has grown, so has the role of labor unions in negotiating with these leagues. Looking at the size, membership, and leadership dynamics of the NFLPA, NBPA and MLBPA in their respective negotiations with their leagues (NFL, NBA, MLB) then analyzing the effectiveness of unions in collective bargaining will show us not only where each league finds itself comparatively, but where each one must go to improve as a league. The goal is to examine the key factors and concepts that impact the success of negotiations between professional sports leagues and unions in order to establish next steps to improve as a whole.
Player Union Size and Leadership
According to a study conducted by Masters (2015), the National Football League Players Association (NFLPA), Major League Baseball Players Association (MLBPA), and National Basketball Players Association (NBAPA) are three of the most powerful labor unions in professional sports. These unions work to represent the interests of their respective players during collective bargaining negotiations with team owners, agents, and other stakeholders. It is important to note that the increasing size of these unions will likely lead to greater job security and job satisfaction amongst their members, which is an important factor in maintaining the competitiveness of the major sports leagues in the US (Masters 2015). According to Masters (2015), the size of these labor unions is projected to grow significantly by the year 2023, with the NFLPA expected to grow from 1,800 members to 2,500, the MLBPA from 800 to 1,000, and the NBAPA from 500 to 600 members (Masters, 2015).
Each association’s membership is made up of athletes from their respective leagues, as well as contributions from non-athlete members including sports agents and lawyers. To ensure proper representation for their members, the associations have created many regulations and procedures. These measures are put in place to guarantee that all aspects pertaining to member affairs are handled promptly and proficiently without any sort of bias or discrimination towards anyone involved within these organizations. The leagues have adopted models of “one-member-one-vote” for internal decision-making, which ensures that each member’s voice is equally heard in the decision-making process. The associations strive to ensure that members are represented in the negotiations of collective bargaining agreements, which set out the wages and working conditions for the athletes (Masters, 2015).
Advancements in technology and social media have also allowed the members of each association to easily communicate and stay updated on the latest news and issues concerning their respective leagues, which better equips the NFLPA, MLBPA, and NBAPA to represent their members better than ever before. With increased size and power, these unions can negotiate more player-friendly contracts, leading to greater benefits and rights for their players and ensuring that the major sports leagues remain successful and overall more competitive (Masters 2015).
Function and Influence of each CBA:
According to Johnson (2021), the MLB CBA has had a significant impact on how teams negotiate with players in other American sports leagues. Due to the MLB CBA, teams now are ultimately paying higher salaries to players in different American sports leagues, like the NBA and NFL (Johnson 2021). The MLB CBA has led the way and made teams much more open to negotiation with players, which, as a result will greatly increase the amount in which players are paid for their services Johnson’s (2021) observations show not only increased pay rates but also longer contract lengths as teams invest further into securing promising talents – this development benefits everyone involved, from the athletes themselves and their respective clubs to even extending its positive impact on the league itself.
The NBA and the NBPA pride itself for being trendsetters when it comes to keeping a strong relationship with each other, and other major American sports leagues have started to take notice. According to McLean, Strack, and Russell (2019), this collective bargaining agreement, was first established in 1983 and has been amended several times since then, has made the NBA the only major North American sports league with a guaranteed player salary structure. This has led to increased salaries for players, which has also impacted team payrolls and the structure of contracts in the NBA. Additionally, the NBA CBA has provided players with greater job security and more negotiation power, which has allowed them to receive a larger share of the league’s revenue. McLean, Strack, and Russell (2019), point out that the NBA CBA has allowed for the implementation of salary caps, luxury taxes, and a much shorter regular season compared to other American sports leagues. This has enabled the NBA to maintain competitive balance and attract more viewers, which has led to increased league revenue. Overall, the NBA CBA has had a positive effect on the structure of American sports leagues, and its implementation has been a model for other leagues looking to improve their competitive balance and profitability (McLean, Strack, and Russell (2019).
Many people view the NBA’s association with the NBPA as exemplary, given their incredibly positive relationship. Throughout history, the NBA has consistently demonstrated a progressive attitude when addressing labor matters and always prioritizes equitable payment that aligns with league standards (McLean, Strack, and Russell 2019). Additionally, the NBA prides itself on the “players first” approach when dealing with things like labor disputes, retirement benefits, and social awareness within the game. This model has served as an example for other leagues to look towards when considering their own labor negotiations. In accordance with the CBA, the NBA and NBPA are provided the opportunity to monitor and revise each party’s obligations to avoid any potential labor disputes.
Despite being the most profitable American sports league, the NFL finds itself lagging behind the NBA and MLB when it comes to labor relations amongst their players, according to McGowan and Mahon (2009). This failure has been largely attributed to the league’s hesitation to effectively collaborate with its players and their union. The lack of cooperation within the NFL and the NFLPA has resulted in a rise in many labor disputes over the years, which is not typically an issue with other major American sports leagues, such as the MLB or the NBA. According to McGowan and Mahon (2009), harmonious relations between players and team owners are indispensable for any sports league’s prosperity; this applies especially to the NFL, due to its sheer impact on the American sports consumption. Despite the NFL’s success, t is imperative for the organization to take proactive measures towards building better relationships among its stakeholders if they wish not only survival but also triumphs amidst fierce competition present. McGowan and Mahon (2009) suggest that the NFL should create a more collaborative approach by engaging in collective bargaining with its players and their union, which could lead to more favorable labor relations and help the league close the gap with the NBA and MLB. McGowan and Mahon (2009) argue that the NFL should consider implementing a salary cap in order to ensure a more equitable distribution of revenue among players and owners. By taking these steps, the NFL could ensure better labor relations and remain competitive in the sports industry. When taking a step back and looking at the leagues as a whole, it appears that the NBPA and MLBPA have had more luck in negotiations, most notably in the NBPA’s successful efforts for a 50/50 revenue split which pushed the revenues of NBA players to the highest among the major professional sports (McGowan and Mahon, 2009). Nevertheless, the NFL is urged by McGowan and Mahon (2009) to reevaluate their operations and benefit structure to ensure their players are fairly compensated, in order to stop the other leagues from further outpacing them in terms of revenues.
Overall, when comparing the NFLPA, NBAPA and MLBPA, there are some similar characteristics and important differences between these three large unions. While all three partnerships strive to create equitable working arrangements, varying team income and other dynamics create an unequal bargaining power and differences in player rights for each league. Specifically, the NFLPA has dealt many lawsuits that have weakened the union’s bargaining power and have caused them to have the furthest to go in contract negotiations. However, through collective action and union solidarity, the NFLPA, NBAPA and MLBPA can continue to advocate for player rights effectively.
Comparing Retirement Benefits:
Professional sports leagues, such as the NFL and the NBA, have faced with the task of providing benefits to players once their playing days are over. There have been some aspects of concern regarding the retirement benefits and pension plans offered to players throughout the years, despite efforts to ratify them. All three major leagues take different approaches when it comes to their pension plans and other retirement benefits, and Deubert, Cohen and Lynch (2017) take a look at how those benefits are broken down by age and distribution.
The MLB pension plan provides monthly payments to eligible former players based on the time period during which the player played, the player’s retirement age, years of service, and annual compensation (Deubert, Cohen, & Lynch, 2017). Fixed monthly payments range from a low of $85.10 to a high of $13,666, with higher payments for players in more recent eras, players who retire at an older age, players with more years of service, and higher average annual salaries (Deubert 2017). Eligibility for the MLB Pension Plan varies based on when a player played. Players who played in 1980 or later are eligible for the pension plan on the first day they are on an MLB club’s roster, while players who played prior to 1980 are eligible in three ways (Deubert, 2017). These ways include having four years of service, reaching the age of 65 prior to April 1, 1980, if they played prior to 1970, or reaching the age of 62 prior to April 1, 1980, if they played in 1970 or later (Deubert 2017). Players with fractional years of service receive pro-rated benefits (Deubert 2017).
Under the 2017 CBA in the NBA, the pension plan pays players $572.13 per month for each year of credited NBA service, with the possibility of annual increases based on actuarial calculations (Deubert 2017). The NBA indicated that pension benefits per year of service are the same for all players who played after 1965, regardless of when they played (Deubert 2017). The NBA also noted that players automatically receive pension plan payments if they do not file for them, and the Pension Plan is funded by the clubs (Deubert, 2017).
In contrast, the NFL’s Retirement Plan has a vesting requirement of three years of service, and players can begin drawing their pension at age 55 (Deubert 2017). The amount of the pension payment is determined by a formula based on the player’s years of service, age at retirement, and average annual compensation and its funded by contributions from both the clubs and the players (Deubert, 2017).
Deubert, C., Cohen, I. G., & Lynch, H. F. (2017). Comparing health-related policies & practices in sports: The NFL and other professional leagues. Comparing Health-Related Policies & Practices in Sports: The NFL and Other Professional Leagues.
Edelman, M. (2009, July 2). Are commissioner suspensions really any different from illegal group boycotts? analyzing whether the NFL personal conduct policy illegally restrains trade. SSRN. Retrieved March 11, 2023, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428480
Mahon, J., & McGowan, R. (n.d.). Corporate social Responisibility – Shippensburg University of Pennsylvania. Retrieved March 11, 2023, from https://www.ship.edu/contentassets/569211b0c6f243808c3c64f54e816cd2/v1mcgowanp45-p82.pdf
Mirabile, M. D. (n.d.). The NFL rookie Cap: An empirical analysis of one of the NFL’s most … The Sport Journal. Retrieved March 11, 2023, from https://thesportjournal.org/article/the-nfl-rookie-cap-an-empirical-analysis-of-one-of-the-nfls-most-closely-guarded-secrets/
Johnson, C. (2021). Loss aversion, reference-dependent preferences, and collective bargaining agreements in the national basketball association. International Journal of Sport Finance, 16(2), 69-78. doi:10/32731/IJSF/162.052021.02
Masters, A. (2015). Corruption in sport: From the playing field to the field of Policy. Policy and Society, 34(2), 111-123. https://doi.org/10.1016/j.polsoc.2015.04.002
McLean, B. D., Strack, D., Russell, J., & Coutts, A. J. (2019). Quantifying physical demands in the National Basketball Association—Challenges around developing best-practice models for athlete care and performance. International Journal of Sports Physiology and Performance, 14(4), 414-420. https://doi.org/10.1123/ijspp.2018-0384
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