Leading to a lockout? NFL vs NFLPA collective bargaining negotiation

Guest post. This post is part of series of posts written by my sport management students and is cross-posted on the UMass Center for Spectator Sport Research blog. The authors of this post are Lilah Brown, Dan Hatman, Oleg Kamenetsky, Miha Kline, Ariel Weisman.

To put the current negotiations in perspective you need to look at the last 20 years.  The Reggie White vs NFL antitrust case led to NFL players gaining free agency, while the owners gained a salary cap and floor.  The salary floor was based on the players having access to 58% of broadcasting and attendance revenue.  Subsequent renegotiations of the CBA led to increases in minimum salaries and increased contributions to pensions and 401K’s.  In 2006, the owners’ in-fighting over revenue sharing allowed the NFLPA to gain tremendous leverage in the negotiation.  This led to the players gaining access to 59.5% of ALL football revenues.  In 2008, the owners opted out of the CBA saying that the 2006 agreement increased salaries to the point that the owners felt they were not making the same profits.

The owners said after opting out that they wanted to renegotiate the CBA with an 18% revenue exemption that the players would not have access to. The NFLPA expressed concerns over justifying this cut, when NFL teams average $31 million in profit.

The NFLPA has said publicly that they have no intention of accepting an 18% pay cut and are preparing for a lockout in 2011. To protect the players, the NFLPA has saved $200 million as a lockout fund by increasing dues by $5,000 per player and the players signing over their royalties from group licensing rights to the NFLPA.  From this fund, the NFLPA hopes to pay each player $60,000 in 2011 if a lockout occurs.  The NFLPA has made their perspectives public, hoping fans and lawmakers put pressure on the owners to lower their demands.  One such strategy is to remind the public that the NFL is a non-profit and does not pay taxes on its $8 billion of revenue.  Another move has been to highlight the NFL’s reluctance to open its books to the NFLPA or the public in order to prove that they are actually hurting financially.

The NFL owners have countered many of these points.  The NFL argued that their non-profit status should remain as they do not collect the $8 billion in revenues, but rather pass those profits on to the 32 teams, who in turn, pay taxes on that money.  Furthermore, several NFL owners have made multi-million dollar investments into new stadiums to grow revenues for both owners and players.  The owners want players to contribute to these projects and share in their risk.  The NFL also clarified the 18% cut.  This would not be a straight 18% reduction in player salaries, but rather the NFL would take 18% of the total pie, before revenue sharing, to cover operating expenses. The remaining 82% would be shared with 60% going to the players and 40% going to the owners. The players would end up only seeing around 5% less than they currently do and the owners argue that this 18% ($1.4 billion) would be used to grow league revenues, allowing for higher player salaries in the future.

As fans, we see this as an argument between millionaires and billionaires but this potential lockout also impacts local government (less tax revenue), corporate sponsors (less funding), stadium development (suspended), NFL employees in both the league and team offices, coaches, transportation groups, and stadium & media employees (unemployment).

Scheduled sponsorship revenue for the 2011-2012 season

Revenue Source	Value (in millions)
Visa	$30
AB InBev	$50
Verizon	$187.5
EA Sports	$30
Reebok	$30
Other sponsorship discounts	$125
Preseason	$500
Potential league-wide losses	$952.5

Growing number of unpaid internships may be illegal

Unpaid internships are an almost unavoidable part of a student's transition into the sport industry. Many sport management programs mandate an internship as part of the degree requirements, and it is part of the sport management accreditation process. With that in mind, the NY Times article "Growth of Unpaid Internships May Be Illegal" caught my eye (HT: Patrick Gettings).

According to US labor laws, unpaid internships have to meet certain criteria, such as being educational (not just grunt work), not replacing the role of existing employees, being at the benefit of the trainee, and possibly even inhabiting workplace efficiency (yes, really). The Times article calls attention to the increase in unpaid internships, particularly as the economy has tightened budgets.

If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

This isn't to say that sport internships are a problem. In fact, sport organizations have a long history with internships and should be familiar with the procedure. Most student interns receive course credit (an acceptable trade-off in lieu of pay) and the leanness of sport organizations means that interns are exposed to many parts of the business--even if their work is menial, it's still educational. That said, there are still many sport internships positions that run afoul of the law, and it's important for student and university internship coordinators to be very cognizant of the relevant issues.

The article also raised a point to which I'm particular sensitive: unpaid internships are economically biased. Many people can't afford to take an unpaid internship, which hinders their prospects for future employment. Those who are well-off, or can be supported by their parents, can afford to gain valuable work experience and connections through by unpaid internships. These jobs make the students more attractive to employers once the students enter the job market. Unpaid internships do not help break the poverty cycle, nor do they help diversify the socioeconomic make-up of sport organizations. I think SBJ had an article on this issue about a year ago, and though I couldn't find that one, I did find some others.