Pro Sports Unions: Do They Help Or Hurt?

By Angela Daidone | June 13, 2011 AAA
Pro Sports Unions: Do They Help Or Hurt?

Professional sports has always been big business. And just as in many other industries throughout history, athletes' labor unions came about as a quest for fair treatment from owners who wanted to retain as much control as possible.

But five decades after the first players' associations formed, pro sports have changed a great deal and are not like other industries at all. The explosion of media exposure, the emergence of luxury boxes and lucrative contracts for stadium parking and concessions have helped create astronomical revenue for teams. Likewise, player salaries have grown exponentially and athletes are considered rock stars in team uniforms. Indeed, the stakes are very different than in the past. (For more on unions, check out Unions: Do They Help Or Hurt Workers?)

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Who wins and who loses when it comes to sports labor disputes? And what happens to the fans in the scrum? Here's a quick look at the background and current status of sports unions and their impact on the industry.

National Football League
No other sports union issue is more prominent right now than in the NFL, whose 2011-12 season is threatened by the ongoing lockout. Among the major sticking points: adding two regular season games to the existing 16-game schedule, salary caps and restructuring the division of the game's annual $9 billion revenue.

The owners want a longer season because it would mean more ticket sales, increased TV revenue and more money in their pockets. The players say adding more games increases the risk of injuries. Players want bigger paychecks; the owners don't want to fork it over. Period.

But contract disputes and labor issues are nothing new to American football. The players strike in 1987 was one of the most publicized labor disputes in history. A few weeks into the season, players demanded free agency and a bigger percentage of revenue. Owners didn't give in, replacing the striking players with lineups of replacement amateur athletes. It backfired in one sense for the owners, who saw drastic drops in stadium attendance and TV ratings. But in the end, the players were the bigger losers, returning weeks later without any of their demands met.

It wasn't until 1993 that the owners agreed to free agency for veteran players in exchange for the players' union agreeing to a "hard" salary cap. Right now, however, what was agreed upon 18 years ago is again up for grabs. (For more on the NFL, check out The Money Behind The NFL Players' Lawsuit.)

National Basketball Association
It may be hard to fathom basketball players saying they're being treated unfairly when it comes to contract issues, especially when two of Forbes' top five highest paid athletes are in the NBA, and the average salary of players sits at about $6 million per season. To be fair, the disparity among players is quite striking, as some players make less than $100,000 while L.A. Lakers' Kobe Bryant rakes in about $25 million a year.

Regardless, the National Basketball Players Association recently filed a charge with the National Labor Relations Board claiming the league has "engaged in unfair labor practices" during the collective bargaining negotiations by making "harsh takeaway" demands. The NBA, which lost $340 million last year and is projected to lose another $300 million this season, wants a "hard" salary cap for its players, reductions in current and future salaries and shorter contract lengths. The players are refusing and with the collective bargaining agreement deadline a little more than a month away, the NBA season is also in jeopardy. (For some athletes that are good investments, read Sports Stars Worth Every Penny.)

Major League Baseball
One cannot discuss baseball labor unions without mentioning Curt Flood, whose challenge of the reserve clause in 1972 opened the gates to free agency. Flood, an 11-year veteran center fielder with the St. Louis Cardinals, refused to be traded to the Philadelphia Phillies following the 1969 season. In a letter to then-MLB commissioner Bowie Kuhn, Flood requested he be given the right to consider offers from other ball clubs and not be treated like a "piece of property to be bought and sold." When Kuhn refused, Flood appealed his case to the U.S. Supreme Court. Although his bid was unsuccessful, it was a groundbreaking event for players, who were granted the option of free agency three years later.

When it comes to paychecks, though, baseball players command the top numbers overall. Team payrolls are unrestricted and stars are being signed in mega-deals that pay out multi-millions over years-long contracts. Case in point: New York Yankees' third baseman Alex Rodriguez inked a $252 million 10-year deal in 2001. This season, he's hauling in a cool $32 million. Even on the bottom-tiered teams, like the Kansas City Royals with a paltry $36 million payroll, the average salary is just above $1.3 million.

Baseball, however, does not have a salary cap. Instead, it has a luxury tax and revenue sharing, and the players association fights long and hard to keep it that way. Similarly, the owners of the richest teams come under fire for "buying" the top players, but having the most cash doesn't guarantee a World Series ring. (For more on baseball, check out Baseball Books: The Major League's Financial Secret.)

The Bottom Line
When it comes to the effectiveness of sports labor unions, who are the winners and losers depends on which side of the table you're sitting. However, the fans -- the ones fueling the revenue engine in the first place - are the ones who inevitably feel the crunch. When salaries rise, so do ticket prices. When negotiations stall and seasons hang in the balance, the fans are forced to sit and wait. (For more on pro sports, see Who's Cashing In On Pro Sports Revenue?)

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