Antitrust and labor relations in sports


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A presentation about antitrust, its importance, collective bargaining agreements and player strikes/lockouts.

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  • CBA is a good faith negotiation between union and management.Things like the draft, free agency would be violate antitrust laws because it limits the ability to earn $. But the CBA covers those issues.
  • % of total revenue that players are entitled to. (i.e. money earned from gate receipts, concessions, parking, broadcasting rights)Retirement benefits, how long and how much?
  • MLB – arbitrator picks 1 of 2 figuresNHL – arbitrator can pick 1 of 2 figures or select one in between the two
  • Free agency process and types of free agents depends on the league.Penalties for violating drug policy.Steroid policy.Drug prevention programs.
  • World Series TV ratings dropped 33%. Lost money from potential ad revenue and broadcasting rights.Lost $375 mil in ‘94, $519 mil in 2001.Expos had to lower their payroll and couldn’t field competitive teams. Bought out by MLB, destroyed fan base, relocated.
  • Orioles attendance has decreased every year since the strike. Due to loss of revenue and failure to field a competitive team because of that revenue loss.
  • Playoffs not affected.Salary cap limited potential player earnings.Nike suspended 230 players endorsements.Younger players signed shorter contracts for more flexibility.
  • 388 players went to Europe.Affected the 2005 Worlds as well because countries were reluctant to select players without proper conditioning.There were no previous results to determine draft order.If the NHL ever locksout again, the Stanley Cup can be won by a non NHL team.
  • Also, television ratings and ticket sales are affected. The NBA saw a drop in both categories for the first 3 years after the strike.
  • Antitrust and labor relations in sports

    1. 1. Antitrust and Labor Relations in Professional Sports<br />By: Derek McVay<br />
    2. 2. What is Antitrust?<br />Helps prevent monopolies<br />Promotes commerce<br />Prevent/block strikes<br />Allows free trade<br />
    3. 3. Pro Sports As Monopolies<br />Can…<br />Restrict entry<br />Collude on revenue sharing<br />Must have “honest competition”<br />CBA’s are protected from antitrust law<br />MLB exempt from antitrust law<br />
    4. 4. Importance of Antitrust<br />Gives consumers choice<br />Prevents domination by one organization<br />Balance of power<br />Promotes competition<br />Prohibits businesses from operating in a way that harms consumers<br />
    5. 5. Subjects of CBA<br />Three main categories<br />Wage Provisions<br />Hour Provisions<br />Terms and Conditions of Employment<br />
    6. 6. Wages<br />Salary caps<br />Fines<br />Termination/severance pay<br />Salary arbitration<br />Benefits<br />i.e. pensions, health insurance<br />
    7. 7. Salary Arbitration<br />Use of neutral 3rd party to resolve pay disputes<br />Goal is to determine a player’s worth<br />Used in NHL and MLB<br />Process differs between the two<br />
    8. 8. Hours<br />Scheduling<br />Regular season, postseason<br />All Star game<br />Training camp/Spring training<br />Travel<br />Charitable requirements<br />Public Relations<br />
    9. 9. Terms and Conditions of Employment<br />Free agency<br />Draft<br />Disciplinary Actions<br />Drug Testing<br />Player Conduct<br />
    10. 10. Past Strikes/Lockouts<br />MLB – 1994-1995<br />NBA – 1998-1999<br />NHL – 1994-1995; 2004-2005<br />
    11. 11. Effects of MLB: 1994-1995<br />Lost around 2000 games <br />Including World Series<br />World Series ratings have decreased<br />Lost money every year<br />Decrease in attendance<br />Montreal Expos<br />
    12. 12.
    13. 13. Effects of NBA: 1998-1999<br />Lost a little over 900 games<br />Players lost roughly $500 million<br />Salary cap introduced<br />Rookie pay scale<br />Loss of revenues, endorsements<br />Players signed max amount contracts<br />Younger players signed shorter contracts<br />
    14. 14. Effects of NHL: 1994-95, 04-05<br />Players played in Europe<br />Affected 2005 World Junior Championship<br />CFL and NLL popularity increased<br />Salary cap<br />Affected 2005 draft<br />Stanley Cup<br />
    15. 15. Overall Effects<br />Revenues<br />Salary caps and contracts<br />Attendance <br />Popularity of other sports<br />Effects non-sports related business<br />i.e. hotels, restaurants, travel<br />