No matter what sport you’re aspiring to work in, it’s time to focus one eye on the business developments brewing in the National Football League. The policies and court proceedings currently under review have the ability to influence sports business as a whole and more importantly, thousands of jobs.
Most discussions surrounding the NFL Collective Bargaining Agreement (CBA) have been focused on the start of the league’s first uncapped salary year since 1993. Fortunately, the most recent CBA agreed to in 2006 provided enough safeguards to protect the league’s parity in an uncapped year. As the free-agency period continues business as usual, the clock continues to tick on the March 2011 expiration of the CBA.
NFL Commissioner Roger Goodell and DeMaurice Smith, Director of the Players Association, have been posturing on the matter publicly for months, however the real chess match began soon after the previous CBA was agreed to when the NFL quietly hired super-lawyer Bob Batterman in 2007. Batterman, of New York law firm Proskauer Rose, is known for seeing the NHL through its lockout in 2004-2005. Several NFL Players Association officials considered the hiring a sign of things to come.
If an agreement is not reached by March 2011, there are a number of scenarios that could play out, including the owners locking the players out, the Players Association decertifying as a union and/or the Players Association and NFL negotiating to impasse. Each of these scenarios, if not completely preventing play, could dramatically change the conditions under which the game is played.
In addition to the CBA negotiations, the NFL is currently in front of the Supreme Court in the case of American Needle v. NFL to argue for single entity status, which would provide them immunity from section one of the Sherman Antitrust Act. Acquiring single-entity status would allow the NFL conduct business under the premise that the league cannot collude with itself.
The NHL and NBA were quick to support the NFL’s stance as they could then file for single entity status as well; giving them greater influence and saving substantial amounts of money. Although a decision in favor of the NFL looks unlikely right now, a win in this case could bring significant changes to sports business; such as allowing the leagues to set player salaries in lieu of them being negotiated on the team level.
Effects of a Lockout
According to a March 7, 2005 report by the Sports Business Journal, the 2004-2005 NHL lockout caused approximately 1,000 employees to be laid off or to leave on their own volition. Being that many NHL teams now manage the arenas they play in, there was still a significant amount of business being generated by concerts and other events, however those that weren’t laid off had to resign due to a lack of business for their commission-based positions. Several hundred people also lost their jobs when the Arena Football League canceled their 2009 season, leaving each team with only one or two employees.
An NFL lockout would produce a similar result, however on an NFL-sized scale. Thousands of NFL team and league employees would be let go and those who aren’t will have their salaries reduced. In further evidence that the league is bracing for a lockout, many coaches and scouts are currently having work-stoppage clauses forced into their contracts requiring them to take pay cuts of up to 50% or have their contract suspended or terminated upon 20 days’ notice of a lockout,.
The NFL front office blamed the recession when they laid off 150 employees in early 2009, provoking several teams to follow suit by eliminating up to 30 positions. Also, the league passed a resolution in May 2009 allowing its teams to opt out of the NFL uniform pension plan for coaches. Some have speculated that these cuts are an unfortunate scapegoating of employees in the face of the labor negotiations.
Further than those employed by the NFL, a lockout could cause a ripple effect throughout several divisions of related industries. When you consider that Super Bowl XLIII generated $261 million in ad revenue, sold an estimated 9 million slices of pizza for Domino’s and produced approximately $150 million in economic benefits to Tampa Bay, there is much more at stake than the jobs sustained directly by the league.
If an NFL lockout occurs and lasts the duration of the season, it could act as a springboard for less popular sports. How do the millions in advertising planned for Super Bowl XLIV get spent if the Super Bowl doesn’t happen? How does ESPN fill all of that NFL time? Major League Soccer just settled a contentious CBA negotiation. Could this be the year that MLS takes off, that more than a few NHL players become household names, that boxing experiences a rebirth in the form of Pacquiao vs. Mayweather?
A long NFL stoppage will free up a lot of corporate money with a lot of experienced sports professionals looking for work. As usual in the business of sports, the race is on…
Jason Kobeda is Business Specialist at the Sports & Exhibition Authority of Pittsburgh. His previous experiences include operations positions with the Cleveland Browns, Houston Texans and Pittsburgh Steelers and Football Scout at Joe Butler’s Metro Index Scouting Service. To learn more about Jason connect with him on LinkedIn.