THE ECONOMY OF PROFESSIONAL SPORTS
As the National Football League prepares to celebrate another victorious season at Super Bowl XLVI in Indianapolis, James Dworkin, chancellor of Purdue University North Central and former associate dean at the Krannert School of Management, reminds fans of what might have been an economic defeat.
Dworkin, an expert in labor relations in professional sports, says that without a new collective bargaining agreement between owners and players, all or part of the 2011 season could have been lost, along with nearly $8 billion in revenues among the 31 cities with NFL teams and another $450 million to this year’s championship host.
THE REAL PLAYING FIELD
When an accord was reached in late July to end the longest lockout in league history, the real cheers belonged not to the NFL, but to the players of the game behind the game, the dealmakers and strategists who navigate the delicate balance of economic and political power in professional sports to help ensure that everybody –– including fans –– wins something.
Dworkin analyzes the NFL lockout and other labor issues in professional sports in a chapter he is contributing to the Labor and Employment Relations Association (LERA) 2013 Annual Research Volume. He and co-author Rick Posthuma, a professor at the University of Texas, first addressed the topic in LERA’s 2002 volume, and current events are giving them ample fodder for discussion.
“The role of collective bargaining in sports has rarely been more important and timely,” Dworkin says. “Within a span of 18 months, the labor contracts of the four largest professional leagues in the United States will have expired, and the owners and unions will have either reached a new agreement, endured a lockout or both. That’s unprecedented.”
HE WROTE THE BOOK
Although Dworkin’s duties as chancellor now keep him on the sidelines during such negotiations, he has served as an arbitrator, mediator and fact-finder for a variety of labor-management disputes in both the public and private sectors. An inducted member of the National Academy of Arbitrators, he also has published two books and more than 50 articles about industrial and labor relations, mostly related to professional sports.
Dworkin’s seminal work on sports unions, “Owners Versus Players: Baseball and Collective Bargaining,” remains one of best manuals for understanding the industry’s current labor dynamics.
“Most of the labor issues now being faced by players and owners were first addressed by Major League Baseball, which has had more work stoppages than any other sport,” he says. “For better or worse, the MLB players association is the model for sports unions today.”
Lately, Dworkin says, the results have been mixed.
LESSONS TO BE LEARNED
Some experts predict that the National Hockey League, whose collective bargaining agreement with its players' union expires in September 2012, will repeat the mistakes of the NFL and NBA and force a lockout. Dworkin says a better strategy for the NHL would be to follow the more recent lead of professional baseball, which in November announced a new deal that ensures play through the 2016 season.
Unlike the protracted feuds between owners and players in baseball’s earlier years, the current deal came only a month after the previous five-year contract expired. That’s a stark contrast to 1994, when a strike wiped out the entire MLB season at an estimated cost of more than $800 million in owner revenues and player salaries.
“It took the league years to recover, but it was an important lesson,” Dworkin says. “There hasn’t been an MLB work stoppage since.”
EYE ON THE BIGGER PRIZE
While collective bargaining in baseball and other professional sports has clearly come a long way, many argue that it still has a long way to go.
“In a difficult economy, backlash over the perceived greed of players and owners will only escalate, especially as ticket prices continue to rise and taxpayer-funded stadiums are built,” Dworkin says. “Keeping a loyal fan base should be their primary concern.”
$480 MILLION LOST
As the NFL dispute neared its end in the summer of 2011, simmering discord between National Basketball Association owners and players over the division of income followed a similar pattern to lockout, Dworkin says. By the time a new agreement was reached in December, however, the first seven weeks of the NBA season and revenues of some $480 million had been lost.