Rethinking Sports Unionism (Part 1)

A lot has changed in the past forty-odd years, the era of sports unionism. Sports unions were vitally important in the 60’s, 70’s and 80’s in shifting a greater share of the economic wealth associated with professional sports away from team owners and towards players. Given the realities of pro sports and their legal treatment at the time unions emerged, unions had a necessary role; although the truth is, the only reason they were needed was that courts had mucked up sports antitrust jurisprudence. In this first of three posts, I suggest that the players' unions have outlived their usefulness.

Antitrust law could easily have solved the problems unions addressed in professional sports had it been applied sensibly and consistently to the sports industry. Sadly, it was not. Instead, the Supreme Court long ago introduced an absurd antitrust exemption for the “business of baseball”. I say that antitrust could have solved the surplus-shifting problem because the only reason owners captured a greater share of the surplus generated by baseball (and once television revenues began to skyrocket in the 60s and 70s that surplus became astounding) was by engaging in both explicit and “gentleman’s” agreements to restrain trade in the professional athletic labor market. Given that baseball was deemed “exempt” from the antitrust laws, players were unable to use the obvious Section 1 claims available to workers in any other industry; only by the power of unionism, collective bargaining and labor arbitration were they able to free themselves of the onerous Reserve Clause and capture their rightful share of the television-revenue windfall.

In football and basketball, no such antitrust exemption applied. Even without the exemption, however, antitrust was a flawed remedy in those industries. For one, courts refused to apply the “per se” condemnation of obvious horizontal restraints of trade that would be applied in any other industry. Instead, courts reasoned that there were certain levels of cooperation among competitors that were simply required for the organization of effective sports leagues; as a result, labor market restraints in the non-exempt football, basketball, and hockey leagues were subject to Rule of Reason inquiry (and eventually, “quick look” rule of reason inquiry). This may seem like a sensible proposition—that cooperation is required for a league to function—but it has to be considered from the perspective of legal strategy, tactics, and litigation costs. The move towards universal ROR inquiry for sports league antitrust cases has made such cases incredibly costly and time-consuming for plaintiffs. A further problem for the football and basketball players early on was that the NFL and the NBA were not actually market dominant (the way that Major League Baseball has been since the turn of the century). Even through the early 1980s, rival leagues were able to effectively challenge the NFL (the AFL, WFL, and USFL) and the NBA (the ABA) for market dominance. Although these leagues may have withered or been absorbed, they were all able to offer marquee players attractive if not supra-competitive salaries. Section 1 suits against the NFL and NBA faced a difficulty of demonstrating that those leagues had sufficient market power in the player labor market to produce, via horizontal restraints, a demonstrable “anticompetitive effect”.

But things have changed. First, with respect to the professional labor market, the baseball antitrust exemption has been obviated by statute (the Curt Flood Act of 1998). Baseball players could, today, effectively have challenged the Reserve Clause under Section 1 of the Sherman Act. Moreover, the NFL and the NBA have become supremely dominant and their “market power” cannot rightfully be questioned. The barriers to entry in professional football (at the NFL level) and basketball created by television contracts are now severe (witness the collapse of the XFL and the ABA). Antitrust law could now solve all of the problems of owners’ acquiring too much of a share of revenue from pro sports (during the 1980s, the NFL players successfully utilized antitrust law on a number of occasions). Only it can’t, of course, because labor unions exist and collusive activity for all three leagues is now exempt from scrutiny under the so-called “non-statutory labor exemption” from antitrust law.

And the pernicious effects of sports unions cannot be ignored. In my next post, I will explore some of the consequences of labor conflict (strikes and lockouts) and suggest a solution. For the meantime, consider the three most dramatic negative effects of current sports unions. First, they have engaged in a relentless protection of insiders (and particularly “superstar” insiders) at the expense of outsiders. Unions could help ensure access to employment for rising stars; instead, they collaborate with the leagues to erect barriers to entry such as age-limits. While the insider-outsider problem is well-known in labor economics, it seems particularly potent in connection with sports unions. Second, sports unions have harbored criminals (e.g., Latrelle Sprewell, Steve Howe, and the Indiana Pacers Basketbrawlers), cheaters (e.g., Bonds, Giambi, Sosa) and scoundrels.

Most significantly, in part because of these negative consequences, it is my belief that the players’ unions have had a debilitating effect on the American union movement generally. I’m no union-buster; in fact, quite the opposite (see my support of minor league umpires here; but see my vaguely pro-management paper on specific performance in athletic employment contracts, the final version now up here). My mother was in a union, I spent around 30% of my time in practice representing members of the United Farm Workers, and I enjoy the protection of a collective bargaining agreement at my university (although law professors are apparently barred from membership in the union based on legal ethics rules, which is nice, because I’m relieved of the obligation to tithe union dues). But even supporters of the labor movement have to acknowledge the well-documented decline of American unions. So too the increasingly negative view the public has of unions. Why has the public abandoned unionism? Of course, there are many factors to explain these developments. But I would submit that sports unions – full of bratty, petulant, abusive millionaires constantly demanding just a little bit more coin and willing to sacrifice the happiness of fans and communities (see my next post) – have played a role. Players’ unions are the unions most in the public view (as Judge Sotomayor noted in her Silverman opinion, 880 F.Supp. 246, strikes in pro sports "captivate[] the public's attention" and "place[] the entire concept of collective barganing on trial."). The behavior of sports players’ unions has been morally deficient. Other unions, struggling on behalf of far less well heeled employees in more cash-strapped industies, have acquired guilt by association. And the whole of the American labor movement has suffered as a result.

Stay tuned for Part II of this discussion, next week.

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