Wednesday, November 7, 2007

This Week's Union News

This week's edition of Street & Smith's Sports Business Journal contains two interesting developments on the labor front:

First, Liz Mullen (11/05/07, NHL players give approval to new union constitution) reports that NHLPA members last week approved a new union constitution that eliminates the executive committee of players, which had so much power during the 2004-05 NHL lockout. The union will now be governed by 30 player representatives and each team will have an equal vote. According to NHL player Eric Lindros, “This new document ensures that the players have control over their union and have the full ability to govern themselves.”

Second, Dan Kaplan and Mullen (11/5/07, Debt vote prompts union collusion inquiry) report that last week the NFLPA launched an investigation into whether the NFL’s decision to lower the debt ceiling of its 32 clubs constitutes collusion to reduce competition for players or players’ salaries. Last month, NFL owners voted to lower the debt ceiling (how much money a team can borrow) by $30 million, which reduces the debt ceiling to $120 million from $150 million. At the same time the debt ceiling is being lowered, the league says it is planning to cut $1 billion of league and team debt over the next three years. Commissioner Roger Goodell characterized the move as a prudent business decision in reaction to turbulent credit markets. According to NFL spokesman Brian McCarthy, “The decision was motivated by several factors, principally relating to current credit market conditions, the uncertain economic environment, the prospect of slower growth and recent significant increases in leaguewide debt levels. It’s consistent with our generally conservative approach to debt and debt policy.” However, NFLPA executive director Gene Upshaw and union outside counsel Jeffrey Kessler expressed concern that lowering the debt ceiling could have a chilling effect on team spending for players. Kessler noted that clubs frequently finance player compensation and signing bonuses with debt.

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