Cause and Effect of Labor Strike in Sports - Essay Example

Outline Introduction 2. What Is the Collective Bargaining Agreement? 3. The Lost Sports Season 4. The Economic Cost of Labor Strikes in Sports 5. The Need for Salary Caps 6. Conclusion 7. Works Cited The Cause and Effect of Labor Strike in Sports The businesses of the world rely on a constant flurry of activity and exchange of monetary considerations in order to remain effective and beneficial to all the parties concerned. In order to keep the money machine rolling, certain concessions and agreements must be reached by the business managers / owners and its employees / players. Parties agree that there is a need for equal sharing of the profits realized by the enterprises and endeavors that the employees participate in.However, there are times when they fail to meet eye to eye in terms of what would be a fair share of the earnings between management and staff. Such disagreements are common in the world of business. However, these type of management problems get magnified a thousand fold when it happens in the world of sports because of the way sports seasons have become a part of and a way of life for the avid fans of the games. Therefore, such problems have a profound effect on the sports in terms of lost manpower / player hours and economic revenue for the sports team and stadium owners. In order to understand how these sports labor disputes occur, one must first become familiar with the term Collective Bargaining Agreement and what it stands for. In any area of business wherein there are large numbers of employees who have common interests at stake, they are forced to form unions whose sole job it is to represent these varied employee beneficial goals with management. As a collective group, it becomes much easier to lay their needs on the table and present a unified solution to the problem to the representatives of the management side. A bargaining procedure is then enacted wherein the two parties must find a way to reach their economic earning goal without being unfair to their party. The end of these series of negotiations results in an agreement that the employees and employers sign a legal document for in order to formalize their meeting of minds and interests. This is what becomes known as the Collective Bargaining Agreement or CBA. It is important for sports teams to have a CBA in place in order to insure the smooth flow and number of games played during a regular season. Without an effective CBA in place, the players may choose to go on strike, better known as a lock-out in sports lingo, in order to gain better benefits for themselves as employees. However, such situations have an adverse effect on the popularity of the sport overall because avid sports fans who get disgruntled by the lack of play time during what should have a regular season for the sport, find themselves disenfranchised in a way, and therefore in need of other sports entertainment venues. However, there is sometimes a need to have a lost sports season in order to allow both parties more time to sit at the negotiation table and come to an agreement regarding player demands and team owner needs. As far as the fans of the game are concerned though, they can just sit out the labor dispute period, get busy with other things, and just come back to enjoy the game as soon as the labor dispute is over. The lock-out period caused by the lost season or lack of played games during a season results in an economic downturn for all parties concerned however. This is because the players do not get paid any salaries when they are not on the playing field or court representing their franchise owners. Such a scenario is commonly seen during the NHL, NFL, MLB, and NBA seasons. Paid sports venues such as arenas and the television stations broadcasting the games are not recession proof and neither are the players. These lock-out situations prove to have detrimental effects towards their yearly incomes although the players, in the long run, become more adversely affected than their owners and the television stations as the owners and television stations have more avenues for income than the players. To quote Scott Norton of Norton Sports as interviewed by Helene Elliot (2011): The bottom line in any of these things is that owners of the teams dont rely on revenues from the sport for their income, whereas athletes do... The main bone of contention between these two parties actually goes back every time to the revenue and profit sharing percentages generated by the games and its accompanying franchises. While the team owners would like to see what they deem to be a more beneficial profit sharing scheme at 50-50 %, the players would like to share in at 57-52.5 % instead. Currently, the NBA is already in lock-out mode with their bargaining discussions seemingly dragging on and perhaps allowing only half the games of the regular season to be played. There is already a growing sentiment that this scenario might again play out once the regular NHL season starts. Even though the team owners recognize the value of their players on the field, at the end of the day, they are still running a business that must generate a positive income for them at the end of the day. That is something that can only be realized by placing a salary cap on the players which of course, does not sit well with the players. Thus causing more disagreement between two parties and the need for a new CBA to be enacted in order to keep both sides happy. What the players lose in terms of salary, their owners try to make up for by sharing ticket sales, game related merchandize profits, and other side deals instead. These deals however, still need to be approved by the players union in general and formalized in the CBA. So, these sports labor disputes and game lock-outs do not benefit either side. Both lose out significantly and require both sides to make concessions out of the need to make more money for each other in order to protect each sides vested interest. Works Cited Adalbert. “A Look Back at Professional Sports Labor Disputes”. AMOG. 9 June 2011. Web. 1 November 2011. Elliot, Helene. “NBA Lockout Could Be a Preview of NHLs 2012 Labor Talks”. On the NHL. Los Angeles Times. 31 October 2011. Web. 1 November 2011. Matheson, Victor A. “The Effects of Labor Disputes on Consumer Demand: A Re- Examination of Major League Baseball”. College of the Holy Cross Department of Economics. October 2004. Web. 31 October 2011. Read More