Title: Management
1Management Player RelationsThe History and
Effects of Strikes and Lockouts
- Mike Scheller
- PED 4761
- Sport Management and Adminstration
- 6/7/2006
- Graduate Project
2Strike vs. Lockout(Gifis 1996)
- Strike A strike is a concerted action or
combined effort by a labor union designed to
exert pressure on an employer to accede to
certain demands. Today the right to strike is
usually governed by the National Labor Relations
Act. The strike is the primary weapon to force
owners to either adhere to the players demands
compromise or prolong negotiations. In a strike
for economic reasons which is the basis for most
strikes the strikers may be replaced. Most
strikes occur because of discrepancies between
the union and league when dealing with or
renewing the collective bargaining agreement or
contract. - Lockout A lockout is the employers counterpart
of a strike. In a lockout the employer prevents
the players from working in an effort to gain a
better bargaining position in labor negotiations.
A lockout may occur upon the expiration of a
collective bargaining agreement. The lockout
gives the employer the tactical advantage because
timing is made by the league rather than the
players union. Unemployment benefits may accrue
to employees who are locked out as opposed to
employees on strike.
3Disruptive Variables(Staudohar 1999)
- Most strikes and lockouts occur because of
disagreements on the basis of one or several of
the following issues. - Team Salary Caps
- Individual Player Salary Caps
- Free agency clauses
- Team Tax Rates
- Player benefit packages
- Pension plans
4 General History
- Most strikes or lockouts are the result of
communication breakdowns during negotiation of
contracts - Each of the Big Four have suffered strikes or
lockouts - Baseball has seen the most interruption
- As the sports industry grows the effects of
strikes and lockouts becomes more detrimental.
5Big Four History(Schmidt 2004)
6MLB History(Associated Press 2006)
7NBA/NFL/NHL History(Schmidt 2004 Blum 2004)
8First MLB Stoppage(Wikipedia.com 2006)
- Reason Players wanted the league to bargain on
issues dealing with salary and pension but the
league refused to. The problem began during
spring training of 1972. - Outcome The players went on strike during
spring training and into the season until the
league finally gave in and paid 500000 to the
pension fund. Players saw the benefit of the
strike and use it each time the collective
bargaining agreement expires in the future.
9Latest MLB Stoppage(Wikipedia.com 2006)
- Reasons Worried about the survival of small
market teams the league recommended a salary cap
due to falling revenues. The players association
rejected the proposal and a strike ensued. - Result The 1994 World Series was cancelled the
first time since 1904. After the league
threatened the use of replacement players the
players voted to return to work after part of the
1995 season was cancelled as well. Baseball
suffered in attendance and revenue as fans were
repulsed by the financial activities of players
and teams. A new agreement was not signed until
1997.
10First NFL Stoppage(Helmethut.com 2006)
- Reasons In 1982 players want several conditions
changed during the renewal of the collective
bargaining agreement including information
availability free agency pension and severance
pay. - The league did not give in until the players went
on strike. The season was shortened from 16
games to 9 with a revised postseason format.
Teams and players gained access to all contracts
and an increased salary benefit program. Other
issues were not resolved.
11Latest NFL Stoppage
- Reasons The players wanted free agency a
higher pay scale and increased pension benefits
which the league was not willing to offer. The
players went on strike two games into the season
as a result. - Outcome The strike lasted for 24 days but
players returned to work after the league played
games with replacement players. The return was
due to television coverage of replacement player
games and the break down of player union support.
Both parties eventually agreed to a salary cap
tied to a players share of league revenue and the
league permitted free agency.
12First NHL Stoppage
- Reason Players wanted full control of their
marketing rights such as photographs and playing
cards as well as changes in arbitration free
agency and pension fund policies. The league
did not agree at first and a strike ensued. The
strike came at the end of the season and
threatened the post-season. - Outcome The strike only lasted 10 days and the
30 lost games were made up at the end of the
regular season. The two parties agreed on a two
year contract extension full marketing rights
for players and a compromise on disability
benefits.
13Latest NHL Stoppage
- Reason The players union and league were unable
to agree on a salary cap that would lower the
average salary by 500000. The league forced
the issue due to consistent loses. - Outcome The lockout of the entire 2004-2005
season. Players eventually gave in and played
the 2005-2006 season under a salary cap.
14NBA Stoppage(Staudohar 1999)
- Reasons - The owners were in a bad situation with
the lose of money due to rapidly increasing
salaries and falling apparel sales. The owners
recommended a salary cap that was not accepted by
players. - Outcome The league and players came to the
table after a 202 day lockout and agreed on
issues dealing with salary caps free agency
rookie pay scale bad behavior and minimum
salary. The first ever individual player salary
cap resulted and the two parties came to
agreement.
15Parties Effected by Lockouts/Strikes
- Owners - loss of revenue
- Players - loss of salaries
- Fans - loss of entertainment and their team
- Sponsors - loss of contracts and exposure
- Cities - tax revenue and draw of tourists
- Restaurants/Bars/Hotels - Loss of customers and
income
16Parties Effected by Lockouts/Strikes
- Retail stores - Decrease in apparel sales
- Employees - loss of jobs for individual teams and
league (concessions cleaning hosts etc.) - T.V. Radio - Loss of broadcasting rights and
viewers - The sport - loss of support and general appeal
- ALL stakeholders in the league and organizations
will be effected financially and/or
psychologically
17Financial Loses from Strikes/Lockouts(Baade
2006)
- NBA owners lost 1 billion from the 1998 lockout
- Players lost 500 million in salaries from the
same lockout - Since 1987 78 major league stadiums have been
constructed at a cost of 22.6 billion of which
16 billion was financed with public funds - The Cardinals brought 301 million in annual
economical benefits to St. Louis with the
potential of an additional 48 million from the
post season in 2000. - The Seahawks generate 234 million annually for
Seattle - The Saints generated 402 million in 2002
18Financial Loses from Strikes/Lockouts
(cont.)(Baade 2006)
- The Saints generated 402 million in 2002
- Studies have shown that a MLB strike or lockout
can have an economical impact for the host city
ranging from 16.2 million to 300 million - The financial effects vary with the size and
economical condition of the host city - Smaller markets are effected more by a lockout or
strike regardless of the amount of money lost
compared to larger markets - True economical impacts are impossible to measure
since many parties are effected
19Most Recent Lockout Facts(TSN.ca 2006)
- NHL lost entire season
- Average salary in 1995 773000
- Average salary in 2004 1.83 million
- Teams lost 224 million in the previous season
- 75 of revenues went to player salaries
- Owners implemented the lockout due to heavy
losses and high salaries of players
20Most Recent Lockout Facts(TSN.ca 2006)
- The players association paid 29 to 44 million
to its nearly 700 locked out players - Lost contracts with major television companies
now shown on OLN - For a discussion on the NHL situation prior to
the lockout click the link and chose the NHL
Insiders discuss the lockout - September 15
2004 video link - http//www.tsn.ca/nhl/feature/fid9932hubname
21Trends
- Player salaries discussions are the main cause of
strikes and lockouts. The link below traces
player salaries and ticket prices for the past 7
decades for the MLB - http//eh.net/encyclopedia/article/haupert.mlb
- The followingfollows MLB salaries from
1984 to 1997. Notice the increase in percentage
change in the years prior to the 1994 season long
strike.
22MLB Salaries
23Effects on Fans
- While fans are lost during strikes and lockouts
studies show that eventually they return to the
sport - The sport will suffer during the interruption and
in the following year or years but ultimately
fans return - MLB suffered 20 decreases in attendance after
the 1994 strike until the homerun race in 1998
when attendance began to increase (Beasty 2005)
24Effects on Fans (cont.)
- NHL realized the effects of lost support after
the 2004 lockout and undertook marketing
campaigns to sway back fans. - Attendance for the NHL was down and television
ratings took dramatic hits - The following link covers fan reactions to the
NHL lockout and the emotional effects fans
undergo in such situations. Chose the What the
fans think - September 15 2004 video link. - http//www.tsn.ca/nhl/feature/fid9932hubname
25Future Expectations
- Strikes and Lockouts have been implemented in the
past and will continue to be used in the future - They are very inexpensive to implement and with
many organizations in each league losing money
each year it can be expected that lockouts will
be used as a weapon to lower player salaries.
(Gifis 1996) - To combat this players will threaten strikes
during post-season play (the most profitable
games for owners) - With player salaries growing conflicts are
inevitable - Whether fans continue to support players and
teams after play stoppages is completely up to
them but if history repeats itself strikes and
lockouts will have no permanent effects on fan
support
26Discussion Questions
- What can management do to avoid the need for
lockouts or strikes when dealing with collective
bargaining contracts - Should every league implement a salary cap for
teams Give reasons to support your opinion and
at least one contradicting reason. - What can fans do to reprimand leagues for
striking or locking out players and would you be
willing to take such actions against your
favorite team
27References
- Associated Press Players union sets Aug. 30
strike date. www.snnsi.com. May 2006. - Baade Robert Baumann Robert Matheson Victor
The Economic Consequences of Professional Sports
Strikes and Lockouts Revisited.
www.holycross.edu/departments/economics/website.
April 2006 - Barret Wayne M 1995 Fools for fans. USA
Today. - Beasty Colin. The Post-Strike NHL Set to
Score. Customer Relationship Management. Oct.
2005. p. 19. - Blum Ronald. NHL will lock out players today.
Daily Iowan. May 2006. - Briones Maricris. How NBA could make it up to
fans. Marketing News. Jan. 1999. p.111. - Burnette Roberta. Walking out on wages.
Workforce Management. Aug. 2005. p 12-13. - Cold War. May 20 2006. TSN.ca.
- Gifis Steven Strike vs. Lockout. Barrons
Legal Guides Law Dictionary. 1996. - National Football League Players Association
May 20 2006. http//en.wikipedia.org/wiki/Nationa
l_Football_League_Players_Association. - NFLPA helmethut.com 2006 May 20 2006.
- Schmidt Martin Berri David. The Impact of
Labor Strikes on Consumer Demand An Application
to Professional Sports. The American Economic
Review. Vol. 94 no 1. March 2004 - Stanford University News Service. Fans will
decide outcome of baseball strike sports
economist says. www.Stanford.edu/dept/news/pr.
6/5/2006. - Staudohar Paul. Labor relations in basketball
the lockout of 1998-99. Monthly Labor Review.
April 1999. p. 3. - Schmidt Martin Berri David. The Impact of
Labor Strikes on Consumer Demand An Application
to Professional Sports. The American Economic
Review. Vol. 94 no 1. March 2004. - Weve been here before http//www.cbc.ca/sports/i
ndepth/cba/features/flashback.html 2006. - 1994 baseball strike May 20 2006.
http//en.wikipedia.org/wiki/1994_baseball_strike