Labor Law Leads to Efficient Operations in the NFL Commentary
Labor Law Leads to Efficient Operations in the NFL
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JURIST Guest Columnist Erica Menze, Marquette University Law School Class of 2012, is a member of the Marquette Sports Law Review. She writes on the implications of labor law and antitrust law on the National Football League’s operations…


During the National Football League (NFL) lockout in 2011, the National Football League Players Association (NFLPA) — the NFL players’ union — decertified in order to bring an antitrust suit against the NFL. If the NFLPA had not decertified, the players would only have been protected under labor law because of the antitrust exemptions it provides for union-employer bargaining in labor disputes. While many players prefer that the NFL operate in the antitrust law arena, more equitable outcomes will likely result from operation in the labor law arena.

Currently, the NFL operates under labor law standards. The union and the employer — in this case, the NFLPA and the NFL owners — negotiate a collective bargaining agreement (CBA) in order to establish rules for how the relationship will work. The CBA covers a broad range of issues, including legal remedies and union earnings. When the negotiations reached an impasse this year, the NFL owners had the legal right under labor law to lockout the players. Usually, when a lockout occurs, the union can still collect employment benefits from the employer, such as insurance or pension benefits. If this occurred during the NFL lockout, the players still would have collected benefits under their union rights, but the owners would incur these costs without earning any profits for the lost football season. In addition, the NFLPA acquired lockout insurance, which guaranteed the players around $200,000 each, if the entire season had been canceled. While this amount is minuscule for many NFL stars, most players could comfortably survive on this amount for a lost season. This move could have been leveraged to push the owners for a new CBA. By staying in the realm of labor law, the players would have avoided the owners’ perhaps valid allegations that decertification was a “sham” and that the players continued to act as a union. The NFLPA decertification was extremely risky. By decertifying, the NFLPA left its labor law protections and voluntarily joined the antitrust arena. As a result, the NFL or the NFLPA could have filed an antitrust suit against the other.

The players filed their antitrust suit, Brady v. NFL, first, claiming that the NFL owners engaged in anti-competitive acts in violation of the Sherman Antitrust Act based on how they allotted NFL players in the draft and the use of franchise tags. Furthermore, the suit claimed that the owners prevented the players from reaching their full earning potential by enforcing salary caps. When the lockout ended with agreement on a new CBA, players went back to their teams, training camps started and the players dropped the suit. While football fans are fortunate to have a season, the legal world was left with a lingering question regarding the effects of labor law and antitrust law in the NFL.

Currently, every major sports league in the country operates in the labor law arena: baseball, basketball, football, hockey and soccer. Some sports even enjoy more specific antitrust exemptions, for example the Curt Flood Act in baseball and 15 USC § 1291 in football, which gives an exemption for broadcasting rights. The fact that all of the leagues operate in labor law tends to support the claim that labor law is more beneficial to the sports industry. For example, labor law in sports has provided the industry higher player salaries, large television contracts and in some sports greater disparity among the teams.

However, this does lead to an interesting question: how would the NFL operate if it acted solely under antitrust standards instead of labor law? What if there were no NFLPA, no CBA and no player allotment that comes from this contract? What if American Needle v. NFL applied to everything the NFL does? What if the NFL acted as 32 separate and distinct teams, conducting business with the players? The answers to these questions would create a different version of the traditional NFL.

First, the NFL owners could not negotiate television contracts for the entire league. Each individual team would pursue its own television rights, whether in its market territory or beyond. Teams with large populations in the viewing area would demand higher prices for broadcasting the game. On the other hand, teams in smaller markets, such as Green Bay or Buffalo, would charge lower prices due to the smaller population.

In addition, if the NFL did not operate under labor law then owners could not agree to revenue sharing because it would be anti-competitive, causing injury to any other entity trying to gain entry into the market. Teams would have the ability to earn greater profits depending on their market shares, not only in broadcasting contracts, but also on increased ticket and merchandise sales. Therefore, teams with a smaller market share would not be able to compete with those teams enjoying a larger market share.

Increased profits lead to the acquisition of the best players through high salaries. Since there could be no NFL draft or waiver system if the NFL were operating under antitrust laws, as both would very likely be found anti-competitive, players would have no obligations or incentives to sign with any particular team. Rationally, players would play for whichever team could pay them the highest salary. Accordingly, the small number of teams that would be able to attract the best players through paying the highest salaries would easily dominate the field. While everybody wants his or her own team to win, part of the excitement comes from an indefinite outcome. An increase in disparity among teams would mean losing excitement, which ultimately would mean losing fans for the league. Eventually, teams would begin moving or folding and the NFL would become less national and more regional.

Individual players have different outlooks regarding whether or not the NFL should operate under labor law. The more highly compensated players likely would prefer the anti-competitive method because with no salary cap their incomes would skyrocket, while the lower paid players likely favor labor law, as they benefit from the salary base set by the CBA. Ultimately, with 53 players on an active team roster, there are far more of the latter than the former. These same issues apply to the 32 NFL owners; there are far more owners that would suffer without labor law than would thrive.

Without labor law, each individual team would have to set its own benefits and each individual player would have to set his own demands. This would create an extremely inefficient negotiating process and difficulty in an industry where players risk serious injury for the entertainment of others.

From a fan’s perspective, it is easy to see why the NFL and the NFLPA have a relationship under labor law. It allows all the parties involved to thrive and produce maximum profits, while maintaining a presence across the nation. However, the situation in Brady v. NFL proves the owners’ argument that the NFLPA decertification was a “sham.” If the NFLPA wants the benefits of the labor law exemption from antitrust, the union should also take the legal route carved out for it under labor law. The consequences under antitrust in this case are significant and players, owners and fans cannot bear these extreme consequences.

Erica Menze graduated magna cum laude from St. Ambrose University with Bachelors of Arts in Sports Management and Marketing. Erica interned at NIKE, Inc. as a Sports Marketing Legal Intern and at Gamebreakers, LLC as a Sports Law Intern. At Marquette, Erica is a candidate for the National Sports Law Institute’s Sports Law Certificate.

Suggested citation: Erica Menze, Labor Law Leads to Efficient Operations in the NFL, JURIST – Dateline, Dec. 19, 2011, http://jurist.org/dateline/2011/12/erica-menze-labor-law.php.


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