SBJ/Jan. 24-30, 2011/Opinion

How contentious labor issues in sports compare to others

Similar to many other industries, management and labor in many sports leagues use a collective-bargaining agreement to set forth the rules regarding how they will conduct business and resolve disputes with each other. A recently resolved 16-week strike involving 305 workers at a Mott’s apple processing plant in upstate New York makes for an interesting case of comparison as we monitor the ongoing CBA negotiations in both the NFL and NBA.

A brief review of the facts surrounding the Mott’s strike: Mott’s is a subsidiary of Dr Pepper Snapple, a publicly traded company that realized a record net profit of $550 million and increased its dividend 67 percent last year over 2009. Citing the fiduciary duty owed to its shareholders and arguing that the employees were overpaid compared with other unionized manufacturing employees in the local economy, Mott’s sought a $1.50 per hour wage cut ($3,000 a year); a pension freeze for existing employees and no pension for new hires; a reduction of 401(k) retirement contributions; and an increase to the employees’ health care benefits costs.
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A sports league work stoppage, such as the 1987 strike that put NFL players on the picket line, could share some traits with the strike at a Mott’s apple processing plant in New York.

Though the company never threatened to close, outsource or relocate its only U.S.-based apple sauce-producing plant, Mott’s hired replacement workers shortly after the strike commenced, and a judge found that there were no unfair labor practices involved in doing so. This shifted the leverage to Mott’s and ultimately led to a settlement for almost what was on the table pre-strike: a three-year deal, with no pension freeze (though new hires don’t get a pension; they do get 401(k)); a wage freeze instead of pay cuts; Mott’s 401(k) contribution being lowered to match the first 2 percent of employee contributions (it was 5 percent before strike) for current employees and 4 percent for new employees; a $1,000 signing bonus for each employee; and the workers now being responsible for 20 percent of health care costs.

There are some notable similarities between the Mott’s strike and the ongoing disputes in the NBA and NFL as well as prior league CBA negotiations. There was plenty of acrimony both privately and publicly. Mott’s took out ads in local newspapers criticizing the union’s stance and chiding the workers for being greedy. Reminiscent of Cowboys general manager Tex Schramm’s infamous quote during the 1989 NFL labor negotiations (“Don’t you see? You’re the cattle, we’re the ranchers. We can always get more cattle.”),­­ a union delegate told The New York Times that a plant manager “said we’re a commodity like soybeans and oil, and the price of commodities go up and down. He said there are thousands of people in this area out of jobs, and they could hire any one of them for $14 an hour.”

Usually companies seek to gain concessions when the industry or company is thought to be hurting and needs the concessions to survive, as has been argued by the NBA, NHL and MLB in past negotiations. However, both Mott’s and the NFL (though not the NBA) are currently highly profitable companies seeking concessions.

Both the Mott’s strike and potential league labor disputes could have a significant impact on local economies. While reportedly 50 percent of the entire apple production of upstate New York orchards is purchased by the Mott’s plant, any league games not played affect local businesses to some extent (especially those dependent on game-day business).

Finally, though neither Mott’s nor the NFL or NHL ever threatened to close, relocate or outsource its plant (or teams), the NBA has mentioned contraction as a possible recourse in its current negotiation, as did MLB in 2002.

There are also notable differences between the negotiations involving Mott’s and the typical sports league. The cumulative wages earned by all of the members of a sports union typically represent what is far and away the largest expense for the members of the league. Athletes in the NBA, NHL, NFL, and MLB receive between 50 percent and 60 percent of the revenue generated by the leagues. This dwarfs the percentage of revenue that unions in other industries receive.

The 305 unionized employees at the Mott’s plant earned a combined $9.8 million of the $5.5 billion in revenue for the parent company. In sports, the CBA is the basis for determining the parameters of a number of issues that are a fundamental to a league’s success. Having an agreement that makes fiscal sense for management is of utmost importance.

There are notable differences in the union constituencies and marketplace, as well. Pro athletes earn significantly higher salaries over a much shorter career span. The Mott’s employees cede their right to negotiate salary as individuals to the union, where individual athletes have the parameters of their salaries set by the union but have freedom to negotiate in between these boundaries. The Mott’s employees all had relatively the same priorities at stake, whereas sports unions have much wider disparities in their memberships, with some members more focused on salary inflators and others simply focused on the pension, retirement benefits and minimum salaries.

Unlike in many other industries, the superior talent of the unionized work force in leagues is easily recognizable to even the most casual fans. There is a very limited number of individuals with the skills to be pro athletes and they have more fan loyalty, which makes them essentially irreplaceable by replacement workers, as opposed to the Mott’s employees, who have no customer loyalty, little individual negotiating power and are fairly easily replaced, especially in a tough economy. This final trait provided Mott’s with the ability to hire replacement workers, who provided the company with leverage despite being a reported one-third as productive in the short term as the unionized workers. Leagues essentially shut down during work stoppages; other industries do not.

Finally, it has been posited that Mott’s was an employer looking to take advantage of macroeconomic conditions by reducing wages because they thought that they could do so. This does not seem to be the case in any of the ongoing league negotiations.
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