NHLPA Function and Services Flashcards
What is the definition of Labour?
Productive human work
What does Marginal Revenue Product (MRP) refer to?
The maximum a team will pay for a player’s contribution to revenue.
MRP is affected by market size.
In perfect competition, how are wages determined?
Wages = MRP
What is a monopsony in the context of wages?
Wages < MRP
According to Medoff (1976), what percentage of their MRP were MLB players paid?
30-50%
What happens when player wages are less than MRP?
When players take discounts to play in certain markets/ places.
Players are exploited
ie. McDavo vs. Janmark- Janmark is worth less than McDavid (who might need to take a pay cut to play in Edmonton).
What does RW stand for in the context of player salaries?
Reservation wage
How is RW affected by reserve system?
Players RWs are lower.
RW = lowest acceptable salary for a player.
Where does wage sit in reference to RW and MRP?
Depending on the bargaining position of the player and the team, wage is between RW & MRP.
How did leverage historically favour owners?
Lack of information, reserve system and draft reduces RW, few NHL jobs.
How was Gordie Howe’s contract affected by lack of information?
People did not talk about their salaries and they weren’t made public until 1989.
Most players were given a contract each year, and were forced to choose with signing it to play, or not playing.
But with Gordie Howe, a blank contract was given to him each year… he would give himself only 1000$ raise per year. Found out that he was the seventh highest paid player on the Red Wings.
What led to the need for union representation in professional sports?
More specifically the NHL.
As leverage historically favoured owners… lack of information, reserve system and draft reduces RW, few NHL jobs.
Players united to negotiate and decrease bargaining imbalance.
What is the goal of the NHLPA?
Drive salaries closer to MRP and create competitive pay structure.
What are the issues with the NHLPA?
Labour sustainability, Dissimilarities in productivity.
True or False: Unions violate antitrust laws.
False
Due to Clayton Act (US, 1914), labour is not a commodity or article of commerce
Exempts trade-union activity from the antitrust laws, therefore labour is not subject to antitrust laws.
What act exempts trade-union activity from antitrust laws?
Clayton Act (US, 1914)
What are the main functions of the National Labour Relations Act (1935)?
Select bargaining agent, Adjudicate unfair labour practice charges.
Also helps with permissive subjects.
ie. NHL not allowing players to play in the Olympics was deemed a permissive subject and therefore able to play.
What rights does the National Labour Relations Act guarantee for labor?
- The right to organize and form unions
- The right to bargain collectively
- The right to use pressure tactics such as strikes and picketing
What were the purposes of the National Labour Relations Act?
Protect public from industrial unrest and work stoppages.
Facilitate the peaceful negotiation of labour-management disputes over terms and conditions of employment (mediator).
Ensure equal bargaining power between employers and employees for collective bargaining.
What is collective bargaining?
Union power low where labour is easily replaced.
Pro sport similar to entertainment industry: specialization.
Under NLRA, once ratified, union has the right to bargain for all players.
Are players required to become a part of the union?
Can choose not to be a part of the union, but must abide by collective bargaining terms negotiated by the union.
Therefore union has the right to bargain for even those that aren’t a part of the union.
ie. Player crossed the picket line to play in the MLB strike… he was later not allowed to be a part of the union. As a result he was not included in MLB Wii game, for ex.
What are the governing rules of collective bargaining?
Compensation
Duties and performance of workers
Rights of workers in the workplace
ie. Negotiated much shorter preseason for NHL players.
What is a common reason for the failure of collective bargaining?
Employer refuses to recognize the union; can result in charges brought with the NLRB against the employer
Union may become decertified
Employer goes out of business
Can union decertification be used for good?
Union decertification was used in the NFL as players were not in agreement with bargaining… they decertified the union and were able to go after league for violation of antitrust law as they no longer had a union.
Eventually they won and got free agency established the following year.
So… yes? But rarely.
What is the typical outcome of a union being decertified?
The biggest bargaining chip is gone
Employers are not required to agree with the union, but they are required to meet with the union.
What are typical elements included in collective bargaining agreements?
- Duration of the agreement
- Reopening clauses
- Draft rules and procedures
- Compensation issues
- Player location issues
- Channels for addressing player grievances
(1) Duration of collective bargaining agreement, sometimes with a reopening clause.
(5) Free agency, ability to move. players want less restrictive free agency but not complete free agency (as this would cause the leafs to spend insane amounts to acquire McDavo, and a bunch of insane players, for ex)
What is the statutory labour exemption?
A labor union is a collection of competitors that coordinate their negotiations with one or more employers.
Typically, such coordination would violate the antitrust laws because horizontal competitors are not allowed to work together in their dealings.
So, to allow labor unions to function, Congress statutorily exempted labor unions from antitrust liability in certain limited circumstances
What is the non-statutory labour exemption?
Exempts the actual agreements between and among employers and unions from antitrust liability.
What issues can arise in professional sports regarding player contracts?
- Career lengths and negotiating
- Pay discrepancies
- Unfair labour practices
- Decertification
- Canada/ US certification
- Changing constituents (owners, players)
Pay discrepancies: highest paid players vs. average paid player…
Changing constituents: easier to keep 32 owners in line vs. however many players.
Fill in the blank: The lack of information regarding salaries for players was prevalent until _______.
1989
What is the impact of market size on MRP?
MRP is different depending on market size
What is the role of the NHLPA in relation to salary negotiations?
Negotiate to decrease bargaining imbalance
How does collective bargaining differ in sports from other industries?
Union power is low where labor is easily replaced
What is one significant issue that can lead to a strike in professional sports?
Disputes during playoffs
What is the significance of Gordie Howe’s contract practice?
He received a blank contract each year and gave himself a minimal raise
What is the difference between a strike and a lockout?
Lockouts typically happen at the start of the season due to bigger advantage for owners: players waiting to be paid
Strikes typically happen during playoffs
