CBA Talks Start to Hit Stride – What to Expect

SBJ last week did a cover story on the upcoming CBA negotiations for the four major sports, each whose contract expires in a different quarter in 2011, making 2010 a big year for negotiations. Less linked to the big four, but still worth watching, MLS enters what could become a ground changing CBA negotiation this winter.

The story gave a high-level background on each league’s situation and some overarching issues. First, don’t expect anything to get done easily or any earlier than after the league’s complete their next full season. Early indications are the NFL will lead in rhetoric – but big talk does not buy you anything. Football is the most interesting, and likely to be most watched labor talks since they have new leaders on both sides in DeMaurice Smith and Roger Goodell, the owners already declined to renew the current deal setting up a potential uncapped 2010 season, and NFL players have the shortest careers and non-guaranteed contracts. Though, as Peter King pointed out recently, the uncapped year carries many additional stipulations that actually benefit the owners.

Putting aside sport specific issues, expect a few macro-level concepts to emerge. Financial transparency is a major issue as more owners publicly proclaim losses, and commissioners claim few teams achieve profitability. Players expect to see proof if they are expected to make concessions to benefit leagues. Less critical to the negotiations, fans should expect to see proof as to why their teams slash payroll and never put a winning team on the field in certain markets. David Stern openly stated the NBA would be as transparent as needed, while the NFL is the antithesis, saying players have no need to see the books. Given that manipulating financial books and lack of transparency contributed to the current financial crisis, and federal government has made a move to increase filings by public companies, it makes sense for sports to follow that path – unless you have something to hide.

Hockey may have the most to lose. It already teeters on the brink of obscurity, but it finally picked up some momentum recently with the Winter Classic, a great playoff, and two emerging young superstars. With off ice ownership problems permeating multiple franchises, another strike could obliterate the sport domestically. Further, as the lowest paid players of the four sports, its players can least afford a stoppage. It may be painful, it may be the last move in Bettman’s marred tenure, but both sides need it to happen.

Another overarching theme that should pervade is convergence among the deal structures within each league, perhaps other than the NFL since its revenue skews more towards national than local. Collective bargaining in sports is a mature process and both sides now have many years of data and experience to pull from. Each league sees what works and doesn’t work in their own league and in other leagues. That said, expect to see more parity develop between leagues. The NFL and MLB will discuss draft salary slotting, a concept the NBA perfected, the NBA and NFL may implement revenue sharing closer to what MLB does, while MLB will revisit the salary cap, which the other three leagues all use differently. Never will all four converge, but they may start to look and smell similar, with different percentage allocations and small concessions depending on the leverage in each situation.

Though unlikely, it’s always intriguing to see if any unions will decertify and challenge the league’s anti-trust exemption. That would cause some fireworks and be the equivalent of going all-in in poker.

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