Tuesday, May 24, 2011

Magazine: Fall 2010 Sports, Inc.

Our fall issue is finally complete:


Check out the 60 pages of sports analysis, covering everything from soccer to skateboarding and about everything from labor / antitrust law to fan psychology. Highlights include ESPN 30 for 30 reviews, coverage of the 2010 Ivy Sports Symposium, and an interview with MLB SVP and General Counsel, Labor, Daniel Halem '88.

Feel free to share feedback, or start a discussion about any of the content, in the comments section below.

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Sunday, April 3, 2011

VIDEO: ILRSMC President Gives First Ever "Evolution of Sports" Address

Labeled as "an opportunity to present a message, an idea or a revolutionary thought that could someday change the face of sport," the first Evolution of Sports Address was given by ILR Sports Management Club Co-President Gabe Gershenfeld ('11) last month at MIT's annual Sloan Sports Analytics Conference.

Gershenfeld's address, specifically, focused on "HR, Labor Relations, and the Future of Sports."

For reactions to the event, click here

MIT Tech TV

For more information on:
  • The first subject, look for an article entitled "Quantifying Succession Planning and Player Development: What the HR Nine-box Can Learn from Baseball Analysis, and Vice Versa" in the forthcoming Sports, Inc. magazine issue.
  • The second subject, look for an article entitled "Bargaining When the Future of an Industry is at Stake: Lessons from UAW-Ford Collective Bargaining Negotiations" in the forthcoming Negotiation Journal issue.
  • The third subject, read this blog post entitled "Solution for the NFL-NFLPA: Change the Rules of the Game."

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Saturday, March 12, 2011

Solution for the NFL-NFLPA: Change the Rules of the Game


Yesterday was the day the NFL and NFLPA had been hoping to avoid for two years. With no new collective bargaining agreement, the league has locked out the players, and so the players union has decertified itself in order to file an antitrust lawsuit against the league. The two sides may still reach agreement, but the move from the bargaining table to the courthouse is an unambiguously bad sign for football fans. The issues at stake -- division of revenue, rookie pay, health and safety, and the length of the regular season, among others -- have and will continue to be discussed. However, a solution that brings long-term success and stability to the NFL must change the very rules of the game under which both sides bargain. Consider applying planes, trains, and labor relations -- the Railway Labor Act (RLA) -- to pro sports.

Why does the NFL legal bargaining framework need to be changed? And what exactly is their legal bargaining framework in the first place? As a private business, the NFL (and all pro sports leagues) fall under the National Labor Relations Act (NLRA) and the law's enforcing body, the National Labor Relations Board. Very briefly, under the NLRA, labor and management are allowed to use economic weapons, such as strikes and lockouts, to resolve contract disputes as long as they don't commit any unfair labor practices in the way. These tactics should be familiar to sports fans: baseball has had eight work stoppages from 1972 to 1995, and the NBA and NHL have locked out players in 1998-9 and 2004-5.

The NFL and NFLPA have been through this before, and just like 1987, the ability to sue the league for antitrust damages emboldened the union to withstand a lockout, to the detriment of negotiations and a new collective agreement. FMCS Director George Cohen is as talented a mediator as one can find, but over sixteen days even he couldn't overcome the legal / lockout alternatives both parties had. His official (under)statement yesterday said it all: "No useful purpose would be served by requesting the parties to continue the mediation process at this time." Clearly, the mediation process and this private system doesn't incentivize the parties towards agreement.

Before explaining the RLA, a brief introduction to the public-sector labor law is helpful for context. As we're seeing now in Wisconsin, Ohio, and Indiana, policies vary by state, but the basic principles remain the same. Policeman, fireman, teachers, and others who do have the right to bargain and can't reach agreement are not allowed to strike, because the work they do is so essential to the public interest. Binding arbitration is instead generally the last step of the dispute resolution process.


The RLA was passed in 1926, the same year as Northwestern Airlines (above) was founded, but the Act has clearly lasted longer. In many ways, the RLA merges the interests of private- and public-sector labor law framework. Since deregulation, the airline and railway companies are privately owned. However, the transportation industry is strongly in the public interest, as a work stoppage would direct affect the rest of the country's economy. I see a clear parallel to the sports industry. Like transportation, sports leagues are privately run with private owners, yet again in the public interest. An NFL lockout doesn't just directly affect players, but thousands of stadium employees and hundreds of thousands of workers in secondary business (one study estimated a lockout would cost $160 million per city), not to mention indirect effects on morale of millions of football fans. This public interest may not be enough to establish a government regulatory body, but is sufficiently central to the future of the sport to warrant a private version of the RLA.

The RLA -- and a potential application to the sports industry -- is effectively a hybrid of the NLRA and public-sector labor law. A couple highlights from the Act:
  • Contracts don't "expire", they simply have a date after which they can become amendable
  • Strikes / lockouts cannot be used for disputes classified as "minor"
  • They can only be used for "major" disputes after mandatory mediation, non-binding arbitration, and a cooling-off period.
The Act's enforcing body, the National Mediation Board, has strong discretionary power to control the process based on the interests of the parties and the affected public. While some may complain this process is cumbersome, I believe it highlights the best characteristics of private- and public-sector labor relations. Like the private-sector, both parties reach the agreement themselves, without a neutral third party arbitrator essentially telling the company how to run their business. And like the public-sector, work stoppages are exceedingly rare, since their jobs are directly in the public interest.

What would the RLA and its strategic private / public advantages look like if applied to sports? Imagine these NFL-NFLPA negotiations in a world where their contract never expired (the 2011 season would be played under their previous contract if they couldn't reach a new agreement) and we would see a lockout and courthouse battles only after a dispute resolution process many times more exhaustive than George Cohen and the FMCS can subject them to.

Will this ever happen? Congress is unlikely to intervene as they did in the transportation industry in 1926, and even if they did, sports leagues and unions would likely resist government intervention. Any legal change must come from within the sport itself, if both sides look beyond their short-term economic gains to truly re-structure their process in the interests of the most relevant parties not at the table -- fans and communities. There is no better time to explore this option than now.

Note: this post was adapted from part of my Evolution of Sport address at the 2011 MIT Sloan Sports Analytics Conference last weekend. Watch video here.

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Sunday, February 27, 2011

Event: Networking and Relationship-building in Sports Business [3/1]


Tuesday 3/1 - 4:30 - Ives 105

On Tuesday, March 1st, our club is honored to host consultant and entrepreneur Eric Kutner. A 1995 graduate of Princeton (with a degree in Physics), he is a sports marketing expert who owned an operated world class tennis events, served on the USTA Eastern Board of Directors, WTA Tour Tournament Council, and Ivy Sports Symposium Planning Committee. However, this background gives an incomplete picture, as he is also a homeland security specialist, consultancy founder, and solar eclipse expedition team member.

Throughout these diverse experiences, his common thread has been social networks and relationship-building. How do these topics apply to the "inner-workings" of the sports industry? We are very much looking forward to his presentation and subsequent discussion on this topic, and we hope you will join us.

In the meantime, please show your support by attending this event on Facebook. See you all there!

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Saturday, February 19, 2011

VIDEO: Gary Bettman, Rob Manfred, and ILR in Pro Sports

What are some similarities and differences in collective bargaining between professional sports and traditional industry? Find out what NHL Commissioner Gary Bettman (ILR '74) and MLB EVP HR and Labor Relations Rob Manfred (ILR '80) say on the subject -- and what this has to do with the NFL-NFLPA negotiations -- in the video following the jump.


A year ago, I was honored to participate in the Human Resource Practices and Industrial Relations in Professional Sports ILR School Workplace Colloquium Series at the Cornell Club in New York City. Both Mr. Bettman and Mr. Manfred have spoken to our club separately in the past, but seeing them interact together and compare experiences added great insight to the relevant issues. Fortunately, video of these excellent remarks from Mr. Bettman and Mr. Manfred are posted online:





Questions discussed include:
  • Do players unions more play the role of trade associations or vigilant protectors of worker's (player's) rights?
  • How do labor and management bargain when the most relevant party -- the fans -- are not at the table?
  • How was the 2004-5 NHL lockout different from the 1994-5 MLB strike? Should government intervene in a private dispute?
  • Will MLB ever see a minimum payroll or international draft?
  • Are professional sports leagues a single entity or competing teams? How does this distinction fit into antitrust law?

Keep in mind, of course, that Bettman and Manfred offer management perspectives. How might Donald Fehr, current NHLPA Executive Director and former MLBPA Executive Director, respond to their comments? Where would he agree or disagree?

These issues are extremely relevant for the NFL-NFLPA negotiations, as the NFLPA has threatened to sue the NFL under antitrust law and the NFL reacted by filing an unfair labor practice charge with the National Labor Relations Board (NLRB) for failure to bargain in good faith. Both parties recently agreed to Federal Mediation and Conciliation Service (FMCS) mediation. FMCS Director (and Cornell undergrad and law alum) George Cohen has issued an introductory statement. Their collective bargaining agreement expires in less than two weeks. What, if anything, can the NFL and NFLPA learn from labor relations in hockey and baseball?

If non-ILRies have any questions on the terms used here, I'm happy to do my best to explain.

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Monday, February 7, 2011

Alternative Dispute Resolution in the Olympics

Olympic athletes don’t just compete on the track, pitch, pool, or ski slope—they also can compete in front of a mediator, arbitrator, or judge.

On Tuesday, our club was honored to host U.S. Olympic Committee (USOC) Athlete Ombudsman John Ruger in conjunction with the ILR LR/ICL 9800 Faculty Workshop Series. You can find a few pictures here. For nearly two hours, we discussed his job, the USOC, and Alternative Dispute Resolution (ADR) processes.


Since Ruger was appointed in 1999, his responsibilities include providing independent advice to athletes, mediating disputes between athletes and Olympic organizations, and assisting in the development and implementation of policies. A former Olympian himself in biathlon, he uses his experience as an athlete, coach, and administrator (as well as a bachelor’s degree in economics and an Executive Masters in Sports Organization Management) to understand and communicate relevant issues.


American Olympic athletes fall under unique legal protections. In the 1970s, when the NCAA and AAU were fighting each other in the courts over amateur athletics, the U.S. government did not want these organizations harming our country’s Olympic medal goals. As such, former Alaska Senator Ted Stevens sponsored the 1978 Olympic and Amateur Sports Act to charter and grant monopoly status to the USOC and requirements for National Governing Bodies (NGB). Following this act, amateurism was redefined to allow athletes who received professional pay to play in the Olympics (with the exception of boxing, because of their respective NGB). When the modern Olympics were founded at the end 19th century with the noble intentions of global sports competition, the amateurism regulations also prevented blue-collar athletes from competing, since the working-class were the ones who needed to receive money to train and compete at the highest level. Nowadays, with that relevance outdated, the U.S. simply wants to find athletes who can bring home the medals.


In 1998, revisions to the Act created the USOC Athlete Ombudsman position and the Athletes’ Advisory Council (for which Chairman Matt Van Houten, an Olympian in Handball and Ithaca native, was also in attendance). Soccer is the only Olympic sport to be covered by a Collective Bargaining Agreement, and so in the absence of union protections, these functions act as representatives, advisors, and occasionally counsel to the athletes. Sports executives have even described the council as the “conscience of the USOC.”


With a duty to represent all athletes, the position can be challenging. Ruger sometimes has to advise athletes who are competing with each other for a single position on a team, which he compared to playing the role of divorce lawyer for both the husband and the wife. Truly, any “win-win” outcomes he facilitates from those situations must be impressive.


Working with athletes also presents an interesting ADR challenge. By the very nature of their professions and achievements, athletes are confident and expect to win. However, the circumstances that lead to them contacting Ruger—such as the possibility of being sent home the night before your gold medal competition—nearly always bring athletes down to earth and leads to respectful interactions. Additionally, personalities—and resulting ADR tactics—can vary by sport. In a team-based sport such as ice hockey, a player who feels he or she has been wronged is less likely to pursue a confrontational resolution strategy (such as arbitration) if the process is going to be drawn-out and potentially detrimental to the team’s morale and objectives. However, for an individual sport such as skiing, athletes may be more likely to act in their own self-interests first.


These differences between individual and team-based sports also extend to the nature of the disputes themselves, specifically, trials. Olympic trials are one of the most common types of disputes Ruger faces, as the issue of who makes the team and who doesn’t is often contested. In a way, these arbitrations can be compared to MLB Salary arbitration, as a third-party is called upon to essentially evaluate player performance. The standards for performance are derived from the nature of the sport itself. Swimming is simple, as the top two times go to the Olympics, with no further considerations. Judging performance in soccer, for example, is much more subjective, as player instincts and leadership must be weighed in combination with the physical measurables such as speed, strength, and agility.


The other frequent USOC dispute-type is constantly under media scrutiny: doping. The realities of the situation are such that every athlete has to tell the World Anti-Doping Agency (WADA) the exact address of the physical location they will be for one hour for every single day of the year, in order to have a truly random drug test. MLB and the MLB Players Association have made significant improvements in their PED testing policies, but certainly nothing approaching this level of thoroughness. At the same time, WADA’s policies are such that approximately 50% of doping violations are unintentional. Such athletes generally receive more lenient sentences, yet if they were to challenge the case in arbitration, the arbitrator can only rule on whether they violated the rule or not, and not whether the rule (the substance on the banned list) was unfair in the first place. The saddest example of this situation may have been Zach Lund, the top medal contender for skeleton in the 2006 games, who was banned after his hair-replacement was added to WADA’s list, even though it had no performance-enhancing properties.

It was removed after the games, but Lund cannot get those games (and his medal opportunity) back. The NFL, NBA, MLB, and NHL all bargain with their respective unions over drug policy and implementation, but the Olympics, without an athlete union, rely exclusively on WADA’s policies.


Three additional quick comments:

1. The formal USOC dispute resolution system is a three-step process, starting at the NGB level before the USOC investigates and potentially mediates. The American Arbitration Association is called upon as a last resort, but of course Ruger’s job is to resolve disputes at the lowest levels possible, first. His familiarity with the recurring issues makes him a valuable asset for suggesting policy changes at the NGB and USOC level, even though he has no legal authority to dictate procedures.

2. Ruger identified swimming and skiing as model NGB examples. What makes these successful? Beyond the popularity of these respective sports, these organizations have a strong leader, a board that provides appropriate checks-and-balances, and staff that is professional and motivated. This sounds like a universal formula for organizational effectiveness, whether in business, higher education, or sports.

3. The USOC is a relatively unique organization compared to other countries, and the U.S. was the first country to create the position of athlete ombudsman (Britain and Canada have since followed to a certain extent). Let’s hope effective ADR can bring us the gold.


Three potential questions for further discussion:

1. In what ways are dispute resolution involving athletes similar to and different than dispute resolution in the workplace?

2. What value does effective ADR provide to the USOC?

3. Should the Olympics negotiate with their athletes over drug policy as other pro sports leagues do? Or should they be held to a higher standard to enforce themselves?

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