Contract Dispute (Essay Sample)

Contract Dispute
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Contract Dispute: The Case of the NFL Lockout of 2011
From time to time, contract disputes arise in the professional sports and the entertainment industries both of which are unionized. At times, this may lead to strikes or lockouts resulting in work stoppage. This paper will present analysis of a contract dispute in the professional sports industry, highlighting its major points, as well as its impacts on the various industry stakeholders. Specifically, the paper will draw on the National Football League (NFL) lockout which lasted for 136 days beginning March 12, 2011 and ending July 25, 2011.
The Lockout began after failure by the NFL players and NFL teams owners to agree on a new Collective Bargaining Agreement (CBA), following the expiry of the existing CBA (CBS Sports, 2011). The major elements of the dispute included the decertification of the National Football League Players Association (NFLPA), the union that represents the players, and various aspects of the CBA which include salary cap and floor, revenue sharing, the opt-out clause, wage scale for rookies, free agency rules, health and safety benefits, and retirement benefits (CNN 2011 & ESPN 2012).
The league’s annual revenue which stood at $9 billon was one of the areas sharply disputed (Escobedo & Welch, 2011). Based on the earlier CBA, owners would receive $1 billion and of the remaining $8 billion, players would receive 60% while the owners would receive 40% ( Mao, Quach, & Tay, 2011). The owners wanted this amended while the players insisted that the revenue sharing ratio should remain unaltered. The owners wanted an increase of $1.4 billion dollars in their share to reflect increased overhead costs (Dansbury, Mao, Quach, & Tay, 2011). This matter was solved with the adoption of an "all revenue system" under which the players’ floor share was set at 47% (CNN 2011).
The stronger capacity by the NFLPA to fight for better terms for players by way of decertifying or suing the league through antitrust laws gives credit to the Radovich v. National Football League, 352 U.S. 445 (1957). The United States Supreme Court determined that the NFL should be treated as separate teams, rather than a single entity and thus antitrust laws were binding. It is on this basis that several NFL players filed the suit against NFL (Dansbury, Mao, Quach, & Tay, 2011). Under the new CBA, the key dispute areas were addressed and the agreement reached runs through to 2020. Minimum salaries for players were raised by $55,000 and agreements were put in place for continued increments; a more satisfactory revenue sharing system was adopted; substantial improvements in players’ safety and health benefits were made; and free agency would no longer be restricted (Judge 2011).
The impacts of the contract dispute were not limited to players only as other stakeholders were also significantly impacted. Advertisers and sponsors of NFL who rely on the broadcasts of NFL to sell their products were hurt through dropped consumption (Horrow & Swatek). Advertisers and sponsors, take advantage of the NFL to pass information about new products to a wide audience. This means, with work stoppage and reduced NFL activity, advertisers and sponsors would have to seek other platforms that might not be up to the effectiveness required. Merchandisers who rely on the League’s good standing and continuous activity in order to realize meaningful sales of Jerseys were also affected by declined sales (Roberts, 2011). Bars and restaurants, and fantasy footbal...