North American Sports Labour Negotiations

[Anton Gramscescu]

A question for collective bargaining nerds:

In all these big bargaining deals, the question is always: what % should players get?

But how does this actually work in practice? It's not that every single team has to spend x% of turnover on wages every single year, is it?

Seems to me teams make their own decisions about every individual contract - what's the mechanism by which the league takes these hundreds of individual decisions and ensures that x% of total turnover goes to players?

[ursus arctos]

North American Sports Labour Negotiations

The NHL does this through a combination of the salary cap and floor (which restricts spending to a certain band) and an escrow mechanism that holds back a certain portion of players' compensation, which is only released at the end of the season if revenues have been "sufficient" to allow it to be played.

I don't know about the NBA. The NFL and MLB tend not to characterise their deals in this fashion.

[Anton Gramscescu]

North American Sports Labour Negotiations

Interesting. OK, so this escrow mechanism: a certain proportion of *every* player's salary is put in escrow, and released based on revenue? How does that work, exactly? How do you know what the proportion should be in any given year, especially when you're signing a long-term contract?

[ursus arctos]

North American Sports Labour Negotiations

Yes, it applies to every player, and I think that the percentage is applied equally across the league.

The escrow percentage is set as part of the collective bargaining process. In doing so, I assume the owners look to keep it close to what they see as the variable percentage of their revenues, keeping in mind they know what the bulk of their income (season ticket sales, corporate boxes, television) will be by the time the season starts.

[Anton Gramscescu]

North American Sports Labour Negotiations

Cool, much appreciated.

And you say that MLB and the NFL don't characterize it this way...what do they do instead?

[ursus arctos]

North American Sports Labour Negotiations

MLB has a "soft" cap that allows for teams to spend as much as they want, while requiring those over the cap to pay a "luxury tax" that is re-distributed to low revenue teams. As a result, the concept isn't applicable.

I honestly don't know about the NFL, but the absence of guaranteed contracts eliminates the long term concern that you mentioned.

[Incandenza]

North American Sports Labour Negotiations

Larry Coon is the expert at interpreting the NBA's collective bargaining agreement and trying to explain it to the average person (as well as plenty of reporters, who rely on him). He has a Salary Cap FAQ page. Here's where it starts on what percentage of Basketball Related Income (BRI) players are gauranteed under the newest CBA. The explanation of the escrow system is the question below:

http://www.cbafaq.com/salarycap.htm#Q18

[Anton Gramscescu]

North American Sports Labour Negotiations

re: MLB luxury tax: duh. I knew that, of course. Not properly awake when writing the question.

Cheers for that, Inca.

[Incandenza]

North American Sports Labour Negotiations

No problem. That guy has an interesting story...he's just a basketball fan that understands stuff like that, he doesn't do anything basketball-related for work (he works in IT at UC Irvine). He started this site and has become a resource, now he gets to travel away to watch the Finals sometime.