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Friday, April 29, 2011

Are NFL Owners Anarchists?

This story was amusing.

Let me start by stating the obvious: In the world in which I live, if I’m driving down the street and I see some red, flashing lights in my rearview mirror, I pull over to the side of the road.

If an officer approaches my car, tells me I was speeding and begins writing me a ticket, I don’t roll my eyes and say, “Whatever, I don’t recognize the validity of your radar devices or even acknowledge that you have jurisdiction.”

And when I see the print on the ticket advising me that I must pay or appear before a judge to plead my case, I don’t turn it into a paper airplane, throw it back at the officer and gloat, “I’m just going to get this overturned on appeal.”
Actually, that's correct. The policeman's authority and judge's authority is not legitimate. However, I'd grudgingly pay the penalty, rather than risk greater fines, kidnapping, or having State thugs steal my property.

In effect, the NFL owners are acting like anarchists! They're deliberately ignoring the judge!

A Federal judge ruled against the NFL, saying the lockout was illegal. However, the NFL is mostly ignoring the ruling. The NFL owners are letting players into the workplace. However, they are not allowed to workout or meet with coaches. Also, the league is not paying roster bonuses or workout bonuses. The league is not signing free agents.

Starting today, some limited work is resuming. Presumably, if the NFL loses on the appeal of the injunction, they'll fully start the season.

In effect, the NFL gave the Federal judge the finger. That's like a true anarchist!

There are two conflicting parts of the dispute.
  1. Should employees be forced to unionize?
  2. Do owners have the right to stop operating their business?
The players decertified their union. They can't negotiate even if they wanted to. However, a settlement of the class action lawsuit would probably include a clause saying the players must re-certify their union.

In effect, the lockout says that the players are forced to unionize. Without a State-sanctioned union, is a lockout illegal?

Previously, the players' union decertified and filed an antitrust lawsuit. A CBA provides the owners with immunity from player antitrust lawsuits. That lawsuit led to the current agreement. The owners claim that the decertification and lawsuit is a sham decertification. However, the previous CBA specifically forbade owners from raising the "sham decertification" argument.

The ruling has another disturbing aspect. Should the owners be allowed to stop operating their business? A business owner should have the right to shut down his business.

The judge made the wrong ruling. The NFL should be allowed to stop operating their business and stop hiring new employees. However, the NFL should have been required to pay out all already-signed contracts. That would have been a ruling that disadvantaged both sides.

The NFL has a weird incorporation structure. Each team is its own separate corporation. That makes them subject to an antitrust lawsuit. However, teams act jointly, for negotiating a TV contract, making rules, hiring referees, and other things. Is the NFL a single corporation, or 32 separate corporations colluding?

Newer professional sports leagues like Soccer (MLS) and Women's Basketball (WNBA) are "single-entity". There's one big corporation and each team owner is a shareholder. Players sign contracts with the league and not individual teams. This provides more antitrust protection.

The players invoked a "nuclear option" by decertifying their union. There's a "nuclear option" available to the owners. They could re-incorporate as a single entity, with each current team owner a shareholder. With a suitable shareholder agreement, they owners could act the same as now. That strategy might provide the owners with more antitrust protection.

The NFL claims it's legally risky to proceed, without a ruling from the judge. They don't know what labor rules are legal and which are illegal. The owners might be allowed to operate under the recently-expired CBA rules. Another possibility is that some policies may be illegal.

Without a CBA, the following probably are illegal:
  1. salary cap
  2. the draft
  3. free agency restrictions
The NFL isn't planning to have a salary cap without a new CBA. However, they do have revenue-sharing agreements.

The draft is probably illegal without a CBA. The judge should rule "All players not signed to a contract are unrestricted free agents." The NFL would be subject to huge punitive damages, if they lose an antitrust lawsuit on this issue.

Unfortunately, the judge won't rule on the legality of the draft and free agency restrictions for a long time. The restraining order only applies to a lockout. The ruling on the other issues could take years, including appeals. By that time, punitive damages would be ridiculously high. (Antitrust law provides for triple damages.)

There's no clear legal precedent. I predict the NFL should lose. You don't know until the judge makes a ruling. However, the NFL might win.

The anti-lockout injunction forces the league to gamble billions of dollars on the outcome of a lawsuit. There's a huge political risk and legal risk.

I never understood how a CBA legitimizes the draft. A "rookie wage scale" is obviously unfair. In effect, the current players are getting a higher salary for selling out recently-drafted players. It's an excellent example of democracy leading to unfairness. If only 1/5 of the union members are rookies, then the veterans can vote to cheat them. Rookies may not even get to become voting union members until they sign with a team.

Another example of CBA unfairness is the "franchise tag" and "transition tag". Via that mechanism, a team can force a star player to sign a below-market contract. Only the top 5% of players are potentially affected. Therefore, the players' union can rationally vote to cap the salary of superstar players. That's another example of the majority stealing from the minority. The underpaid superstar can't publicly complain without looking like a whiner, because he's already paid a huge salary.

If the NFL players prevail in court, that's an interesting precedent. Then, other sports' players migh de-certify their union and sue. The NBA players are already considering this. District court decisions are not a precedent. An appeals court decision is binding only in that circuit, but may be cited in others. Only a Supreme Court decision is absolutely definitive.

The real evil is not the players or owners. It's the State. The State forces certain rules on employees and owners. For example, the owners aren't allowed to fire or punish unionized players for striking. If the players were unionized, they could play until December, collect most of their season paychecks, and then stike. (The league makes most of its revenue from the playoffs and the Super Bowl, but players make most of their salary during the regular season.) The State also forces players to accept whatever the union majority votes for.

State antitrust law penalizes owners for their monopoly. The owners only have a monopoly due to the State. It's practically impossible to form a new league competing with an established league, due to State restriction of the market. If the players feel mistreated, they can't easily start a new competing league. Most successful competing leagues were formed 30+ years ago, when the USA had a freer market. Examples are AFL/NFL, ABA/NBA, and AL/NL. In the present, it's practically impossible to start a new league that competes with an established league. There are too many market restrictions, making competition effectively illegal.

In a really free market, the owners would be free to make up whatever rules they wanted. The players would be free to start another league if they feel mistreated. The antitrust law is attempting to patch an unfair non-free market.

1 comment:

e said...

Hi fsk. Just discovered your blog.Learning a lot of things.God bless you.Keep writing.

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