The Decertification Threat
By Kent Wilson
11 years agoAfter the NHLPA proposal/rejection kerfuffle the other day, I made a glib remark on twitter about the union going the decertification route. I was only half serious when I suggested it, but the option is starting to get more attention. James Mirtle recently wrote about the threat and what it would mean if the players union dissolved.
If players voted to decertify, the NHLPA would no longer serve as a bargaining unit, and the lockout would either end or have its legality challenged in an antitrust lawsuit…The value of professional athletes having a union has become a subject of debate in sports law circles the past few years, as owners have used labour stoppages to shrink players’ share of revenues. Without a union to negotiate with, a league couldn’t have a collective agreement, which would mean basic elements of the league, such as the salary cap, could be challenged under antitrust laws.
Decertification is the union’s nuclear option: it essentially resets things to zero, meaning owners would again be bargaining with individual players for their services without the safety net of things like a salary cap. It would also make actions such as the lock-out or other "collusionary" activities by team owners are actionable in court via anti-trust lawsuits.
The NBA played the decertification card during their lock-out last year and ESPN’s Larry Coon explained:
Decertification owes its power to the uneasy truce between labor laws and antitrust laws. The antitrust laws prevent employers from banding together to restrain competition. For example, if all the banks in a city agreed that they would not pay their tellers more than $30,000 per year, it would almost certainly be an illegal case of "price fixing." Likewise, if the banks laid off all their tellers and refused to rehire them unless they agreed to take a pay cut to $30,000, it would almost certainly be an illegal "group boycott." These types of agreements — which restrain competition — are addressed by the antitrust laws.However, collective bargaining encourages the very type of behavior that the antitrust laws make illegal. To resolve this inherent conflict, there is something called the "non-statutory labor exemption," which shields collective bargaining agreements from attack under antitrust law. This protection extends even after the agreement expires — so long as a bargaining relationship continues to exist.Here’s the key to the whole process: This bargaining relationship continues to exist as long as the union is in place. If the players dissolve the union, the bargaining relationship dissolves with it. Without the bargaining relationship, the league is no longer shielded from antitrust laws.Much of the economic structure of the NBA — such as the salary cap, maximum salaries, rookie-scale salaries and the luxury tax — could be challenged under the antitrust laws as a form of price fixing if there was no union. The lockout itself could be challenged as a group boycott.
Of course, the CBA affords players certain protections as well (rights in contract negotiations, a minimum standard salary, etc.), so why would players as a collective risk decertification and an erasing of the CBA?
It’s all about Leverage
A couple of reasons: the first was discussed in Mirtle’s piece above – modern players unions and collective bargaining agreements have been used by ownership to extract money and concessions from the players over the last decade or two. As Coon points out in his article, much of what is possible under "non-statutory labor exemption" is considered illegal when it’s not practiced under the blanket of a CBA.
Second of all, and more importantly, it’s become more and more clear over the last two labor disputes that the union doesn’t have much in the way of leverage over the owners in these sorts of negotiations. The NHLPA’s membership is made of some 700+ different individuals, many with rather disparate incentives and priorities. For example, Roman Hamrlik’s very public annoyance regarding the CBA negotiations is an altogether rational reaction from Hamrlik’s point of view. The 38 year old defender is on the last season of a contract that pays him $3.5 million. He risks losing all of that money – as well as final chance to win something meaningful – if 2012/13 is wiped out by CBA negotiations. In addition, most of the contentious issues being fought over right now, including contract length limits, five year "make whole" agreements and limiting front-loaded contracts aren’t really relevant to him.
That’s true for other portions of the union’s constituency as well. Tim Jackman, for example, re-signed in Calgary last year for two seasons at $613k per. Losing one of those years to a lock-out is almost certainly more damaging to his current and future financial position than any of the things his union reps are currently bickering about with the league. Like Jackman, there is a whole underclass of third and fourth line type NHLers who have a very limited career window during which they can establish themselves and make a few dollars before fading into obscurity (and for whom many of the key bargaining rights that are of issue right now don’t really matter).
In contrast, the cadre of team owners is smaller, more cohesive in their aims, drastically richer than the players, and, to a man, have a more diversified financial portfolio. They’re in it for the long haul. The owners are also obviously aware that a majority of players are much more exposed and therefore face greater pressure from a losing a season.
Which is why modern collective bargaining and CBA’s always seem to result in this sort of brinkmanship, with the threat of a lost year acting as a cudgel the owners wield to extract more concessions and dollars from the union. The NHLPA can delay things and play the PR game, but eventually they must capitulate to one degree or another because, ultimately, the players need the games more than the owners do.
So the leverage mostly resides with management. Decertification becomes a weapon in the PA’s arsenal, albeit one which would be deployed only with the greatest of reluctance since predicting the "brave new world" after the erasure of a CBA would be, uh, challenging.
It’s probable a decertification move would be a bluff anyways, but at this point the PA doesn’t have much else up its sleeve. The closer the reality of another lost season becomes, the more pressure the union will feel to get a deal done and therefore the more leverage the league has to extract concessions…
Throughout these negotiations, the players had little real leverage. The window in which professional athletes can earn their millions is short. Bodies are aging during every missed game, every missed paycheck. The players did seem to pick up a bit of leverage, however, after they decertified as a union on Nov. 15, and filed anti-trust lawsuits against the league that could have cost the NBA $6 billion in damages. The NBA would never publicly admit this union tactic scared them. But we know that before the suit, NBA commissioner David Stern was insisting that if the players did not take the 50-50 revenue-split offer on the table, it would never return, and that the owners would not be willing to accept more 47% of basketball-related income going to the players. In the end, the players received more than 47%.So if you’re an NBA player, you have to be asking yourself: what took us so long to decertify?
That’s from Time’s November 28, 2011 article on the NBA’s agreement that came together less than two weeks after the union opted to decertify. Something similar happened during the NFL’s recent labor strife.
There’s no guarantee the same thing would happen in the NHL’s case, but the union has so few arrows in their quiver it only makes sense for the players to consider it.
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