The Narcotic Effect of Antitrust Law in Professional Sports: How the Sherman Act Subverts Collective Bargaining
64 Pages Posted: 27 Sep 2011
Date Written: August 30, 2011
Using textual analysis and data from federal court opinions, I explore the relationship between collective bargaining and antitrust litigation in baseball, football, basketball, and hockey. Since collective bargaining began in these sports in the 1960s, there have been 21 strikes or lockouts. Baseball and football have had the most labor strife, with 8 work stoppages apiece – but their experiences have been very different. Because the Supreme Court ruled that baseball is completely exempt from antitrust law, players have had to use the strike weapon under the National Labor Relations Act (NLRA) to liberalize free agency and increase team competition for their services. Football players, in contrast, staged several unsuccessful strikes in the 1970s and 1980s. Because of their weak bargaining power, they decertified their union in 1991 and 2011. This gave them standing as individuals under the Sherman Act to challenge NFL restrictions on their labor market mobility. Using detailed case materials, I show how a district court constantly supervised their labor agreement from 1993-2011.
My study draws from legal and industrial relations theories to explain how labor agreements in pro sports are settled by collective bargaining or antitrust litigation. First, when courts do not define the antitrust-labor law boundary so that labor disputes are exempt from their jurisdiction, they open an alternative path to bargaining these agreements. Second, when courts entertain antitrust lawsuits, they raise the odds that economic weapons under the NLRA will not be used because of judicial inclination to protect players from irreparable harm and injury resulting from league-imposed labor market restrictions. Third, as this behavior becomes a pattern, collective bargaining is disrupted by faulty information as players, unions, and leagues guesstimate the odds that their differences will be settled at a collective bargaining table or in a court supervised negotiation. Fourth, as players negotiate better agreements in court compared to the bargaining table, they become addicted to this settlement process.
To apply these theories, I use data from 82 federal antitrust court opinions from 1965-2011. Individual players are the most common antitrust plaintiff (65.5%), compared to player unions (8.6%). This means the dispute resolution processes of collective bargaining are supplanted by litigation in federal courts. And except for baseball players, pro athletes often lose labor disputes when economic weapons are used. Their dismal bargaining experience substantially improves, however, by suing under the Sherman Act. In court, players win 43.9% of the rulings, compared to 46.3% for the leagues. These rulings – for example, an injunction that ends a league’s restrictions on free agency – can have dramatic consequences for antitrust settlements that are later codified in a collective bargaining agreement. Textual analysis of cases supports this conclusion.
Applying the “narcotic effect” theory from industrial relations, I conclude that antitrust litigation addicts players in football and basketball to the adjudicatory procedures of the Sherman Act – thereby replacing collective bargaining. This is undesirable because Congress intended, under the NLRA, to leave labor and management free from government interference as they adjust their differences. In contrast, baseball’s total exemption from antitrust law, combined with its high frequency of work stoppages, shows what happens when the opiate of antitrust litigation is not available to players: In time, labor and management establish an informed bargaining protocol, and work through their issues by making difficult concessions on their own. As long as courts entertain these sports lawsuits under the Sherman Act, collective bargaining will be subverted.
Keywords: Antitrust, Labor Dispute, Collective Bargaining, Sports Law
JEL Classification: K21, K31, L83
Suggested Citation: Suggested Citation