1. Substantive Terms of the Collective Bargaining Agreement

2. Moore/Braves
Why can individual clubs and players provide special covenants only that benefit the player?
Why can’t Braves waive requirement for Moore to go into “re-entry draft”?

3. MLB Bonuses
Can the Phillies agree to give Ryan Howard a $2m bonus if he hits 60 HRs next year?
If not, why not?
What bonuses are permitted in baseball?
Suppose the Phillies deliberately beneched Howard so he would fail to earn bonus?

4. History of Salary Arbitration
Adopted in NHL in ’70; MLB in ’76
Is the purpose to mirror the results of the free market that would exist but for other restraints?

5. MLB Salary Arbitration Procedures
Each side files “final offer”
Arbitrator must select one or the other
No advance briefs
No written opinion
Why do owners and players agree to such unusual procedures?

6. Scott Gomez arbitration: precedents
Martin St. Louis
Brad Richards
Steve Sullivan
Milan Hejduk
Alex Tanguay
Marian Gaborik
Marian Hossa

7. Relevant Criteria
Quality of player's contribution last yr, including special qualities
Length & consistency of contribution
Record of past compensation
Comparative salaries
Physical or mental defects
Recent performance of club

8. Excluded Evidence Why is this relevant evidence excluded?
1> finances of club or player; impt aspect of the compromise
2> press comments
3> NHL: K of junior player or free agent
4> prior offers

9. Salary Cap: Background
Key concept: player gets guaranteed % of Designated Gross Revenues, and owners can cap salaries
History
NBA
NFL
NHL

10. Problems with definition of Gross Revenue
Proper Accounting
International Revenue
Relationship between club revenue that is “designated gross revenue” for purposes of salary cap and revenue that is designated for purposes of revenue sharing
Good faith/best efforts to maximize DGR

11. Escrow Concept
where $ spent on exceptions > $ saved by clubs spending less than cap (subject to floor), result is total player spending will exceed agreed upon cap %
league recaptures by holding a % of each paycheck in escrow and eventually “taxing” each paycheck to pay owners back to get total spending down
Further overspending in NBA lead to individual player caps

12. Individual Negotiations Under the Cap
Generally left to free market
Rookie caps
How can PA agree to a rookie cap that pays a junior player far less than fair market value?
Process like tax law: complex rules that clubs and agents try to exploit with loopholes, that league must then try to close in next CBA

13. Salary Cap: Differences
How they relate to other incentives for teams to become or remain competitive
NFL: hard cap; wriggle-room
NBA: soft cap: Larry Bird exception
Why would teams want this?
NHL: hard cap
MLB: No cap: luxury tax
Relevance of salary floor

14. Labor Law: Conclusions
Wagner Act gives workers choice to form unions and to organize labor markets through collective bargaining
Recall purposes
Prevent unfair exploitation by superior bargaining power of employers
Minimize industrial disruption
Macroeconomic help to purchasing power of workers
Do these concerns justify giving major league players the choice to form unions and to organize labor markets collectively?
Are there other public-interest reasons why American professional sports should be organized around collective bargaining, rather than free markets?