The Use of Mediation For Resolving Salary Disputes In Sports
I. INTRODUCTION
A. History of Alternative Dispute Resolution in Sports
Alternative dispute resolution, specifically arbitration, has been inextricably connected with professional sports in recent years. In fact, the arbitration terms “baseball” and “night baseball” are used to describe common types of arbitration which were originally derived from procedures used to resolve labor arbitration disputes in the sport. [4] “Baseball” arbitration involves an arbitrator choosing either one or the other of a specific settlement proposal of a party without the ability to compromise or select aspects of each parties’ proposal. “Night baseball” arbitration is a similar concept involving an arbitrator drafting a proposed settlement, and selecting the specific party offer which comes closest to that proposal.
By way of further example, the face of baseball, not to mention the rest of professional sports, was altered significantly through the “Messersmith-McNally” arbitration decision following a 1975 hearing. In his decision, Arbitrator Kevin Seitz ruled in favor of the two pitchers by ending the long reign of the reserve system, and beginning free agency. This followed years of failed attempts through the civil court system by players challenging the reserve clause and attempting to bring about some form of free agency.
B. Basics of Mediation
Mediation is a form of alternative dispute resolution in which an impartial third party—a mediator—facilitates the resolution of a dispute by promoting voluntary agreement by the parties to this dispute. This process is known as “self-determination. ” A mediator facilitates communications, promotes understand, focuses the parties on their interests, and seeks creative problem-solving to enable the parties to reach their own agreement.
While it is difficult to refute the logic of applying principals of mediation to salary disputes in sports, the major sports leagues in the United States have failed to adopt any form of mediation, voluntary or otherwise. One could postulate as to the many barriers to bringing such a concept to fruition. These include the existence of collective bargaining agreements and delicate union relationships, fear of owners giving up additional control, lack of understanding, and the shear mystery of what infusion of such process would mean. The purpose of this article, however, is to emphasize the wisdom of mediation in sports and to focus on the unique fit between mediation and sports and to focus on the unique fit between mediation and sports, especially as related to salary disputes.
II. MEDIATION IN SPORTS DISPUTES
A. Why Mediation is Well-Suited for Sports
Certain unique characteristics of mediation provide remedies for many of the problems plaguing players and management in today’s market. Mediation offers a speedy, cost effective means of resolving any type of dispute. Its confidential nature would promote open communication between the parties, which would preserve, if not enhance, their working relationships.
Mediation typically has a success rate which along make it a worthwhile endeavor. The American Arbitration Association, for example, boasts greater the 80% settlement rates for all cases that participate in its mediation program. Considering the millions of dollars at stake if settlements are not reached quickly, common sense dictates a closer look at what many have already found to be the alternative dispute resolution mechanism of choice.
For example, the recent stalemate between Detroit Red Wings and Sergei Federov and the team’s management vividly demonstrates this point. In the beginning of the 1997-98 season, Federov demanded a raise in his salary to bring him “in the neighborhood of $6- million {sic}” per season. The parties’ failure to reach an agreement eventually hurt everyone involved:Federov ultimately ended up missing 54 regular season games, 12 games more than half the season. Federov stayed active by practicing with the Plymouth Whalers, the Junior A affiliate of the Carolina Hurricanes. Federov’s practice sessions were a nightly fixture on most of the local sportscasts in the Detroit area, causing concern for the thousands, if not hundreds of thousands of Red Wings fans across the state and the country. While the news coverage may have helped the local sportscasts during sweeps month, nothing was really being accomplished to settle the holdout.
Rumors were abound about the ultimate fate of arguably the most talented Red Wing and an elite among his NHL peers. Was Federov going to be traded? Are the Red Wings working out a deal with the Hurricanes? The questions filled many nights of talk radio and sports television. Fans and media’s predictions on the ultimate resolution of the hold out changed from week to week. However, during all of the attention, the fan support for Federov was diminishing rapidly.
During the Olympic break in February of this year, while Federov was showcasing his talents for the world in Nagano, Japan, and a trade embargo was in place throughout the NHL, the Carolina Hurricanes signed Federov to an offer sheet worth $38 million over six years. Carolina had structured the deal to pay Federov $28 million in the first year with incentives and salary. The front-heavy structure of the contract was no doubt designed to lessen the Wings desire to match the offer. Ultimately, facing the prospect of receiving five draft choices from one of the worst teams in the league in return for a former Hart and Selke trophy winner did not appeal to Red Wings management, and the Red Wings did not hesitate to match the offer; Federov once again donned the “winged wheel” logo of the team.
The final outcome of the Federov deal was mixed. Because the Detroit Red Wings prevailed in their run for a second Stanley Cup, team management was forced to part with $28 million to Federov within four months. During his negotiations, Federov and his agent were often quoted in the newspapers with various comments to strengthen his bargaining position. Similarly, the Red Wings used the media to place the blame for the hold out away form the franchise. A preferable method to resolving such a dispute would avoid this hostile atmosphere, and media attention, concentrating instead on the negotiations.
Obviously, if an early settlement had been reached, Federov could have offered his services throughout the entire season and the financial blow to the Red Wings’ management could have been lessened. Nevertheless, hindsight tells us that the Red Wings were still able to successfully defend their Stanley Cup Championship. What if the Red Wings, however, had missed the playoffs by just a few games because of Federov’s absence? His presence for the remainder of the season and during the playoffs is undeniable. In the final analysis, Federov got the money he was seeking. It seems plausible that better negotiation procedures could have enabled a deal allowing the Red Wings more time to stagger his salary, avoiding both the “poison pill” and the missed games. Perhaps mediation could have prevented this “no-win” situation for the Red Wings.
Fans of every major sports league in the United States cannot ignore the obvious eroding trust between players and management this decade. A neutral third party, one who is trained in various mediation techniques, would reduce this distrust, and assist the parties in reaching a speedy settlement. Preserving the constructive communication that is so vital to successful negotiations could be enhanced by a disinterested mediator who has no business or personal agenda in the dispute. In fact, resolving a situation expeditiously is the benchmark of mediation. It would enable the Sergei Federov’s to focus more on their game performances, and free management to concentrate on the business and marketing aspects. Settling labor disputes without the rhetoric and black hole of “negotiations” that accompanies holdouts should be the number one priority of every league.
B. Mechanics of Mediation
Generally, in a dispute between any parties, including employment related disputes, the parties can submit their dispute to non-binding mediation. Filed with an administrative agency like the American Arbitration Association, the parties will be appointed a mediator by the agency and will then schedule a mediation date. Prior to the hearing, the parties and mediator sign a confidentiality agreement ensuring that the content of the negotiations, and hopefully settlement, remain between the parties.
Many employers, union and non-union, utilize mediation today as a way of resolving their disputes prior to finding arbitration or litigation. Today, millions of workers across the country have agreed to have their disputes mediated, arbitrated, or both. Sports franchises can employ the same tactics as many of the leaders in industry have regarding dispute resolution. In fact, if mediation was an agreed upon method of alternative dispute resolution within the National Hockey League Players Association’s collective bargaining agreement, there is no reason why the same positive results cannot be reached.
III. SPECIFIC REASONS WHY MEDIATION IS ESPECIALLY SUITED FOR SPORTS
A.Unique Public Relations Concerns
While public relations and overall consumer attitudes are important in any industry, success of sports leagues and teams appear to be especially dependent on public reaction. A professional sport league’s inability to gauge the reaction of its supporting public can lead to a spiraling negative effect and must be reversed as early as possible to stop irreparable harm and loss of public interest and confidence. While sports are usually slow in reacting to such public outcries for a variety of complex reasons, the phenomenon of damage caused is easy to document. For example, Major League Baseball’s refusal to address various issues, such as length of game and overall lack of interest to some demographic groups, has caused both a missed opportunity to increase its market share, and perhaps even a decline in overall fan interest.
Similarly, the National Basketball Association has been hurt by escalating salaries, frequency of long-term contracts over $100 million, increasing numbers of draft choices from high schools, battles between star players and the law and public displays of embarrassing conduct. All of these well-documented phenomena are chipping away at the once lofty position of the NBA as a marketing flagship in sports, both in the United States and internationally.
Although individual salary disputes are only part of the puzzle, long and drawn out public negotiations with unreasonable positioning by owners, players, and agents through the media impacts negatively on overall public perception. One only needs to listen briefly to any sports radio show to hear complaints about “greedy college age athletes” who make much more than they should, but are still refusing to play for less than a $100 million contract.
Mediation would offer hope that such disputes could be resolved at an earlier stage with much less public displays of greed and pettiness. Even though mediations may not resolve salary disputes immediately, ground rules could be set for confidentiality during the course of mediations, which may be conducted during multiple sessions over a period of time. It may be, for example, that even though the mediation process may not resolve the salary issues, certain other agreements may be reached to ensure confidentiality and avoid public statements. As such, the negative public reaction that follows public commentary on professional sports league disputes would be avoided.
B. Preservation of Working Relationships
Although working relationships are important in all businesses, bitter negotiations in sports disputes involving the performance of an individual player, such as basketball, can lead to unique problems. This is especially true when the general manager conducting the negotiations also has a role as a coach. Team ownership has a definite interest in the player maintaining his confidence and not hearing comments during negotiations about his weaknesses which are intended solely to deflate the agent’s perceived value of his client.
During the mediation process, an experienced mediator can make sure that these goals are implemented through the use of “private caucuses. ” A private caucus occurs when “the mediator talks with each party and its lawyer confidentially, away from the other participants. ” Usually, these private caucuses will go back and forth until the separated parties can reach an agreement, or “shuttle diplomacy. ” For example, this would permit the mediator to soften the general manager’s tone in criticizing the player, and prevent the player hearing such negative commentary directly. Even where joint mediations sessions become emotional, a skilled mediator can monitor the exchanges, maintain civility in the negotiation process, and promote a better working relationship once the agreement is reached.
C. Time Sensitivity and Flexibility of Mediation
Mediation can be altered to meet the timing needs of the parties. In fact, a mediation system could be put into place for pre-selection of a mediator, which would create a very quick time frame to allow mediations to take place as needed. Many large employers in the United States have initiated similar mediation programs, and even allow the process to take place while employees are still at work and on the clock. Mediators are even prepared to act during odd hours if that is when disputes are best resolved to assure that problems do not escalate.
Mediation also allows flexibility in a variety of other areas, such as allowing privacy to the parties through private caucuses to allow the mediator to fashion a potential resolution. As a typical ground rule of mediation, although these vary greatly, a mediator can listen to concerns and issues raised by one party and agree not to divulge any such sensitive information until clearance is received from that party. This process could be particularly useful for sensitive financial information about a team or player, health problems of a player, potential transactions, and similar information. Unless all such information is available to the mediator, he or she cannot propose resolution that fulfills the actual goals, needs, and desires of both the team and player. Such process and creativity is not possible in a professional sport’s dispute when the general manager and player agent are placed in a room or conduct negotiations by phone without the assistance of a neutral third party.
D. Neutral Environment/ Neutral Third Party
Mediators are trained to bring about a resolution by providing an environment of neutrality. In fact, neutral mediators have experienced significant success in matters involving multiple parties and issues more difficult to grasp than the basic issue of the continued employment of an athlete with a team. Even disregarding such success rates, the mere infusion of a neutral person into the formula can be all it takes to make a difference in resolving such a dispute.
Furthermore, it is common for experienced general managers and agents to have a history in negotiating with each other, and where negative, they might bring this excess baggage with them to the negotiations. Mediators, however, are trained to deal with the issues, and not the personalities. For example, they may spend a significant amount of time in private caucuses to prevent deterioration of the negotiations.
Similarly, the neutral mediator will take charge in scheduling mediations and assuring that the parties are brought together initially, and follow-up with written or telephonic communications where appropriate. They will also facilitate communications and assure that the parties are talking, which is usually one of the major impediments to resolving disputes. Typically, an agent will be representing several other athletes, and the general manager will have many issues and problems to deal with on a daily basis. As such, the neutral mediator can assist in keeping the parties focused in on their dispute by preventing procrastination.
E. Ability to Retain or Get Back Control
Not surprisingly, when problems arise or communications break down, it can be difficult to get the matter back under control. Mediation, however, offers the parties a set mechanism for getting back together and taking control of the problem. Depending on the nature of the mediation utilized, the parties will have the right and ability to control the following (1) the identity of the mediator; (2) timing and scheduling of the sessions; (3) the nature of discussions; and (4) confidentiality of the sessions and related negotiations.
When negotiations have broken down or stalled, as with the Federov dispute, getting the control back can be difficult to accomplish, and the parties are strategically reluctant to make the next contact, preventing the resumption of discussions. Because a mediator is a neutral party and is trained to deal with these types of situations, the mediator can help break through these “stalemates. ”
F. The Amount at Stake
In light of the escalating salary levels of athletes, mediation remains a relatively cheap first step at attempting to resolve a dispute that may potentially reach tens of millions of dollars. A mediator’s pay can be analogized to the fee for visiting of psychiatrist, or perhaps preventive investments in a tangible good. If there is a significant danger of needing to be institutionalized, it would make sense that an individual first seek the assistance of a professional who can prevent being institutionalized, even though the hourly rate may seem somewhat high. Similarly, the protracted negotiations with the attendant public attention, disruption with other team members, etc. can be compared to being institutionalized and it is difficult to see the downside of attempting resolution prior to going to that drastic next step.
G. Identification of Key Issues
Obviously, some mediation will not directly or immediately lead to a resolution. Even with such mediations, experience shows that the process, when properly conducted, leads to the identification of key issues that may, in turn, lead to resolution sometime in the near future. Communication and open discussion of issues is absolutely essential to a resolution and may lead to a better working relationship. Alternatively, it may allow a team and player to more expeditiously conclude that the working relationship should not continue, and that it is better for both to agree to trade or other player transaction.
IV. WHO SHOULD SERVE AS MEDIATORS?
A. Selection Process
Appointment of a mediator can be a hotly contested issue in mediation. However, if players and management agree to the use of a neutral agency to handle administration of the case, the difficulty can be minimized. As with a mediation in the corporate world, the agency could administratively appoint a mediator from a list of mediators that have been approved by the players and management. Upon receipt of the parties’ stipulation to mediate, the agency could obtain a date from the parties in which mediation is feasible and appoint a mediator who can accommodate the parties. Nevertheless, the most important achievement would be that the parties have agreed to try to settle their dispute through a method that has a proven track record of success.
B. Qualifications
Getting the parties to mediate their dispute is the biggest hurdle, although as a voluntary undertaking “neither party has much to lose by entering into such discussions. ” Although the parties have the final word on who serves as mediator, the individuals chosen should have more than a cursory understanding of sports law and facilitation techniques, as well as how the two could successfully intertwine. Similarly, the mediator needs to be versed in sports law and particularly versed in the idiosyncrasies of the sport he or she will serve. As such, the mediator of a sports dispute should have knowledge of the player market since an understanding of the true worth of the product can only aid in the facilitation process. In the Federov situation, Federov was paid what the market concluded he was worth; demonstrating that management’s appraisal of player value may not always be accurate. Necessarily, the mediator with an independent knowledge of player values is better able to determine which party, if any, is taking an unreasonable stance.
The quagmire that is called free agency, however, is not easily understood by the vast majority. The various contingencies that can occur during free agency should be addressed by both parties, of course with the help of a mediator, to completely understand the current situation. Was the impending Olympic break and subsequent trade embargo fully considered in the Federov situation?The Hurricanes played a trump card during the break that could have cost the Red Wings a franchise player.
Since all major sports leagues are covered by Collective Bargaining Agreements, mediators must also have a basic understanding of labor laws and the intricacies of labor and management relations. Lack of knowledge of these types could lead to immediate loss of credibility for the mediator in the eyes of both management and the player, which is the death knell to a successful mediation.
In today’s environment of professional sports, the mediator needs to understand the personalities of the players and the concerns of the owners when working towards a settlement. Typically, it is the above average player who will want to negotiate his contract. Players have egos; some large, some very tender. Small market teams might not be able to pay the kind of salary demanded by a star player. Through creative accounting avenues explored together with a mediator, however, perhaps the small market team may be able to keep its superstar and the player can make the amount of money that he is worth.
Although the logical conclusion from the criteria previously articulated makes attorneys seem like the logical choice for mediators, the players and management might be served just as well by a non-attorney. Certainly attorneys will have knowledge of the many legal facets of collective bargaining, contracts, and sports law. The code of professional conduct which binds attorneys to a code of ethics and confidentiality is a selling point for the profession by itself. Perhaps the most significant characteristic of an attorney’s background that uniquely qualifies them as mediators is that they work on facilitation techniques virtually every day. All of the knowledge in the world will not make a successful mediator if the mediator cannot work towards a settlement. Since the techniques of facilitation are not unique to the legal profession, it makes since to offer the parties as many options as possible. As long as the mediator is respected by all parties involved and has a sound understanding of the necessary elements of the situation at hand, a mutually beneficial settlement can be reached.
For sports, especially hockey, which seems to be enjoying increased fan base around the country as well as around the world, settling the disputes that turn fans off the sport is paramount. Markets are fickle. Foreign markets are even more challenging. Mediation is about settlement and options. Settling these costly holdouts should be the goal of the players and the league alike. In some cases, it could be the biggest goal scored all season.
V. CONCLUSION
The history of sports disputes and their negative effect on fans and team morale vividly demonstrates the need to adopt a speedy and cost effective resolution technique, such as mediation. Mediation is the perfect remedy for sports disputes because it provides a forum for open communication, which is currently missing in many sports negotiations. It gives both parties a sense of confidentiality, which can be used to strengthen their working relationship. The neutral environment that accompanies mediation has proven to be very helpful in resolving disputes, as well. In short, the ease and flexibility of the mediation process, the unique qualities of trained mediators and the high success rate of mediation in the past proves that mediation is the perfect answer for resolving various disputes in sports. The adoption of this technique would be financially and emotionally rewarding to everyone involved.