The world has changed

For many of those coming to the bargaining table, everything starts with the recession.

“I think that our players understand completely that the world has changed,” said NBA commissioner David Stern. “They look outside. They live in Detroit. They live in Phoenix. They live in California. They understand unemployment is at 11 percent, that office vacancies abound. The players understand those are our fans, the ones who aren’t working, who are in foreclosure, who don’t have jobs in offices.”

Revenue for professional sports leagues has increased regularly over the years, and that increase has made it easier for deals to be made between leagues and players unions. In the last 10 years, only the NHL has suffered a work stoppage, the lockout of 2004-05.

But in most leagues that revenue growth has run into a brick wall in the form of the recession, which could make new agreements much more difficult to reach, labor experts say.

Howard Ganz, Batterman’s partner at Proskauer Rose, who serves as outside counsel to the NBA and to Major League Baseball, said the current economy is the biggest issue for owners and leagues as they prepare for collective bargaining with players unions.

Ganz said the economy’s overall effect on sports leagues isn’t yet clear because many of the leagues’ biggest revenue-generating deals were made when times were better and stretch over multiple years.

“Those arrangements will be coming to a conclusion over the next year or two. And who knows whether sponsors are going to continue to spend lots of money on sports promotion,” he said. “At the same time costs have not declined.”

Batterman said the economy is affecting how team owners look at their costs of doing business, and players’ salaries make up the majority of costs in all of the leagues. “The feeling among all the owners and all the senior management teams in all the leagues is that the business is changing,” he said.

Owners are questioning whether growth opportunities for revenue are going to continue “or do we need to revisit the revenues or shares [guaranteed to players] as a result?” Batterman said. “ I don’t know that there are any answers yet, but I think that question is being raised all over.”

At the same time, they say their expenses outside player salaries also continue to rise.

“You’ve got a lot of costs with sponsorship, with fulfillment, our fans are asking more. Our business partners are asking more,” said NFL chief legal officer Jeff Pash.

Before the recession, sponsors and advertisers increasingly were asking leagues and clubs what return on investment they would get in a deal. Now “it seems like you get those questions much more quickly and that there is a lot more rigor in the analysis that goes into it,” Pash said.

But NFLPA officials say the NFL has not provided them with any information about their costs. “The union thus remains in the dark as to what the owners consider to be the main items for the negotiations,” NFLPA outside counsel Jeffrey Kessler said after two formal bargaining sessions with the NFL.

And the NBPA’s Hunter noted that the NBA bought a full-page ad in the Wall Street Journal touting the league’s third-highest attendance ever and increases in television viewership. “So you tell me what they mean,” Hunter said.

Although other issues often emerge in CBA negotiations, like age limits and marketing rights, negotiators on both sides of the table say that in this round of talks, the main issue is players’ share of league revenue. “It’s about dividing up the Benjamins,” Hunter said.

The economy, and whether it improves between now and 2011, is also a wild card. Labor experts say that a bad economy favors owners seeking concessions, but negotiators say it is much easier to get a deal done in good times versus bad.