Losing Games: Player Strikes Adversely Affect Sponsorship Agreements


The end of the collective bargaining agreement between a professional sports league and the players association that represents the athletes triggers a series of dominos: The players go on strike, the league implements a lock-out of the players, the parties meet over the course of several weeks to try to negotiate a new deal, both sides posture (with the league cautioning that pre-season and regular season games will be cancelled and the players association threatening to decertify as a union if a new agreement cannot be reached), the league files an unfair labor practice complaint with the National Labor Relations Board coupled with a declaratory judgment action in U.S. district court seeking a ruling that the lock-out is a legitimate negotiation tactic under the labor laws, the union decertifies and files its own lawsuit claiming that the league's lockout constitutes price-fixing and an illegal group boycott in violation of the antitrust laws, and fans brace for lost games.

Many writers, observers and enthusiasts following the most recent professional sports labor disputes in both the National Football League (NFL) and the National Basketball Association (NBA) have focused solely on the players, the owners and the fans. But there is another group of stakeholders that is inevitably affected by a lack of labor peace: sponsorship partners. Sponsors such as banks, beverage companies, electronics manufacturers and athletic apparel companies that spend millions of dollars a season to sponsor the teams and promote their products to fans may be left losing much of the value they bargained for, even if no pre-season or regular season games are actually lost.

This article provides some background on strikes and lockouts in the world of American professional sports, compares the 2011 NBA labor dispute with what happened during the NFL strike and lock-out earlier this year, and offers ways in which the sponsors can protect themselves.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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