Lockout: Responding to the Replacements

March 7, 2014, A sobering day for many US soccer officials, both professional and amateur. The dreaded lockout, which has been casting a shadow over the refereeing world of late, has finally shown its hideous face. In less than 24 hours the MLS season will open, but MLS referees will not be on the pitch.

PSRA and PRO were $440,000 apart on a total compensation package that would have averted a work stoppage, one source said. A separate source with knowledge of the negotiations said the divide is more than $1 million. PRO will use replacement officials for the eight MLS matches played this weekend and until an agreement is reached with the Professional Soccer Referees Association (PSRA).

This weekend is a pivotal moment for professional refereeing in this country. One major issue during any of the 8 matches has the potential to substantially boost PSRA’s bargaining power. On the flip side, if matches are uneventful, it could unravel the essentiality of PSRA referees. In either case, PSRA or PRO will capture a larger share of bargaining power than they currently have.
One aspect that has been overlooked, is the incentives of players to behave or misbehave this weekend. For while referees and players seem to be adversaries on the pitch, when it comes to contract negotiations they are both on the same side of the table: labor unions. MLS will soon enter into talks with the players’ union regarding a new collective bargaining agreement.

If PSRA lose in their negotiations, it could weaken the players’ union bargaining power. Indeed, the players’ union has already issued a statement in support of the PSRA. The statement, while focused on concerns for players’ safety, may have been a strategic anticipation of the parallel causes between PSRA and themselves.

Meanwhile, PRO has expressed confidence in their designated replacement officials. “We have high confidence in the qualifications of our replacement officials and can ensure our fans, clubs and players that all games will be officiated at a professional standard that protects the integrity of our matches and the safety of our players,” Walton said.

However, will replacement officials be able to respond to players resolved to tilt the bargaining in PSRA’s favor? Even disregarding their economic incentives to jeopardize replacement officials, it is likely that players will test the replacements. Players tend to respond negatively to inconsistency and replacement officials inherently bring a style that is distinct from the “regular” MLS referees. This added pressure will be compounded by the stress of last-minute appointments and opening day nerves.

Replacement officials have an unenviable task before them as their performance will be closely monitored by fans, players, coaches, MLS referees, and MLS. By the time the last whistle blows this weekend the landscape of professional refereeing will have been altered one way or another. There is only one thing certain amidst all this speculation, this opening weekend will be one of the most captivating openers for referees since the league’s inception.

PSRA/PRO Negotiations Analysis

The March 8^th Collective Bargaining Agreement deadline looms large for PRO and PSRA. If an agreement is not made, a strike will ensue and all the costs and chaos associated with it. The results of negotiations will be a derivative of the power that either side has. Either side’s power sets the framework for what their final offer will be and their negotiating strategy.

PSRA’s power is that it can strike, which can decrease the quality of the on-field product, and consequently decrease the revenue MLS generates from match attendance and TV audiences. This power is contingent on referee solidarity. If PSRA, and more broadly, the referee community, does not stay together, the strike may fall apart, and the collective bargaining will fail as a result. A failed strike would be a devastating blow to the PRSA credibility, which is still relatively young.

PRO (MLS) has the advantage of being the top-level of soccer in the country. This may allow them the ability to influence referees to work matches during the strike. These referees may be USSF referees not within PSRA, foreign referees, or a combination of both. MLS may also be able to withstand a strike with the revenue it has collected from season passes, from renting out soccer stadiums for special events, or other such alternative streams of cash. Their power will be linked to MLS fans’ reaction to a referee strike; if fans are not responsive, the strike will not alter the league’s ability to make money. However, unhappy fans that do see a decrease in the MLS product due to the replacement referees will increase the pressure on PRO to end the referee strike. If replacement referees do not alter the fan’s experience, it will be much tougher for PRSA to continue their strike.

Aside from power, there are a variety of bargaining sub-processes that either side will have to choose during collective bargaining. These choices can be seen as zero-sum bargaining known as distributive bargaining and integrative bargaining, which focuses on improving working conditions and worker productivity. Additionally, both sides may have to confront issues of intra-organizational bargaining and trust.

 

Distributive bargaining is viewed as zero-sum bargaining. A win for one side is a loss for the other side. A wage increase is a win for PSRA, but a loss for the MLS. In this case a loss for MLS may be further compounded by the impending player’s contract next year. A win for referees will make management look vulnerable to similar strike threats from the players’ union.

Integrative bargaining is viewed as a win-win. Integrative bargaining topics may be improving referees’ access to physical trainers, more flexible flight arrangements, locker room conditions, and other measure that could increase worker productivity in various ways. These topics are beneficial to both sides since improved working conditions for referees could result in better refereeing, which would allow for an improved product on the field.

The cost of this increased productivity may be less than the increased revenue, and general rule changes can improve referees’ satisfaction and happiness. These sort of resolutions require each side to treat the other side with respect and to avoid aggressive posturing.

Furthermore, trust becomes crucial in the bargaining process. Both sides must make efforts to ensure that they are trustworthy. This is one reason the unfair labor charge PSRA brought against PRO was a rattling report.

Intra-organizational bargaining is bargaining within the same organization. This process can occasionally be an issue for unions, and is where solidarity becomes a critical component of success. Not only do current MLS referees need to stick together in support of the union, but also referees outside of the union. Although these non-union referees are not bound or obligated to PRSA, their solidarity is crucial in maintaining a united front in the face of an impending strike. If too many non-union referees agree to work for PRO, they will inhibit the bargaining power of PRSA.

Finally, another key issue for PSRA will be the wage-employment-trade-off. The wage-employment-trade-off states that at higher wages, a firm may be forced to lay off workers. For PSRA this could come about by MLS reducing the amount of referees in the pool for MLS. This issue may be less critical for already established MLS referees than for referees aspiring to reach that level. The key is to recognize if the wage-employment-trade-off is present before PSRA makes its demands.[1]

All of the various bargaining processes and the factors will determine what collective bargaining agreement PSRA and PRO come to. The most critical of these are factors that influence strike outcomes. This is true even if a strike does not occur because a strike is the threat point in the negotiations between the two sides.

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[1] http://www.purduereview.com/10/demystifying-collective-bargaining/

MLS Growth and the PSRA Strike Vote

On February 22, 2014, in a near-unanimous vote, MLS referees authorized the referee union, PSRA, to strike if a collective bargaining agreement is not reached with officiating management before the March 8 season openers.[1] This vote came after 20 meetings between PRSA and PRO, the organization that manages the officiating program on behalf of MLS, where both sides continued to disagree on financial terms. .With the March 8th deadline looming large, the possibility of a strike seems more and more likely. 

One fundamental principle underlines the employee-employer relationship: The value of an employee’s labor is generally greater than the wage paid by the employer. This difference gives rise to a surplus that has to be divided between the worker and the employer.

Strikes occur when the two sides are unable to agree about how this surplus is divided. Most strikes arise as a result of miscalculation, such as when the union is relatively confident that the employers can afford to pay a high wage, but this confidence is in fact misplaced. This leads us to the question: Are the MLS referees unreasonably confident in the amount of wages they can capture?

PSRA’s demands should come at little surprise given the league’s recent success. In 2011, average MLS attendance hit 17,872 to surpass both the NBA and NHL, and it has since increased to 18,611 fans per game. More impressively, the average franchise is now worth $103 million, up more than 175% over the last five years. With five planned expansion teams and a new league TV deal on the way, there’s no reason to believe that growth is slowing anytime soon.[2]

This growth has created a larger surplus between referees’ wages and their value to the MLS. Unsurprisingly referees have sought to reduce this gap. Besides the growing surplus, another factor contributing to referees’ demands is the increased work responsibilities that have been established by PRO. Time demands on referees have increased because of, for instance, regular training camps instituted by the new regime.

The ultimate factor in continued negotiations between PRSA and PRO lays in who has more leverage over the other. If PRSA’s demands lie within management’s acceptable contract zone, PRSA is more likely to attain gains without a strike. However, if PRSA’s demands exceed the contract zone set forth by management, a strike may occur. These miscalculations often occur as a result of uncertainty caused by changing economic conditions and newly formed negotiating relationships. Both of these are present in this situation.

The perceived leverage that PRO had over PRSA in the initial stages of negotiations was neutralized once unfair labor practice charges were brought against PRO by the union. The damage done by these accusations has thrown a wrench into the negotiations, thus creating a larger gap that must be breached before the start of the season. If an agreement cannot be reached by March 8, there are many avenues that PRO can take to cover MLS games. None are ideal, but some may be employed in order to begin the MLS season on time.

[1] http://www.washingtonpost.com/blogs/soccer-insider/wp/2014/02/22/mls-referees-authorize-strike/

[2] http://www.forbes.com/sites/chrissmith/2013/11/20/major-league-soccers-most-valuable-teams/