Tuesday, September 29, 2009

NBA Locks Out Referees 

Labor relations in professional sports are notoriously contentious. Nobody gets along. Players strike, owners lock out players, referees strike, owners lock out referees; it happens all the time. Labor disputes in professional sports almost always revolve around the periodic renewal of collective bargaining agreements (CBAs) - contracts between leagues and unionized employees that specify all the details of the employer-employee relationship - that usually last five years or so.

The latest chapter in this sad saga pits the NBA against referees. Negotiations between the NBA and the National Basketball Referees association (NBRA), the union that represents NBA referees, broke down last week and appear to be stalled. The points of contention are the usual suspects: wages, travel benefits, and retirement benefits. The NBA wants to scale back pension benefits and keep wages flat over the life of the CBA, citing the effects of the recession on revenues. The refs want this CBA to run only two years, instead of the usual five, so that they can re-negotiate in an improved future economic climate, and, of course, want wage increases.

One unusual feature of this labor dispute is that the NBA has released information about their offer to the press, probably in an attempt to force the NBRA to settle. These details are seldom made public, an the NBRA is crying foul (sorry, I couldn't resist). The NBA claimed that entry level referees make $150,000 and experienced referees make upward of $550,000. The union claims that entry level salaries are $91,000 and experienced referees make less than $400,000. The severance package paid to retiring referees, reported to be $575,000 by the NBA, is also under negotiation and a matter of dispute.

The NBA will open the season with non-union referees, drawn from the WNBA, the NBA development league, and other places. The same thing happened in 1995, the last time the NBA and the NBRA couldn't agree on a new CBA. Because reasonable substitutes for NBA referees exist (it doesn't take a highly trained expert to let NBA stars get away with walking and palming the ball), it seems unlikely that the NBRA can hold out for too long. Referees don't have as much bargaining power as players in labor negotiations.

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Sunday, March 08, 2009

College Basketball Referee Compensation 

John Feinstein has an interesting column in today's Washington Post about David Hall, a college basketball referee. Sports officiating, even at the elite level, is a part-time job. The seasonal nature of sports contributes to this situation -- it was not that long ago that professional athletes in the NFL, NBA, MLB and NHL worked off-season jobs -- as well as the scheduling patterns in sports like football where games are played primarily on weekends.

But conditions in this labor market appear to be changing. Hall, and some other college basketball referees, are now able to make a full time living as referees. According to the article, the BCS conferences now pay as much as $2,000 per game, plus first class airfare and other travel expenses. Hall works aboout 100 games per college basketball season. You can do the math to figure out an estimate of his before tax compensation. He left his day job at a broadcase software firm a few years ago.

The column contains a couple of interesting economic tidbits. First, as we would expect, the non-BCS conferences have had to increase their compensation for referees. Second, again as we would expect, this switch from part-time to full-time employment seems to have led to an increase in the quality of officiating, and an increase in the demand for the services of the full time officials. According to Feinstein:
Guys such as Hall and East Coast officials Jim Burr, Tim Higgins and Mike Kitts (among others) are in so much demand these days that the second-tier leagues have taken to scheduling more games on Tuesdays and Thursdays in order to get them to work.

"It has gotten to the point where you schedule with referees in mind," said Doug Elgin, the commissioner of the Missouri Valley. "The good news is we can get those guys on their off nights from the BCS leagues. The bad news is we have to pay them BCS prices. Obviously we think it's worth it."
There's a lot of interesting economics going on here. For example, the implication about the relative quality of officiating has interesting consequences. The people who organize basketball contests appear to face heterogeneity in referee labor inputs and a quality-price trade off in that labor market. The move to full-time referees -- specialization -- and the associated increase in compensation, is a market-based solution to this particular problem. I wonder how bad the information asymmetries are in the market for college basketball referees? (Feel free to insert your own Tim Donaghy comment here).

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