GUEST EXPERT ANALYSIS: Why the Lockout Strategy did not work for the NFL and why the NHL is in a Different Position

Looking for a repeat of its successful bargaining strategy of locking out players, the National Football League locked out its 121 part-time referees in June following the expiration of the National Football League Referees Association contract on May 31, 2012.  Three months later, the NFL decreased its demand for concessions and increased its wage proposal in order to end this work stoppage before the replacement referees made another bad call on the field that changed the outcome of another game.  Most people credit the call awarding a touchdown to Seattle’s Golden Tate at the end of the Monday Night Football Game between the Seahawks and the Green Bay Packers on September 24, 2012; however, there were at least five factors that caused the NFL’s lockout strategy to fail.

In early June, the NFL Referees Association announced that it had no plans to strike or call for a strike.  At the same time, the NFL announced that it was going to begin hiring replacement referees and prepare them to work the upcoming season.  A “lockout” is an offensive economic weapon that Employers may use after the expiration of a collective bargaining agreement.  In many instances, a “lockout” is characterized as “defensive” as the purpose of the lockout is to protect the Employer’s business from sabotage or from an unexpected strike that a union could call at an inopportune time.  The NFL Referee lockout was an “offensive” lockout, designed to apply economic pressure to employees by depriving them of the opportunity to work and earn an income.  Why did the owners’ lockout strategy fail so miserably in failing to cause the referees to submit to the owners’ demands?

1.  The vast majority of NFL Referees have other employment.  In fact, for many, being an NFL Referee is their “second job”, subordinate to their day job.  The “real” NFL referees have a wide range of jobs that include airline pilot, claims adjuster, computer systems analyst, insurance broker, probation officer, store owner, and teacher.  The most famous NFL Referee, Ed Hochuli is a trial lawyer and a partner in an Arizona law firm.  A few NFL referees are retired from their day jobs.  While the loss of their NFL salaries certainly impacted the referees, this lockout did not apply the same level of economic pressure that the 2011 National Football League Player Association had on NFL players.  The referees were able to withstand the loss of their NFL salaries long enough for the NFL to feel the burden of the loss of the referees’ services.

2.  The effectiveness of the NFL’s “business continuity plan” could be publicly observed.  A business that locks out its employees implements a business continuity plan that will allow it to continue to service its clients without the labor of its bargaining unit employees.  In most cases, the Union can only guess how well the Employer is faring in their absence.  The longer that an Employer can give the impression that its operations are not impacted by the work stoppage, the more effective a lockout will be.  In 1987, The NFL made the mistake of attempting to move forward with regular season games played by replacement players: a mistake that it did not intend to repeat in 2011.  With each questionable call and non-call by the replacement referees, the NFL’s leverage grew weaker and weaker.

3.  An Employer may not hire workers to permanently replace locked out employees.  Had the NFL been able to hire permanent replacements, it may have been able to induce highly qualified referees from top college conferences to leave their jobs to work for the NFL; however, none of the most qualified replacement candidates would give up their college jobs for temporary work in the NFL.  As a result, the quality of officiating dropped significantly between the regular officials and their replacements.

4.   Employers need the full support of management to make a lockout effective.  As a lockout places greater demands and stress on other employees at a business, it is important to have the full support of all non-bargaining unit employees for the Employer’s business continuity plan.  During the first three weeks of the regular season, sixteen games were played each week, which equates to sixteen losing teams each week.  Losing teams have been known to blame the regular NFL officiating crews for a loss, so it should come as no big surprise that the performance of the replacement referees took a beating from the players, coaches, ownership, and the talk radio hosts for each losing team.  Once the regular season started and the games started to matter, the NFL had no prayer of keeping unanimous support for its business continuity plan.

5.  The use of temporary replacement officials “de-valued” the NFL’s product on the field.  The NFL overtook baseball as the favorite American sport by continuously working to improve the quality of the game on the field.  Rules were changed, play clocks were added, radio communication to players was allowed, scoring increased, and total time for a complete game decreased all as part of the NFL’s commitment to protect and build up the “Shield” (the NFL Logo).  Every time that replacement officials needed to huddle before making a call de-valued the game experience.  Each incorrect call de-valued the game experience.  Potentially costing likely playoff teams, the New England Patriots and the Green Bay Packers, a regular season game each, devalued the game. Almost any other non-healthcare operation that locks out its employees is able to maintain quality by sacrificing quantity or by simply stock piling prior to the work force.

As the NFL could not hire the best qualified officials to temporarily replace the locked out officials, it made a public exhibit of how valuable the regular referees were to the game when it decided to play regular season games with second tier replacement referees.  The league lost the full support of its ownership group once the replacement referees started affecting the outcome of games.  Since most regular referees have other steady employment, the loss of income during the lockout did not cause them to cave into the owners’ demands before fans, players, owners, and television broadcasters all cried out for the league to settle this labor contract immediately.

It is true that the NFL did achieve some of its goals in the contract settlement reached with the referees; however most observers would concede that the value of these concessions were not worth the cost of three weeks of regular season games with replacement referees.  Ask the Green Bay Packers, who are paying A.J. Hawk $6.5 Million for 18 solo tackles and 15 tackle assists, no sacks, no interceptions and no fumble recoveries in four games this year if they would fork over the estimated $3 Million cost for the entire league to settle the NFL Referees Association contract in exchange for having the right call made on the last play of Seahawks game.

Hockey Players are in an Entirely Different Position than the NFL Referees

Most NHL Players have no other source of income, so the lockout may force them to travel far from home to play for less money in Europe.  The average career of an NHL player is just over 5 years: they must earn as much money as possible during those years in order to support them as they transition into life after hockey: the loss of even part of a season is catastrophic to most players.  The career of an NFL referee can last much longer.  The profits of NHL Owners pale in comparison to NFL Owner profits, greatly lowering the opportunity cost of a lockout to the owners.  The NHL does not have the pressure (or the revenue) that comes from having a major television partner.  The NHL is not considering the use of replacement players, so its business continuity plan will be much easier to sustain than the NFL’s continuity plan for the referee lockout.  The NHL was able to maintain a lockout for the entire 2004-2005 season, and there is no reason why it could not do the same again.  It would be a huge mistake for NHL players to miscalculate that they will have the same leverage as the NFL Referees.

Sean P. Beiter is the Chair of Goldberg Segalla’s Labor and Employment Practice Group. He focuses his practice in the area of traditional labor law for public sector and private sector employers, including representation in collective bargaining negotiations, contract administration, and grievance arbitration. Sean has also represented many employers in disciplinary procedures and contract dispute arbitrations, before compulsory interest arbitration proceedings, in state and federal courts, and before federal and state authorities.

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