By Chris Deubert[1] of Ginsberg & Burgos, PLLC
(Editor’s note: This article originally appeared at 37 Brooklyn Journal of International Law 65 (2011))
In August 2010 it was announced that three-time Tour de France winner Alberto Contador, less than a week after his latest victory, was leaving his Kazakhstan-based team, Astana at the end of the season.[2] Contador reportedly rejected a two-year, nearly $13 million deal from Astana,[3] instead choosing to sign with Bjarne Riis’ Danish-based Saxo Bank-SunGard team for a reported two-years and $20 million.[4] The move was particularly notable because Contador was essentially replacing rider Andy Schleck, who announced that at the end of the 2010 season he would be leaving Riis’ squad to form a team based in his native Luxembourg.[5] Schleck finished second to Contador in both the 2009 and 2010 Tours de France, including a controversial thirty-nine second victory in 2010.[6]
While the freedom of contract is something to be celebrated considering the history of control exercised by teams over their athletes across many sports, there are superior business models that would improve the operations and financial viability of professional cycling while also making it more comprehensible and appealing to the fans. This Article explains key areas where the structure and operations of professional cycling could be improved by adopting a more American approach.
Legal Basis for Improving Professional Cycling
From 2001 to 2010, on average, 52% of the riders of the Tour de France were either new riders or with a new team as compared to the previous year’s Tour.[7] On average, a team returning to the Tour from the previous year did so with four new riders out of a team of nine.[8] Although this turnover could be from a variety of factors, such as retirement, injury, skill, or doping bans, the fact remains that large percentages of riders change teams and teams change names each year makes the sport difficult for fans to follow.
There are a number of areas in which professional cycling could be improved through the adoption, application, or replication of some typical American sport features, including team collaboration, free agency, contractual creativity, and revenue generation. European labor and antitrust or competition law play an important role in these areas. Many of these issues can be dealt with through collective bargaining as in American sports.
Labor Relations in Professional Cycling, the United States and the European Commission (“EC”)
In the United States, the joint activity of employees through union conduct is statutorily exempt from antitrust law.[9] The joint activity and agreements of multiple employers, such as the thirty-two NFL teams, can also be exempt from antitrust law in collective bargaining negotiations with a union. This exemption is known as the non-statutory labor exemption and has been developed through case law.[10]
The necessary conditions for satisfaction of the exemption were definitively laid out in the context of the NFL labor situation in Mackey v. National Football League.[11] The Eighth Circuit stated that for the conduct of joint employers to be protected by the non-statutory labor exemption, (1) “the restraint on trade [must] primarily affect[] only the parties to the [CBA],” (2) the issue must “concern a mandatory subject of bargaining,” and (3) the issue must have been achieved through “bona fide arm’s-length bargaining.”[12] This non-statutory labor exemption has served as the backbone for negotiations between American player unions and leagues.
EC law has developed a non-statutory labor exemption upon which a meaningful collective bargaining agreement in professional cycling can be based.[13]
The Non-Statutory Labor Exemption in the EC
To establish a non-statutory labor exemption under EC law, a defendant must establish that (1) a CBA exists between management and labor, (2) the CBA was conducted in good faith, (3) on core subjects of collective bargaining, and (4) that the CBA does not directly affect third markets and third parties.[14] The first three prongs are substantially similar to the Mackey Test in American law. The fourth prong is unique to EC law and may contradict American labor law that allows unions to negotiate CBA provisions, which affect persons not yet a part of the bargaining unit.[15] As a result of this fourth prong, certain agreements common in the Big Four CBAs, such as minimum age requirements and drafts, would probably not be legal in the EC.[16]
In addition to these specific CBA provisions, American sports leagues contain many other provisions, such as salary caps and free agency restrictions, that would likely violate Section 1 of the Sherman Act if not for the non-statutory labor exemption. Accordingly, these provisions would also likely violate Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) — though some would be exempt by the EC non-statutory labor exemption or even the exemption described in Article 101(3).
Professional cycling teams should consider adopting many of the provisions or practices of American sports leagues. Many of the issues needing attention can be resolved through a CBA between the CPA and the AIGCP pursuant to the EC non-statutory labor exemption. However, the proposed reforms will require careful compliance with Articles 101 and 45 of the TFEU.
Areas of Improvement
A. Improve Team Collaboration
A negotiated salary cap in cycling should be exempt from scrutiny pursuant to the EC non-statutory labor exemption. Such a salary cap should easily satisfy the first three elements of the EC non-statutory labor exemption. The fourth element—that the CBA does not directly affect third markets and third parties—is less clear. A salary cap could affect those that are not a party to the CBA, such as not-yet-professional cyclists, by depressing the salaries they could earn upon their entry into the professional realm. However, the salary cap is not designed for that purpose and the harm to these young cyclists should not be considered direct. A salary cap or revenue sharing arrangement could help provide financial stability to the teams by allowing them to appreciate in value over time.
Change the Transfer Period
Presently, even though rider contracts run concurrent to calendar years, riders and teams are permitted to begin negotiating a contract during the current season for the following year beginning August 1.[17] The transfer period should begin in late September, at the earliest, to allow for the completion of the Vuelta a Espana. The sport of cycling ultimately revolves around the Tour de France. However, the current transfer period undermines one of its three most important events. Moving the date until after the Vuelta a España would allow the Vuelta to grow in importance and prestige creating a more balanced schedule that grabs and holds fan attention.
Increase the Creativity in Contractual Provisions
Cycling teams generally sign riders to one or two-year contracts as anything longer would be a financial commitment that most teams cannot make alongside their one or two year sponsorship deals. Through nonguaranteed contracts that provide an upside to the riders in the case of good performance, teams could control riders for longer durations. Riders’ careers are short and their desperation for employment is what has already caused them to allow the UCI to control the sport in place of a CBA. Therefore, riders are unlikely to complain very long or loud about a change in the structure of their contracts. Nevertheless, this change can and should be negotiated in a CBA with the CPA.
Revenue Generation
Television broadcast revenues are among the most important and lucrative sources of revenue in American sports. However, cycling teams do not create or control the events—the UCI and event organizers, such as ASO, do. Since ASO is a single entity, it can and does collectively sell the rights to many of its events. For example, in 2010 Versus broadcast eight of ASO’s fourteen professional cycling events.[18] ASO is able to leverage the importance of broadcasting the Tour de France into forcing Versus or broadcasters in other countries to broadcast ASO’s lesser known events. It is the failure of the UCI to do something similar which continues to deprive the UCI of meaningful revenues.
Conclusion
Cycling is one of the world’s favorite sports. It has withstood countless scandals questioning the legitimacy of its champions and races. Nevertheless, those scandals continue to cast a dark shadow over the sport’s governance and sustainability. The stability and sustainability of the sport of cycling continues to be threatened by the sport’s antiquated systems which have placed nearly all of the power in the hands of event organizers, rather than the teams and riders. American sports have been largely successful in creating a shared and lucrative partnership between teams and athletes through the collective bargaining process. Cycling teams and cyclists need to do the same. By adopting some of the American approaches to professional sports, cycling could take steps towards a cleaner and more stable sport.
[1] J.D./M.B.A., Fordham University School of Law and Graduate School of Business, New York, NY; B.S., Sport Management, University of Massachusetts, Amherst, MA. The author can be reached at cdeubert@gmail.com and he rides a Specialized bicycle.
[2] Alasdair Fotheringham, Contador Quits Astana to Replace Rival Schleck, Indep. (U.K.), Aug. 4, 2010, at 54, available at http://www.independent.co.uk/sport/general/others/cycling-contador-quits-astana-to-replace-rival-schleck-2042336.html (reporting that Contador turned down approximately £4.1 million (about $6.3 million) annually); Andrew Hood, Bjarne Riis Signs Alberto Contador for the 2011 Saxo Bank-Sungard Team, Velo News (Aug. 12, 2010, 5:13 PM), http://velonews.competitor.com/2010/08/news/riis-signs-contador_132572 [hereinafter Hood, Riis Signs Contador].
[3] Fotheringham, supra note 2.
[4] Contador Signs Two-Year Deal with Saxo Bank-SunGard, El País (Madrid), Aug. 4, 2010, at 6.
[5] Richard Moore, Cycling: Tour Champion Contador to Replace Schleck at Saxo Bank, Guardian (London), Aug. 4, 2010, at 7; Ben Atkins, Andy Schleck Confirms Saxo Bank Departure, Velonation (July 30, 2010, 10:44 AM), http://www.velonation.com/News/ID/5070/Andy-Schleck-confirms-Saxo-Bank-departure-destination-still-to-be-announced.aspx.
[6] Contador in Yellow as Schleck Suffers Untimely Mechanical at the Tour. France’s Voeckler Wins the Stage, Velo News (June 22, 2011, 2:46 PM), http://velonews.competitor.com/2010/07/news/contador-in-yellow-as-schleck-suffers-untimely-mechanical-at-the-tour-frances-voeckler-wins-the-stage_129933. Entering Stage 16 of the 2010 Tour de France, an important mountain stage, Schleck held a thirty-one second lead over Contador. Juliet Macur, Etiquette Debate Follows Tour De France Lead Change, N.Y. Times, July 20, 2010, at B.11. However, on a decisive climb that day, Schleck’s bike chain became dislodged, forcing Schleck to stop and repair it. David Roth, Contador Wins by One Bike Chain, Wall St. J. Blog (July 26, 2010, 10:34 AM), http://blogs.wsj.com/dailyfix/2010/07/26/contador-wins-by-the-length-of-one-bike-chain. While Schleck was forced to stop, Contador rode on, in a move some said was against unwritten rules not to attack a rider who has stopped through no fault of his own. See id. Contador took thirty-nine seconds on the stage to take an eight second lead over Schleck. Id. On the Tour’s penultimate stage, the individual time trial, Contador added thirty-one more seconds to his lead to win the 2010 Tour by thirty-nine seconds—the exact margin that Contador obtained as a result of Schleck’s mechanical problems in Stage 16. Id.
[7] See generally Races & Results: Tour de France Previous Years, cyclingnews, http://www.cyclingnews.com/tour-de-france (last visited Sept. 23, 2011) (This data was calculated by examining the Start Lists from the 2001 to 2010 Tours de France.).
[8] Id.
[9] Clayton Act, 15 U.S.C. § 17 (2006).
[10] United Mine Workers of Am. v. Pennington, 381 U.S. 676, 710 (1965) (“[I]n order to effectuate congressional intent, collective bargaining activity concerning mandatory subjects of bargaining under the Labor Act is not subject to the antitrust laws.”).
[11] Mackey v. Nat’l Football League, 543 F.2d 606, 614 (8th Cir. 1976).
[12] Mackey, 543 F.2d at 614.
[13] The preeminent article on this topic is Marc Edelman & Brian Doyle, Antitrust and “Free Movement” Risks of Expanding U.S. Professional Sports Leagues into Europe, 29 Nw. J. Int’l L. & Bus. 403, 419–20 (2009).
[14] Id. at 430 (citing Case C-222/98, Van der Woude v. Stichting Beatrixoord, 2000 E.C.R. I–7111, ¶¶ 22–27; Case C-67/96, Albany Int’l BV v. Stichting Bedrijfspensioenfonds Textielindustrie, 1999 E.C.R. I–5751, ¶ 296).
[15] Wood v. Nat’l Basketball Ass’n, 809 F.2d 954, 960 (2d Cir. 1987) (citing 29 U.S.C. § 152(3) (2006)); see also Fibreboard Paper Prods. Corp. v. N.L.R.B., 379 U.S. 203, 210–15 (1964); Time-O-Matic, Inc. v. N.L.R.B., 264 F.2d 96, 99 (7th Cir. 1959); John Hancock Mut. Life Ins. Co. v. N.L.R.B., 191 F.2d 483, 485 (D.C. Cir. 1951). In Wood, Leon Wood, a first round pick in the 1984 NBA Draft sued the NBA and NBPA claiming that the CBA between the two parties, including a salary cap and draft, violated antitrust laws as it applied to Wood because it was agreed to before Wood was a member of the NBPA. 809 F.2d at 958, 960. The court disagreed and ruled that the CBA was protected by the non-statutory labor exemption and Wood was subject to its provisions. Id. at 906–64.
[16] See Edelman & Doyle, supra note 41, at 424.
[17] UCI Regulations, Part II, supra note 11, ch. XV, § 4, art. 2.15.120(a), at 106.
[18] See Press Release, Amaury Sport Org. & AEG, ASO and AEG Expand Cycling Partnership Agreement (Jan. 20, 2011), available at http://www.prcity.com/amgentourofca/stories/pdf/AEG-ASO-partner_1.19.11.pdf. The eight events were The Tour de France, Tour of Qatar, Tour of Oman, Paris-Nice, Le Criterium International, Paris-Roubaix, La Fleche Wallonne and Liege-Bastogne-Liege. Philip Hunter, European Broadcasting Union Reaches Deal for Major Cycling Events, Broadcast Engineering (Mar. 28, 2011, 12:33 PM), http://broadcastengineering.com/news/european-broadcasting-union-reaches-deal-majoring-cycling-events-20110328/; Media, Tour of Oman 2010, http://www.tourofoman.om/2010/media.php?cls=vi (last visited Oct. 4, 2011); The Critérium on Television, Le Tour de France (Mar. 22, 2010), http://www.letour.fr/2010/CRI/COURSE/us/actus.html#zone148826; Nigel Wynn & Andrew Canning, Tour of Qatar 2010: Preview and Coverage Index, Cycling Weekly (Feb. 4, 2010), http://www.cyclingweekly.co.uk/news/latest/441288/tour-of-qatar-2010-preview-and-coverage-index.html; 2010 Versus TV Schedule for Cycling Coverage, Chasing 1:20 Blog (January 12, 2010), http://www.chasing120.com/2010/01/2010-versus-tv-schedule-of-cycling.html; see also Cycling, Amaury Sport Org., http://www.aso.fr/us/cyclism.html (last visited Oct. 4, 2011).
