We have all seen or heard the phrase, Player/Team headed to arbitration. Most recently, it was reported that the dispute between the St. Louis Rams of the NFL and the owners of the Edward Jones Dome are indeed headed to arbitration.

Alternative dispute resolution, specifically arbitration, has been inextricably connected with professional sports in recent years. In fact, the arbitration terms “baseball” and “night baseball” are used to describe common types of arbitration, which were originally derived from procedures used to resolve labor arbitration disputes in the sport. “Baseball” arbitration involves an arbitrator choosing either one or the other of a specific settlement proposal of a party without the ability to compromise or select aspects of each parties’ proposal. “Night baseball” arbitration is a similar concept involving an arbitrator drafting a proposed settlement, and selecting the specific party-offer which comes closest to that proposal.

Why Mediation is Well-Suited for Sports

Certain unique characteristics of mediation provide remedies for many of the problems plaguing players and management in today’s market. Mediation offers a speedy, cost effective means of resolving any type of dispute. Its confidential nature would promote open communication between the parties, which would preserve, if not enhance, their working relationships.

Mediation typically has a success rate which alone makes it a worthwhile endeavor. The American Arbitration Association, for example, boasts greater than 80% settlement rates for all cases that participate in its mediation program. Considering the millions of dollars at stake if settlements are not reached quickly, common sense dictates a closer look at what many have already found to be the alternative dispute resolution mechanism of choice.

For example, the stalemate between Detroit Red Wings and Sergei Federov and the team’s management vividly demonstrates this point. In the beginning of the 1997-98 season, with the Red Wings fresh off a Stanley Cup championship the year before, Federov demanded a raise in his salary to bring him “in the neighborhood of $6M USD per season. The parties’ failure to reach an agreement eventually hurt everyone involved: Federov ultimately ended up missing 54 regular season games-12 games more than half the season. Federov stayed active by practicing with the Plymouth Whalers, the Junior A affiliate of the NHL’s Carolina Hurricanes. Federov’s practice sessions were a nightly fixture on most of the local sportscasts in the Detroit area, causing concern for the thousands, if not hundreds of thousands of Red Wings fans across the state and the country. While the news coverage may have helped the local sportscasts during sweeps month, nothing was really being accomplished to settle the holdout.

Rumors were abound about the ultimate fate of arguably the most talented player on the Red Wing’s roster and an elite among his NHL peers. Was Federov going to be traded? Are the Red Wings working out a deal with the Hurricanes? The questions filled many nights of talk radio and sports television. Fans and media’s predictions on the ultimate resolution of the hold out changed from week to week. However, during all of the attention, the support amongst Red Wings fans and NHL fans in general for Federov was diminishing rapidly.

During the Olympic break in February of this year, while Federov was showcasing his talents for the world in Nagano, Japan, and a trade embargo was in place throughout the NHL, the Carolina Hurricanes signed Federov to an offer sheet worth $38 million over six years. Carolina had structured the deal to pay Federov $28 million in the first year with incentives and salary. The front-heavy structure of the contract was no doubt designed to lessen the Wings desire to match the offer. Ultimately, facing the prospect of receiving five draft choices from one of the worst teams in the league in return for a former Hart and Selke trophy winner did not appeal to Red Wings management, and the Red Wings did not hesitate to match the offer; Federov once again donned the “winged wheel” logo of the team.

The final outcome of the Federov deal was mixed. Because the Detroit Red Wings prevailed in their run for a second Stanley Cup, team management was forced to part with $28 million to Federov within four months. During his negotiations, Federov and his agent were often quoted in the newspapers with various comments to strengthen his bargaining position. Similarly, the Red Wings used the media to place the blame for the hold out away from the franchise. A preferable method to resolving such a dispute would avoid this hostile atmosphere, and media attention, concentrating instead on the negotiations.

Obviously, if an early settlement had been reached, Federov could have offered his services throughout the entire season and the financial blow to the Red Wings’ management could have been lessened. Nevertheless, hindsight tells us that the Red Wings were still able to successfully defend their Stanley Cup Championship. What if the Red Wings, however, had missed the playoffs by just a few games because of Federov’s absence? His presence for the remainder of the season and during the playoffs is undeniable. In the final analysis, Federov got the money he was seeking. It seems plausible that better negotiation procedures could have enabled a deal allowing the Red Wings more time to stagger his salary, avoiding both the “poison pill” and the missed games. Perhaps mediation could have prevented this “no-win” situation for the Red Wings.

Fans of every major sports league in the United States cannot ignore the obvious eroding trust between players and management this decade. A neutral third party, one who is trained in various mediation techniques, would reduce this distrust, and assist the parties in reaching a speedy settlement. Preserving the constructive communication that is so vital to successful negotiations could be enhanced by a disinterested mediator who has no business or personal agenda in the dispute. In fact, resolving a situation expeditiously is the benchmark of mediation. It would enable the Sergei Federov’s to focus more on their game performances, and free management to concentrate on the business and marketing aspects. Settling labor disputes without the rhetoric and black hole of “negotiations” that accompanies holdouts should be the number one priority of every league.

Preservation of Working Relationships

Although working relationships are important in all businesses, bitter negotiations in sports disputes involving the performance of an individual player, such as basketball, can lead to unique problems. This is especially true when the general manager conducting the negotiations also has a role as a coach. Team ownership has a definite interest in the player maintaining his confidence and not hearing comments during negotiations about his weaknesses which are intended solely to deflate the agent’s perceived value of his client.

During the mediation process, an experienced mediator can make sure that these goals are implemented through the use of “private caucuses.” A private caucus occurs when “the mediator talks with each party and its lawyer confidentially, away from the other participants.” Usually, these private caucuses will go back and forth until the separated parties can reach an agreement, or “shuttle diplomacy.” For example, this would permit the mediator to soften the general manager’s tone in criticizing the player, and prevent the player hearing such negative commentary directly. Even where joint mediations sessions become emotional, a skilled mediator can monitor the exchanges, maintain civility in the negotiation process, and promote a better working relationship once the agreement is reached.

Time Sensitivity and Flexibility of Mediation

Mediation can be altered to meet the timing needs of the parties. In fact, a mediation system could be put into place for pre-selection of a mediator, which would create a very quick time frame to allow mediations to take place as needed. Many large employers in the United States have initiated similar mediation programs, and even allow the process to take place while employees are still at work and on the clock. Mediators are even prepared to act during odd hours if that is when disputes are best resolved to assure that problems do not escalate.

Mediation also allows flexibility in a variety of other areas. For example, mediation gives the parties privacy my utilizing private caucuses which allows the mediator to fashion a potential resolution. As a typical ground rule of mediation, although these vary greatly, a mediator can listen to concerns and issues raised by one party and agree not to divulge any such sensitive information until clearance is received from that party. This process could be particularly useful for sensitive financial information about a team or player, health problems of a player, potential transactions, and similar information. Unless all such information is available to the mediator, he or she cannot propose resolution that fulfills the actual goals, needs, and desires of both the team and player. Such process and creativity is not possible in a professional sport’s dispute when the general manager and player agent are placed in a room or conduct negotiations by phone without the assistance of a neutral third party.

Neutral Environment/ Neutral Third Party

Mediators are trained to bring about a resolution by providing an environment of neutrality. In fact, neutral mediators have experienced significant success in matters involving multiple parties and issues more difficult to grasp than the basic issue of the continued employment of an athlete with a team. Even disregarding such success rates, the mere infusion of a neutral person into the formula is sometimes all it takes to make a difference in resolving such a dispute.

Furthermore, it is common for experienced general managers and agents to have a history in negotiating with each other. When those experiences are negative, they might bring this excess baggage with them to the negotiations. Mediators, however, are trained to deal with the issues, and not the personalities. For example, they may spend a significant amount of time in private caucuses to prevent deterioration of the negotiations.

Similarly, the neutral mediator will take charge in scheduling mediations and assuring that the parties are brought together initially, and follow-up with written or telephonic communications where appropriate. They will also facilitate communications and assure that the parties are talking, which is usually one of the major impediments to resolving disputes. Typically, an agent will be representing several other athletes, and the general manager will have many issues and problems to deal with on a daily basis. As such, the neutral mediator can assist in keeping the parties focused in on their dispute by preventing procrastination.

Conclusion

The history of sports disputes and their negative effect on fans and team morale vividly demonstrate the need to adopt a speedy and cost effective resolution technique, such as mediation. Mediation is the perfect remedy for sports disputes because it provides a forum for open communication, which is currently missing in many sports negotiations. It gives both parties a sense of confidentiality, which can be used to strengthen their working relationship. The neutral environment that accompanies mediation has proven to be very helpful in resolving disputes, as well. In short, the ease and flexibility of the mediation process, the unique qualities of trained mediators, and the high success rate of mediation in the past proves that mediation is the perfect answer for resolving various disputes in sports. The adoption of this technique would be financially and emotionally rewarding to everyone involved.

by Travis Bell

Travis Bell is a mediator, member of the Southern California Mediation Association, and certified agent with the National Basketball Player's Association. With his broad experience and highly developed analytical skills, he provides mediation services in the areas of Aviation, Business, Civil (general), Contracts, Copyright, Engineering, Entertainment, Intellectual Property, Online Mediation, and Patent and Technology. Relying heavily on the power of understanding rather than the power of coercion or persuasion, he allows people to make decisions together that best serve the interest of both parties.