The WNBA's Labor Market Is A Sports Owner's Dream
By: David Berri
Here is how the labor market probably works for you. You apply for a job. If the employer likes you -- and you like them -- you negotiate a deal and go to work. If later on you decide you would like to work some place else, you leave and go work elsewhere.
Once upon a time, the labor market for professional athletes worked the same way. Of course, that “time” was the 1870s. Beginning in 1879, sports owners began to conspire to change the labor market for professional athletes. And these changes were created to make life better for the owners.
First came the “reserve clause” (first established in 1879), which gave teams the ability to hold the rights to an athlete’s services whether or not the athlete and the team actually had a contract. In other words, if you faced the “reserve clause” then your current employer could prevent you from leaving your current job and work elsewhere. And that could happen even if there was no written contract between you and your employer. This innovation clearly benefitted the owners. If you can’t negotiate with any other employers then your salary demands will be quite a bit lower.
The reserve clause was only the first innovation introduced by owners to lower salaries. In the 1930s, the NFL introduced the draft (the NBA, MLB, and NHL later did the same), which means players couldn’t even choose their first employer when they left college. Again, imagine graduating from school and having an employer simply decide --without your consent -- where you would begin your career?
Once again, this innovation benefits owners since it reduces players’ salaries. And again, this was not the last method owners devised to limit salaries. In the 1980s the NBA created an institution the explicitly lowered player pay (the NFL and NHL later followed this example). The salary cap -- or a limit on each team’s payroll -- restricted how much the team and league would spend on player. The NBA followed this with both caps on individual rookie salaries and individual veteran salaries. In recent years, the NBA also returned to requiring players be a certain age before they can play.
So, North American sports leagues have devised a rich menu of labor market restrictions. Age restrictions, the draft, a reserve clause, individual salary caps, and payroll caps have all been used by at least one of the major North American professional sports leagues (i.e. MLB, NBA, NFL, and the NHL).
But no professional sports league has been able to achieve the number of restrictions adopted by the WNBA. The current labor market for the WNBA is as follows:
A player must 22-years of age before they can enter the league. This is three years past the NBA limit. And this helps the WNBA because it means a player gets four years of publicity from their play in the NCAA before they first take the floor in the WNBA.
Like the other major North American sports, most WNBA players enter the league via the draft. Again, players don’t tend to choose their first employer.
Once drafted, salaries -- like the NBA -- are restricted. Salaries are restricted for rookies. Salaries are restricted for veterans. And payrolls are restricted for entire teams.
Unlike the NBA, the “core” restriction means the top players in the league can be completely prevented from leaving their teams.
And also unlike the NBA, though, WNBA salaries are not really linked to revenues. This means as league revenue rises, the percentage paid to players declines.
Add it all up and we see that the WNBA owners must be the envy of owners in any other sport. WNBA players appear to face just about every restriction owners have ever dreamed into existence. And all this should make the owners much better off. But despite getting all they want, the current deal the WNBA has with their players is really quite bad... for the owners!
There a few reasons this deal doesn’t work for the owners. First and foremost is the issue of player movement. A key feature of the off-season in other sports leagues is players leaving one team and joining another. These transactions give hope (or perhaps dash hope) for the league’s fans. More importantly -- as Lyndsey Darcangelo argued --because the WNBA’s rules result in far less player movement, the WNBA misses out on much of the “hot stove” discussions we see in other sports.
Of course, this issue isn’t important to owners, right? Although these labor market restrictions severely limit the WNBA “hot stove” discussions, they also significantly restrict player pay. Whereas NBA players are given 50% of league revenue, WNBA players are only given about 20% of what the league takes in. And because WNBA revenue growth isn’t linked to player pay, as the league does better the percentage paid to players keeps declining.
This is definitely good for the owners in the short-run. But in the long-run, lower player pay has some significant negative consequences for the WNBA.
Currently a large number of WNBA players also play in leagues in Europe or Asia. This means the assets of the WNBA are suffering additional wear and tear -- and running the risk of injury -- playing basketball outside the WNBA. The strain of having to play in multiple leagues has also caused stars like Diana Taurasi, Angel McCoughtry, and Emma Meesseman to skip entire WNBA seasons. And the low pay and other labor market issues (like poor travel conditions) might have contributed to Maya Moore’s decision to skip the 2019 season. As was argued at Forbes -- if WNBA players were paid like NBA players (i.e. same split of league revenue, same scale for minimum wage players, etc...), a player like Maya Moore would be paid close to $700,000. At that wage, deciding to skip an entire season becomes a much harder decision. Moore might have still made the same choice. It just might not have been as easy.
If WNBA players received 50% of league revenues -- like the NBA -- it would be less likely players would play in other leagues and/or skip seasons in the WNBA. In addition, these players would be in the United States throughout the year promoting the league. All of this makes the league stronger in the long-run.
To make that happen, the WNBA would have to spend about $18 million more on player salaries. In other words, for less than what the NBA pays Jabari Parker this year, the WNBA could close the gender-wage gap and strengthen the league.
Such a move might make the owners of the WNBA worse off in the short-run. It might even worsen the profit picture in the WNBA. But perhaps the WNBA owners could think of as increasing the pay of players as an investment (not a cost). In other words. perhaps the WNBA and the NBA could think less about creating a labor market that works for the owners in the short-run and more about creating a league that benefits everyone -- owners and players -- in the long-run.