By: Gurtej Grewal
I. INTRODUCTION
Arbitration is a foundational tool for resolving disputes in professional sports, prized for its efficiency, confidentiality, and finality.[1] However, the systems employed by professional sports leagues vary significantly in fairness, transparency, and outcomes. This paper briefly explores the arbitration frameworks of the National Basketball Association (NBA), National Football League (NFL), Major League Baseball (MLB), and Ultimate Fighting Championship (UFC), highlighting their strengths, weaknesses, and opportunities for reform. Special emphasis is placed on how these systems impact equity and accountability for athletes. This paper concludes with several recommendations to design a balanced and equitable arbitration framework for a professional sports league.
II. NBA: COLLECTIVE BARGAINING AGREEMENT-GOVERNED ARBITRATION
The NBA’s arbitration system, rooted in its Collective Bargaining Agreement (CBA) with the National Basketball Players Association, represents a collaborative and transparent model.[2] Neutral arbitrators are selected jointly by the league and the players’ union, ensuring balanced representation and mutual trust.[3] This system provides a structured mechanism to address grievances promptly and fairly, reflecting a deliberate effort to safeguard the interests of both parties.[4] Unlike systems where decision-making authority is concentrated, the NBA’s model ensures an impartial process that reduces potential conflicts of interest.[5] Furthermore, the league’s commitment to transparency reinforces public trust and encourages accountability among all stakeholders.[6]
Despite these strengths, one notable weakness is the limited scope of the NBA’s arbitration model. Certain disputes, particularly those involving league-wide policies, may fall outside the jurisdiction of arbitrators, leaving players without a clear path to resolution.[7] This limitation can create inconsistencies in how grievances are addressed and may necessitate additional mechanisms to bridge the gap.[8]
Nevertheless, the NBA’s approach effectively resolves disputes over suspensions and contractual grievances, setting a standard for procedural equity and serving as a potential model for other professional sports leagues.[9] By fostering collaboration between players and the league, it ensures a balanced system that prioritizes fairness and transparency for all stakeholders.
III. NFL: COMMISSIONER-DRIVEN ARBITRATION
In the NFL, the commissioner wields significant authority in arbitration, particularly in disciplinary matters.[10] This concentration of power has long been criticized for its potential to create conflicts of interest, since the commissioner acts as both the enforcer of league rules and the arbiter of disputes arising from the application of disciplinary rules.[11] This dual role raises significant questions about the impartiality of the system, undermines perceptions of neutrality, and leaves players questioning the fairness of the process.[12]
Furthermore, while confidentiality is often lauded as one of the primary advantages of arbitration, given the power structure of the NFL, there has been a demand for more transparency.[13] A lack of consistency in proceedings has eroded trust in the system.[14] As a result, players and stakeholders have been unable to verify the “fairness” of arbitration decisions.[15] For example, high-profile cases, such as the New England Patriots’ “DeflateGate” controversy, highlight these shortcomings. In that memorable case, the lack of independent oversight caused by Commissioner Goodell’s refusal to appoint a neutral arbitrator led to prolonged legal battles that tarnished the league’s reputation and raised questions about the integrity of its dispute resolution system.[16]
The NFL Players Association has repeatedly called for reforms, advocating for the appointment of neutral third-party arbitrators in disciplinary cases.[17] Such changes could enhance the credibility of the arbitration process while promoting trust among players and other stakeholders.
IV. MLB: SALARY ARBITRATION MODEL
MLB primarily deploys arbitration in a distinctive salary arbitration model tailored to players with specific tenure in the league.[18] A distinctive feature of MLB’s arbitration model is its requirement for both parties—the player and the team—to submit a salary proposal, with the arbitrator mandated to select one of the two proposals without modification.[19] This “final-offer” approach encourages both parties to present reasonable and well-justified figures, reducing the likelihood of extreme or unrealistic demands as an overly ambitious offer risks being dismissed in favor of a more reasonable alternative.[20]
Moreover, while there have been a few exceptions, MLB’s arbitration system is well-known for its structured hearings and clear, decisive outcomes.[21] These aspects of its arbitration system foster trust and confidence among players, teams, and fans.[22] The model’s open nature ensures that arbitration decisions are perceived as fair and impartial. This system also educates stakeholders about the economic dynamics of the sport by requiring both parties to present detailed evidence and arguments supporting their salary proposals.[23] For players, the process serves as a valuable platform to demonstrate their worth based on performance metrics, market trends, and comparable player salaries.[24] For teams, it reinforces fiscal responsibility and ensures accountability in contract negotiations.[25]
By combining fairness and transparency, MLB’s salary arbitration model provides a potential blueprint for other professional leagues looking to enhance their arbitration frameworks.[26] Its structured approach mitigates disputes while maintaining the integrity of the negotiation process.
V. UFC: INDEPENDENT CONTRACTOR CONTRACTS AND ARBITRATION CHALLENGES
The UFC has established itself as the leading premier global mixed martial arts (MMA) organization.[27] However, while the UFC continues to see exponential gains in revenue, its athletes have actually received a decreasing percentage of those earnings.[28] In comparison, athletes in the NBA, NFL, and MLB receive approximately 50% of league revenues based on collective bargaining agreements.[29] This disparity is also evident when examining the UFC’s arbitration practices, which reveal significant deficiencies in fairness and transparency in comparison to other professional sports leagues.[30]
In contrast to athletes in other major American professional sports leagues, fighters in the UFC are classified as independent contractors, not employees.[31] These contracts have always disproportionately favored the organization and restricted the fighters’ negotiating power.[32] Further, the absence of a fighters’ union exacerbates power imbalances and limits advocacy.[33] As highlighted in cases like Cung Le v. Zuffa, the UFC’s anticompetitive practices leave fighters without the ability to individually negotiate fair contracts or seek alternatives.[34]
Without meaningful reforms, the arbitration process remains a tool that entrenches organizational control rather than ensuring equitable resolutions. These practices underscore the need for systemic reform to enhance equity and accountability within UFC arbitration processes.
VI. CONCLUSION
Arbitration remains a cornerstone of dispute resolution in professional sports, yet its implementation varies widely across leagues, yielding mixed outcomes in fairness, transparency, and accountability. The NBA and MLB have established models that prioritize equity and procedural clarity, with the NBA leveraging collaboration through collective bargaining,[35] and MLB employing a transparent and balanced salary arbitration process.[36] Conversely, the NFL and UFC expose significant shortcomings, including concentrated authority in the NFL’s commissioner-driven arbitration,[37] and the UFC’s opaque and inequitable system that disproportionately favors the organization over its athletes.[38]
To foster trust and integrity, reforms are essential. Introducing neutral, third-party arbitrators and ensuring transparency in decision-making are critical steps to address the disparities highlighted in this analysis.[39] By adopting best practices from successful frameworks like the NBA’s collaborative model, or MLB’s salary arbitration model, leagues can design arbitration systems that uphold fairness and accountability while promoting trust among athletes and stakeholders. These changes are imperative to maintaining the credibility of professional sports arbitration in an evolving landscape.
Footnotes:
[1] E.g., American Arbitration Association (AAA), Using ADR to Resolve Collegiate, Professional, and Sports Business Disputes 2 (2023), https://perma.cc/6KP4-RT8E.
[2] See NBA & National Basketball Players Association (NBPA), 2023 Collective Bargaining Agreement 457, 470 (effective June 28, 2023), https://perma.cc/6GKE-E7S3.
[3] See id. at 457-459
[4] See generally Lewis Kurlantzick & B.J. Pivonka, League Ownership of Teams, Conflicts of Interest, and Personnel Exchanges, 24 Fordham Intell. Prop. Media & Ent. L.J. 997, 1015 (2015).
[5] E.g., Bria L. Davis, “Put Me in Coach!” Recognizing NBA Players’ Need for Legal Protection in the League and Increased Participation in Governance, 43 J. Corp L. 939, 949 (2018).
[6] E.g., Yanxue Hu & Shengfang Shu, Exploring the Dynamics of Governance: An Examination of Traditional Governance and Governance Innovation in the United States Professional Sports Leagues, 10 Heliyon, no. 13, 2024, https://perma.cc/TH24-4SMA.
[7] See NBA & NBPA, supra note 2.
[8] See generally Scott Bukstein, A New Solution for Salary Disputes: Implementing Salary Arbitration in the National Basketball Association, 22 Marq. Sports L. Rev. 25 (2011) (discussing how implementing salary arbitration in specifically defined circumstances could have a potentially positive impact on the NBA’s current restrictive free agency process).
[9] See Hu & Shu, supra note 6.
[10] E.g., Jeremy Cole, Dropping the Ball: How the Commissioner’s Exercise of His “Best Interests” Authority is Failing the NFL and What Can Be Done About It, 17 Tex. Rev. Ent. & Sports L. 43-45 (2015).
[11] See id.
[12] E.g., Jarrett Bell, New Conduct Policy Only Fortifies Goodell’s Position, Usa Today (Dec 20, 2014), https://perma.cc/6KPY-SGYA.
[13] E.g., Samantha Pallini, Is There Something Arbitrary about the NFL’s Arbitration Process?, Syracuse L. Rev.: Legal Pulse (Nov. 2, 2017), https://perma.cc/LHZ7-ZDZA.
[14] See id.
[15] See id.
[16] See Jason Lisk, Roger Goodell Rejects Request for Arbitrator in Tom Brady Appeal, The Big Lead (May 14, 2015), https://perma.cc/CH4X-KEHH.
[17] See S. Tyler Owens, The NFL Commissioner as Judge, Jury & Executioner: Discretion Detrimental to the Integrity of Arbitration, 11 Liberty Univ. L. Rev. 237, 244 (2016).
[18] See MLB Players Association (MLBPA), 2022-2026 Major League Baseball Collective Bargaining Agreement 17 (2022), https://perma.cc/FK3L-PGGD.
[19] See id. at 18-19.
[20] See id.; See also, Justin Sievert, Breaking Down the MLB Salary Arbitration Process, The Sporting News (Jan. 12, 2018, 7:00 AM), https://perma.cc/MU8N-MA99.
[21] E.g., Jeff Monhait, Baseball Arbitration: An ADR Success, 4 Harv. J. Sports & Ent. L. 107, 134 (2013).
[22] See id.
[23] E.g., Sievert, supra note 20.
[24] See id.
[25] See id.
[26] E.g., Monhait, supra note 21, at 137.
[27] See TKO Group Holdings, Inc., TKO Reports Full Year 2023 Results (Feb. 14, 2024), https://perma.cc/HJU4-WKLH. (stating that the UFC raked in a record high $1.3 billion in revenue in 2023—a 13% increase from 2022.).
[28] See id. In 2023, the UFC reduced athlete costs, driving total revenue share for its athletes to approximately 13-15%. See id.
[29] E.g., Duane Rockerbie, Revenue Sharing in Professional Sports Leagues, 4 Encyclopedia 1173 (July 26, 2024), https://perma.cc/FE72-6E5Q.
[30] See Steve Ross & Gurtej Grewal, Cung Le v. Zuffa Promised to Change the UFC., Promarket (Apr. 17, 2024), https://perma.cc/2DVN-N4W5.
[31] See id.
[32] See Cung Le v. Zuffa, LLC, No. 2:15-cv-01045-RFB-BNW, 2023 U.S. Dist. LEXIS 138702, at *6 (D. Nev. Aug. 9, 2023)
[33] E.g., Chad Dundas, MMA Fighters Overwhelmingly Support Unionization, Despite No Clear Path Forward, N.Y. Times (June 3, 2020), https://perma.cc/QE2L-7KEB.
[34] See Ross & Grewal, supra note 30.
[35] See supra Part II.
[36] See supra Part III.
[37] See supra Part IV.
[38] See supra Part V.
[39] See generally Ronán Feehily, Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest For Arbitral Justice, 7 Penn. St. J.L. & Int’l Aff. 88 (2019) (emphasizing that the legitimacy of an arbitration process depends on the perception and reality of neutral decision-makers, as biased or non-independent arbitrators can undermine trust in the system).
About the Author:
Gurtej is a third-year Penn State Law student. Before attending law school, he earned a Bachelor of Science in Economics and Organizational Communications from the University of Wisconsin-La Crosse. There he played on the Division III Football Team and was recognized for his commitment to creating inclusive spaces for multicultural student bodies. While in law school, Gurtej has served as President of the Sports and Entertainment Law Society and pursued his interest in dispute resolution through Mock Trial and Moot Court. After arguing as a Vis Moot Oralist during the 31st International Commercial Arbitration Moot Competition, he now coaches the Penn State Law Vis Moot Team and works as a research assistant for Professor Ylli Dautaj, whose research focuses on international arbitration. Additionally, he writes for and manages the Penn State Sports and Entertainment Law Blog – a dynamic platform where students can explore a wide range of topics within sports and entertainment law.
Suggested Citation: Gurtej Grewal, Arbitration Practices in Professional Sports: A Comparative Analysis, Penn St. L. Rev.: F. Blog (Mar. 5, 2025), https://www.pennstatelawreview.org/the-forum/arbitration-practices-in-professional-sports-a-comparative-analysis/.