Wednesday, March 21, 2018

The Revenue Red Herring in the US Soccer Equal Pay Dispute

Yesterday, Hope Solo visited my big class at the University of Colorado, Introduction to Sports Governance, and discussed the equal pay issue that is currently the subject of an Equal Employment Opportunity Commission dispute between  a group of US women soccer players and the US Soccer Federation.

In this post I'll discuss what I believe to be the central red herring at the center of this dispute: the idea that differential revenues attributed to men's and women's teams should be used as a basis for the differential compensation of individual athletes under US Olympic sport national governing bodies. Before I proceed, let me emphasize that this post reflects a policy analysis, and not a legal analysis. I'm a policy professor, not a lawyer.

The issues are complex, but let's start with the relevant organizations. The US Soccer Federation is one of 47 organizations in the United States that serve as a "national governing body" for an Olympic sport. USSF exists under US law, the so-called Ted Stevens Olympic Act (or Amateur Sports Act of 1978).  The Stevens Act (here in PDF) created an organizational framework for Olympic sports, centered on the US Olympic Committee and the establishment of national governing bodies for individual sports.

Among the goals of the Stevens Act are:
to obtain for the United States, directly or by delegation to the appropriate national governing body, the most competent amateur representation possible in each event of the Olympic Games, the Paralympic Games, and Pan-American Games.
It would seem fairly obvious that by "most competent representation possible" the law is referring to sporting competence as exhibited in international competitions. We want athletes who are the world's best, who can win tournaments and medals. That is what the Olympics are about and medal counts are, for better or worse, an important criterion in how national governing bodies are judged.

In their pursuit of sporting success, the Stevens Act imposes certain legal requirements on the USOC and national governing bodies, among them:
For the sport that it governs, a national governing body shall provide equitable support and encouragement for participation by women where separate programs for male and female athletes are conducted on a national basis.
This requirement is unambiguous, though lawyers surely will no doubt parse the precise meaning of "equitable support and encouragement." For purposes of this discussion, let's define "equitable support" in financial terms as "roughly equal" with "equal" defined as a mathematical term that can be measured in dollars and cents.

The EEOC complaint filed in 2016 (here in PDF) by several US women soccer players alleges that the compensation for women US national team players "pales in comparison" to that of US men's national team players. The complaint lists a long set of issue for which men and women are compensated differently (at the time of the filing), ranging from the World Cup competitions to daily per diem rates (e.g., men get $75 per day internationally, women get $60).

In a response to the EEOC filing, lawyers for the USSF focused on the relative revenues generated by each team of players as a primary basis for their argument against the complaint. The USSF acknowledges that there may be disparities in pay, but argues that these differences are justified based on differential "production."
. . . to the extent that there are differences in compensation paid to WNT and MNT players, those differences do not establish a violation of Title VII or the Equal Pay Act. Under both statutory schemes, where a payment that differs by gender is being made “pursuant to … (iii) a system which measures earnings by quantity or quality of production[] or (iv) a differential based on any other factor other than sex,” there is, by definition, no violation.
This is important.

The USSF is defining "production" in terms of dollars generated by each team, and not by sporting success. The primary justification offered by USSF for any differences in compensation is: "the greater amount of revenue produced by the MNT."

Further, the players, both men and women, seem to have accepted through their players associations that negotiate collective bargaining agreements governing compensation that revenue should be used as a metric of compensation. The USSF response to the EEOC complaint explains:
With respect to the MNT and WNT, the compensation paid each team is based, in part, on predictions regarding the revenue that each team will generate over the course of the collective bargaining agreement.
The USSF invokes an analogy to make its point:
[A]ssume that Player A and Player B are wide receivers of different races playing for the same professional football team. Suppose further that Player A had consistently produced more yards and touchdowns than Player B, and received a more lucrative contract as a result. The fact that Player B came to outperform the Player A over the term of the contract would not remotely suggest in hindsight that the original contracts were the product of a racially discriminatory motive.
From its response, it seems pretty obvious that the USSF is overseeing the US men's and women's national teams as if they were independent professional franchises. (There are important legal points about employees of the same organization doing the same work, that I won't get into here.)

The professional sports analogy used by USSF is simply misplaced. The USSF is a non-profit which operates under the Ted Stevens Act. While it needs revenues to do its work, such revenues are always to be a means, not an end. Under the Stevens Act (here in PDF) the USOC can provide "financial assistance to any organization or association, except a corporation organized for profit" and "may not engage in business for profit." From a legislative perspective, profits are not the point of Olympic sport.

To the extent that USSF views US national soccer teams as businesses generating profits, and uses those profits as the basis for compensation, it may be in violation of the legislative intent of the Stevens Act governing Olympic sports. Recall that among the legislated goals of a US Olympic sport national governing body are to provide "competent representation" (which means success in the World Cup, the Olympic games and other competitions under the Olympic Movement) and "equitable support and encouragement."

With apologies to Gene Hackman in Unforgiven, revenue's got nothing to do with it.

The relative revenues generated by men's and women's national team should have no bearing on their relative compensation. USSF is not a for-profit business. Soccer players who compete in international competitions produce primarily sporting successes (and losses). The revenues that they generate contribute to support the work of the non-profit, but the revenues should always be viewed as a means to achieving "competent representation." It is worth noting that US Soccer has as much as $140 million sitting in reserve, which dwarfs the size of both the EEOC claim and providing the futureequal compensation.

And crucially, under the law, men's and women's national soccer teams are legally required to be treated equitably from a sporting perspective, with no footnote or clause that says equity can be ignored due to revenues or anything else.

So the bottom line here is that the women soccer players' EEOC complaint is in fact flawed. It is flawed not because they are wrong about equal compensation -- they got that right. The complaint is wrong because it has not gone far enough.

Consider overall investment in men's and women's national teams: The data below come from 2013 and  2014, but they are illustrative.

Whatever the relative profits of the US MNT and WNT, data consistently show that the USSF invests less in the WNT versus the MNT. This disparity would seem to be fundamentally at odds with the legislated objectives of the Ted Stevens Act which governs USSF.

To sum up, issues of equal pay in US Soccer are currently playing out in the legal system. However, with Congress now paying greater attention to USOC and its associated national governing bodies, a more appropriate venue for resolving this issue may be through the legislative process

US Soccer is treating the US men's and women's national teams as cost centers that generate profits to justify differential treatment. Not only is this possibly illegal (we shall see in due course), it is all but certainly in violation of the intent of the Ted Stevens Act. 

If athletes also treat the USSF as a professional sport organization, they cede important ground. Consider for instance a court decision in response to a call for dismissal of the EEOC complaint only references the Ted Stevens Act in passing, here in PDF, and proceeds to characterize the USSF as if it were a professional franchise owner.. 

National soccer teams are not professional franchises. Their relative revenues and profits are a red herring. Athletes and their representatives would be on firmer ground if they rejected relative revenues as a legitimate basis for securing athlete payment. USSF is a non-profit under the Stevens Act and is bound to treat men and women equitably. That is the legislated intent of the US Congress and it is time for USSF to be held to that standard. 

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