McDermott Will & Schulte, a global law firm

Collective bargaining has become one of the principal economic drivers in modern sports. What gets decided in labor negotiations shapes franchise valuations, media rights deals, sponsorship revenue, and investor confidence. The 2025–26 season has shown this repeatedly: The Women’s National Basketball Association (WNBA) concluded a transformative collective bargaining agreement (CBA), Major League Baseball (MLB) opened high-stakes successor negotiations, the National Football League (NFL) and its referees ratified a seven-year agreement, and college athletes continued to press employee status and unionization claims. Increasingly, CBAs determine how league revenue is allocated, how labor costs are managed, and how franchises plan for growth – not simply the terms and conditions of employment.

The WNBA’s agreement with the Women’s National Basketball Players Association (WNBPA) is the clearest example, combining significant pay increases with revenue sharing and better working conditions. The CBA reflects the league’s effort to convert rising viewership, sponsorship interest, and expansion demand into a more durable economic model. The same themes appear in the other developments, tying labor outcomes to revenue, competitive balance, or the unsettled legal status of athletes.

For leagues, teams, universities, investors, sponsors, and media rights partners, the stakes go beyond labor costs. Bargaining outcomes increasingly determine whether a sports enterprise can preserve operational continuity, maintain public confidence, and capture the full value of rapidly expanding fan and commercial interest. Below, we summarize the key developments, their implications, and practical considerations.

Labor agreements as economic governance documents

CBAs in professional sports now do far more than set wages and benefits. They function as economic governance frameworks that allocate revenue, set salary caps and floors, govern player movement, and shape the quality and credibility of the on-field competition.

For owners, investors, and prospective buyers, these terms feed directly into projected cash flows, operating margins, and asset values. The average NFL franchise is valued at roughly $7.1 billion and the average National Basketball Association (NBA) franchise at approximately $5.4 billion, while the average MLB club has more than doubled in value over the past decade to about $2.8 billion. Each of those valuations depends on continued media rights growth, scheduling certainty, sponsor confidence, and the quality of performance, all of which depend on labor peace.

Recent developments

WNBA

The WNBA and WNBPA reached a landmark collective bargaining agreement just weeks before the league’s 30th season. The deal is expected to increase the salary cap from $1.5 million to $7 million over its term, increase the supermax salary to about $1.4 million, push average salaries toward $600,000, set minimum salaries above $300,000, and give players a revenue-sharing model that could grow their share to nearly 20% of league revenue. The agreement also comes as franchise values continue to rise, illustrated by the Golden State Valkyries’ reported $1 billion valuation about one year after entering the league.

Beyond raising salaries, the agreement adopts a revenue-sharing model that links a greater share of player compensation to the league’s financial performance while improving benefits and working conditions. If those revenue projections materialize, the structure should help the WNBA compete more effectively for talent, strengthen its commercial partnerships, and provide greater confidence to investors.

At the same time, the agreement underscores a familiar challenge in professional sports. Rising player compensation is easier to sustain when media rights, sponsorships, and expansion fees continue to grow. Teams with weaker revenue bases may face greater pressure under the new economics. Whether the agreement ultimately proves successful will depend not only on labor peace, but also on the league’s ability to sustain the commercial momentum that made these terms possible.

MLB

With the current collective bargaining agreement set to expire on December 1, 2026, MLB and the Major League Baseball Players Association (MLBPA) have exchanged opening proposals that reflect sharply different visions for the sport’s economic future. The union has proposed a $1.5 million major-league minimum salary beginning in 2027, expanded pre-arbitration bonus pools, broader salary-arbitration eligibility, elimination of the qualifying offer and its associated draft-pick penalties, higher competitive-balance-tax thresholds, and new mechanisms designed to encourage greater payroll spending by lower-spending clubs.

MLB’s proposal would also reshape the league’s economic framework. On June 25, 2026, the league proposed a hard salary cap and salary floor, a 50/50 split of baseball-related revenue with players, and a ban on future deferred-compensation contracts if the union agrees to a cap system. If adopted, it would replace MLB’s competitive-balance-tax system with a cap-and-floor model like those used in the NFL, NBA, and National Hockey League.

The MLBPA responded by reiterating its longstanding opposition to any salary cap, and the association’s executive director, Bruce Meyer, described the parties as “very far apart.” Although these are opening positions rather than final bargaining terms, the salary-cap issue remains the central obstacle to a new agreement and will shape how MLB allocates revenue, regulates payroll spending, and balances competitive parity. Absent a breakthrough, an owner lockout after the current agreement expires remains a realistic outcome, creating uncertainty for clubs, broadcasters, sponsors, investors, and others making long-term decisions about payroll, media rights, and franchise valuations.

NFL officials

In May 2026, the NFL and the NFL Referees Association ratified a seven-year collective bargaining agreement running through 2032. While the negotiations attracted far less attention than player bargaining, the agreement reduces operational risk by securing labor peace with the officials responsible for administering every game. For a league built on scheduling certainty and the integrity of competition, even a relatively small bargaining unit can have outsized business significance.

Collegiate athletics

Name, image, and likeness (NIL) compensation, proposed revenue-sharing models, and unionization efforts at the college level reflect the same workforce activism now visible in the professional leagues. Whether college athletes qualify as employees under federal labor law remains contested across National Labor Relations Board (NLRB) proceedings, antitrust litigation, proposed legislation, and National Collegiate Athletic Association (NCAA) governance reform. The answer will shape labor costs, institutional governance, and the economics of college athletics for years to come. Universities, conferences, media rights partners, sponsors, and investors should treat this as a live issue that calls for active monitoring rather than reliance on the current rules.

Federal policy has added another layer to the uncertainty. July’s executive order 14400, signed in April 2026, follows the administration’s July 2025 Saving College Sports order and ties federal contracts and grants to compliance: A university that violates the rules on eligibility, transfers, or NIL payments risks losing that funding. It calls on the NCAA and similar governing bodies to adopt a five-year eligibility period with limits on transfers, restrict pay-for-play arrangements made through NIL collectives, and design revenue-sharing so that payments to student athletes do not reduce scholarships or funding for women’s and Olympic sports. It also directs the US Department of Justice to challenge state laws that conflict with interstate intercollegiate athletic governing body rules. The earlier Saving College Sports order separately directed the US Department of Labor and the NLRB to clarify student athletes’ employment status in a manner that preserves educational benefits and opportunities associated with participation in college athletics. Many of the orders’ substantive reforms do not take effect automatically; instead, they depend on the NCAA and other governing bodies to adopt the rules the orders contemplate.

Private equity

As labor costs increase and traditional athletics revenue comes under pressure, outside capital is beginning to reshape the business of college sports. The June 2025 House v. NCAA settlement let schools share revenue directly with athletes, straining already-thin budgets at many athletics departments. In December 2025, the University of Utah’s athletics department became the first in the nation to accept private equity investment, partnering with Otro Capital and spinning its commercial operations into a new for-profit company, Crimson Brand Partners. Reports placed the original commitment at roughly $500 million, phased over the life of the deal, with donors also able to take an equity stake. The University of Utah retains majority ownership and control, holding four of the company’s board seats (Otro holds two and a donor-investor one). Coaching, conference affiliation, scholarships, player management, revenue sharing, and compliance remain outside the entity, and the University of Utah may buy out Otro’s interest after five to seven years. The first reported round of staff layoffs within the university’s athletics department followed within months – an early signal that these structures carry real workforce and execution consequences alongside the new financing.

Key business risks: labor stability and cost management

Whether higher labor costs are sustainable depends on the underlying business. Clubs with strong media rights, sponsorship revenue, and access to expansion capital may be able to absorb larger payrolls while continuing to invest in their brands. For lower-revenue organizations, the same obligations can compress margins and limit competitive flexibility. Much of modern sports bargaining, therefore, centers on mechanisms – salary caps, luxury taxes, revenue sharing, payroll floors, and similar devices – that attempt to balance those competing interests.

Practical considerations

In light of these developments, sports-industry stakeholders should consider the following items as they evaluate labor-risk management, bargaining strategy, transaction diligence, and commercial planning:

• Assess labor-cost sensitivity. Model how existing and anticipated CBA terms flow through to operating margins under multiple revenue scenarios, accounting for conservative and optimistic assumptions regarding attendance and media rights.
• Underwrite CBA risk in diligence. Prospective purchasers and institutional investors should treat the governing CBA as a core economic document, on par with major media rights contracts and stadium agreements. Diligence should account for where the current agreement sits in its bargaining cycle, how its costs are likely to increase, and the likelihood and cost of a work stoppage. Pricing and financing assumptions that ignore an approaching expiration or a contentious successor negotiation can understate downside risk.
• Monitor the collegiate sports landscape. The employment status of college athletes is unsettled, may vary by jurisdiction, and is likely to keep shifting. Universities, conferences, and their commercial partners should track the relevant litigation and rulemaking, map their exposure under competing outcomes, and avoid long-term agreements that assume the current framework is permanent.
• Coordinate communications. Bargaining now plays out in public, through traditional media, social platforms, and direct fan messaging from players and unions. Leagues, teams, and employers should align internal and external messaging with their negotiating posture and legal-risk position before a dispute escalates. Organizations should designate spokespeople and approval channels. A measured, consistent public posture protects both negotiating leverage and brand value.
• Scrutinize private-capital structures. As outside investment moves into college and professional sports, universities, owners, and investors should closely examine governance and exit terms before committing to a partner. Key among these are board composition and voting control, the functions an institution retains, restrictions on transfer, and buyout or right-of-first-refusal provisions. Confirm that the structure preserves regulatory compliance and institutional control over core athletic decisions.

For assistance with collective bargaining strategy, CBA analysis, labor-cost modeling, or related labor and employment issues in professional and collegiate sports, please contact your McDermott Will & Schulte lawyer or one of the authors .

For more than 30 years, McDermott Will & Schulte has represented owners, investors, players, teams, and sports venues around the world in various leagues, including the Association of Tennis Professionals, MLB, Major League Soccer, NBA, NHL, NFL, and PGA TOUR, handling their most critical transactional and non-transactional matters.

Our award-winning sports practice is recognized in Chambers, Legal 500, and as Law360’s 2026 Practice Group of the Year (Sports & Betting), further underscoring its leading position in the industry. With legal experience ranging from individual investments in teams and the purchase and sale of franchises to solving critical tax, real estate, intellectual property, and employment matters, McDermott leverages top-tier M&A, tax, and estate planning lawyers to deliver a client-centric approach while solving your most complicated matters in the rapidly evolving sports world.