Wednesday, September 28, 2011

Labor Law 101 explains the NBA Lockout: Day 90

It looked like the NBA was finally ready to make a comeback.

The 2011 Finals were heard in over 46 languages, seen in 215 countries, and skyrocketed TV ratings to an all-time high. So it was completely warranted for NBA fans to have high hopes for the 2011-12 season, right?



According to last week's official press release from NBA Commissioner David Stern, “player training camps for the 2011-12 season have been postponed indefinitely because a new collective bargaining agreement has not been reached with the National Basketball Players Association.”

October 3, 2011 was supposed to mark the first day of training camps, but now it's official: not a single NBA gymnasium light will flicker 28 days before Halloween.

So what is fueling the lockout? and what are the major issues the league and the players are facing?

The cause of the lockout, as well as its solution, is rooted in labor law. The NBA ultimately deals with its players through a collective bargaining agreement, and the terms of this labor contract are paramount.

The most recent collective bargaining agreement expired in June, and since then neither the players nor the league has softened their hard-line stances on what they want the terms of the next CBA to look like.

The players are going through a bifurcated process.

The essence of collective bargaining in professional sports is significantly different from the normal model for most trade unions. In the latter, negotiations consist solely of the interests of the workers against the interests of management. In professional sports, however, each side has various interests at stake. Although the league’s proposals have been met with some resistance from individual team owners who believe they know how best to run their franchises, this process is best seen from the players’ standpoint.

In professional sports, the workers (athletes) are represented by a union for certain purposes, and at the same time, each player has his own representative (agent) to fulfill other functions.

As you are reading this article many powerful agents are trying to get their clients to decertify from the players union, meaning the union would no longer have the authority to negotiate on behalf of the players, and each player would essentially be an independent contractor.

Lech Walesa shakes his head.

Pro-decertification agents argue that decertifying would enable a path towards a more-favorable agreement for the players.

For example, the players could then challenge the salary cap as being an anti-competitive measure under anti-trust law.

While decertification may be in the best interests of agents, whose careers span decades, it is a last resort to the players because decertification would guarantee that the lockout lasts longer.

The average career of an NBA player is only about four seasons. A long-haul lockout means less time to make income, a lives work, if you will, not to mention the fact that the players would have to give up any collectively-bargained benefits such as minimum salaries and healthcare. The bottom line is that the NBA players union and the agents are supposed to be on the same side, and as they remain divided, it is hard to see a path to the resumption of basketball any time soon.

But do they share?
Sharing is caring (revenue, that is).

At the heart of the dispute is money - shocking, I know.

The owners think players are getting too much of it, and the players refuse to give anything up. It ain't rocket science - revenue sharing needs to be introduced before anyone can move forward.

Under the last collective bargaining agreement, the players salary was set at 51 percent of BRI (basketball-related income). The owners now claim that the teams have lost a collective $400 million in the 2008-2009 season alone. By contrast, the players have presented figures projecting league revenues to grow this season by 3 to 5 percent, or between $100 and $200 million.

In addition, the players have highlighted the fact that the Warriors, one of the league’s worst teams, sold for a record $450 million last summer.

Fans are tired of hearing about millionaires fighting against billionaires, but neither side has yet to budge on the issue of revenue sharing.

A billionaire I'll PAY to watch fight.

Lastly, the salary cap question...

NBA payrolls have been capped since 1983, and the structure of its salary cap is unique.

Other professional sports leagues operate under a hard cap, meaning that teams are prohibited from exceeding the salary cap.

The NBA operates under a soft cap that provides teams with several significant exceptions, which allow them to exceed their salary cap to sign players.

Most notably is the “Larry Bird Rule,” which allows teams to exceed the cap in order to re-sign their own players.

The players’ theory is that the soft cap bolsters fan support in each city by allowing teams to keep their players. By contrast, the owners argue for the institution of a hard cap that would prevent league-wide inflation of salaries that can come from one bad deal. With the players countering that no one forced the Hawks to sign Joe Johnson to a deal that will pay him $20 million a year when he is 35, talks on the salary cap front are going no where.

Without Larry, there might not have ever been a Big 3, let alone a Green 17.

The NBA lockout has been in effect since June 26, 2011, and it seems as though this unfortunate circumstance is far from seeing the light at the end of the tunnel.

1 comment:

  1. So players are like taxis in a way?