An overview of the 2011 NBA Lockout
Millions of basketball fans around the world are holding their breaths as the owners and the National Basketball Player’s Association prepare for their next meeting to create the new Collective Bargaining Agreement next Monday in New York City and finally put an end to the basketball drought.
What is the lockout? It is a type of work stoppage when the employer prevents employees from working. In our case, players cannot access facilities owned by their respective teams, they don’t get their salaries and health care while teams are not able to sign, trade or contact players or staff until a new CBA is agreed upon. This legal contract would set up the rules of operation, defy the salary cap, minimum and maximum salaries, the rules for trading, the NBA Draft and many other crucial issues.
The lockout is not a unique phenomenon since there have been many cases like this in the history of American major sports, involving the National Basketball Association during the 1998/99 season, the National Football League during the 2011 off-season and the National Hockey League during the 2004/05 season which was the only occasion when the failed negotiations resulted in the cancellation of the whole season.
After the previous lockout, the CBA was extended for 6 years which expired in 2005 when the two parties successfully solved the issues regarding the length of long-term contracts, rookie age limit and drug policy. In addition, as a result of the massive growth in commercial revenue, players were given 57% of all basketball related income (BRI). The latest deal was set to expire in June 30, 2011. However, eight owners addressed Commissioner David Stern expressing their worries about the loss of balance between small-market and large-market team due to the then current economic system of the league. Negotiations began early this year.
Owners reported that the league has never had a positive net income for 6 years; in fact they estimated a $300 million annual loss and claimed that only 8 out of the 30 teams are profitable. Besides this, they proposed to reduce the players’ salary with 40% which is around $800 million, demanded the review of the current distribution rates of all BRI and suggested the introduction of the hard salary cap instead of the soft cap. Introduced in 1984, the NBA salary cap is the limit of the amount of money a team may spend to pay their players which is calculated after the revenues of the previous season.
The idea behind the cap is to keep the richest teams from acquiring all the best players available and to create fair competition. The difference between the two types of caps is that the soft cap allows certain exceptions to exceed the limit such as Mid-level exception which enables the acquisition of a player with a contract equal to the league average even if the team is over the cap. Opposed to this, the hard cap offers very few or no exceptions at all. The current limit is $58 million and the owners proposed a $45 million hard cap, even though only 3 franchises are able to suit this requirement. This offer was quickly rejected by the National Basketball Players Association, so was the idea of the flex cap.
By the end of June, the two parties couldn’t find a resolution to the salary cap issues and the income split. The owners accused the players of being uncooperative while the union stated that demands of the owners are unacceptable. The lockout officially began on July 1, 2011.
The two parties returned to the roundtable early autumn, but negotiations collapsed very soon. The NBPA was ready to accept salary cuts by $500 million in 5 years with their shares reducing from 57% to 54% if the owners would make compromises regarding the cap system, but the proposition was rejected and the league demanded a cut of $2 billion in 10 years. No solution.
There were rumours circling around the media that Commissioner Stern threatened to cancel the whole season if no deal is made soon, meanwhile training camps and preseason games were cancelled early October. Players firmly refused the idea of the hard cap and discussions related to BRI distribution, luxury tax, mid-level exceptions and salary limits also failed. Owners asked for more strict regulations regarding luxury taxes since it would encourage competition; however, the NBPA argued that teams with smaller markets can also be successful such as the San Antonio Spurs which won 4 titles in the last 12 years. This claim was later confirmed by analysts saying that even draft efficiency have more influence on a team’s chances than the payroll.
Even though the players took a firm stand and weren’t willing to go below 52% of BRI, they have to realise that the owners have leverage against them. Run by billionaires, franchises still have income from broadcasting rights, merchandise, etc., while players don’t even get paid and can’t receive medical care without insurance. More than 70 have already signed with other clubs overseas for less money; others participate in pickup and charity tournaments, train or get fat. Owners must recognise that players cannot be treated as regular workers, but more like special talents like musicians and actors since they mean the difference between the NBA and the rest of the world. Millions watch the NBA broadcasts only because of LeBron James, Dwyane Wade, Kobe Bryant and other superstars. What can the League offer the fans without these guys? The owners must face the fact that it is impossible to create equal opportunity for every team because certain cities will always receive more attention than others. Memphis will never have the slightest chance to compete with the market of New York City or Los Angeles. Even if they equalize the payroll, there will always be differences in strength of teams.
During October, agreements have been reached in certain issues, but discussions regarding the distribution of basketball related income are stuck at the league’s last 50-50% offer. Although there are around 14 hardline owners who would like to set the player’s share to 47%. The leading figure of this group is the greatest player of all-time, Michael Jordan, the owner of Charlotte Bobcats, who is famous for his involvement during the previous lockout when he yelled at then-Washington Wizards owner Abe Pollin, “If you can’t make a profit, you should sell your team.” This ironic turn caused major uproar among players and one particular agent told the media that none of his clients will ever join the Bobcats because of Jordan’s actions. Meanwhile, the commissioner announced the cancellation of all regular season games through November.
The parties met once again on November 6, where the league proposed a 49-to-51% deal, after rejecting the NBPA’s 51% offer. In addition to this, Commissioner Stern issued an ultimatum which would lower the BRI of players to 47%, set mid-level exceptions to $3 million and introduce the flex cap with $62 million, should they choose not to accept the deal before November 9. This way, the hardline owners will get the deal they want. Despite the fact that many players are in favour of the current deal, it seems unlikely that the union accepts the offer.
However, the players are contemplating the possibility of decertification which would result in the dissolution of the NBPA so there would be no union to negotiate with and no CBA to deal with. This last-ditch effort may give advantage to the players who would have a chance to file an anti-trust lawsuit against the owners in order to ask the court to end the lockout since the league would no longer be protected from anti-trust law. On the other hand, dissolving the NBPA would mean giving up certain benefits they have already achieved throughout the negotiations and players wouldn’t be able to re-establish a union in a year without the league’s consent. However, decertification would put the whole season in jeopardy and the NBA may suffer a major setback even if a whole new CBA is agreed any time soon.
After months of tough negotiation, we have arrived to a decisive moment. According to the owners, the latest deal would result in a better league with higher average salaries, shorter contracts, more free agents, easier trades, less super teams and equal competition. It sounds right in theory, but no one knows how the new NBA would actually work out. However, players are concerned about the enormous pay cuts, the restrictions and the diminishing security. Meanwhile, hundreds of stadium workers have no jobs and millions of fans are deprived of the joy of basketball during the battle of millionaires. One thing is sure though, we are going to know a lot more about the future of the NBA after their next meeting on Monday. The ball is on the player’s court.