At the heart of the NBA Lockout is a fundamental inability for billionaire owners and millionaire basketball players to determine how much each side deserves. Some beat writers insist that the “only” thing standing in the way of a deal being reached is for the two sides to figure out how to split a $4 billion dollar pie. It’s like this should be as easy as figuring how to distribute the expense of a dinner check.
It’s $4 billion.
After the owner’s locked out the players during the Summer of 1998, the two sides agreed that the players would be guaranteed 57% of income derived from basketball activities. At the time, that signified significant concessions from the Player’s Union that were supposed to make the league franchises profitable. A dozen years later, during a period where municipalities bought franchises arenas and growth in league revenue exploded (even during a recession), the owners insist that the Union needs to cut their share of revenue by 20% so the league will not lose $300 million per year.
If not, the owners insist they instead will choose to forfeit every cent of revenue for as long as it takes to break the Union. That is unless the Union actually breaks, in which case they will take the players to the Supreme Court, if necessary, to force them into collectively bargaining.
This situation comes to a head today.
After months of negotiations that have shown promise before suddenly falling apart, Commissioner David Stern put the league’s “final offer” on paper. The offer says that in return for taking a 12% cut in pay and system changes that definitively favor the owners, the players will get to receive the money promised to them in the contracts that the owners signed. Seriously, ownership views that as a major concession.
Of course, as crappy as the deal is for the players, their lack of leverage derived from a crappy economy probably means this is the best deal they can hope to receive. Accepting it, though, means horrible things long-term for the Union. It means the next agreement starts from an awful jump off point, and despite the $400 million per year that will now be shifted over to the owners to cover mostly phantom expenses, only a fool thinks they won’t pretend to be hemorrhaging money even if the economy next time is splendid.
In addition, the offer–which must be agreed to today (supposedly without any wiggle room on the side of ownership)–puts it in writing that the players are weak. Stern included an ultimatum saying that failure to accept the offer means that the next offer will revert back to their “wet dream” demands.
Why does this matter? Well, for one, the collective bargaining, which has been going on in earnest for months is basically hitting a stand off similar to the Bay of Pigs. Both sides are staring each other down in hopes the other will believe that mutually assured destruction is in the cards.
As I type this, the Union has claimed they will refuse the offer unless the owners agree to make some concessions. From the league side, Stern is hedging on whether he will even agree to a meeting to discuss anything. That means, the most likely outcome is that no deal is reached by the 5:00 deadline demanded.
Since the ultimatum is in writing, there is absolutely no way, the ownership committee will back off on their plan to become even less reasonable. In response, the Union will have to go with their least rationale course of action and disband. The league, while wanting all power to reside with ownership, certainly doesn’t want this to lead to a purely capitalist situation will go to the courts to demand the player’s unionize again. This will take months and the season will have to be completely cancelled like the NHL did two years ago. Then, when the courts agree with the owners, which they will since the owners forum shopped, the final agreement will look remarkably worse than what the players could have accepted today.
As collateral damage, Oklahoma City fans will lose a season of Kevin Durant’s career, a season that promises to build of a Western Conference Finals appearance, and a season where half the team is still affordable. When the league returns, there could be a hard cap that makes it impossible to keep Russell Westbrook, Serge Ibaka, and James Harden.
We shall see how this plays out, but if there is anything newsworthy to occur during the day, I will add updates to this post.
UPDATE (9:20 am)
This is a sign of hope. If there is any chance of salvaging the season, the owners will throw the Union enough crumbs during this last meeting before the deadline. It doesn’t have to be significant even. Just enough that the Union reps can sell it to their constituents that they got a better deal than what was offered in the ultimatum. That way, the Union can take away a minor, symbolic victory instead of looking like they happily ate the turd sandwich ownership put on their plate. They can say they got the bread switched from wheat to sourdough.
UPDATE 1:10 pm
The meeting teased by Chris Broussard above has been going on for about an hour. Most sources are reporting that the owners are willing to make small “tweaks,” but nothing major. Basically, this would amount to the “crumbs” I mentioned.
If the players expect more than some patronizing “concessions” they are out of luck. Sure, they are standing to be in a much worse situation than before and the owners are demanding their dignity, but the deck has always been stacked against them. To put it into basketball terms, the owners have a front court loaded with seven-foot tall behemoths and a back court of heady guards that can shoot lights out. Meanwhile, the players team is loaded with skinny white guys who were cut from NAIA junior varsity teams.
With the global economy cratering at the same time the collective bargaining agreement came up for re-negotiation, the owners game planning their accounting practices for this moment, and the players probably getting an overly good deal the last time, it was bound to end up like a one seed (NBA) versus a sixteen seen (NBPA).
My advice to the Union is to accept that the owners are trying to dribble out the clock to the deadline and take the deal. Putting on the full court press in hopes of turning it around in the final seconds is only going to end with a larger losing margin. Because the league ownership is perfectly happy to run up the score.
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