The National Basketball Association (NBA) Lockout
HRMG 5930
Strayer University
October 08, 2012

Abstract

While there were many who might have been sick of the whole NBA lockout fiasco, and were thinking the NBA lockout may have been a bad thing for all parties involved…it was clear that the lockout not only effected the fans, it also had a lasting effect on many people behind the scenes as well. From the people like the office assistants who did a lot of the scheduling of games, marketing and halftime entertainment, to the concession stand companies and workers, bar owners (who hosted watch parties), the thousands of security guards and ushering staff members that worked and staffed the arenas, the problems trickled down and caused issues and unemployment problems for many people we may not have even though about. In retrospect, the lockout affected a lot more than the players and owners that we have seen on television, it lasted so long that its affect also caused havoc and mayhem in the lives of so many working class folks, that it even forced some to seek part-time or other employment to make ends meet in their households. This paper will address what the NBA lockout was about, what each sides issues were (Owners and Players), what they wanted and set out to achieve, the outcome and what it meant for the owners and players, and finally, CBA affected all parties involved.

While the fans and countless others were probably sick and tired of the whole NBA lockout debacle, the 2011 NBA lockout was the fourth lockout in the history of the National Basketball Association (NBA). With news broadcasts airing that the first two weeks (and possibly all) of its 2011-12 season may be cancelled, many irate fans were sickened and disgusted that the players and owners couldn’t reach an agreement in their labor dispute to keep the basketball league and season intact. Many fans were just couldn’t understand, and were trying to figure out why and how greedy billionaire basketball franchise owners, and millionaire NBA players weren’t able to get together collectively and come to an agreement that would allow them to allocate and distribute their profits in a system that would serve and entertain their millions of loyal fans, keep working class people employed and lastly allow the owners and players both to capitalize and make a profit. So what was the clash really about that was threatening the whole 2011-2012 NBA season, in a nutshell? The players wanted the NBA to be more like Major League Baseball, they wanted huge player salaries that were guaranteed to pay out, even if they under-performed. While the owners wanted the NBA to be more like the NFL. They wanted smaller player wages, more "profit sharing," and they wanted an option that allowed them to let players go if they weren’t performing. So, the fans far and wide, players, and workers who were on the chopping block, stand to lose or be laid off from their jobs, along with the some players, wanted to know how talks and negotiations turned into the forth lockout in National Basketball history. The 2011 NBA Lockout started because greedy franchise owners claimed that they expected to lose $300 million in revenue in the 2011-2012 seasons after losing more than $300 million the previous period. David Stern and the owners claimed that the millions in losses that they suffered the previous season and stood to lose for the upcoming 2011-2012 weren’t just losses that were absorbed by a handful of franchised teams; the losses collectively involved two thirds of the NBA's 30 teams. Since the owners were currently paying their players about 57 percent of their respective clubs gross revenue, they complained and banned together hoping to negotiate and use their barging power to do what some felt was manipulate and force the players to decreasing their share of the pie from 57 percent, closer to 50 percent. Commissioner David Stern, and the owners who claimed to have lost millions, felt that if they could get the players to go along with this, they might be able to get back out of the red, and see some profit in the upcoming season. They were lobbying to build a system that would allow franchise owners to offer players a more competitive salary across the board and not cause so much havoc, hardship, and loss on the smaller franchised ball clubs.
While negotiations between the owners, led by Commissioner David Stern, and for the players, led by director Billy Hunter and President Derek Fisher of the labor unions National Basketball Players Association (NBPA), began in early 2011 and continued through November. The chief complaints on the table that separated and divided both sides were revenue split-ups and the reconfiguring of the NBA Players salary cap and luxury tax. The Owners proposed and were set on decreasing the players’ portion of Basketball Related Income (BRI) from 57 percent to 47 percent, which the Players continued to countered although constantly in negotiation mode, initially were willing to accept a reduction of 53 percent of BRI. The Owners also sought to remove the NBA Player’s soft salary cap and wished to implement a hard salary cap and a harsher luxury tax, which they hoped would increase the competition among teams, even though the Players were bargaining for and were adamant about keeping the current soft salary cap structure intact. As both sides unsuccessful and collectively failed at reaching an agreement, it was imminent that something would have to be done to force some type of movement in the negotiations. So of course the owners initiated a power move, ordering a stoppage of game play at the expiration of the 2005 collective bargaining agreement which delayed the start of the 2011–12 regular NBA season. David stern, the NBA commissioner, canceled preseason play and any further game play until they felt an agreement could be reached. Thus, a 161 day lockout began on July 1, 2011 and ended on December 8, 2011. To prepare for the lockout, Hunter began instructing its union players to start saving their money the last two years of the CBA, as he vowed that the national labor union of the NBPA wouldn’t bend or break as they did during the 1999 lockout.
The problem and issues being debated by the NBA team owners, led by Commissioner David Stern, maintained that 22 out of the 30 NBA franchised ball clubs were having trouble making a profit with the current system that was agreed upon in the previous CBA. Their chief complaint was that two thirds or more of the 30 owned and contracted ball clubs in the league were losing millions in revenue during the past season, and it was almost virtually impossible for every team in the NBA, especially the “small-market” teams like Phoenix and Charlotte to operate and or compete and have a chance against the bigger marketed teams such as New York or LA. On the other hand, the players; who were led by NBPA (National Basketball Players Association) chief Billy Hunter were not only fighting to keep the present collective bargaining agreement (CBA) system that was agreed upon in the 2005, they wanted and were fighting for much more. The players were arguing against and believed that the NBA figures verbally presented by the owners where inaccurate and the claim of a loss of more than $300 million last season could not be substantiated and if anything, possibly only maybe 10 franchises ball clubs out of the 30 actually lost money in the past year.
The players also wanted to remind us that this was a lockout and not a strike. They were the ones being denied, as if they were given a choice in the process. But undoubtedly it was also known that the arenas would quickly open up if they agreed to what the owners were proposing. On the other hand, how can owners pretend to act as if they're working in good faith if they had prerequisites set in place?
Many of the workers who were affected by the lockout, along with the fans wanted to know what the difference was between a soft and hard salary cap. The salary cap is the spending limit allotted on the players. The owners were aiming to implement a hard salary cap, like that used by the NFL, which allows for few to limited allowances for their teams to spend above the allotted limit (salary cap) on its players. The limit that NFL imposed on their teams also made it possible for more team competitiveness. The hard cap prevented teams with numerous mega-stars like hmmm… let’s say the Miami Heat from affording big name stars like LeBron, Wade, and Bosh from eating up and taking a whopping almost 75 percent or approximately $43 million of the $58 million salary cap of the Heats payroll. With a smaller amount allowed money to compensate for players, teams like the Heat wouldn’t be able to afford numerous big ticket players under a “hard cap”, and the little money that they were left with would have be all that is left to fill their twelve remaining roster spots.
The NBA moving to a hard cap wouldn’t leave the more popular and notable teams many choices, they would either have to downsize and get rid of other mid-range players. For instance…the Heat would have to either get rid of players like Mike Miller and/or Udonis Haslem, and downscale the team surrounding their big ticket three with a bunch of scrubs on ten-day contracts in hope that they could win championships with their big three having to average 75 points a nights or, get rid of and replace one of the big three. The same thing would apply for teams like the New York, Knicks, who are trying to add Chris Paul with their big star power players Amare Stoudamire and Carmelo Anthony.
Currently the NBA had what was called and considered a "soft" cap. The authorized cap or limit set for the NBA was about $58 million, but the teams were allowed to go over that limit in many ways, not being held accountable for their overspending. One of the most famous ways people can relate or understand the soft cap is by the infamous "Larry Bird Exception" which allowed ball clubs to hand in a notice on players above the cap without it counting. Many of the teams that were noted for and who are still above the cap were big ticket teams with mega stars like the Boston, Celtics, the New York Nicks and the Los Angeles Lakers who have spent more than $100 million, of a $58 million cap. An there are teams like the Minnesota, Timberwolves who spend a reduced amount $50 million of their allotted 58 million salary cap, but can’t get a break or acquire any of the big ticket players because they aren’t offering the big money. But NBA teams who overspend way above their salary cap pay a luxury tax that is reallocated all through the league like in the major baseball league.
Once more, the NBA owners, led by Commissioner David Stern, were standing firm and insisting on moving from a soft salary cap to a hard salary cap like the salary cap the NFL uses (in which nobody overspends). Because the NBA’s soft cap allowed larger, big marketed franchised teams like the Los Angeles Lakers and New York Nicks to overspend to acquire what they consider the better qualified athletes and exceed their supposedly max salary cap of 58 million which put the smaller marketed respective franchise teams like the Charlotte Bobcats and now Cleveland Cavaliers (since the loss of multiple NBA Player of the Year – LeBron James) in the red. The NBA owners chief complaint and issue on the table was that more than two-thirds of its teams were losing money, which the players naturally were disputing, the owners also wanted the players, who currently were receiving 57 percent of income, to agree to decrease of 7 percent, making their new percentage 50 percent, which owners felt would allow for the small struggling franchises losing money at some point financially get back in the black and eventually see a profit.
So with all the mess going on and all the uncertainty revolving around there possibly being no 2011-2012 NBA basketball season, the fans and enquiring minds wanted to know and get a full understanding of what exactly he owners want and were looking to gain in this fighting. The owner’s inequitably wanted a “hard cap”, which would lower the salary cap, or the maximum amount of money each team could spend on players, below the current cap of $58 million. The Owners felt that by lowering the salary cap, they could decrease the cost of player payroll, putting the leftover money right into their pockets. The owners also wanted to implement a revenue plan where they bagged roughly 60 percent of all the NBA’s league revenue. This would be a huge jump in the amount of revenue from the 43 percent share of Basketball Related Income (BRI) they currently were receiving under the current system in place.
Everyone also wanted to know, exactly what were the player’s issues, and what did they want and were prepared to walk away with at the end of negotiations? At that time, current NBA player average salary was close to $5 million dollars, more than any player in all four major American sports. Under the then current CBA the NBPA proposal, salaries would continue to rise up to around a whopping $7 million the final year of the contract, which represented a tremendously unrealistic and unlikely raise, although it was though the athletes may have just started the bidding that high to match and counter the owners’ utterly similarly crazy demands. Also, the players were very insistent on a continuation of a continued “soft cap”, where their salary caps would be higher, giving them more money. As a final point, the players wanted to keep their revenue share at 57 percent although they weren’t opposed to lowering it to 54 percent in previous meetings and or proposals, which instantaneously were rejected by the owners.
The players countered in continued negotiating meets where they offering to lower their share of revenues or Basketball Related Income (BRI), taking 53 percent but not a penny less, and that’s where matters in the negotiations came to a standstill. After no agreement could be reached, the NBA’s commissioner David Stern, canceled training camp and the first two weeks of the regular season, and it was reported by the New York Daily News that the “National Basketball Association was prepared to cancel games through the end of November”. Typically a threat of such a delay, almost always worked in the favor of those with the most revenue and leverage, but it was clear that players’ position seemed to only to have strengthened and was thus far unbreakable.
Why was this question on everyone’s mind? It was because of big named players like Kobe Bryant, Kevin Garnett and Paul Pierce, (three mega-superstars) whose statures were largely regarded and respected in the league, and all who had before the lockout probably attended minimally few meetings presence was a significant voice that projected loudly. Particularly, the aggressive and argumentative presence of Kevin Garnett who was considered by many in the association and the league alike to be a combination of an ornery, defiant, but yet a determined player showing up to negotiate carried a tremendous amount of weight (upping the stakes) in the battle. Kevin Garnett and his fellow mega-superstar players that were also members of the labor unions National Basketball Players Association (NBPA) and came to lent their support and star power, showed up and showed out at the negotiations in the same way that they have monstrously stalked out teams and opponents on the court as they would when playing the game of basketball.
The same organization and NBA league that relentlessly have spent decades promoting the individuals on the team, versus the whole team, shouldn’t have been shocked that those individuals would eventually become comfortable basking in the glory of individual promotion and start acting as the whole. The players in the beginning could afford to miss a few checks, and seemed committed to their convictions in this battle. The players felt as they were the biggest part of the game, and wanted and felt that they deserved the biggest share of money. The players felt as if they couldn’t have it, the owners weren’t going to get the most and capitalize on their talents.
While reexamining where things stood in the aftermath of the latest meetings that continued to threaten to nullity a few more weeks of regular-season NBA games, both sides’ demands went from being irrational to illogically unreasonable. For the fans, there seemed to be more comfort found nestled somewhere between a rock and a hard place than in the unruly and overwhelming meetings that have taken place so far. Union executive director Billy Hunter and players' president Derek Fisher resorted to blasting, ranting and railing publicly after talks seemed to continuously and abruptly end and the players began to feel that their only buffer in contrast to the owners cutting them to shreds behind numerous perceived failed closed door sessions. It was hard to assess whether negotiations had dipped from bad to worse in this labor dispute! With all the finger-pointing, mud-slinging and name-dropping bringing the labor dispute any closer to being resolved, there was no longer any room reserved for any private back-room dealings or leaking of attempted negotiations by anonymous sources in the negotiating room. It was clear that pitting owners against players in a brawl that continuously spilled into the public light didn’t make things easier or better for either side or mad things any easier for anyone to understand. Instead, it just made the gobbledygook and projected noise from the owners and players much flashier and voluminously disseminated and exposed publically.
The negotiations were supposedly to be in good faith, but unfortunately the owners didn't appear to be doing any that. The negotiations turned into cold-blooded neglect. It was virtually a challenging undertaking to sit in a room where individuals sat in a room at a table across from one another but no one was talking or even speaking the same language among the gathered. All parties involved wanted the negotiations to yield results in their favor, and the players fought tooth and nail against a new system which threatened to take back seemingly every benefit they negotiated and were granted in the previous collective bargaining agreement. It was evident that the player’s concessions meant little to nothing to the owners, and they didn’t even want to entertain the previous labor deal or any part of a percentage split that favored players. The owners came in guns a blazing and were lobbying for a new deal at any cost.
There were no longer any indications and it didn’t even seem possible that there was or could be any good faith dealings. There was no logic, rhyme or reason in disguising the lies that were being flung out the mouths of both sides. The Lockout came down to a test of wills, and it was clear that both sides were geared up to see who was going willing to lose the most. The owners were in and could still go on if they lost millions, but the players weren’t, coming from a year of lost revenues. Foolish, suicidal pride was in the way, and kept both sides from working on settling things.
On or before November 14, the players disbanded the union, which permitted them to file anti-trust lawsuits against the National Basketball Association. On November 26, both sides reached a tentative agreement to end the lockout. The new CBA called for a revenue split of 49 to 51 percent and a flexible salary cap structure with a stricter luxury tax on franchised players on teams that exceeded the salary cap. After a tentative agreement was reached, the owner’s finally permitted the players to participate in voluntary workouts at team sites starting December 1, 2011. The final Collective Bargaining Agreement CBA was ratified on December 8, 2011 and thus training camps, trades and free agency movement began the next day.
Many things happened during the course of the lockout, such as some players formally signing and accepting contracts to play in other countries, mostly in Europe and Asia, with most of them having the option to return upon the lockout's conclusion. The lockout also impacted the economy due largely to many NBA cities losing revenue generated by games. Many television networks and sporting venues also lost money, ratings and advertisement revenue.
The NBA’s five month labor crisis finally ended and Basketball was once again in the fore front of being a big ticket business and household and heavily sold out venue. Unfortunately for the players, the new Collective Bargaining Agreement (CBI) heavily favored the owners getting a lot of what they were lobbying for, despite some eleventh-hour concessions. The league sought out to renovate its $4-billion-a-year enterprise, and they got close to pretty much what they were asking…a nearly $300 million annual reduction in player salaries and an option allowing for new restrictions on contracts and team payrolls. The modifications more money for the owners; a whopping $3 billion gain over the life of the 10-year deal. Finally, before agreeing to the many sacrifices, the players’ mediators did win one or two allowances that will continually permit the richest teams to keep spending on players, which will guarantee for a more competitive free-agent market.
At the end of the day; I didn’t shed any tears for the NBA billionaire owners nor the millionaire Player who in the end I felt were both greedy. I also believe little sympathy existed for the millionaire athletes, particularly as the American public suffered through and are still struggling in today’s frugal and twisted economy. Simply put, the players are athletes and the owner’s businessmen. Through various pathways, most of them have established themselves in the business world with skills that will continue to enrich them throughout a lifetime. Some professional athletes, on the other hand, have no business sense. They came into the league far too young, far less mature, possessing a completely different skill set than what’s needed to earn the money they have learned in the course of their lifetime.
The lockout was not a win-win for the players, nor did the owners come out totally on top. I believe if both sides sincerely attempted to make an effort in good faith bargaining, this whole ordeal and other systematic labor disputes in today’s society could have been possibly prevented and the, jobs, time and money lost during the NBA lockout avoided. We all are a part of and contribute in some way shape or form where the values and principles of the wealthy and powerful and most often times glorified as sports figures and other popular or superstars encourage and influence our younger generation of children to believe that becoming the next Michael Jordan, Kobe Bryant, or LeBron James’s and getting money are the only thing and best part of life. Cash money and being a millionaire I’m sure is cool and probably has plenty perks, and benefits, but as we can see through the issues and drama associated with the NBA lockout and other labor disputes, money has its issues to; that is why it’s also easy to have disdain and content for these free-spending superstars, the vast majority of whom will probably be bankrupt in the years to come.

References
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Holley, J., Jennings, K., & Wolters, R., (2012). The labor relations process (10th ed). South- Western, Cengage Learning
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McDonald, B. (July 8, 2011). Other effects of the 2011 nba lockout. SBNation. Retrieved from http://houston.sbnation.com/houston-rockets/2011/7/8/2265019/other-effects-of-the-2011-nba-lockout
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