Some Lengthy Thoughts on the Current State of CBA "Negotiations"

Over the last couple of days, stories about the counter-offer made by the players’ association to the owners have been dribbling out in the media. Here's one, bizarrely highlighting the least important aspect of the offer, eliminating the age limit.   

This offer was made to the owners some time ago, and as of yet, there has been no response.  It is more and more clear that the owners interest is not in making a deal but in breaking the players, because the think they can.  Some more thoughts about collective bargaining after the jump. 

One of the basic principles of successful collective bargaining is that both sides must understand the relevant economic conditions, and be willing to negotiate in good faith.  What I mean by that is that while you try to make the best deal possible for your side, you do so within a framework of reasonableness given the prevailing economic conditions in your industry. 

Given that, despite the wider poor economy, NBA revenue once again reached a record high last season, the Golden State Warriors sold for a record amount, uncounted (by me) amounts were spent in the free agent market this past summer, and the salary cap went up again, one would be hard pressed to call the owners’ offer a legitimate attempt at good faith bargaining.

Demanding a 35% reduction in player compensation just as Drew Gooden is signing for more than $30 million is…difficult to swallow.  More to the point, this sort of rollback is unheard of in almost any industry, even ones that are in a lot more trouble than the NBA is.  It’s not something that any responsible union could even entertain, and the owners absolutely know this. 

Now, the owners’ position seems to be that too many teams are losing money under the current structure; the problem appears to me that to the owners "too many" means "more than zero."  Their position appears to be that every team should be guaranteed an operating profit every year, and that labor costs should be low enough that it is impossible to lose money.  That seems absurd to me; if you run a crappy business, why should you make a profit?  Why should owners be disincentivized from running a successful business? 

The counter-argument to that is that sure, in a more natural competitive environment, poorly run businesses should not be guaranteed a profit, but in a system where separate businesses are at the same time competitors AND partners, like a sports league, it’s unhealthy if some teams are consistently losing money.  I don’t disagree with that, but what I would say is that’s no reason to guarantee a profit, rather it’s a reason to have a system in which you make a profit if you operate your business well.  I think they have that now, but even so, the players have offered to negotiate down their percentage of revenue as long as the owners do a better job of sharing revenue.

Changing tacks, one has to ask: how can the owners justify this, and why are they able to win the PR battle so easily?  Especially after this summer, when Stern was crying poor, and teams were spending money like water?  It seems obvious that what the owners want is for the players to save them from their own poor decisions.  As for the PR…this is a sticky one.  Stern is very good in front of a microphone.  Billy Hunter isn’t as good.  And while I hesitate to go here for fear of distracting the conversation, I strongly believe that race plays a part in how the general public views this.  Subconsciously, I believe that there is a sense that successful, older white guys must "know better" than young black guys who are good at basketball and (stereotype warning!) spend their money on bling and pimped out rides. 

Now, another problem with the owners position, beyond its extremity, is that it’s not really logical.  In a natural economic environment, how do we reduce prices?  Either by increased supply or reduced demand, right?  Basic economics.  However, the owners seem to want to decrease salaries AND decrease supply by keeping players tied to their own teams.  On that level, the ONLY part of their proposal that makes any sense to me is reducing the amount of guarantees in contracts.  To the extent that that would put more players on the market, it makes some sense from an economic perspective.  The problem is, though, that it’s patently unfair to have contractual terms bind only one party to the contract.

Almost all of us are employees at will.  That means we can be fired at any time for any (almost) or no reason.  However, it ALSO means that if we get a better offer, we can leave at any time.  The owners seem to want to bind players but not be bound.  That seems unfair to me, but I’d be interested to hear other opinions.

Ultimately, the owners’ position is not based on making a reasonable deal, or even a deal that generally favors them; it’s clear that they want to break the players.  They made an absurd proposal, and have not responded to the players’ offer, which did offer to reduce salaries.  I don’t think the owners want to make a deal, I think they want to lock out.   Now, the players have a couple of options beyond just engaging in a battle of wills that they probably will lose.  They can, eventually, go to the NLRB and charge the owners with not bargaining in good faith.  That might loosen things up if the owners sense a danger that they will lose such a case and be forced to pay penalties.  Alternatively, they could consider decertifying the union, which would allow them to sue under anti-trust law, among other advantages. 

I have given up hope that this is going to get settled before a lockout; it’s clear that anything other than complete capitulation by the players won’t stir the owners.  The question is what strategy do the players adopt, since the owners have already shown their hand? 

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