Let’s be honest – this summer has been pretty depressing.
Months have gone by without a resolution between the NBA owners and players, and the prospect of losing games seems to be growing more likely by the day.
If you’re interested in the specifics of the NBA Lockout struggle, I recommend this article written by Henry Abbott at TrueHoop. He talks about the specific sticking points in the current negotiations.
Frankly, my reaction to this whole lockout situation has been a bit bizarre, at least to the untrained eye.
Please click "Read More" to see why...
I work as a Republican political consultant. You could call me a “union-busting Republican,” and I probably wouldn’t quarrel too much with you. I generally believe that unions have way too much power, and I believe in right-to-work laws.
And despite all of that, on this particular issue, I find myself siding with the players’ union 100%.
At first, I couldn’t quite figure that out. Am I having an ideological break? Is my affinity for NBA athletes clouding my sound economic judgment?
Nope. I’m just fine. I’m standing up for free markets and capitalism because that’s what Republicans do.
In typical labor negotiations, unions will fight for what they would consider “fair” wages while corporations will try to keep wages as close to the market rate as possible. In simple terms, unions typically fight for higher wages than what they’re worth.
One such example of an artificially set “fair” wage is the minimum wage. Without the minimum wage’s artificial price floor for labor, many low-skill jobs would pay close to nothing because of the lack of specialization – the more people capable of doing a job in the free market, the less that job is going to pay.
Without a minimum wage, our economy would have much lower unemployment, but we’d probably have a larger separation between the rich and poor. And as a society, we’ve determined that we want to have a price floor for labor in order to maintain certain standards for pay.
Okay. Now having said that, the NBA Lockout is completely different.
Wages in the NBA are artificially capped instead of being artificially propped up. LeBron James made a shade over $16 million last year, but according to sports economist David Berri, James’ production may have been worth nearly $46 million!
In fact, the last collective bargaining agreement mandated these types of discounts for owners. The rookie scale ensured that young players like Blake Griffin and Derrick Rose, who would have absolutely commanded all-star money in the free market, were stuck earning tens of millions of dollars less than what they were worth.
The owners have made the argument throughout the lockout that they’re in the midst of an “arms race.” The current system supposedly creates a prisoner’s dilemma that forces them to spend themselves into financial losses, and therefore they need a strict collective bargaining agreement to protect them from themselves.
This is a ridiculous notion. There are plenty of “arms races” in the business world, and that competition drives up the value of labor, especially in specialized markets like technology and science. This phenomenon doesn’t force corporations into losses. A smart business owner always analyzes the marginal return of each worker they hire. You simply don’t add workers that cost more than they produce.
Why are we trying to blame the workers for what amounts to a lack of business acumen from the NBA owners?
And here’s the thing: the players aren’t even asking for free-market wages. They’re actually giving the owners major concessions, despite the reality that the last CBA capped their wages both directly on the individual level and indirectly on the team level (due to the luxury tax). Players are already receiving a raw deal in the free market, and in these negotiations they’re willing to give up even more!
This type of arrangement would never happen in the real world. But in the world of sports leagues, we’re supposed to just accept this blatant disregard for player value. Owners are arguing that they should be guaranteed a profit, regardless of how poorly they run their businesses. This line of thinking makes absolutely no sense in a capitalistic society.
The truth is that this isn't your run-of-the-mill union/owner negotiation. This is a blatant example of an oligopoly (the 30 owners) colluding to force their workers (the players) into lower wages.
Right now, the story seems to be “Will the players cause a lost season by not making concessions?"
The story should be, “Are the NBA owners violating U.S. antitrust law?”
I would argue yes. And I'm a Republican.
Sorry but this argument is just totally wrong. The NBA is not a collection of independent businesses, but rather a joint venture between different owners to make money from the game of professional basketball. Economically, NBA teams compete not against each other but rather against other forms of entertainment, whether it's football, movie theaters, etc. It is substantially similar to a franchise restaurant- Burger Kings are owned by a wide variety of people, but they try to limit competition against one another and gain market share from other companies.
The problem with a "free market" approach is that revenue potential is unevenly divided between markets. The top few teams could not exist on their own; they benefit from the large size of the league. The rest of the league has no interest in seeing a few franchises dominate the sport completely unhindered, and beyond that the game benefits from a more competitive environment (as the NFL has shown). Salary limitations are crucial for the league to maintain credibility and profitability, because otherwise 90% of franchises would be permanently doomed and interest in the NBA would wane in most markets.
Anti-trust laws probably should not apply at all, but courts have fashioned a hybrid approach. When the league is clearly acting as one unit, then it is treated like a joint venture- e.g., negotiating national TV deals. In other situations they treat the franchises separately, which is why the major sports leagues are sued on a semi-regular basis (except baseball, since it is mostly exempt). A recent Supreme Court case illustrated the current state of the law: see American Needle, Inc. v. NFL.
For anyone new to TWolvesBlog, a huge FAQ/Discussion on this topic raging in the forums HERE: http://twolvesblog.com/forum/nba-jam/65527-get-ready-for-the-lockout.html
The players seem to have the stance that 1/3 or 1/4 luxury tax is a number owners won't spend and that it equals a hard cap. I don't get that at all. The owners have proven that they'll blow their bottom line to try to win over and over. They do it at 2-1, 3-1, 4-1. I think that is a solid compromise personally.
As WW said it is nice to read something different. It sounds like you'd love the European sports model. They have many leagues, few business rules, and it is assumed that 2-3 teams will always win their respective league. Sports fans in America will never accept that model and if LeBron James is playing in a league where fans don't buy into the core business he won't be worth $46M. The owners and the players union understand these facts and that is why fundamentally both sides want there to be an NBA. This article is essentially rooting on a Free Market system that neither side wants.
The player resources are much more scarce in the NBA compared with the NFL (QB position aside). The NFL's popularity doesn't remotely hinge on the popularity of individual players. In the NBA it is the exact opposite. Just based on that fact I'd put floor at a 50% (given WW noting that the NFL split for the players is 48%).
Jon, I appreciate your unique perspective on this. It is always great to read something from a different stance other than the "feel sorry for the fans" or "owners are nutjob greedy poopyheads" or whatever. Very nice job.
A couple thoughts. Bearing in mind that my perspective is more or less "both sides are idiots for letting this play out," and that I spend extra time pointing out the player's flaws in the negotiation becuase no one else seems to:
1. You spend a lot of time on the 'free market' discussion. Need to remember only 10-20 guys would command super-star level pay. Things must be standardized to apply to the other 95% of the league.
2. While market size I think is an overrated aspect to how well it correlates to competitiveness, a salary cap is an ABSOLUTE must in the NBA, otherwise the big markets could and would trump every mid/small market team 100% of the time for the relatively modest amount of star-level talent in the league. You would face a situation where Miami would add Chris Paul AND Dwight Howard next year. No one wants that. On the flip side, a hard cap is too much.
3. IMO this is far beyond a 'who is right and wrong' discussion. Both sides are being total idiots. Owners need to understand that a 46% split of BRI would not stand a chance of being ratified in a vote from the players, and vice-versa for a hard cap. It is a freaking negotiation. No one will end up getting everything they want. Just shut the hell up, stay in the room, be a rational/reasonable human, make some concessions and move the f^&% on before you do more damage.
4. My most important point: Remember that it was not a level playing field to begin with.....a 57%-to-players BRI split was the highest in any pro sports league AND NBA contracts are 100% guaranteed. So for the owners to want a dip in split and stricter contract rules should not be alarming to anyone at all (although 46% is low). The NFL CBA was ratified with a 48%/52% PLAYER/OWNER split. and contracts aren't guaranteed. So what I mean is, NBA players absolutely had it MADE and then some. And everyone and their mother agreed the system was flawed and needed changes. Everyone except for, shockingly, the players and their agents. I think it is important to realize that when you look at the amount of concessions the players have made (3 pts in BRI and NOTHING else system-wise) while the owners have come up 14 percentage points from their initial offer and tried to compromise on a hard cap alternative. Just a thought. But again, I think the owners are morons, too.
Just some thoughts to spark discussion. I'll make a longer write up on this. Again, nice job.
@drivlikejehu Wow, great and insightful comment. Thank you for sharing this here with us and stopping by.
@Pants80 We brought up a tiered tax system in the forums years ago. Seems like a great compromise to me. And a hard cap is just stupid anyways.
TrueHoop covers this AGAIN today... and I found this to be a very interesting read: http://espn.go.com/blog/truehoop/post/_/id/32196/if-the-nba-is-serious-about-parity
Would higher salaries (with a salary cap) create more one-star teams, and thus more parity?
@Pants80 I think it depends on whether you pair it up with a hard cap or not. If you hard-cap it but leave it free market, then they would avoid the multiple stars on teams 'problem.' But if not, then that solves none of the fundamental issues troubling the owners' side.
Of course the individual league dynamics affect the split, hockey is closer to the NBA range, but more or less in principle it should not be surprising to anyone that the owners want these concessions given how good it was for the players. I think the NFL/NHL/MLB splits are an interesting benchmark comparison, but probably not a hard argument or anything.
But when you take a step back and think about it, it just seems to me that it's the players who are not willing to negotiate, despite the PR we see....they seemingly have remained hard as a rock on every issue, while the owners are the ones who have made the concessions.The players have pretty much given nothing back.
@WallyWorld Good rebuttal WW.
Things to note...
- The Owners originally started with giving the Players 33% of Total Revenue... which is the MOST ABSURD OFFER IN HISTORY. Seriously.
- Yes, the Players get 57% right now, but that's not TOTAL revenue. The Owners get a bunch of credits off the top first, so the Players actually have gotten like 51%. As far as I know, the Owners 46% offer STILL includes those credits and fees and (call them whatever you want to call them) off the top first, before splitting with the Players. In the NFL, the Players get 48% of ALL Total Revenue.
Thanks WallyWorld.I think the biggest thing I left out was discussing BRI -- I guess in my ideal model, we wouldn't see that in the system at all. We'd end up seeing some teams spending higher %ages than others, and as you said that would certainly hurt parity and, in a lot of cases, probably increase the turnover of franchises in the league. Would small market teams even be able to exist?
I think ultimately we can all accept team salary caps and player wage caps... it's part of creating a strong product from top to bottom. However, the main thesis of my article is that players are already having their wages capped artificially, and they're willing to make even more concessions... I feel like that makes the players the "good guys" in this whole ordeal.
@JonSchweppe Interesting article. He's basically describing the MLB model, no cap, but there is a luxory tax. The NBA needs to be more careful with fairness than the NFL/MLB/NHL because more rests on the shoulders of one individual player. Maybe it'd bring more parity and maybe it'd bring much less.
@WallyWorld The 57% that the players are getting now isn't some pie in the sky number. It is a % that was similarly negotiated with the owners.
It'd be interesting to know how that number was originally landed on by the owners. Were the owners working in $X in losses but factoring that against a huge gain in the price of the franchise? Owning a sports franchise for 10 years was basically like printing money no matter what you did during that time from 1980 to 2007ish. It seems that we've hit the end of it and now it is time to balance the books.
@Pants80 I just don't see how the players cannot see compromise in a stiffer luxury tax. I mean....come on.
@CollegeWolf One always starts with an unrealistic offer. That offer shouldn't even be discussed or used in an argument because it was never remotely realistic, nor is the present one. The point is the owners have provided far more concessions that the players.
I guess the difference between me and many is that most people are worried about picking sides and debating as such when I am more fixated on picking "who is negotiating in such a way that best preserves the season." And in this case I have to say the owners seem to be trying harder to compromise while the players are saying no to everything, even a loaded luxury tax (which is mind numbing how that can't be agreed to as we all agreed above)
@CollegeWolf@WallyWorld I actually think it makes sense having $X that the it takes a team to run factored in. That way if the economy goes belly up the owners aren't left holding the bag. The NFL is so far in the green that is irrelevant (especially given the lack of guaranteed contracts).
What those percentages are remains to be seen but I don't think it is unreasonable in theory.
@JonSchweppe I mean, BRI and System-stuff are kind of the main sticking points right now. It is interesting that an issue not really even relevant to the lockout framed your view on the subject. But again, I liked the new perspective.
@JonSchweppe Why would your ideal model be one that potentially kills off small market teams (like the Wolves)? Seems like that is favoring dogma for the sake of dogma.
@Pants80 Of course. I understand that. But, again, in principle I have a hard time believing it is some crooked conspiracy theory (as some suggest, not you), that more importantly, hasn't been hammered into the ground behind closed doors in the negotiations. I also believe that there is no way the yearly team operations have been as successful as they were a decade ago. Hence the desire for changes from ownership. There is a reason for changes...otherwise 30 owners wouldn't have taken such a hard stance....but there is no way I can argue that they are asking for WAAAYYYY too much from the players. It is ludicrous and not agreeable at this point.
@WallyWorld Every company in this country of any size puts a lot of time, effort and money into complex accounting to make as much money as they can. Is this crooked? Morally, maybe. Legally no.
What it means to me is that the number at the bottom a companies version of the W-2 isn't the be all end all. Companies that are considered 100% legit engage in dealing that would seem very shady behind the scenes. It is the players/jouralists covering this job to root these things out. You can't expect the owners to plead guiting (especially when guilt or innocence is a grey thing here)
Case and Point: Hormel - http://motherjones.com/politics/2011/06/hormel-spam-pig-brains-disease - Ignore the brain disease just key on the companies within companies within companies created out of thin air because it could help the bottom line.
@Pants80 Very true. I guess I tend to be a little more pragmatic in my view that I don't think 30 NBA owners suddenly became crooks, manipulated their accounting, and wanted to milk their employees of $$ and jobs for an extended period of time just to make a few million bucks extra per year. I guess I don't think you can become a successful business person by treating your employees that way (I am speaking of more than just the players here). Probably a portion, but not all. I could be naive. Probably to a degree, of course, but I have to believe the franchise business model actually has not been as successful ever since that minor global economic downturn happened since the last CBA was ratified. People act like teams are free from losses which is just obviously laughably false.
Doesn't make any of this okay from the owners' end, and they certainly are shooting themselves in the foot, well both sides actually, by holding true to a deal neither side can ultimately agree to without a riot ensuing.....ugh.
Why doesn't one side just start by proposing a deal that is actually realistic and MIGHT be agreeable. That is step 1 here.
@Pants80 I didnt think we were arguing?
@WallyWorld I'm done with this argument on who is giving more.
@Pants80 That was an extension on the last paragraph of how I feel it is the players who aren't negotiating and are turning down a stricter lux tax//hard cap replacement. That seems to me in principle as fair of a compromise on this issue as one could find.
Also players are still stuck at 53/54 If they go harder cap. That's the 'giveback' from the player's end. Owners have been at 46 for 2 weeks.
Reality is probably the players are holding a hard stance to maintain as much of their dignity/needs as possible until they have to fold within a couple of weeks. Seems likely.
Still say no more than 1/4 of the season lost.
@WallyWorld What is your point? We are seemingly inching closer together BRI wise. Last check it was 52 to 46 (player amount).
@JonSchweppe But yeah not by much.
@JonSchweppe Griffin > Love. Griffin is like if Kevin Love became the incredible Hulk and/or grabbed a star/mushroom power up in Super Mario.
@WallyWorld Maybe I'm overrating Kevin Love, but isn't that a little much for Blake Griffin? TWO future firsts, Love, and Wes Johnson? I feel like Blake Griffin will have the better career, but not by that much. I snap accept this deal if I'm the Clippers, it's too good to pass up.Actually, I feel like Kevin Love in Hollywood is almost destiny...
@CollegeWolf Probably not, but LA THINKS about it? They have to?
@WallyWorld I'm already onboard. Would they even do that though? Maybe we have to throw in Jonny Flynn's corpse and the Ghost of Marko Jaric as well? And of course 7 more first round picks.
@CollegeWolf Same to you.
PS...side note....we should trade Love, Wes Johnson and 2 future firsts for Blake Griffin and Ryan Gomes
@WallyWorld Also a good point by WW. Don't be mistaken, I'm not hating on your or anything like that through all this.
@Pants80 Agree with Pants. Figure out the split is the biggest part of the battle here. Figure other expenses into the split or whatever, and that should be fine. Like Owners can have Credits off the top but then Players get 54%. Or split all total revenue like 50-50% or something. Just making up numbers, but you get the point.
I read that Revenue Sharing was nearly finalized over the weekend though. Here is one article of many from the weekend on this. Haven't wrapped my head around it yet:
Also the players have moved 3 pts on the split IN EXCHANGE for the system staying the same, which is just not enough no matter which side you are on. I mean, come on, just put somethign on paper that is realistic and could hold up in a ratification process. Ugh...
@CollegeWolf@WallyWorld That's my point. WW keeps saying the owners are giving here and there but all the players have done is moved on the split. As far as I'm concerned the split is 90% of the problem so the rest is virtually mute.
I could be off because I feel like every other article I read says "the cap is all that matters" and "the split is all that matters".
@WallyWorld But once they figure out the Revenue split then everything else will fall into place.
If the side offering more different things is the "better" side then obviously the owners were going to look better from the start because they want a different system. A system can be different in a lot of ways.
The owners haven't proven to me that the system needs to change drastically. There are a lot of things I'd love to see change in the NBA (reffing, playoff for 8th spot, draft lottery system, etc) but I don't think lighting fire to the current revenue system is all that high on my list.
If it is truely not possible for a small market team to turn a profit that increase sharing and adjust the split. The other stuff is just a side show.
I disagree. I think if you were pro-get shit done you would understand and acknowledge that the player's unwillingness to change their flawed system is the current major holdup to basketball starting, instead of ignoring that reality and repeating the slimeball stuff ad nauseum (which I don't think anyone disagrees at this point in the game, but still).
Currently all the players have done, to my knowledge, is move down 3 percentage points of BRI in exchange for the system staying the same. I mean, epic fail in this negotiation.... FAIR OR NOT... Whether you or I think it's fair or not doesn't matter. That's my whole 'just get it done' stance vs. picking a side. Don't care what is fair, I just want to see Ricky Rubio check in the game for the first time and hear the crowd go ballistic as he starts to carve out his 3.2 ppg rookie year scoring average.
That just isn't going to cut it in this situation, the rest of the league not involved is going to start losing millions of dollars in exchange for nothing. It's just plan dumb.
@Pants80 But they ARE greedy and slimy! Won't show financials, won't figure out revenue sharing, are/were trying for the stupid hard salary cap system, and it's no secret they are trying to destroy the NBAPA.
All that is fact.
Yeah, I guess you can say the Players are "greedy" too, but the NBA superduperstars and rookies are the most underpaid players in pro sports. Also, the Players never asked for more than they already have.
I don't think my above comment is biased.
@WallyWorld I also want to get this done. I appear to be more "pro-Player" because look at it...
-the Owners locked the Players out.
-the Owners are greedy and won't show their financials to anyone.
-the Owners may or may not fudge/distort/hide their true earnings, and claim to lose tons of money when in actuality it does not appear that's entirely the case.
-the Owners are slimy and led by $tern, who is the ultimate snake.
-the Players just want the "status quo", while not a great system, is what both parties agreed upon.
I am not arguing that the past NBA CBA was great and the Players have no blame. I realize things need to change. I'm just looking at how slimy and ridiculous everything the Owners have done is. They are just trying to absolutely SCREW and DESTROY the Players Association. That's pathetic to me.
Show us your books and your TRUE loss/gain from the past. And then figure out Revenue Sharing. Those two things happen and I guarantee you the lockout will end very very soon.
@CollegeWolf Fair point! And, well, yes.
However I think you are the main one who always thinks I am pro-owner when I am actually pro-get this shit done. I will never understand why you seem to have so much attachment to the player's side when, in reality, their refusal to move off of ANY of the system issues (the stuff that destroys franchises and what fans should actually care about) is half of this battle and an equal or greater sticking point in this negotiation than BRI. I hate to attack you POV, but it baffles me why or how you don't see it that way, and that the true goal can and should be: get a deal done and don't worry about sides.
Look, the point is we, as in fans, get into this mindset that our loyalty or opinion matters throughout this. It doesn't. Players don't give a shit about us, and neither do the owners. Loyalty-to-a-side being factored out, neither side has made an offer that is remotely agreeable to the other and each side has valid reasons for feeling that way. That's just the way it is.
Step 1 in this is to simply make a proposal that isn't a joke and might actually be ratified by both sides in a vote. You can say it's the owners lowballing and using their time as a negotiating tactic, but the players have also not made a proposal that is reasonable themselves....and every fan in america thinks the NBA system is a joke
@WallyWorld The Owners are not negotiating in good faith. So by your logic, if the Players said "we demand 80% of All Total Revenue!" and then came down to their 54% offer now, then they would have "made far more concessions"?
@JonSchweppe If teams could just be responsible for their own bottom line they could have rubber stamped a small change to the current BRI split and gone on about their business.
@Pants80 I should've used the word "theoretical" instead of "ideal."I believe in salary caps, not so much wage caps. With higher salaries, wouldn't we see more one-star teams (as their wages approached $30, $40million) and therefore more parity? Teams like Miami would probably cease to exist (unless their stars took SUBSTANTIALLY less money, where in this situation they took a little less money) and teams like Minnesota would still be able to keep their stars by paying more for them.
I think, at the end of the day, a team should be responsible for itself. If a team as a business model fails, then contraction should be an option as the league looks for other locations where new potential teams will succeed.