The NBA's Nuclear Winter

I love labor disputes in professional sports. They are the best, most sublime form of entertainment available to the sports/legal geek hybrid.

Labor disputes in real industries where real people lose real money to feed their real families and pay their real bills aren’t any fun. They’re serious stuff with serious consequences. But labor disputes in professional sports? They’re silly stuff with silly consequences, except for the tangential businesses that rely on them.

The NBA owners and players are currently locked into the most ridiculous labor battle since the NHL players lost an entire season to their own admixture of hubris and stupidity. Unable to learn anything from the past, NBA players are in the midst of making the same mistakes as their other professional league predecessors.

What’s really driving the NBA and their players to their nuclear winter (a brilliantly timed turn of the phrase by Commissioner David Stern) isn’t merely hubris and stupidity, though each is playing its part. This time the lambs are being led to slaughter by those who supposedly are being paid to have their backs, their agents.

The NBA players union is ostensibly led by Billy Hunter, a mostly ineffective middling labor executive. Hunter has been around awhile and his only discernable accomplishments to date has been to avoid any significant labor dispute through almost complete capitulation to whatever Stern has wanted.

In fairness, though, Stern hasn’t wanted much until now. Now he wants plenty.

The owners, whom Stern represents, have been mostly transparent in their goal since the economy first turned in 2008. They want to change the economic equation that had long since gotten out of whack. Players were taking too big of a piece of the pie, revenues were not keeping up, and just about every aspect of their salary cap and its multitude of exceptions had made their business virtually unmanageable, at least according to them.

As unprepared as only professional players can be, the NBA players, like NFL players, like NHL players, never really did develop any goal outside of holding on to as much as they could. Not understanding at all what success could look like at the bargaining table there really was no chance that they could strike a deal that they’d ever consider fair.

And that is the nub of the problem. By not developing any concrete goals or otherwise defining victory for themselves, they left themselves open to back channel manipulation and those pulling the strings now are the agents who were supposed to be representing their interests.

A little back story first. There’s a group of 5 or 6 of the biggest agents in the NBA who got together early in this process in order to try and manipulate the outcome. What drove them together was their lack of unity during negotiations for the last contract. That’s the one where the union agreed to a couple of key items that have mostly hurt their agents: a rookie salary scale and maximum contracts for veterans. In each case there isn’t much to negotiate for an agent representing either a rookie or a veteran and hence there isn’t much of a fee that can get generated.

The other thing these agents understand is that the league’s current economic structure is such a mess and the competitive balance so skewed that only a radical refiguring could straighten it out. Surmising correctly, the agents believed that this radical refiguring would in essence again further their ability to generate a fee.

So they’ve been working behind the scenes, convincing their gullible and uninformed clients that they were getting screwed by Hunter and the union and the owners. The rejection by the players of the owners’ last, best and final offer wasn’t a surprise in that context. It really didn’t matter what was in that proposal anyway. It was never going to be accepted.

What this group of agents has been gunning for mostly is to change the leverage proposition in these negotiations. The agents know that the Hunter-led union has never been a match at the bargaining table to Stern and his committee. Thus their goal has been to keep the union from striking a deal of any sort by offering litigation as a viable alternative to bargaining.

At first, they were the minority voice in the room. Hunter was able to keep the group together. Eventually he was not.

The problem with the agents’ thinking is the same as the problem with the NFL players’ thinking on this issue. There is no end game to this strategy. The only thing a court could eventually do, assuming that their legal strategy is sound, which it’s not, is to force the parties to continue to negotiate. No court anywhere can force the NBA to moderate their proposals to the union or put in place any new deal.

What the agents have sold their players on is the likelihood of a court declaring that the lockout amounts to illegal concerted activity on behalf of all the owners and putting in place the status quo, meaning the old contract, until a new one is negotiated.

Certainly if that strategy was sound, it would force the owners to be more moderate, meaning more opportunities for the agents to preserve their fees. But that’s a big “if.” As we learned during the NFL strike, federal labor law provides an exemption to an antitrust claim during a labor dispute. There can be no question that there is a labor dispute in this case.

For the strategy to work, individual players need to file the antitrust lawsuit (which they have, in two courts) and make the difficult claim that a labor dispute no longer exists because they are no longer, in fact, represented by a union.

It didn’t work for the NFL players and there’s no reason to think it’s going to work any better this time, either. David Boies, a superstar antitrust lawyer representing the players, seems to think that his clients have the upper hand this time because the owners have given the players their final offer.

It’s a nice theory but it isn’t likely to hold up. The owners are perfectly within their legal rights to bargain hard and to give a last, best and final offer and to lock out the players. The players are within their legal rights to not accept that offer just as they have the right to strike. At some point, if nothing changes the economic pressures on each will increase to the point that one or both are likely to moderate their positions and strike a new deal.

That’s the worse case scenario for the agents of course which is why they’ve been pushing the litigation strategy. If I had more respect for Hunter’s abilities as a union leader, I would say that he let the litigation hawks pursue this avenue to prove that it won’t work. More likely Hunter just gave up, like he has so many times before.

At this point there’s no reason to expect any NBA games this season. Depending on your level of interest in the game, it might make no difference to you. Heck, I just realized a few months ago that the NHL was no longer on strike.

But even if you’re the biggest NBA fan ever you still have to laugh at how ridiculous all this really is. The issues are, in large measure, idiotic. The inability of adults to figure out in an orderly, professional manner how to divide a discretionary pie this big is such a colossal failure that it ought to at least make you re-think exactly why you’re a fan in the first place.

I’ve rethought it and yet remain. Why? For the laughs. For the laughs.

Lingering Items--Laboring Edition

For those who hate the business side of professional sports, the news that the NBA owners are spoiling for a lockout as much as the NFL owners did probably isn’t all that welcome.

The NBA’s collective bargaining agreement expires at the end of this month and for now the players and the owners are getting nowhere fast. There are plenty of similarities between the NBA’s labor issues and those in the NFL, but central to it is the straw that always stirs the drink: money. Would you expect it to be about anything else?

According to a recent article about the negotiations from the Associated Press, the NBA owners are claiming losses for this season at $300 million and an anticipation of 22 of its 30 teams losing money. That’s pretty dramatic if true.

The players don’t necessarily agree with that assessment because they say that television ratings have increased along with ticket prices and merchandise sales. They don’t have any more access to the owners’ books than the NFL players and thus can only speculate on how much the league might be losing. As an aside, why isn’t anyone complaining that NBA owners won’t open their books?

In any event, like their brethren in the NFL, NBA players seem to understand that the economy has changed, at least for their fans, and are willing to make some compromises but it’s the scope of those compromises that are the sticking point. Again, would you expect it to be anything different?

The lynchpin to these negotiations is likewise similar to that in the NFL: the owners’ desire to get better cost certainty. In the NBA the chosen vehicle is the revision of their currently byzantine salary cap into a more straightforward version. But since it’s the NBA where exceptions dwarf nearly every rule, don’t be misled into thinking that it’s a hard cap the owners want in the same way that the NFL has a hard cap. That would be too radical of a change and, frankly, would make too much sense.

If you listen to the players, who claim they’re united just like any labor group claims unity among its troops, they’re willing to give some money back presumably in the hope of having a larger pie to divide down the road. The owners have scoffed, yes scoffed, at what they call the modest moves of the players to this point, but so much of that is just posturing anyway.

Still there is less than a week before the contract expires and while much can happen between now and then, in all likelihood not much will happen. This is the owners’ first real chance since the economy cratered to address their issues and they won’t let go of that opportunity lightly.

In other words, don’t be surprised when the NBA owners do lock out the players, possibly as early as July 1. Like the NFL’s lockout, it probably doesn’t mean much with the season months away but it means enough to label the situation serious, assuming you care whether there is another NBA season ever.

What’s far less certain is whether the NBA players will pursue a litigation strategy. It’s mostly been a failure for the NFL players in that it hasn’t given them the perceived leverage they thought they would have, but that doesn’t mean the NBA players are any brighter than their counterparts in the NFL.

The other thing to keep in mind is that if DeMaurice Smith is the worst head of a professional sports union then Billy Hunter, the executive director of the National Basketball Players Association, is a close second.

What makes Smith inept is his abject lack of experience. He’s a litigator by training and brought that mentality to the NFL players, hence the massive amount of litigation taking place that has bogged down negotiations. What makes Hunter inept is just a general lack of competence and gravitas.

But in fairness to Hunter, he probably understands that David Stern controls the NBA with an iron fist to the point that Hunter would never be willing or able to effectively challenge that authority anyway. Stern is more Kenesaw Mountain Landis and less Roger Goodell and as long as Stern’s in place the players are only going to get as far in these negotiations as he’ll let them.

Whatever union president Derek Fisher’s claims of unity among the players may be, they’ll never effectively challenge Stern’s control or break his will to shape the game as he sees fit.

You don’t have to be fully versed in tea leaf reading to conclude that unless the players knuckle under between now and June 30th, Stern will lock out the players. The only question is whether the players will be as pig-headed as their counterparts in the NHL and let a full season pass until they figure out that for however popular their sport might be in China, in the United States whatever fan uprising might occur will be drowned out by the otherwise massive fan indifference.

**

As for a sport the fans really do care about, football, the good news is that the owners and the players are finally negotiating in earnest. For the most part the posturing that inevitably arises at contract expiration time has given way to the realities that whatever else the courts could do for either of them, the one thing they can’t do is the one thing they need the most: a new labor contract.

The lack of real substantive news coming out of these negotiations is actually a very positive sign. The less the principals talk publicly the more likely it is that they are getting things done behind the scenes.

The average fan, even the average fan who’s in a labor union, probably doesn’t fully appreciate the complexity that is the NFL’s collective bargaining agreement. Much of that complication comes from the provisions dealing with the division of revenue, but the contract is also so much more than that.

The other thing the average fan may not realize is that although the re-slicing of the financial pie is a major issue, there is a laundry list of other items the parties are working their way through, including retiree health care, injury pay and the like. These take time as well.

But the real complication stems from the nuclear approach the union took to these negotiations. It’s not just about reaching a new labor contract. It’s also about resolving the pending lawsuits, particularly the underlying class action lawsuit that was filed.

Without going into the rather mundane details of class action law, the resolution of that lawsuit is subject to both the approval of the court and the prospective class members. Then there is the not so small matter of the union re-certifying as the collective bargaining representative for the players. Although the NFLPA is calling itself a trade union and its attempt at decertification has been disputed by the owners, ultimately this issue needs to get resolved and the union needs to re-form as part of what will surely be a global settlement. Without the re-certification, the negotiated collective bargaining agreement cannot technically be approved by the players.

In short, the parties could reach a deal on the new contract but the process of approving it and living by it could take months to work through. That doesn’t mean that the lockout would need to remain in effect until that happens. But rest assured that unless the owners have very good assurances that everything will get resolved they will be reluctant to open the doors.

It seems like a very good chance that a tentative agreement will be in place in the next few weeks. Whether that means football will ultimately start on time is hard to say. But if it forces a delay in the season, the NFL probably won’t complain anyway. With the way they run the league, nothing would please them more than to play up until the day that baseball’s spring training starts in mid February.

**
A few quick words about Travis Hafner and the Indians.

As frustrating as the Indians recent slump has been, what’s more frustrating is that their highest paid player literally cannot play a position other than designated hitter. For a team that has trouble generating offense, the fact that Hafner is irrelevant for the 9 games in National League cities is a cause for real concern.

Basically the Indians go into this stretch fielding a team with 7 legitimate bats, given that the pitcher will have to hit as well. Everyone saw how moribund the Indians’ offense looked when Hafner was on the DL. The likelihood now is that it will be worse for this stretch in large part because it’s as if Hafner is back on the DL.

It’s nice to see that Hafner has regained most of his batting eye after walking through the desert the last few years. But it’s not so nice that the Indians are paying the kind of money they are paying Hafner and have to endure similar stretches of their schedule when he simply can’t play.

Nine games may not seem like a lot given a 162 game schedule, but going 2-7 instead of 5-4 against the National League could very easily be the difference between making and not making the playoffs.

**

With all the frenzy surrounding the Cavaliers’ just completed draft, this week’s question to ponder arises: How many of those fans either praising or bitching about the Cavs’ picks can honestly say they’ve seen Kyrie Irving or Tristan Thompson play enough to have an informed opinion?