There’s an eerie consistency to management rhetoric during labor standoffs, one in which the boss insists that without a drastic reduction in employee pay, the business or government entity in question is destined for insolvency. The NBA’s current player lockout, a result of the expiration of the collective bargaining agreement on June 30, is no different. The owners are citing a $300 million loss, with twenty-two out of the thirty teams said to be in the red. In a sluggish economy, they say, the only way to fix this is by cutting payroll through a hard salary cap, with a $45 million player payroll per team.
Included in that consistency are questions about the owners’ cries of poverty. The union has argued that as much as $250 million of those losses are from depreciation and amortization when a team is sold, and that owners can shift revenues among their teams and the other businesses they control that take in basketball-related dollars. An investigation by Forbes showed that while ticket revenue was down 6 percent from five years ago, media revenue has grown significantly, in part because the league is bound by long-term contracts. Nate Silver of the New York Times amplified this argument, pointing out that publicly available estimates, via Forbes and other sources, show the NBA has been moderately profitable in recent years—and the profits that big-market teams typically earn are more than enough to compensate for the losses of their small-market brethren.
The league claims these figures are inaccurate and says it uses Generally Accepted Accounting Principles, but this hasn’t extinguished doubt. Larry Coon, an oft-cited expert on NBA labor relations who runs NBA Salary Cap FAQ, said, “Just because something is legitimate from an accounting perspective doesn’t mean it’s a good argument in terms of dealing with the players.”
Despite the fact that many fans dismiss sports labor conflicts as squabbles between billionaires and millionaires, the current struggle between the National Basketball Players Association and the owners has much in common with classic labor disputes, including a misrepresentation of owners’ losses and so-called worker excess. The union, meanwhile, claims that at no point during this round of bargaining has it asked for anything more than a firewall against givebacks, and argues that the owners are using a weak economy to further erode the NBPA’s power.
The players now receive 57 percent of “basketball related income,” or BRI, which includes proceeds from ticket sales, TV deals, etc. In addition to reducing this percentage, the league wants to end exceptions to the salary cap. Currently, a free agent can receive a salary increase of up to 10.5 percent if he retains his so-called “Larry Bird” rights (more on this later) and 8 percent if he is re-signed to another team. The league wants to cut this to 3 and 2 percent, respectively, according to the union. “The owners are looking for pretty draconian changes,” Coon said.
From the get-go, even though the union has questioned the size of the losses, it has made serious concessions, including an offer to lower the percentage of BRI set aside for players. Initially the owners wouldn’t agree on a number higher than 39 percent and insisted on other cuts as well. In June, owners proposed a 50-50 split, contingent on redefining BRI. Union officials claimed players would lose between $900 million and $1 billion under this new definition, according to the New York Times, an excessive sum when the league is claiming a $300 million loss.
“They really weren’t serious about trying to reach an agreement. This wasn’t sufficient justification for what they were asking,” NBPA executive director Billy Hunter said in a phone interview. “It was just posturing to get us to capitulate.”
In addition, the union believes that if high-profit teams like the New York Knicks, Los Angeles Lakers and Chicago Bulls share their revenue with the league, the NBA can save the handful of teams the union believes are in actual economic despair. “It’s the nature of the beast,” Hunter said, noting that it is for the good of the league for the rich teams to help out the ones in need. “The LA Lakers have to play somebody. If they don’t have any other teams in the league, then what good are they?”
Only recently has the NBA buckled, after a decade of union concessions. The NBA labor deal of 1999, which was re-signed in 2005, already gave owners more controls on salaries than exist in the other major sports leagues. (The increase cap for free agents is higher in the National Football League and nonexistent in Major League Baseball.) Moreover, the union counters that the BRI percentage guarantee for players isn’t as generous as the owners insist. BRI is measured with eighteen types of revenue, and in thirteen of those categories, according to the union, operational expenses are deducted from the final sum, even though in some cases the expenses are for contract work done by a business that is also held by the team’s owner. There are other imbalances, the union believes, like the fact that players only take in 40 percent of the revenue of luxury boxes, a major growth area.
It’s tough for the NBPA to get its message across to the general public, in part because labor negotiations are complicated but also because the players have often damaged their own image. During the lockout before the 1998–99 season, Knicks star and NBPA president at the time Patrick Ewing famously said, “Sure, we make a lot of money, but we spend a lot, too.” The tone-deaf image has stuck in fans’ minds and hardened the stereotype of players as spoiled brats who equate their bling and Bentleys with other people’s food on the table.
However difficult emotionally it might be for a middle-class wage earner to sympathize with an NBA star, what is often lost in the discussion is that top players like Kobe Bryant and LeBron James, who command high salaries along with big endorsements, are atypical of the NBPA. You don’t see most players in commercials, and while they might earn more than the blue-collar worker watching the finals in a bar, they don’t accumulate ruling-class wealth. The average basketball career, according to the union, is four and half years. Dallas Mavericks guard Jason Kidd is one of the oldest men at the factory, at 38.
If there is a settlement before the start of the season—the last lockout forced the cancellation of thirty-two games—it is not going to be between the owners and people like James and Bryant, but between the league and a large bloc of journeymen who actually do have to think about their livelihoods. It is for that reason that solidarity may falter as the season approaches; the longer the paychecks don’t arrive, the more likely that bloc will settle for whatever contract it can get. “It’s one player, one vote,” Coon explained. “A lot of players are going to be in the league for two years at minimum salary. These guys are numerous, and they have the votes.” He noted that the NBPA, under the presidency of Derek Fisher of the Lakers, has come a long way since Ewing’s flubs a decade ago. Fisher early on saw a conflict coming, and he urged players to show restraint in their spending and prepare for a possible work stoppage.
“Fisher has a much better handle on it. He knows that when there’s a downturn, they are going to bear some of the brunt of that, but they’ve done a lot to corral the players,” Coon said. “They were a lot more naïve in ‘99 and now they are a lot more savvy.” Hunter said player solidarity has strengthened as the owners’ stance has hardened: “I think we’re much better prepared.”
NBA commissioner David Stern told reporters in May that both sides were eager to come to a deal because a lockout would be “destructive for our business, from the owners’ perspective and the players’ perspective.” But Coon observed that the “owners would rather sacrifice an entire season than continue to play under an economic system they think is broken.”
Shorter contracts mean less economic security for players, as does a hard salary cap. Robert Boland, associate professor of sports management at NYU, points out that it is also a bad idea for certain owners, especially if a final deal scraps the aforementioned Larry Bird exception, which allows a team to go over the cap if it re-signs a player who has become a free agent. Suppose you’re one of the league’s stars—say, LeBron James—and your team is based in Cleveland, a town so undesirable that an infamous YouTube video proclaims one of its most redeeming features is that it’s “not Detroit.” You enter free agency, and Cleveland can’t go above the cap to re-sign you. Now, what motivation do you have to stay in a gloomy, cold Rust Belt city rather than play for a powerhouse team in a place where you can hang out on the beach in December, like the Miami Heat? “Every collective bargaining agreement has unintended consequences that change the game periodically,” Boland said.
But there is a broader class struggle in this dispute, and it extends far beyond the basketball court. It won’t just be the players who will lose paychecks if there is no resolution. The owners will also be effectively locking out a vast labor force surrounding the game. This includes everyone from the highly paid sportscaster to the low-wage coliseum parking-lot attendant to the part-time concession stand worker, all of whom contribute in some way to BRI, and all of whom have rent and mortgages to pay. Michael McCann, director of the Sports Law Institute at the University of Vermont, points out that without a season people may be less likely to buy sports apparel, a blow to the retail sector. And what will happen to servers at sports bars who depend on big tips on game night? “They’re the most vulnerable victims, because they have no seat at the table,” he said.
Through that lens, the struggle is really not about billionaires versus millionaires but billionaires versus everyone else—including consumers, some of whom perhaps need to revisit a scene from the classic comedy Airplane! A young boy visits the cockpit of an airliner mid-flight and discovers the co-pilot is basketball legend Kareem Abdul-Jabbar, who denies his identity despite the boy’s adulation. But the star buckles when the kid says his father believes Abdul-Jabbar’s defensive game is lacking and that he only gives a hundred percent in the post-season. Insulted, Abdul-Jabbar grabs the boy’s collar and says, “I’m out there busting my buns every night. Tell your old man to drag Walton and Lanier up and down the court for forty-eight minutes.”
Basketball fans demand the best from players, and that makes sense. Fans are entitled to expect that if they are paying—whether through pricey tickets, premium TV or the tax dollars that finance stadiums—they should get the most bang for their buck. But basketball is work. And just as Abdul-Jabbar described, it is hard work the average person is incapable of doing. It requires constant practice, carries the specter of injury and can only be performed in an athlete’s youth. The same can be said of many other professions, such as firefighting. And while one might scoff that we don’t need basketball the way we need first responders, the reality is that any work stoppage in a major sports league has enormous and harmful economic consequences.
The reality here is that the owners are using a recessionary market to justify economic restructuring that would put more money in their pockets, taking it from the highly skilled laborers who make the product so singularly mesmerizing. There is an impulse in the United States to say to skilled workers that they can afford to take some cuts. But that impulse typically stops at CEOs and owners. Maybe this high-profile labor struggle is an opportunity to confront that logical inconsistency.