Two economists explain the NBA lockout

by on November 1, 2011 at 2:44 am in Uncategorized | Permalink

Those two economists are Tyler Cowen and the excellent Kevin Grier, we were very happy to produce this piece for Bill Simmons (one of my favorite writers), at www.grantland.com, excerpt:

How far apart are the two sides?
The split on BRI (Basketball Related Income) is supposedly the biggest point of contention. Players want 52.5 percent (down from 57 in the previous contract). Owners are “adamant” on 50 percent and started with an initial lowball offer of 37.

Take the NBA’s 2009-10 BRI estimate of $3.6 billion; 2.5 percent of that is $90 million. Let’s say the life of the contract is 6 years. The total value of that over six years, with reinvestment, is around $500 million.

Is it economically worthwhile for the players to hold out for $500 million?
No. Total NBA salaries last year were over $1.5 billion, about three times the amount they are fighting over. Canceling a third of the current season would wipe out the gain of winning the extra 2.5 percent of BRI over the life of the new collective bargaining agreement. Canceling the whole season over 2.5 percent of BRI is insane for the players.

Addendum: Here is the paragraph which did not make the final cut.

1 newsouthzach November 1, 2011 at 3:13 am

Canceling the whole season over 2.5 percent of BRI is insane for the players.

Isn’t it equally insane for management? Both sides stand to lose gigantic piles of money here…

2 JWatts November 1, 2011 at 11:13 am

Some NBA teams lose money. So no it’s not insane for management who are running at a loss, to not run at a loss for a period of time. Granted, they’ll probably incur some losses anyway, but the additional costs are probably trivial.

3 Robert November 1, 2011 at 3:14 am

“Is it economically worthwhile for the players to hold out for $500 million? No., etc…”

Doesn’t the calculation depend on how likely it is that the other side will cave?

4 prior_approval November 1, 2011 at 3:25 am

This is fun –
‘Players want 52.5 percent (down from 57 in the previous contract). Owners are “adamant” on 50 percent and started with an initial lowball offer of 37.’
combined with this –
‘Canceling the whole season over 2.5 percent of BRI is insane for the players.’

By my admittedly non-GMU econ dept persective, the players are already giving up 4.5%, for which in return, they are expected to give up an additional 2.5%. Of course, it isn’t as if those owners would ever dream of asking the player give up another measly 2.5% (or 7%, using my non-GMU econ dept math) next time, since clearly, there is no economic reason for the players to not keep having their pay cut.

Best satire site on the web.

5 Andrew' November 1, 2011 at 6:45 am

It would still be insane for the players. But slightly less so. The players could also demand 100% by your same logic.

6 prior_approval November 1, 2011 at 6:57 am

Of course they can – or at least 63%, while demanding 37% from the owners. Oh wait – it was the owners that wanted 63%, not the players. In other words, the owners’ first offer was for the players to give up a full 20% of NBA revenue in exchange for – well, in exchange for the owners keeping that now available 20%. And graciously allowing the players to make that revenue for the benefit of the owners while the players earned less (and earned is specifically meant – the owners aren’t running around on the field actually playing the game that people pay to watch, after all).

The proposal for the players to give up 20% of revenue was the owners’ explicitly stated opening position. I imagine that it was just the bigness of the hearts that motivated them to demand only 7% of the revenue from the players that actually generate it. And then shut down the league because the players were so greedy as to only be willing to give the owners a small 4.5%.

Poor, poor owners – they still can’t find anyone to play for free, it seems. Though maybe a NBA Work$ program could be developed, to keep the players’ skills sharp, in the best interest of the players, of course, you know, to tide them over until the job market improves.

7 Andrew' November 1, 2011 at 9:09 am

And why don’t they? Because it would doom the season. That would be crazy for people with no other skills than playing basketball.

8 prior_approval November 1, 2011 at 11:14 am

‘And why don’t they? Because it would doom the season.’
Apparently, the season is doomed because the owners feel that basketball players are dispensable – after all, what do basketball players do but play basketball?

Strangely, that is also exactly the source of the players’ current power – without them, the NBA is not a money making operation. We’ll see how that works out – 2 weeks and counting. But who really has the larger debts – the players or the owners?

9 D November 1, 2011 at 1:17 pm

There are alternatives. Several players have already committed to play in China. I for one welcome our new basketball overlords.

10 Maurice de Sully November 1, 2011 at 1:01 pm

the players are already giving up…

This is the sentiment that is going to doom the players. The players aren’t “giving up” anything. While I appreciate the conservative instinct, a particular chunk of NBA revenue isn’t the player’s birthright. They are entitled to the share of revenue that their union negotiates with the NBA. Period.

More generally, a deal isn’t bad because you don’t like it and would prefer a better one- that’s the case in virtually every deal- a deal is bad if you can actually get a better one. In this case, unless you think the owners are going to cave, the 50/50 deal is the best option the players have. Another league isn’t starting (if it did it would only help a small piece of the union- like the “Europe option”) the NLRB Hell Mary isn’t going to be completed- the deal on the table is as good as it is going to get unless the owners make a decision it is unrealistic to assume they are going to make. Anything better than the current deal is going to require the union to hold together until this time next year. And that’s not going to happen. If the union doesn’t take the 50/50 deal before Christmas (at the absolute latest) the union is going to collapse and that 50/50 deal is going to seem like a fantasy compared to what they ultimately end up with.

I get that you want to strike a blow against those evil owners- and I enjoy that you’re going to try to do it with some other guy’s wallet- but it’s not likely to work. Deserve has nothing to do with it, nor does the acumen of NBA ownership. The reality is that the players have nowhere else to go. And the longer they wait, the worse it is likely to get.

11 D November 1, 2011 at 1:20 pm

“The reality is that the players have nowhere else to go”

Except China.

12 Maurice de Sully November 1, 2011 at 4:49 pm

If there were 360 basketball playing jobs in China, the players would have some leverage in that respect.

There isn’t, so they don’t.

13 Chris November 1, 2011 at 1:36 pm

The problem with the union is they work for the guys in the middle. The min players don’t think they are going to get killed without a union (who knows) and the max players are obvious losers (unless the CBA allows for competitive balance that helps the league as a whole and the tide lifts all the boats). The thing is, it is the dudes in the middle who are the most overpaid. You have a rookie scale and you have superstar maxes and you’ve got all this money left over that has to go somewhere.The only guys in the NBA who have room to negotiate a contract are on average not that good.

14 prior_approval November 1, 2011 at 3:31 am

Or maybe we could just introduce an internship program for NBA players, where they play for free, to keep their skiills up until the job market improves. After all, Georgia Work$ has already been highlighted here as a link to such an idea, where workers work for nothing while keeping their skills current, and just incidentally happen to make an unpaid contribution to the bottom line of the company that can’t afford to do anything but profit from their labor.

I’m sure the owners would approve of the idea.

15 Andrew' November 1, 2011 at 6:46 am

We have that, it’s called parents, rec ball, high school, and college. People already frickin’ hate basketball, they will fare worse than baseball did, or not because people already frickin’ hate basketball.

16 Chris November 1, 2011 at 4:30 am

I don’t understand why the players don’t decertify. It is their only leverage.

17 Andrew' November 1, 2011 at 9:11 am

They should organize a national tour. Make it like Harlem Globetrotters meets And1 meets American Idol. Don’t pull the trigger unless they are locked out.

18 Andrew' November 1, 2011 at 9:20 am

What players should focus on is something non-obvious, like taking over the D league, perhaps in a fashion like I suggest above.

19 D November 1, 2011 at 1:21 pm
20 Rahul November 1, 2011 at 4:43 am

Why the assymetric argument? If its insane for the players to hold out can it be any more logical for the other side?

21 Eric November 1, 2011 at 4:47 am

RFTA

Why do owners have leverage?
They have deeper pockets and alternative sources of income.

Admittedly this whole thing is short on details, but it’s there.

22 JWatts November 1, 2011 at 11:11 am

Some of the teams actually ‘lose’ money on the current agreement. So it doesn’t hurt the owners to not play the season. Owning a basketball team is a prestige issue and many owners will agree to a loss to be the ‘owner’.

So no, the argument isn’t asymmetric. Though it’s possible that it is ‘ass’ymetric. 😉

23 Tomasz Wegrzanowski November 1, 2011 at 4:52 am

Situation is perfectly symmetrical here, so the same argument works both ways identically, but economists seem to be trained to always turn every argument into an argument for whoever is wealthier in the conflict.

24 Andrew' November 1, 2011 at 9:12 am

It is not remotely symmetrical. There are thousands of basketball players available to do what most NBA players do.

25 MD November 1, 2011 at 12:30 pm

Wrong.

26 Andrew' November 1, 2011 at 1:26 pm

No, you’re wrong!

27 MD November 1, 2011 at 3:33 pm

It’s just not true that there are thousands of NBA-level players available. There’s a reason there’s significant dropoff in talent from top to bottom of a roster – there aren’t any more all-star players. Maybe by “most NBA players” you meant the bench players, but that’s not at all what people pay to see.

28 D November 1, 2011 at 1:22 pm

Create sellouts when Lebron comes to town?

29 Tom November 2, 2011 at 12:49 pm

I think that effect is long gone.

30 Chris November 1, 2011 at 1:50 pm

But the owners want the best players. There is no such thing as good enough. This is why left to their own devices they overpay for players. The owners want protection from themselves. Try and float a no max no min salary structure and see how that flies 😉

31 L2P November 1, 2011 at 6:53 pm

Thousands?

That’s literally true, in that there are probably roughly a thousand players, worldwide, capable of playing in the NBA. However, ~400 of them ARE ON AN NBA ROSTER. Another ~200 or so are NBA journeymen that are on and off the rosters every year, retired in the past couple years, or play internationally because although they are very, very good they couldn’t cut it. The other ~400 play internationally and have no interest in playing in the NBA a bench players instead of stars in Italy or Russia or wherever.

I don’t know why you think there’s this massive pool of players available to the NBA. You should watch some summer league. Even the worst NBA player can absolutely demolish even the best non-pros. You’re flat out wrong here.

32 Chris November 1, 2011 at 5:22 am

The NBA is a cartel who’s business practices almost certainly violate antitrust laws but for the statutory labor exception to those laws. No one wants to know what a sports league can actually get away with absent such exemption and the players, if suitably motivated, could force an answer to the question. That is their leverage. There are also non-financial factors at play like owners who really enjoy having their teams play. A sports team is part business and part luxury good.

33 joshua November 1, 2011 at 6:09 am

Considering the statistics on how many NBA players become bankrupt, the level of economic understanding should not be too surprising.

34 Ken Rhodes November 1, 2011 at 6:31 am

I’m not sure about basketball, but over the four major league sports, I would guess the percentage of team owners who become bankrupt is comparable to the percentage of players.

35 Cliff November 1, 2011 at 8:49 am

Highly unlikely. In basketball the 5-year bankruptcy rate is about 75% (for the players of course).

36 Andrew' November 1, 2011 at 10:58 am

Owners got to own teams by being relatively good at money. Players got invited to the party mostly because they grew taller than average.

37 bunker brown November 1, 2011 at 6:49 pm

Citation please

38 B-Line November 2, 2011 at 11:28 am

It’s more like 60%, but still rediculously high. It isn’t hard to see why when you consider the extravagant life many NBA players live.

I think this quote from the 2nd article summs it up quite nicely.

“I’ve seen (an NBA player) having two cars a day to drive. You know, 14 cars,” said Raptors sharpshooter Jason Kapono the other day. “Think about how absurd it is. You say 14 cars. All right, you may have some kids, a family of nine. But a single guy having 14 cars?”

http://www.clearbankruptcy.com/blog/bankruptcy-and-sports/

http://www.thestar.com/sports/article/299119

39 Mike November 1, 2011 at 8:06 am

Hi Tyler,

Any plans on becoming a regular contributor over at Grantlandia?

Thanks.

I would suggest those asking questions about the article read the full thing before responding to the excerpts above. I believe that it mostly addresses what you are asking even if you aren’t a GMU economist…

40 Zach November 1, 2011 at 8:39 am

Do anti-trust laws prevent players from starting a new league in the absence of reasonable terms? A credible threat there would give them ample leverage to demand at least the same BRI share as before; teams have increased in sale value at a rate that dwarfs most other investments since the last CBA was sorted out. A new league would lose a *ton* of value by losing NBA franchises and sweetheart deals with cities subsidizing arenas, but players could potentially get 70+% of BRI as well as possible collective ownership. I think it’s reasonable to think that interest in NewNBA would approach that of the NBA in a few years if it were well managed.

My guess is that if Fisher said, “OK here’s the deal: no salary caps or max salaries; a minimum salary that’s 50% higher than last year; same trade deadlines; changes to the salary structure require a majority vote of the players. If we can find 24 billionaires who want to start teams, let’s go,” it might make some waves in a way that’d help the players. Is it legal, though?

41 I R A Darth Aggie November 2, 2011 at 11:27 am

They should try starting their own league. There is a reason why the ABA, AFL (non-Arena), Western Hockey League no long exist as independent entities. Some times, one has to repeat the mistakes of the past. And I think they might gain a better appreciation of what the owners bring to the table.

Their unis, they probably can get those for cheap/free. Nike/Addidas/Reebok/etc will make boatloads of money selling replica jerseys. Home, away, alternate, breast cancer awareness, etc.

Getting a location for 45 or 50 games (for instance)? that’s going to be harder. Selling tickets? same deal, except they’ll be dealing with the likes of Ticketmaster who is extremely experienced at not leaving any money on the table.

How many teams? and how will they divvy up the talent? would anyone seriously watch if the best of the Lakers, the Heat and the Celtics are on one team?

And what about all the support staff, from the GM down to the towel boy? refs? most of these are under contract to the NBA and would likely to be not available. Not to mention staffing your league offices and officals. For some of these jobs, yes, you can hire a random Joe off the street.

But the others? for a one year stint? you’re not going to get quality.

And who’s going to foot the travel bills?

Nah, starting a new league isn’t about to happen. It’s an awful lot like work.

42 Cliff November 1, 2011 at 8:51 am

Honestly, this article is complete crap and deals with a subject you basically know nothing about (negotiation). A bunch of conclusory statements, it could have been written by anyone. Are you really “a fan of basketball”? How often do you watch basketball games?

43 Andrew' November 1, 2011 at 9:33 am

http://volokh.com/posts/1179272340.shtml

Shocking as it is to me — and to several lawyers that I talked to — but “conclusory,” which I’d long assumed was a standard English term with the definition I just gave, is actually legalese. We lawyers are just so steeped in legalese that there’s some legalese we no longer recognize as anything but normal.

44 Chris November 1, 2011 at 12:29 pm

I pretty much agree. The article just restates what everyone already knows. It boils everything down to BRI split and talks nothing about strategy, how long the CBA should be, median and average salaries, revenue sharing between teams and my personal nitpick: why didn’t the players decertify. You can’t negotiate and win if you take your biggest weapon off the table. I’m sure there must be a reason that I’m not aware of but no one is talking. The NFLPA decertified and they are playing football.

45 fan November 1, 2011 at 9:10 am

The reason the owners can hold out longer than the players is that the revenue/profits for the two sides are asymmetrical. Owners’ revenues are back-end weighted toward the second half of the season and playoffs, while the salaries are paid on a per (regular season) basis. So if the season is 40 games, player salaries are halved, but owners’ revenue drops by, say, 30%.

46 Alex November 1, 2011 at 9:36 am

While I think other commenters above are correct in the making the point that the two sides are asymmetrical, I don’t think that anyone has correctly explained the most important reason they are asymmetrical. The most important reason is the sides’ relative COSTS. It is correct that both sides are losing revenue. But while the players are avoiding a few of their costs, the owners are avoiding much more of their costs.

Both sides agree that the owners are, in the aggregate, losing money each season (although the amount they are losing is in dispute). In other words, the owners’ costs exceed their revenue. While in the lockout, the owners are forgoing most of their revenue, they are also avoiding most of their costs – they don’t have to pay player expenses, many team expenses (i.e., travel), arena expenses (operations and rent), promotional expenses, and other general and administrative expenses. In other words, their costs are much, much lower. In fact, the owners may be losing LESS money by not playing than by playing under the old system. On the other hand, a few player expenses go away (taxes, agent commissions), but most of their remaining expenses stay the same — their mortgages and car payments don’t decrease during the lockout, for example.

47 jimi November 1, 2011 at 9:52 am

>their mortgages and car payments don’t decrease. ==> their child support payments and weed consumption don’t decrease.

FTFY

48 JWatts November 1, 2011 at 11:16 am

Yes, but they do substitute low cost weed for high cost coke, so there is some savings on the table ;). And there might also be a drastic curtailment in the freebies to the player’s posse.

49 Zach November 1, 2011 at 10:19 am

“Both sides agree that the owners are, in the aggregate, losing money each season (although the amount they are losing is in dispute).”

I don’t think the players agree with this at all. Independent estimates give a league-wide profit in line with those of other sports. Sports leagues always claim league-wide losses or suddenly become dreadfully concerned about parity during CBA negotiations, yet the sales price of failing teams like the Wizards and Nets proves there’s still plenty of billionaires around who are willing to buy a team. Larry Ellison offered $350M for the Hornets, who actually are losing money and are worth less than an offer by the NBA to start a franchise from scratch because they’re contractually stuck in NOLA for a few years. The NBA took tens of millions of dollars in losses to kill the deal just because it’d hurt CBA negotiations.

50 Alex November 1, 2011 at 11:22 am

“I don’t think the players agree with this at all.”

Yes, they agree that the league has had operational losses at 57% BRI. That’s why they offered to decrease the percentage. They disagree as to the magnitude of the losses as well as the potential for capital appreciation.

51 Zach November 1, 2011 at 12:01 pm

“There has been ongoing debate and disagreement regarding the numbers, and we do not agree that the stated loss figures reflect an accurate portrayal of the financial health of the league,” Hunter said in a statement released during the All-Star break.

They offered to decrease the players’ take because of the logic outlined in Cowen’s article; not out of some concern for league-wide profits. If the NBA opts to finance a $300M purchase of a failing team, I doubt there’s much concern about the league shedding teams.

52 Glenn Schafer November 1, 2011 at 9:45 am

The big difference is that a franchise is forever and a players career is limited to 10 years or so. Lets say you are a veteran player in the last part of the most lucrative contract in your carrear with no chance of ever signing another one for so much money –then the strike is pure stupid. You have no chance of making the money up. Think Kevin Garnet. Remember current contracts are honored and only future contracts are affected. Losing half a season costs Garnet over $10 million. I would be all over the NBA Union.

53 Henry November 1, 2011 at 10:09 am

Yeah that is why is so important to have union solidarity, because among the player some get more affected than others, Garnet is loosing out in the lockout, new players and future players loose big if the union caves. This is why the agents role has been so prominent, players come and go in a few years, they stay in the business for decades and will be affected if new players get lower pay.

54 MD November 1, 2011 at 12:35 pm

Garnett’s massive contract partially caused the 98-99 lockout, so he got the benefit on the front end. He can lose a few million now.

55 Chris November 1, 2011 at 12:44 pm

This is why median and average salary figures are important to know. If 100 players in the union stand to benefit from a free agency free for all and 300 are making near minimum you have the scrubs holding a gun to the heads of the stars. NBA roster sizes are pretty small and the median salary is around 3 million a year so a good portion of the player base is going to feel at least a little bit rich. Compare that to the NFL where the median is under a million and roster sizes are large. You’d think this would make the NFL union a lot more working class and willing to bust up with the owners but I think you get a paradoxical effect when salaries get higher. The players stand to lose more but they also have more self esteem and are more willing to go toe to toe with the owners.

56 D November 1, 2011 at 1:25 pm

When you hit a certain level of wealth, the incremental value of $1 million decreases, while the value of respect from your fellow players increases. Not saying that’s the case here, but money is not the only motivator.

57 Zach November 1, 2011 at 9:53 am

“Is it economically worthwhile for the players to hold out for $500 million? No. Total NBA salaries last year were over $1.5 billion, about three times the amount they are fighting over. Canceling a third of the current season would wipe out the gain of winning the extra 2.5 percent of BRI over the life of the new collective bargaining agreement. Canceling the whole season over 2.5 percent of BRI is insane for the players.”

This isn’t good math or logic. First, the summed BRI over a 6-year CBA is going to be about $25.3 billion. That’s with a very conservative assumption of a linear increase in BRI fit to the past 6 years in which income growth’s been depressed by the recession. This is a big difference from the back-of-the-envelope estimate of 3.6*6 = $21.6B. The player’s share for this year under the existing CBA would be $2.2B. $2.1B at their 52.5% offer. This is still larger than the $630M they’d lose by dropping to 50% (even more so if you get into the real value), but keep in mind that not all owners are on board at 50%. It also sets a starting point for negotiating subsequent CBAs.

Second, the players also accrue benefits by not playing in addition to losing salary. A year of not having to run around the country and abuse your body is worth quite a bit on its own and will extend careers. Some players will use the time to earn money playing elsewhere or doing other things (on the other hand, players will lose non-NBA endorsement income).

Third, if a third of the regular season were canceled and the 57% BRI limit was in effect, the players will not lose a third of their 2011/2012 salaries. Broadcast revenue is heavily weighted towards the playoffs, etc. I’d guess that the season could be at least halved with no negative impact on the income of players who will play throughout the next CBA. If I were in the union, I’d advocate for a salary scale that grows with the sale price of franchises (using some formula that takes all major professional leagues into account) rather than a fixed percentage of BRI. That’s if I were forced to argue for a salary cap at all; I think the NBA could support a pretty similar number of players without a salary cap and minimal revenue sharing at a higher aggregate salary. At the moment, roster sizes are artificially small to get under the cap; there aren’t enough capable players available the rookie/veteran minimum salaries that teams over the cap are limited to.

Lastly, as others have noted, the logic applies equally well to management, and the municipalities that subsidize NBA franchises have leverage over management and a strong financial interest in maintaining the current structure of the league.

58 Alex November 1, 2011 at 11:27 am

“Second, the players also accrue benefits by not playing in addition to losing salary. A year of not having to run around the country and abuse your body is worth quite a bit on its own and will extend careers.”

However, some of the players will not have a job at all after a year, given that there is a fixed number of roster positions and every year younger players are coming out of college competing for those spots. An older player may have a year less wear-and-tear on his legs but his spot may be taken by the latest freshman phenom coming out of Kentucky.

“Third, if a third of the regular season were canceled and the 57% BRI limit was in effect, the players will not lose a third of their 2011/2012 salaries.”

Players are paid bi-weekly during the regular season — essentially by the game. A loss of 33% of the games means a direct 33% loss in salaries.

59 Zach November 1, 2011 at 12:14 pm

“Players are paid bi-weekly during the regular season — essentially by the game. A loss of 33% of the games means a direct 33% loss in salaries.”

If the season were to start a la MLB’s 1995 season (abbreviated and without a new CBA), there’d be some ad hoc solution. Presumably it’d be along the lines of the current agreement with players receiving some part of their salary and the rest held in escrow with the amount refunded to players or management as determined by the BRI that season, right?

60 Andrew' November 1, 2011 at 10:40 am

Rex Chapman was the crap, man!

61 Slothtosser November 1, 2011 at 11:10 am

Manute Bol!

62 Maurice de Sully November 1, 2011 at 12:28 pm

Unlike in Silicon Valley, there are no NBA “start-ups.”

I’m not getting this argument. The NBA is a private, trademarked entity with officially sanctioned franchises- that’s why no one is starting “NBA teams” without the NBA’s permission. That doesn’t make the NBA a monopoly. Other people are free to put on professional basketball games. In fact it’s happening with non-NBA related entities as we speak. This argument reads to me like someone saying McDonalds has a monopoly on burger sales becasue no one can just open a McDonalds.

Am I missing something here? I’m not really even arguing that the NBA isn’t a monopoly- it may well be, I don’t follow the business side that closely- but that example seems off IMO.

63 Chris November 1, 2011 at 2:43 pm

Given the ruling in American Needle that said NFL teams are individual entities (and NBA teams aren’t that different), things like the draft and salary caps would probably be per se violations of the Sherman Act (and even if not would most likely fail a rule of reason analysis). No one wants to find out and the cartel nature of American Sports leagues has been very successful for owners and players alike.

64 L2P November 1, 2011 at 6:45 pm

The NBA is by definition a monopoly, at least in economic terms. What’s it’s competition? You’re talking about theoretical competitors. When those theoretical competitors are created, the NBA won’t be a monopoly anymore.

You should keep in mind that the second the NBA union decertifies, the NBA will be violating antitrust laws.

65 Maurice de Sully November 1, 2011 at 8:26 pm

There are upwards of a dozen basketball leagues currently operating in the US with no relationship to the NBA. The fact that they don’t generate as much money as the NBA (to put it mildly) does not mean that they do not exist.

As to your legal analysis, can you explain why the union has not taken that path to this point?

66 Chris November 2, 2011 at 12:55 pm

Good question. I keep asking it and no one has any answers. I think it was a huge strategic mistake on the unions part. Decertification always seemed to suit the NBA best of all leagues. Median salary is high. That said, the NBAPA has done pretty well with collective bargaining. Compare that to the NFL where the only real success of the NFLPA required appeals to antitrust law.

67 Chris November 2, 2011 at 12:56 pm

Also, you don’t have to be a monopoly to violate the Sherman Act. Price fixing is a no no for everyone.

68 Chris November 1, 2011 at 12:51 pm

Given the ruling in American Needle that said NFL teams are individual entities (and NBA teams aren’t that different), things like the draft and salary caps would probably be per se violations of the Sherman Act (and even if not would most likely fail a rule of reason analysis). No one wants to find out and the cartel nature of American Sports leagues has been very successful for owners and players alike.

69 RTD November 1, 2011 at 6:39 pm

“They’ve poured a lot of money into those teams and they aren’t comfortable with seeing red on their balance sheets year after year.” Red on their balance sheets? Shouldn’t it read: red on their income statements?

70 ras November 2, 2011 at 11:12 am

The players are inexperienced and so will do what their agents tell them to do. And an agent’s incentive is different from a player’s; longer career, for example.

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