Why is NBA player-owner bargaining asymmetric?

Following up on the recent NBA lock-out post, some of you have asked why losses should be asymmetric across the two sides in the bargain.  Co-author Angus writes to me:

Re your commenters howling that the situation regarding losses is symmetric. It is NOT symmetric. (this is the part we didn’t do because of the basketweavers.)

First, the owners are losing net revenues, the players their gross revenues. Do we really think profits are >= labor costs?

Second and most important, owners are sacrificing SR net revenues for LR increases in franchise values from cost control. Players have no LR gains to motivate SR pain.

Owners have a LR view, players SR, so it makes much less sense for players to take a SR hit without a big offsetting gain.

In the comments, “fan” adds:

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%.

A commenter named Alex (not the MR Alex) writes:

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.

The bottom line: It’s not symmetric, even the basketweavers should see that.


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