The NBA Players' Lost Opportunity

The NBA Players' Lost Opportunity

The NBA Players' Lost Opportunity

Moneybox
Commentary about business and finance.
Jan. 6 1999 7:06 PM

The NBA Players' Lost Opportunity

Well, they split the difference.

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After six months of the NBA lockout, that's pretty much what happened 29 hours before the rest of the 1998-1999 (uh, make that 1999) season was canceled. The NBA players had been scheduled to vote today on an owners' proposal that the union negotiating committee had rejected. But instead NBA commissioner David Stern and union head Billy Hunter pulled the proverbial all-nighter and came up with a new proposal--the Stern-Hunter "split the difference" plan--which the players voted on today and ratified overwhelmingly. (The league's Board of Governors will vote on it Thursday. Approval is expected or else Stern will leap from a window in the Rainbow Room.)

There were lots of interesting tidbits in the deal that was eventually struck, tidbits that suggest how confused the politics of this lockout were. For the first time in the history of sports, there is now a maximum salary for athletes, depending on their seniority. Players with more than 10 years can earn up to $14 million, players with between six and nine years can make up to $11 million, and players between one and five years, $9 million. (There is a grandfather clause for current players, allowing them to resign for up to 105 percent of their current salary.) Remember, it's the owners who insisted on this pretty stunning repudiation of the free market, but somehow I don't think we're now going to see Fortune 500 CEOs agreeing to have their salaries capped according to their experience.

Along the same lines, teams' control over incoming players was further strengthened. Draftees will now have their potential salaries in their first four years in the league limited by where they were drafted in the first round. In other words, the higher you were drafted, the higher your salary and the higher your potential salary increases will be, regardless of how well you play. If this rule were applied to the NFL, Vikings wide receiver Randy Moss, who was drafted 19th because teams were concerned about his reputation but who has proved to be one of the league's best players, would be paid less in future years than whomever was drafted 5th, merely because 18 NFL teams were stupid enough not to draft him when he came out of college.

The point, of course, is that the new agreement in many ways resembles a standard union contract, with its emphasis on seniority and on the need for players to pay their dues before they're fully rewarded. Yet where business has traditionally attacked seniority as paying for experience rather than for merit, in this case the owners have embraced the idea. It's no coincidence that they've done so. As I've argued before, in the NBA the players are the means of production. So the owners have to do everything they can to prevent the players from reaping the real fruits of their labor.

Having said that, the players did get some tolerable, though imperfect, concessions on the heart of the lockout, which was the percentage of annual revenue that would be devoted to players' salaries. In the first three years of the agreement, there will be no limit on that percentage, and in the next three years the players are guaranteed 55 percent. (They get 57 percent in the seventh year, if the owners exercise their option for that year.) The players had wanted more in those last three years, and deserved more, but the owners had wanted to give them significantly less. So 55 percent is a victory, and not a pyrrhic one.

I still think the lockout will be remembered as a lost opportunity for labor, because the players never made their case strongly enough or clearly enough. But the union did hold fairly firm. Next time, perhaps, the difference won't have to be split.