The two sides of the 2011 NBA lockout
In 2011, the NBA players and owners had to negotiate a new collective bargaining agreement, but they were unable to reach an agreement before the season was suppose to start. The result was the season being shortened, but they averted the crisis of the entire season being lost.
When a resolution was finally reached, it was evident which side had “won” the negotiations. The owners were the consensus winners by a long mile. The players and owners have an agreement over what percentage of basketball revenues go towards salaries. The percentage dropped from 57% to 50%. In addition, the owners got some other concessions like length of contracts being limited and harsher tax penalties for going over the cap.
Why were the owners so successful? To answer that, you have to look at the outside options both sides had in these negotiations to see the strength of each side’s bargaining position.
The owners are billionaires. Their financial security goes without saying, but they also own other businesses that act as their primary revenue streams. Obviously, they don’t want a lockout; however, a loss of some short term revenue would be worth it if they can get the concessions they want. In addition, they don’t have a shelf life as owners as opposed to the players who have a limited playing career.
The players are a much more diverse group which weakened them greatly. Sure there are the all star and super star players who have extreme financial security, but most players aren’t making what the top tier players make. There is a large portion of players who aren’t financially prepared to not have a salary for a year. There are older players who are looking at their last chance to cash in, and younger players who have never had a big contract. All players have limited careers, so even for an all-star a loss of a 15-20 million dollar salary is a big hit. Their outside revenue streams become more limited when there is no basketball being played. They get less exposure, and there is little demand for basketball commercials when the NBA is in lockout.
To recap, the owners outside option is a loss of short term revenue in favor of gaining more in the long term. While the player’s outside option is a huge loss of earnings and financial opportunities. The owners aren’t dependent on basketball revenue while players very much are. This gives the owners a lot of power over the players in bargaining.
Ultimately, the owners were able to out wait the players and got a favorable collective bargaining agreement.
Source: http://espn.go.com/nba/story/_/page/CBA-111128/how-new-nba-deal-compares-last-one