The First Rule of Negotiating: Why the NBA Lockout Persists

Any lawyer would likely tell you that the first rule of negotiating a deal is to never negotiate against yourself.

With respect to the NBA lockout, the parties have reached stagnation in negotiating a new collective bargaining agreement because the NBA is demanding that the NBPA negotiate against itself.

Since the lockout began on July 1, one of the main sources of contention between the parties has been how basketball-related income (“BRI”) would be divided between the league and players.

Under the previous collective bargaining agreement, the players received 57 percent of BRI.  From negotiations occurring before the lockout and from the outset of the lockout, it is clear that the NBA does not want to give players more than 50 percent of BRI, with some reports indicating that the NBA does not want to give players more than 46 percent.  Recently, it has been reported that the NBPA told the NBA its players would be willing to settle for 54 percent of BRI.

If reports are true that the NBPA has offered to settle for receiving 54 percent of BRI, this offer would be considered the “opening offer” since the lockout began, meaning that it is the first reported offer made in moving toward a settlement of the BRI issue.

There have not been any reports that the NBA has accepted this offer or made a counter offer.  The reason for this becomes clear when recognizing another source of stalemate in the NBA labor negotiations: conflicting interests amongst NBA owners.

In terms of negotiating, collective bargaining is a different beast than other negotiations which occur between employers and employees.  As the name itself indicates, collective bargaining requires that the interests of individuals situated differently be collectively represented to promote the interests of all.  Given the non-existence of parity in the NBA, as the league is composed of “haves” and “have-nots” in terms of market resources, a cohesive bargaining strategy is not easily developed for the league.  However, as an attorney representing a collective body, it’s important prior to negotiating a collective bargaining agreement to ensure that your clients are largely on the same page in terms of what they seek to obtain through negotiations.

The division between NBA owners in terms of how to navigate the negotiations of a new collective bargaining agreement is seen in their inability to agree on how the league’s revenue should be divided amongst them.  The “haves” of the league do not want to distribute their television revenue to the “have-nots.”  Recognizing this and realizing they need to find income elsewhere, the “have-nots” are seeking to fill that income gap by providing players with a smaller percentage of BRI.

Thus, because the NBA cannot collectively come to terms on how to share its revenue, it is unable to respond to the NBPA’s opening offer with a counter offer.

And because the lawyers counseling the NBPA have arguably been told time and time again to never negotiate against yourself, it’s unlikely that they will drop their initial BRI offer lower than 54 percent without first being presented with a counter offer.

Before warning players of “enormous consequences” if a deal isn’t reached soon, David Stern should first encourage league owners to settle their revenue distribution issue so that the NBA can present an acceptable counter offer the crux of the lockout:  BRI distribution.

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