An NBA Lockout Solution That David Stern Will Almost Certainly Ignore

As NBA lockout negotiations continue, David Stern has issued an ultimatum to the players this week, giving them until Wednesday to accept the NBA's current offer. But what if there's another solution? And why isn't David Stern looking for one?

The NBA lockout has reached the latest of several stalemates, and likewise, David Stern has issued the latest of several ultimatums to the players. On Monday, he gave the players until Wednesday to accept the current offer from the owners. If they don't, Stern promises the owners' offer will get worse.

And the players probably won't take the deal.

If the owners' offer gets worse, then, the players may be forced to do something drastic. Enter decertification, where the players denounce their rights to unionize and collectively bargain, and instead take their case to the courts with a class action antitrust lawsuit.

There are advantages and disadvantages there. In court, the players could challenge the league's suspicious financial statements, the NBA's fixed salary system, and generally, a compelling anti-trust suit would force NBA owners to risk losing billions in damages--if found liable, they would have to pay any player salaries owed during the lockout--and it'd deal a crushing blow to the league's business model going forward. 

On the other hand, the NBA won't exactly lay down and let the legal process take its course. If players denounce their union, the NBA will argue that pro basketball options in Europe render the players' claims of an NBA monopoly null and void. The league has also filed preemptive complaints with the National Labor Relations Board, and threatened to nullify all existing player contracts if the players bring an anti-trust lawsuit, arguing that all contracts were signed under the guidelines of a collectively bargained Uniform Player Contract.

If that sounds like a lot to entangle, just imagine how long it would take a court of law to process the claims and counter-claims underpinning all this, let alone offer any conclusive decision. It would sabotage this season for sure, and possibly the next season, too.

This is the nuclear option for the players, and while their chances of prevailing in court aren't as slim as some have suggested, destruction is assured on all sides. If the NBA misses the better part of two years, there's no telling how much its value craters in the interim. (For instance: If the NBA becomes 30 percent less valuable while the war gets sorted out, then winning a legal battle over percentage points will ring hollow regardless of who wins.)

That's why decertification works as a threat for the players; even if the NBA owners think they could survive an antitrust lawsuit, a prolonged legal battle destroys their assets enough to make victory irrelevant. So that's the backdrop to everything that's happening with NBA negotiations this week. You would think all these looming threats would encourage compromise on both sides.

And for the players it has--they've offered an additional 1.5 percentage points ($702 million projected over 10 years) in exchange for a commitment to compromise on system issues.

Meanwhile Stern offered his ultimatum to the players to accept the existing offer, and a group of 10 or so owners are actively rooting for the players to decline the offer, giving the owners an excuse to lower their offer ... and push the NBA closer to nuclear winter. This makes no sense. But you know what would make sense for just about everyone?

Here's my proposal for solving the BRI split. (Warning: Includes math).

  1. The players agree to accept a 50-50 split, allowing proud owners to look like the ultimate victors in this war, and guaranteeing that more than 90 percent of their losses in 2010 will be covered by players in 2011. But the 50-50 split comes with an asterisk.
  2. The 50-50 split only applies up to $3.8 billion, the amount of revenue the NBA earned in 2010. After that, any incremental revenue gains are split 57-43, just like in the past CBA. (Note: the current NBA proposal increases player percentages only if the NBA exceeds existing revenue projections for any given year).
  3. If the league were to grow by 4 percent in 2011-12 (the number projected by the NBA) adding 57 percent of the growth would mean the overall split would be 50.2 percent. If the league is 10 percent richer in three years, the players make 50.6 percent. The players share could ultimately be capped at 52.5 percent, and to get there, it would take an additional $2 billion in revenue.
  4. In other words, the owners get their 50-50 split, and the only way it changes is if the players make an extra $2 billion for the NBA owners. Likewise, this gives the players a chance to bet on their ability to grow the game, and significant financial incentive if they can. 

In that scenario, both players and owners get some of what they want, and haggling over systems issues could be worked out from there. The problem, and the reason that proposal's unrealistic, is that what the NBA owners want goes beyond financial concessions. As I said last week, the owners are threatened by the new, empowered players dominating their league, and they don't just want to win this lockout, they want to humiliate the players who believe this is a shared partnership.

So ... Unless someone steps in, the NBAPA will continue to balk at a lowball offer (as they should), Stern's ultimatum will pass and the hardline owners will push for a more favorable deal, and the season becomes less and less likely, while going nuclear becomes more attractive for players.

And that's where this comes back to David Stern. Brokering creative deals, talking down blood-seeking owners, soothing players with wounded pride, saving your sport from armageddon and massive embarrassment... These are jobs that fall under the umbrella of "leadership".  

Instead, Stern's sitting on his hands waiting for the other shoe to drop.

As he said Monday, "We are hopeful that the prospect of a less favorable outcome for the players will prompt the players association to realize that the best deal that can be reached is the one the N.B.A. is prepared to make right now." And then on ESPN, Stern said accepting a deal was "the only rational thing" players could do, because "given what's going on in our business right now, [the offer] will get worse from there." So that's the plan, then.

One last threat, and if the players still balk, negotiations become more brutal than ever.  

If Stern really believes this will work, then he's a fool. If not, then he's essentially throwing up his hands in all this, clearing the way for hardline owners to sink their teeth in, players to seek out much nastier alternatives, and his league to inch closer and closer to full-on armageddon.

The tenor and direction of this lockout isn't necessarily the commissioner's fault, but failure to rein in the extremes on both sides absolutely falls to the commissioner's office. As a the league inches closer to an end that will cost everyone millions (and billions) of dollars, it reminds of what I wrote on the first day of the NBA lockout:

...the NBA lockout isn't about the owners' business sense prevailing. It's about greed and financial insecurity obscuring business sense. ... And David Stern should know better. He's lived through a lockout war, and this one figures to be even more brutal. ... rather than fight to protect his sport, Stern's fighting a petty PR battle, looking smug as ever, posing as a victim of economic realities that left no other option.

Here we are nearly five months later, back at square one.

And after calling him the best commissioner in sports for nearly 30 years, the last 10 years might make future generations wonder about David Stern. He betrayed Seattle, he refused to acknowledge problems with officiating until a massive scandal tainted the entire league, he's ignored Donald Sterling's vile behavior in L.A., he never pursued revenue sharing that might have averted the NBA's current financial issues, and now he's presiding over a dispute that could risk his sport's future after the most successful season his sport's seen in years.

So, just for the record...

If the NBA lockout spirals out of control in the next few weeks, it won't be the players' fault. It won't even be a mark against all the greedy billionaires behaving like a bunch of greedy billionaires. Nope. In the end the buck stops with Stern, the leader letting them all go right off a cliff.

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