Lockout: What will the players do next?
The league has made a now-or-never offer to the players in the NBA labor dispute
The drama of the NBA labor dispute is now reaching a climax. Instead of waiting for an early January deadline to make or break the season, the league managed to advance the timetable by two months and set up a mid-November showdown.
With one final take-it-or-leave-it proposal, the league gave the players an ultimatum -- accept their offer and get ready for a 72-game season that starts on Dec. 15, or live with the consequences. If the players reject the NBA's deal, then the league's offer resets to where it was back in June. At that point, a legal battle will be a virtual certainty.
"It's all in the hands of the players," said commissioner David Stern.
"If this offer is not accepted, then we'll revert to our 47 percent proposal,'' added Stern, referring to the league's offer that featured a "flex cap," or two-tiered cap system. In this system, the lower cap would function like the league's previous soft cap. The upper cap would be a hard cap. The proposal also features steep rollbacks on existing salaries.
The players summarily rejected this idea when it was originally proposed. "We view that as just a total distortion of reality," union president Derek Fisher said at the time. "It's not a flexible cap, it's a hard cap."
This dispute has always been about a hard cap -- or at least a harder cap.
Ever since the players made the idea of a hard cap a "blood issue," the league has tried to find clever ways to sneak one in. When the players rejected the flex cap, the league pitched a soft cap with an overly punitive luxury tax. The players rejected this idea as well, recognizing that a luxury tax that no team is willing to pay is really a hard cap in disguise.
So the league shifted its attention back to the system issues -- the exceptions and other cap mechanisms that allow teams to function while over the salary cap. If the players will not allow a directly punitive luxury tax, then the league wants one that is indirectly punitive -- one that takes privileges away from taxpaying teams. Teams that are above the tax threshold wouldn't have access to the midlevel exception, sign-and-trade transactions, and other mechanisms that were the life blood of free agency in the previous system.
Over the past two weeks the players have managed to talk the league down on a number of these issues, but the basic concept remains: The league wants to implement tight spending controls that will make teams think long and hard before becoming taxpayers. Something that looks less like a speed limit sign on a long stretch of desert highway and more like a junkyard dog behind a chain-link fence.
In other words, if it can't have a hard cap, then the league wants a system that clearly says "cross this line only if you dare." But such a system will smother player movement, and that's unacceptable for the union.
That's what the two sides are currently fighting over. It's not about preserving a sign-and-trade mechanism that was only utilized a handful of times during the previous agreement, or an extend-and-trade that has appeared only twice in history. It's about the players' ability to seek employment with the team of their choice -- the very idea that when a player pays his dues and becomes a free agent, there will be as many as 30 teams out there willing to make a competitive offer.
After conceding on the split in basketball-related income -- negotiating down from 57 percent to 50 percent -- the players are now down to their core issue: freedom of movement. This labor dispute has always revolved around the sides' differing philosophies on this key issue. For the players, it's still a blood issue.
The players don't see this as a fight to preserve a few seldom-used cap mechanisms. They see it as a fight to preserve their way of life.
The owners continue to strive for a system with two goals, one in which all 30 teams can compete on equal footing for a championship, and one with economic sustainability. "The competitive issues are independent of the economic issues," said deputy commissioner Adam Silver. "Our goal is to have a system in which all 30 teams are competing for championships, and if well managed, they have the opportunity to break even or make a profit."
Or to borrow a phrase from last year, as close as the two sides might appear to be on the surface, it isn't a gap that separates them. It's still a gulf. It's two fundamental visions for the operation of the league, which are at odds with each other.
"In order for us to have the competitive balance we want, it restricts player movement to a certain degree," Silver said, explaining why it's not possible for everyone to be happy.
On Monday, Fisher and Billy Hunter will gather the player representatives, explain the league's proposal, and lay out the union's options. In a labor dispute that has been filled with hyperbole and bombast, it's not an exaggeration to say that the 2011-12 season may hang on the outcome of this meeting.
None of the players' options is particularly appealing. "We don't expect them to like every aspect of our revised proposal," Stern said. "[There] are many [owners] who don't like every aspect."
But it's not a matter of fielding a proposal the players like, let alone one in which they like every aspect. This is about finding a system the players can live with. Monday's meeting will be about deciding whether this is a proposal they can live with for the next 6-10 years, and for determining the union's subsequent course of action.
They could do any of the following:
Accept the league's proposal
If you take away the philosophical battle, the raw emotion and the competitive fire, and you reduce the labor dispute to a cold business decision, then this may be the players' best option. The reason is simple: The players are losing money they're never going to recoup. With an average career length of 4.8 years, most players -- especially the lowest paid ones who will be hurt the most -- won't be in the league long enough to recover the salary they will lose by extending the lockout. Standing on principle means sacrificing their career earnings, their retirements, their nest eggs. It's a losing proposition.
To sell this option to the player representatives, Fisher would have to tell them, "You gave us the task of negotiating the best deal we could get from the league. This is it. I know you don't like it. I don't like it either, but it's the best offer we're going to get. We could say no -- we could roll the dice on other options. We may prevail down the road. But while the outcome is uncertain, the pain in getting there is not. Many of our guys won't be able to withstand the process."
But even a recommendation from Fisher may not be enough to sway the players, many of whom have indicated they will reject the league's offer. "I would expect that proposal to be rejected after all the players learn more about the deal," the Pacers' Danny Granger told The Indianapolis Star.
Offer a counterproposal
Stern made it clear Thursday that the league's current offer is not up for discussion -- that "yes" and "no" are the only two acceptable responses.
"There comes a time when you have to be through negotiating," said Stern, "and we are."
But this doesn't mean the players won't at least try. Given the number of threats, ultimatums and artificial deadlines throughout this process, the players may be inclined to accept the owners' offer, but only if they agree to a set of specific changes. This would give them one last opportunity to grab a few additional concessions that would promote player movement.
This would put the ball right back in the owners' court. They could live up to their promise not to move any farther, and replace their proposal with the 47 percent "reset" offer. But doing this would likely push the players into going nuclear. The players would also launch into an immediate PR campaign, making it clear to anyone who will listen that the players agreed to the revenue split and to most of the league's regressive system changes, only to be rejected on the last few items.
A counterproposal also gives Stern the opportunity to give the players some face-saving concessions. In a battle that is as much about ego and pride as economics, a few such concessions could make all the difference. Fisher and the union leadership need to have something they can take back to their membership that will soften their resolve.
Even if the owners reject their counterproposal, the players could have a fallback option to accept the owners' proposal as-is. Given this, a counterproposal seems a more likely response than a straight-up "yes." At best, the players can leverage a better deal from the owners. At worst they would accept a deal they are going to accept anyway.
This may be exactly what the union is planning to do. According to SI.com, Hunter wrote in a text message, "We will vote on the NBA's proposal. The proposal will be presented with some proposed amendments."
Let the players decide
As the elected representatives of the players, the union's executive committee has the responsibility to negotiate the best deal possible, and bring a deal to the players only after carefully weighing its pros and cons. They do their best to communicate with the rank and file -- for example, Fisher sends out regular emails and holds periodic informational meetings -- but there are concerns that the bulk of the union is uninformed and ill-equipped to evaluate a proposal. Not many players understand the implications of the proposed system changes, and how those changes will affect the rank and file players. Few even know the details of the league's offer.
So while it may make sense at first glance to let all the players decide their own fate, it is an unlikely course of action. Instead, Fisher will rely on informed feedback from the 30 player representatives attending Monday's session.
A vote of the full union membership is required to ratify an agreement, but the decision as to whether it gets that far rests with Fisher, the executive committee, and the player representatives.
And if the players are upset that they don't have a say in such an important decision, then they have no one to blame but themselves. Few of them bother to show up for the union's informational meetings, and fewer still keep abreast of the issues. There is an information gap between the union's brain trust and the players they represent. As a result, many players will not have a voice in what may be the biggest decision affecting their careers.
Just say no
It is possible that the union will call the league's bluff -- answer "no" to their proposal, let the league reset its offer to 47 percent and a flex cap, and continue negotiating as though nothing happened. The players' argument would be that you can't un-ring a bell -- that with or without a deal this week, 50 percent will be the eventual landing spot of any agreement. Any threats to take their offer off the table amount to a temper tantrum that should be ignored rather than entertained. If the league pulls its offer, it'll eventually put it back.
That's the argument, anyway. The problem with this strategy is that it won't increase the players' leverage. Even if the current offer returns before the season is canceled in early January, the players will be in the same boat they're in today -- except with more of the season canceled, and more paychecks missed.
So it's unlikely that the players will choose such a passive response. If the players say "no," they will likely also decertify their union.
According to sources in the players' camp, more than 200 signatures have been collected on a petition to decertify the union. Approximately 130 signatures are required for the petition to be filed with the National Labor Relations Board. This petition likely will be filed with the NLRB this week. There is no downside to filing the petition -- if the players subsequently agree to the league's proposal, the petition can be rescinded.
A decertification petition would send a clear message to the owners that the players are prepared for battle. The petition would set the wheels in motion on a process that culminates in a full decertification vote in 45 to 60 days. During this time the union can continue to negotiate -- presumably with additional leverage given the consequences of a successful decertification vote.
One possible strategy for the players would be to say "no" to the league's proposal, file the decertification petition, and use the ensuing 45-60 days to try to negotiate a better deal. If the sides do not come to a more favorable agreement in that time, then the players will vote to decertify. Once the NLRB certifies the result and the union is dissolved, a group of players will file an antitrust suit against the league.
The greater immediate threat to decertification is that it will for all intents and purposes end any hope of salvaging the 2011-12 season, and also could put subsequent seasons directly in harm's way. An antitrust suit could take years to litigate, and to see the process through, both sides would have to be prepared to live for a long time without any NBA income.
Stern and the league also are of the opinion that decertification will backfire on the players. "If the union is not in existence, then neither are $4 billion worth of guaranteed contracts that are entered into under condition that there's a union," he said.
Disclaimer of interest
According to SI.com, the players might be favoring a union disclaimer of interest rather than a decertification. The difference between the two processes is that in a decertification the players vote to dissolve the union, while in a disclaimer of interest the union removes itself as the bargaining unit for the players.
But there are several reasons why the union might favor a decertification to a disclaimer of interest:
• The threat of dissolving the union provides leverage. During the ensuing 45-60 days after filing a petition to decertify, the union will have a stronger bargaining position. A disclaimer dissolves the union immediately, eliminating the looming threat.
• A disclaimer of interest is more likely to be attacked in court as a sham.
• The league's federal lawsuit was filed in anticipation of a disclaimer of interest. If the union disclaims interest, the lawsuit will still be pertinent. If the players decertify instead, the lawsuit will become irrelevant.
So what is likely to happen?
From a strict business standpoint, the players' best move is to offer a counterproposal, and to be prepared to accept the league's proposal if their counterproposal is rejected. Perhaps one more bargaining session can be scheduled to hammer out an acceptable compromise.
But the players aren't operating from a strict business standpoint. They're angry. They feel that they haven't gotten a fair deal from the owners, and the only way to ensure a fair deal is to take the league to court. They are tired of making all the concessions. They are tired of being backed into the corner. They are tired of ultimatums. They're prepared to suffer the consequences of a canceled season.
It all comes down to Fisher, and how he intends to describe the league's proposal to the player representatives. If he describes it as the best deal the players are going to get and says the alternatives are too costly to consider, then the representatives -- and the players at large -- will follow his lead. If his description begins, "Here are the reasons this is still a bad deal," then the players will say "no," the owners' proposal will reset, and the union will likely decertify -- with a small window of opportunity to negotiate before the decertification becomes official.
So that's where we are now. The players have a number of options, but they really boil down to just two: They can accept the owners' proposal (or something close to it) and save the season or they can say "no," decertify their union, and likely kill it.
By delivering an ultimatum, Stern has put the season in the hands of the players -- and he's ensured a mid-November verdict. It's now up to the players to decide which is the lesser of two evils.
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