NBA Lockout: Public Argument - Essay Example

NBA lockout- public argument The NBA lockout in is the fourth in the history of the National Basketball Association. Upon the expiration if the Collective Bargain Agreement back in 2005, the owners started working on the stoppage. The lock out took 161 days since it began in July 1st 2011 and ended in December 8 2011. This meant that it delayed the smooth running of the regular 2011-12 season that usually starts in November. The numbers of games were reduced from 82 to 66. The key issues that led to this deadlock were mainly between the owners and the players that were represented by National Basketball Players Association (Goonk 56). They two parties could not come to a consensus regarding the division of revenue and the proposed structure of the salary cap and taxation of the player’s luxury. During the period of the lockout, the player could not access NBA team facilities, trainer or staff; they could not make any trades, sign or contact the players. This led to player signing other contract in countries like Asia and Europe and left a possibility of returning to the NBA after the conclusion of the NBA lockout. A tentative deal was eventually reached in November 26 2011 and allowed for the start of the season shortly thereafter. Following a previous lock in the 1998- 99 season, a six year contract was agreed between the owners and the players. This meant that the CBA was set to expire by 2005. A new agreement was meant to take place but, there were several issues that blocked a new contract. The issues include the age limit for the rookies that were to be drafted in the NBA, limiting the length of the long term contract that many teams had to sign with their players and the toughening of the existing drug testing program. The two parties reached an agreement that prevented a lock out in 2005. This deal was meant to grant the player 57 percent of the Basketball Related Income (BRI). This deal was also meant to last six years. Due to the economic crisis, eight officials of NBA asked the Commissioner David Stern to address the issue on Large market and Small market teams (Rosner 78). He said the current economic system only worked for the large market teams which made them successful but, those small teams were facing major losses. The two parties under the CBA began to look for a possible solution to this issue that seemed to get out of hand. The league declared that it was losing close to 300 million dollars in a year. This meant that out of a possible 30 teams, 22 were counting losses. Therefore, they proposed that the player’s salary was to be reduced to 40 %, which came to about 800 million. They also recommended for the salary cap to be reduced to $ 45 million opposing the current one at 58 million. These recommendations were not taken lightly as the union disputed the figures and were steadfast to oppose these changes. Billy Hunter, the director of the union advised the player for a lockout. Negotiations continued regarding the salary cap, and the newest proposal known as the flex cap was meant to limit the payroll at 62 million but reprimand on the event that the team’s payroll exceeded the average league payroll of the season. The Union still felt that this was a hard cap (Washington post ). Players offered a salary reduction cut an estimate of about 500 million over the next five years from 57 to 54.3 Percent. However, the owners proposed a 2 billion cut for the next ten years. On June 30 2011, both side tried to resolve the key issues of the BRI splits and salary cap but, there were no able to come into an agreement. The owners demanded a bigger portion making claims of losing money whereas, the players were willing to make special considerations, but they refused to completely cave to the demand of the owners. This eventually to a break off and the CBA expired. With the NBA player deciding to reject the latest offer, the mutli billion dollar game ended in a crash. The players disclaimed their union and ended its right to negotiate on their behalf. The big news that came out of the NBA is that the players have rejected the owner’s final offer and the players association has been disbanded. They also declared their intentions to file an anti lawsuit against the NBA. Whether it is about point guards of power forwards, labor disputes always arise from money matters. However, the NBA lockout seemed to involve a lot more. The CBA is the labor blue print that has the mandate of setting salaries and the rule of trades between the player and the owners. The NBA is subject to America’s antitrust laws that protect it from monopolies. Since the two parties were not able to come into an agreement they put the flowing things at stake (Leeds 89). A popular debate was set to discuss whether the NBA loc out was due to the owner or the players. The player’s Union representative insisted that the player did not want the lock out to take place and it was the owners who decided on it. The owner on the other hand said that they has clearly explained the financial problem that was affecting the association but the player did not want to accept the recommended changes. Revenue sharing – the owners claim that they were losing money. Salary cap – due to the revenue sharing imbalance the owners imposed a hard salary cap to fix the total amount each team can spend. For example, a struggling franchise was sold for 280 dollars. The average NBA salary for the previous season was about 5 million dollars. The player do not really need al large amount of money. Those who really need it are those that place their livelihood on the sport. This includes the small business owners and workers who make sales for every game played. The owners and the players are greedy stakeholders who do not consider the plight of the local community. The NBA lockout would have been avoided if the two parties settled on a reasonable amount. Basketball related income – This is the real issue related to the NBNA lock out. The players were receiving 57 percent of BRI which included YV contracts, ticket sales and concessions. The owners usually receive 43 percent. This figure was later drop to 52.5 and are advocating for a 50- 50 split. The National Basketball Players Association current president Derek Fisher has been on the fore front leading the negations. After they rejected the offer, they announced the intention to disband the Union. They also pushed for law suit against the written the anti law trusts. The commissioner, Davis Stern was put on the spot by the fan and is blamed for mishandling the negotiations with the players union. From my point of view, there is a possible need to determine equal rights and participation of the essential stakeholder. Freemans’s doctrine comprises of six principles; the principle of governance, the principle of exit and entry, the principle of externalities, the agency principle, the principle of contracting cost and the principle of limited immorality. The principle of governance states that any change to the normal symbiosis must be unanimously consented by both parties. The principle of entry and exit states that any contract should clearly state the terms of the creation, termination or renegotiations between both parties. The principle of externalities asserts that if the contract between two stake holders negatively affects a third stakeholder, he has the right to enter into negotiations that will ensure that the agreement does not interfere with the smooth running of the firm. The principle of contracting costs claims that the participating parities must contribute to the cost of contracting. The principle of limited immortally supposes that all the parties should have a continued interest of making the firm to be fully functional (Rosner 80). The agency principle denotes that any agent of the stake holder must work in the interest of all stake holders. Freeman indicates is all this principles are followed the firm’s actions will be fair and equal to all stake holders. If the NBA players and owners had thought about the different stakeholders involved, the lock out would have not lasted for long. The two parties should have come to a consensus for the greater good of the game and fro the local community. This lockout did not only affect the economic state of the association but also the emotional state. The fans who come to support the game did not like the cause of action taken by both parties that were involved in the negotiations. We can analyze the lockout situation with the three stakeholders, the owners, player and the local community. When we apply the six principles in Freeman’s doctrine, we find that all of them have been violated. Both the owners and the players were well aware that the contract they had was about to end. They did not come to terms with each other to discuss how they could peaceful negotiate for a contract extension to prevent jeopardizing the stakeholders. In the quest to gain leverage, the principle of governance is violated when the owners lockout the players. They put unwanted pressure on the player to accept the deal that seems to have favored the owners thorough taking away their only source of income. The players on the other end, wanted to decertify the union which also changes the process of the negations. Neither move was unanimously agreed upon even thought if affect both parties negatively (Washington post). The principle of externalities was also affected. Both parties put their interest ahead of other stakeholders. They disregarded the local community who suffered both emotionally and economically. Most college student saw their dreams being shattered. Economically, hotels, Sport bars and stadiums that relied on the sport to be played were greatly affected. Since the local community was greatly affected by the lock out, they should be included in the negotiations according to the principle of externalities. In terms of responsibility, believe that the blame is to be put on the players. Despite the fact that there was no unlawful activity for the players to take the lucrative contract that was offered by the owner, it was wrong for them to cripple the contracts and jeopardize the lively hood of those that are depended of the NBA for the economic reasons. While the owners and the player struggle for billions and millions, the local community suffers. The community does not just lose money for every game that is cancelled, the owners will also feel the straight jacket effect or boycotting the game once the league resumes. Dennis Rodman, renowned Chicago bull player requested the players to “bow down” in order to see the dispute settle. Work cited Goonk, James. "NBA Lock." Jet 17 July 2000: 23-45. Leeds, Michael A. The economics of sports. New york : Addison-Wesley, 2002. post, Washing. NBA lockout: Owners, players reach tentative agreement . 17 April 2012 . Rosner, Scott. The Business of Sports. New York : Jones & Bartlett Publishers, 2005. Zimbalist, Andrew S. The Bottom Line: Observations and Arguments on the Sports Business. Philadelphia, PA: Temple Univ. Press, 2006. Print. Read More