Little Known Fact - The inter-relation Between Hard Cap and Guaranteed Contracts

by Kevin L. Davis (@EsquireSports)

I read a great article from Henry Abbott a few days back that really explains why the NBA Players are so opposed to accepting the hard cap and its impact on guaranteed deals that I had never considered. It was weird because I always here people commenting on Players guaranteed contracts and saw fans writing about how Players in the NBA are spoiled by their collective bargaining agreement (CBA) that I always assumed the provision promising guaranteed contracts was in the CBA. The truth of the matter is its not.

Abbott explained that there is nothing in the CBA that guarantees the Players guaranteed contracts. They just get them because the current market (which includes a soft cap that allows teams to exceed the cap level) allows teams to be more free with their money, and because of that the vast majority of Players are under guaranteed contracts. The Players position is that if teams were to switch and have a hard cap it would also likely mean the end of guaranteed long-term deals for middle and lower tier players; as teams would lock up their stars forever and then annually fill in their roster around the stars. This is why Billy Hunter has the Players claiming that they are willing to lose the season instead of going for that.

My Critique of Excellent David Stern Interview Conducted by Bill Simmons

by Kevin L. Davis (@EsquireSports)

Hello Sportsfans.  Not sure if you all are aware but prior to the weekend David Stern made an appearance on the BS report giving Bill Simmons a rare interview that spanned a little more  than an hour.  If you've not listened to it for yourself, you should definitely check that out >>>>> http://espn.go.com/espnradio/play?id=6856992.

Although I must admit that my views have been slanted toward the players I decided prior to listening to the interview that I would stay open-minded.  Although at times I felt that Stern was condescending and arrogant, and even felt that at times he seemed a little angry and Simmons for bringing up points that didn't paint him or the owners in the brightest light I think for the most part Stern set out to accomplish what he intended to accomplish - to explain to the common fan what the importance of the issues at stake in this CBA and to illustrate the size of the schism that exists between the Players and the Owners, and to present a united front among his contingent of Owners.

Stern accomplished both of these objectives masterfully by calling the NBA Players the "worlds highest paid union" he shows just how well compensated the NBA players are, and by following that up by stating the amount of money being lost by the league annually.  In these shaky economic times, very few fans will have pity on millionaire Players whose lavish salaries are causing their business to be unprofitable.  He also did a good job in arguing why revenue sharing should be kept out of these negotiations and should instead be determined at a later date once Players and Owners have determined the revenue split, as attempting to do that in these negotiations very well could cause a split amongst his Owners.

However this interview also pointed out some of Stern's weaknesses, as condescending, insecure, and quick to anger when he's being challenged.  His continued statements that the players will come around when the offer is explained to them does that (insinuating their too stupid to understand whats going on themselves) and again even more blatantly when Stern snapped at Simmons that he's "been doing this for 40 years, which is much longer than Billy Hunter has" (which seems irrelevant to me when he admits to having lost the last 3 negotiations that he had against Hunter) seems the best illustration of that.  With all do respect Mr. Stern we all know the league has  grown by leaps and bounds under your leadership, you don't have to be so touchy about not feeling as if you got your due.

All in all though this interview shed great insight on where things currently stand in this labor dispute.  In order to get things going the Players simply must realize that will receive a smaller share of the revenues.  Now we just have to find middle ground where both the Players and the Owners will be satisfied.

I still think the offer reportedly made by the Owners which would allow the Owners to be the sole recipients of the first $900 mil in revenues, and then to split remaining revenues 50/50 goes too far, but at least that forms a basis to start.  Additionally middle ground must be reached on revenue sharing.  Personally I still believe that it should be apart of these negotiations, however I do agree that the revenue split must be determined first before the league can figure out an effective way to split those revenues.

Billy Hunter Admits That He Expects There Will Be No NBA This Year

by Kevin L. Davis (@EsquireSports)

While speaking to an audience composed mostly of lawyers at the American Bar Association, Billy Hunter said what most of us have expecting all season - that chances are the upcoming season will be cancelled as this labor dispute drags on.  Although this statement has been repeated time and time again over the last year or so, I believe this is the first time that Hunter has stated publicly that he expects the season to be cancelled.  

Hunter went on to point to what he views as the problem leading to the more contentious manner behind this whole labor dispute, the changes in the constituency of ownership.  At one point Hunter said "[i]n the last six or seven years, there is a new group of owners to come in who paid a premium for their franchises, and what they're doing is kind of holding his feet to the fire."

Whether you agree or disagree with these tactics at this point it seems clear that if there is no resolution soon the true losers here will be the fans.

NBA Files Lawsuit Against Players and File Unfair Labor Charge

by Kevin L. Davis (@EsquireSports)

Remember how I said the meeting yesterday had to be seen as good news?  Scratch that.  The owners and David Stern have now filed a lawsuit against the players as well as filing a charge with the National Labor Relations Board against the Players accusing them of unfair labor practices, specifically for failing to bargain "in good faith" and of "impermissible pressure tactics" in labor talks.

From the information that has been made available to the general public, it seems the league has little chance of success with either of these proceeedings.  Why do I say that?  

First off you must as I'm sure many of you remember, these negotiations didn't take the turn into the current bitterness until David Stern famously told the Players that he knows where “the bodies are buried” in the NBA....because he had buried some of them himself.  Sounds to me that Stern and not the Players started that.

Also you must remember why the league is currently locked out.  The Players had no problem with the old CBA, and would still choose to play under it if given the option.  We're only in lock out mode now because the Owners opted out of the deal and chose to impose that course of action.

I believe the Owners understand that there is a very small likelihood of winning these suits, but are only doing this to try to prevent the NBPA from filing an anti-trust suit against the NBA with the threat of voiding out the Player's contracts if they do pursue a suit.

So as I said, the chance of success for these suits seems low, but they do signal just how far apart the Players and Owners are.  Bad sign.

NBPA and Owners Have First Substantive Talks Since Lockout......No Progress Made

by Kevin L. Davis (@EsquireSports)

Yesterday in what has to be viewed as a good sign David Stern and his high level executives (deputy commissioner Adam Silver, Spurs owner and labor relations committee head Peter Holt, and T-Wolves owner and Board of Governors chairman Glen Taylor) met with Billy Hunter, along with NBPA player-execs Derek Fisher and Theo Ratliff. 

Unfortunately the fact that there was a meeting seems to be the only good news to report. Neither side produced an offer, and it currently appears that neither the Players or the Owners are willing to make any concessions yet. However they did agree to meet again in the coming weeks

Stay tuned sports fans maybe there will be something new to report soon.

No News to Report.........And Thats A Very Bad Thing When it Comes to Collective Bargaining

by Kevin L. Davis (@EsquireSports)

Right now with the lockout in place there seems to be no real news to report on the NBA's labor situation.  The sides have not sat down at the negotiating table recently, and unfortunately that does not look like it will change any time soon.

This is a terrible thing for NBA fans to hear.  Right now the sides are so far apart that they aren't even at the table.  I hope I'm wrong, but its looking very likely right now that games will be missed in the NBA next year.

A Little More Info on Collective Bargaining

by Kevin L. Davis (@EsquireSports)

In my last article I claimed the the Players may have a valid claim that the Owners have acted in bad faith during the negotiating process based on the tactics they have used against the Players while not elaborating on why. Here is a little information explaining the laws as it relates to collective bargaining which may shed a little light on why I made that claim >>>> http://legal-dictionary.thefreedictionary.com/collective+bargaining

• 1) The employer may not refuse to bargain over certain subjects with the employees' representative, provided that the employees' representative has majority support in the bargaining unit. 
• 2) Those certain subjects, called mandatory subjects of bargaining, include wages, hours, and other terms and conditions of employment. 
• 3) The employer and the union are not required to reach agreement but must bargain in Good Faith over mandatory subjects of bargaining until they reach an impasse. 
• 4) While a valid collective bargaining agreement is in effect, and while the parties are bargaining but have not yet reached an impasse, the employer may not unilaterally change a term of employment that is a mandatory subject of bargaining. But once the parties have reached an impasse, the employer may unilaterally implement its proposed changes, provided that it had previously offered the changes to the union for consideration. 

Duty to Bargain in Good Faith

During the bargaining process, the parties are not required by law to reach agreement. They must, however, bargain in good faith (29 U.S.C.A. § 158[d]). Although good faith is a somewhat subjective concept, courts will look to the entire circumstances surrounding bargaining, including behavior away from the bargaining table such as pressure and threats (NLRB v. Billion Motors, 700 F.2d 454 [8th Cir. 1983]).

What this means in the context of the NBA's Labor Dispute?

The Players have felt all along that the Owners have been making attempts at breaking their Union and made offers so bad that no reasonable union could be expected to take it. The offers have definitely been underwhelming, and if the reported comment attributed to David Stern that "he knows where the bodies are buried because he put them there, is true that definitely sounds threatening.

I'm not guaranteeing a legal win, but it definitely sounds like the Players may have a leg to stand on.

According to ESPN's Larry Coon Owners May Be Exaggerating Figures To Reflect A Loss

by Kevin L. Davis (@EsquireSports)

If you have not read this article from ESPN's Larry Coon I suggest you check it out now >>>> http://sports.espn.go.com/nba/column...ancials-110630. In his article that he wrote based on viewing financial records of two teams (2005-06 Nets and 2008-09 Hornets) he makes 2 main arguments 1) Since the Players can't share in the profit when a team is sold it is not fair that they are burdened with the costs associated with buying the team in the first place and 2) If they don't have a say in the team's management decisions, they don't want to pay the cost when those decisions go awry.

He went on to show that the figures the Owners have been reporting as their losses may be the result of an accounting fiction. While it is true that financial statements are prepared by external auditors, who are bound by their license to do things right and subject to review by the IRS, any person who knows a little about finances you know that depending on the method you use to account for your finances, the profit/loss figures could vary by tens of millions of dollars.

This insistence of bargaining from a position of using these figures and not true basketball-related expenses and revenue could be viewed as an attempt by the Owners to doctor the numbers to exaggerate losses. If Coon is correct, its very possible that instead of 20+ teams losing money only 7 or 8 are, and they seem to be losing less than $20 mil a year.

If this is true and it is happening throughout the league, the Players may have a leg to stand on if the legal route is pursued and they allege that the Owners are negotiating in bad faith. I could very well see a court ruling that The combination of utilizing these figures instead of basketball-related expenses combined with their offers which included taking away so many rights from Players (i.e. guaranteed contracts, hard cap, smaller contract lengths, etc.) in times of increasing viewership and attendance as negotiating in bad faith.

NBA Lockout Offically in Effect

by Kevin L Davis (@EsquireSports)

It is now July 1st, and as expected the Owners have locked the players out.  Reportedly team officials (i.e. coaches, trainers, front office staffs) and their spouses have been told to not contact Players or their families during the lockout whether it be in person, by phone, or by electronic means including social media sites like Twitter and Facebook.

I'll have a few more articles coming soon covering important labor issues related to the lockout over the weekend.

At This Point Lockout is Inevitable

by Kevin L Davis (@EsquireSports)

With no major developments occurring in the next few days, it seems inevitable that after June 30th the NBA will be entrenched in its second major labor dispute of David Stern's tenure as commissioner.  Right now both sides seem committed to their positions and unwilling to make necessary concessions needed to begin the path towards a deal.

Hopefully things change soon, but as it stands their is a humongous divide between the Players and the Owners.

Players Speak Out On Current Status of Labor Negotiations...Said to Be Livid

by Kevin L Davis (@EsquireSports)

Now that the latest round of negotiations between the NBA's Players and the Owner's are done the Players are taking to the press to voice their displeasure with the proposal being offered by the Owners'.  While this is a risky strategy that risks turning off the American public I like what the Players are doing. They are making it known, that the Owners are making a proposal that takes away core values that Players of the NBA have enjoyed forever, and they will not accept it and are clarifying their position to the press with statements that have been measured and showed unity. 

The message from the Players was clear, the small amounts of progress that have been made in this proposal (no longer asking for contracts being partially guaranteed, no longer having a true hard cap) are not significant enough to make a difference. The fact that the Owners are trying to retroactively take money that the Owners and Players already agreed that belongs to the Players only makes it worse.

Basically it goes like this, you never want to piss of your adversary in a one-on-one negotiating situation. While some reports have correctly stated that you don't want to start with your final offer, you also don't want to begin an outlandish offer that mobilizes your opponent.  I think its possible that the Owners' have done just that.

From what I can tell, the Players don't feel that the Owners are treating them with respect with these tactics.  First off tho the Players' this insistence towards taking past money that the Players' feel they have already earned and collectively bargained is mind boggling.  

Another issue that is also of supreme importance in these negotiations, is the economics of the league.  Right now the Owners and Players differ fundamentally on how the economics of the league should function once the new CBA is implemented.  Everybody agrees that in the previous collective bargaining agreement small-market teams suffered financially.  The disagreement lies in how this issue should be addressed.  

Players feel that the problem can be solved by larger market teams sharing more revenue (mainly from local TV deals) to support these struggling franchises, and the mechanism to determine how revenue will be shared should be negotiated now.  However, the Owners think these CBA negotiations should only include the manner in which Players should bare their share of the burden, and the way Owners should split money amongst themselves should not be collectively bargained.  

Until one of the sides change their stance on key economic issues and the Players are treated with more respect in this process, expect a protracted lockout.

Owners Make Latest Proposal.....Offer "Flex Cap"

by Kevin L Davis (@EsquireSports)

In their latest offer made to solve the labor impasse, the Owners have offered the Players what has been termed a "flex cap." While all the details of this system have not been explained, this system would include a "target cap number" of $62 mil, but in certain situations teams would be allowed teams to go over the cap, and certain exceptions would remain.  Players also would be guaranteed that they would receive a slice off the revenue pie that would be no less than $2 bil annually over the course of a 10 year CBA.

The dropping of the insistence of a "hard cap" coincides with my expectations. I never expected a hard cap to be implemented during this labor dispute. This is one of the biggest rights afforded to NBA players, so expect Players to right tooth and nail to keep it.  Seems now that even the Owners understand this as well, but I'm not sure if this is enough deviance from the "hard cap" to please the Players.