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A CBA/lockout FAQ: Understanding what's going on

Posted on: July 1, 2011 1:17 am
Edited on: July 1, 2011 12:35 pm
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Posted by Royce Young



The NBA's owners voted to lock out the players on Thursday, meaning that officially, the league is operating under a lockout.

We're all hearing that term being tossed around a lot. I overheard two guys talking about it at a restaurant yesterday in fact.

"You hear there's a lockout? I can't believe this!"

"Me either. So ridiculous. What exactly does that mean?"

"Something about a Collective Bargaining Agreement. And money."

Pretty much, yeah. But there's more to it than that. What is a lockout? What happens to the players? Why does the league do it? What's decertification?

So I put together a little Lockout FAQ. Hopefully most of your questions are answered here. And in normal language, not lawyer talk that the two guys at the restaraunt would never understand.

1. First, a did you know:
The current Collective Bargaining Agreement isn't actually expiring, as many have been saying. It's actually being terminated by the owners. The old one signed in 1999 had an early termination option for the owners and they are exercising it. Just wanted to get that out there.

2. Why are the owners doing this?
The league claims it lost $300 million last season and that 22 teams lost money. That might not be entirely true. But the owners and league maintain that they are operating within a broken system that prevents all 30 teams a chance at profitability. Supposedly, that's all they want. Owners are trying to to reduce things like how much Basketball Related Income (BRI) the players receive, guaranteed contracts and the length of contracts.

Basically the why is that the owners want to make money. What else could it be?

3. I don't get it. The league is reportedly pulling in bigger revenues than ever before. How are they losing money?
Rising costs. That's what the league says. It costs a lot more to operate a franchise now than it did 10 years ago. Player salaries have steadily moved up, arenas cost more and on and on. And the players don't really disagree. Concessions have been made such as the players saying they'd be willing to drop receiving 57 of the BRI to 54. That's a pretty big give.

But the owners want more. They claim the number needs to be in the 40s. They want a hard cap. Some would say that this is a lot the owners' fault by giving stupid contracts out -- also known as "Travis Outlaw" -- but that's just the nature of the beast. The system the NBA operates in allows for that and so to remain competitive, bad contracts are just part of the game. Owners want to try and cut down on some of that to, you guessed it, make more money.

4. What do the players want?
More of the same, really. The NBA is on a path to explode financially over the next 10 years and the players want to make sure their piece of the pie is still big. As Kevin Durant said recently, " The way the CBA worked before is something we really liked. There’s no need to change it. Things have been going very well for us, as far as the league, revenue and things like that are concerned. We want to stick with that pace, but of course the owners want to go a different way with it."

That's kind of the mindset, although they are willing to flex some. How much is the question. And when it happens I guess is the other.

5. So what exactly happens in a lockout?
Exactly that. Players are physically locked out from the practice gym, weight room, video room, etc. No contact between teams and players. Essentially, the teams have suspended their employees which in this case, are the players. The reasoning is to encourage them to sign a new CBA, one that the owners like.

During a lockout, players lose their salary, all benefits and basically any connection to the team (sponsored travel, use of practice facilities, equipment and the like). There won't be any trades, no signings, no extensions, no meetings, no practices and most importantly, no games. The league entirely freezes. People will be laid off, money will be lost. It's an effort to bleed the players so that eventually they'll cede and bargain with the owners.

Right now, the players are taking a Tommy Lee Jones from The Fugitive approach though. I... don't... bargain.

6. Why does the league use a lockout?
A lockout isn't anything new. The league locked out players for four months in 1995. They did it for a few hours in 1996. And then the big one that lasted six months spanning between 1998 and 1999 that resulted in 30 lost games.

Clearly, like I said, the league is looking to try and capitalize on irresponsible players that didn't handle their checkbooks wisely. By locking them out, players don't draw paychecks anymore. Which means a lot of players are in big trouble. Which means they'll want to give in to a deal quicker. You're saying, "But they're millionaires!" Yes, in terms of salary, they sure are. But you'd be surprised how many NBA players live on a paycheck-to-paycheck basis. All those cars, houses and needy fourth cousins add up quickly.

But don't misunderstand: The league and owners are losing money during a lockout too. The idea though is that they have more in the coffers and the owners through their other businesses, can handle missing out on on gate revenue from games.

7. So is that why some players have said they'd play overseas?
Some have said they'd consider it, but let's be realistic: Kobe Bryant, LeBron James, Dwyane Wade and others aren't going to do that because they don't need to. Mid-level and lower income players might, but it's a major risk. If a player were to get injured, his NBA team could void his current contract when a new CBA gets settled.

8. When is free agency then?
Whenever the lockout is lifted. That very well could mean a scattered, scrambled two-week free agency period in September. Or January (gasp). For example, during the 1999 lockout, free agency, training camps and two preseason games were all stuffed into two weeks.

9. What about players like Russell Westbrook that are eligible for an extension right now?
They've got to wait. Everything ceases. And I mean everything.

10. Are players going to get retropay then when the lockout is lifted?
No, players won't get paid back. That's the whole idea of the owners locking them out. They're kind of punishing them for not signing a deal. Whatever paychecks they miss out on during the span of the lockout, they don't get back.

11. How many games can be missed and the league still have the NBA Finals?
I don't think there's actually a set number on that. In 1999, David Stern issued a drop-dead date of Jan. 7 to get a deal done so that the league could build a 50-game season, which was seen as enough of a regular season. I would imagine if a lockout bled into February, that the postseason would be in jeopardy.

12. What happens if Otis Smith decides he wants to check in with Dwight Howard about his summer workouts?
Reportedly, that results in a $1 million fine. And the league could actually punish any way it sees fit. Lost draft picks, money penalties, a phone call from David Stern berating you and your extended family -- who knows. The league means serious business about this stuff though. And you don't want to mess with The David.

13. Could the NBA players do what the NFL players tried to do and decertify?

14. Hang on, come back to that one. What's decertify actually mean?
Basically the players would be separating themselves from the union. The union could announce it is "disclaiming interest" in representing players in their employment within the NBA. Without a union representing them, players pretty much become individual contractors, instead of a collective bargaining group. Because of that, legal restrictions such as max salary, the mid-level exception and the draft would become vulnerable to federal antitrust laws.

It's kind of a way for players to hit back at the owners from locking them out. The NFL players tried it and succeeded, but only momentarily before a judge overturned it in the U.S. Court of Appeals' Eighth Circuit.

15. OK, so again, are the players going to decertify?
They could. They aren't going to though, at least not right now, so says Billy Hunter. The NBA has never decertified, not even in the prolonged lockout in 1998-99.

Clearly the union is interested, at least at the moment, in still trying to negotiate a deal. Hunter said that decertification wouldn't really help the cause and he's probably right. When that path appeared to work for the NFL, I'm sure Hunter and the union took notice. But since it was overturned by a judge and the lockout reinstated, that whole mess is something that the players want to avoid. For now, at least.  

The goal for the players is to get back to work. They want to draw their paychecks and play ball. Decertification just makes it all that much more complicated. What's going to fix this is getting back to the bargaining table and finding a deal both sides can live with. Not a legal battle over antitrust laws. The best way to end this is to keep talking, which is what Hunter and the players intend to do.

16. Does everyone have to grow a lockout beard now?
It's not a rule and David Stern already said he's not going to be donning another. But nobody's stopping you if you really want to.

17. Will there be a 2011-12 season? Should we totally panic?
It's just my opinion, but I have no doubt there will be a 2011-12 season. There's a lot of doom and gloom talk going around, but I just can't picture the league really taking the risk of ruining all this momentum and goodwill by losing a bunch of games. I mean, considering how good a place the league is in right now, if the NBA were to lose a whole season or even just a lot of it, it seriously taints David Stern's career. You think he doesn't realize that?

Don't panic yet. If it's September 1 and nothing has been done, start panicking. All you're missing out on right now are some free agent signings, Summer League and maybe a couple trades. No basketball has been lost yet. We're still a solid four months away before that happens. "Lockout" sounds all big and bad, but there is a lot of time left before things actually get ugly.

18. When's the next bargaining session? Please say tomorrow.
That's yet to be determined as of now. Deputy Commissioner Adam Silver said everyone was going to take a break over the holiday but would start prepping to get back to work at it on Tuesday. By all indications, the two sides are going to keep the dialogue going. In July of 1998, after negotiations fell apart and the lockout began, the sides went a month without talking and that was a minor 90-minute session.

Derek Fisher seemed to believe that talks would resume in a couple weeks though.

19. Who is more right -- the owners or players?
I'll be honest: I can't really decide. Both have very valid points. Hence the reason we're at this impasse. Both sides have made fairly major concessions but both sides don't feel like it's enough. Again, therefore a stalemate.

Remember though: This is billionaires arguing with millionaires about money. There's no way around that. And it's the owners that are the ones pushing things to the limit. So if you want to point the finger at someone and get angry, take it out on the owners. Both the players and owners are to blame, but the lockout was imposed by the owners.

Finding a middle ground is going to be a challenge. Finding a solution that keeps players happy and feeling like they will share in the successes of the league over the next 10 years while also making sure owners have a path to profitability won't be easy. But nobody makes money when games aren't being played. Nobody makes money when games aren't on TV. There's a lot of motivation to get something done. Ticking off fans is a pretty good one. Maybe the best one. Don't think for a second that David Stern, the players and everyone else doesn't totally understand that.

But neither side is willing to blink just because of that. The best leverage the players have is the fact the league is in its best position it has been in some 15 years. Eventually someone will. It's just a matter of how long that's going to take.

20. When will players start feeling the affects of this?

Actually, not until Nov. 15. That's when they're due their first check. So that's kind of a scary part. Up until then, the lockout really isn't going to sting anyone's bank account, which means the players might be fine digging in until then.

21. Doesn't this totally suck?
Yes. Yes it does.
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