Expert Panel Weighs in on NBA Lockout

The Legal Blitz asked three sports law experts to make five predictions on the NBA Lockout and the fallout. The panel includes:

Marc Edelman is an assistant professor at Barry University School of Law.  Edelman has published 18 law review articles and serves as a legal consultant on sports and antitrust matters. Edelman is an alumnus of The University of Michigan Law School.

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Daniel E. Lazaroff is a professor at Loyola Law School Los Angeles and director of the Loyola Sports Law Institute.  Lazaroff has written extensively in the area of sports law and antitrust. He is a member of the Sports Lawyers Association and earned his law degree from New York University.

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Mathew Parlow is the Associate Dean for Academic Affairs and an Associate Professor of Law at Marquette University Law School.  He has written extensively on sports law issues, including a 2010 article analyzing how the recession has impacted the NBA’s labor situation.  He earned his J.D. at Yale University Law.

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How much, if any of the NBA season will be missed?

  • Edelman: Perhaps a lot.  The NBA is represented by the law firms Proskauer Rose and Skadden Arps: the same two firms that represented the NHL during the 2004-05 lockout.   That year, the NHL owners sacrificed an entire hockey season, but ultimately achieved large salary concessions.  NBA owners may be willing to sacrifice to same, in hopes of winning a war of attrition against the players.
  • Lazaroff: I think the season will not be lost, but I do believe that a full schedule will not be played because the labor dispute will last beyond opening day. Hope I am dead wrong on this.
  • Parlow:I think the entire season will likely be missed.
  • How do you see the salary cap issue being resolved?

  • Edelman: At the end of the day, I do not think much will change.  Lower the cap too much, and the NBA will face two problems.  First, some star players will go overseas.  Second, more players will form “super teams” like the Miami Heat.  While it may sound counterintuitive at first, teams in cities like Cleveland actually need a higher cap to compete for players against teams in more desirable markets, such as Miami.
  • Lazaroff: I would expect that there will be a tighter cap, but not the NFL or NHL version. Fewer loopholes but not a strict, hard cap.
  • Parlow: I think we will see a hard cap — though perhaps one slightly higher than the one the owners are suggesting right now — but it will be phased in over a longer period of time to allow adjustment and to allow some of the current longer-term deals to wind down.
  • How will revenue sharing be different?

  • Edelman: Again, not much.  Owners in large markets paid a lot more money to initially purchase their teams, so they are not going to like the idea of giving any more of their revenues to small-market owners who paid a lot less for their teams.  If the NBA owners vote to increase revenue sharing, expect an animated opposition and perhaps lawsuit from New York Knicks owner James Dolan.  Just a few years ago, Dolan, who also owns the New York Rangers, sued the NHL when it attempted to centralize and share equally the revenues from NHL team websites.
  • Lazaroff: This might be the easiest issue to solve — I think that both the NBPA and NBA would like to see an increase in revenue sharing. Whether it is resolved in the context of a new CBA or not, I don’t know.
  • Parlow: I suspect that revenue sharing will not change very much, if at all.
  • Who do you see as the “winner” in the end, players or owners?

  • Edelman: The players.  At the end of the day, the players’ best weapon against the league involves entering China without them.  The NBA has been eying China for years as a revenue opportunity, and both Shanghai and Beijing have become basketball obsessed.  However, just last week, a few NBA player agents have suggested that if there is no season the NBA players might go on a barnstorming tour of China, without the NBA.  If the players seize the opportunity to develop a Chinese basketball footprint that excludes the NBA, NBA owners will likely cave.
  • Lazaroff: Anytime labor gives back some of what they have already won in negotiations, management is a winner. Still, my guess is that there will enough in any new CBA for both sides to claim they did well.
  • Parlow: Given that the players had an awfully good system working for them under the just expired CBA, I would say the owners.  But the players will still be doing plenty well under the new terms that the new CBA will likely contain.
  • Is it possible that any financial restructuring will break up certain teams (Miami Heat)?

  • Edelman: Possible, yes, because we saw it in hockey.  However, I am not sure that any members of the Big Three would choose to leave Miami, even if forced to take additional pay cuts.  In addition, I am not sure competitive imbalance is bad for the NBA.  The 2010-11 Heat are like the late 90s New York Yankees in baseball.  Fans in most markets will pay top dollar to see them play, and root against them.  It’s probably good for revenues.
  • Lazaroff: I feel strongly that the Miami Heat will not be dismantled. I also think that the union will not respond well to any discussions about contraction – too many lost jobs.
  • Parlow: Not in the immediate.  I think the longer period of time for a hard cap to be phased in will allow for teams to stay together for quite some time.  Moreover, even if there was a hard cap that phased in earlier, assuming it was in the $60 million range or more, a team like the Heat could easily keep their big three and still fill a team roster (admittedly, with lowered-priced contracts/players).
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