The Collective Bargaining Process and the NBA Lockout: What You Need to Know

Billy Hunter (NBPA Executive Director) & David Stern (NBA Commissioner)

It’s the year of the lockout.   While there appears to light at the end of the tunnel for the NFL, experts are less optimistic about the NBA.   The main event in any labor stoppage is the collective bargaining negotiations.  But what exactly is a CBA?  Why doesn’t it violate antitrust laws?  And what are the issues the NBA and its players will be negotiating during collective bargaining?  We answer those questions and more in this article based off Marquette Law professor Matt Parlow’s article, The NBA and the Great Recession: Implications for the Upcoming Collective Bargaining Agreement Renegotiation.  Click here for the full article.

Background Information: A collective bargaining agreement (CBA) is the governing authority on employment in a professional sports league.  The collective bargaining process is governed by the National Labor Relations Board (NLRB).  The NLRB established jurisdiction over professional sports in, American League of Prof’l Baseball Clubs v. Ass’n of National Baseball League Umpires.   The NLRB allows players to unionize and negotiate employment terms with their respective leagues.

CBA Requirements: In order for a CBA to be valid, several mandatory items must be negotiated.   These include: hours, wages, and working conditions.   If either side refuses to negotiate on these subjects it is considered an unfair labor practice.

CBA and Antitrust Laws: Without exemptions, the collective bargaining process would be illegal under antitrust laws.   This is because antitrust laws seek to eliminate restraints on commerce due to collusion among competing businesses (in this case the professional basketball labor market).   However, labor law aims to advance negotiations between unions (NBPA) and multi-employers (NBA team owners).  The collective bargaining process is immune from antitrust laws under certain exemptions if the circumstances meet a three-prong test:

  1. The restraint that would otherwise violate antitrust laws must primarily affect only the parties to the collective bargaining relationship.
  2. The restraint must involve a mandatory subject of collective bargaining.
  3. The collective bargaining must have been accomplished through arms lengths bargaining.

Issues in the NBA’s collective bargaining negotiations:

  • Reducing Revenue Devoted on Player Salaries: Currently NBA teams devote 57% of their revenue towards player salaries. Owners hope to lower this to about 40%.  The league will also look to cutting both the length and pay for maximum player salaries.
  • Salary Cap: The league has its eyes set on a hard cap.  This meaning no team could spend over the set amount for any reason.  Currently there are several exceptions to the cap, including the “Larry Bird” exception where a team could go over the limit to resign a current player.  Players are adamantly opposed to a hard cap.
  • Revenue Sharing: Players believe the financial problems of the NBA are due to the inequity between large and small market teams.  The NBPA will likely demand reform in this area before conceding any percentage in revenue.
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