Labor and law professor Michael LeRoy is an expert in collective bargaining and the author of a legal casebook titled "Collective Bargaining in Sports and Entertainment." He discusses the prospects of resolving the 104-day National Basketball Association lockout in an interview with News Bureau Business and Law Editor Phil Ciciora.
What do NBA players want, and how far apart are the two sides?
The players want the status quo on revenue sharing, which gave them a 57 percent cut of revenues under the expired labor agreement. The NBA owners wants to pay them 47 percent, but appear willing to compromise by splitting the revenue pie on a 50-50 basis.
How does the NBA salary cap and luxury tax system differ from the systems employed by the National Football League and Major League Baseball, respectively? Which model would be the better fit for the NBA and its comparatively modest revenues?
The NFL and the players' association recently agreed on a salary cap of $120 million per team. Players bargained for a gain by requiring teams to spend a minimum of 90 percent of payroll toward the cap. That ensures that more of the revenue-split trickles down to teams who, in the past, have had much lower payrolls.
Baseball has no salary cap, but it has a luxury tax. This is hugely advantageous to players, and it creates the possibility for severe payroll inequality between teams such as the Detroit Tigers and the St. Louis Cardinals in mid-major markets, and the New York Yankees and the Atlanta Braves in major markets. But the rich teams with fat payrolls do not necessarily do better on the field than their modest brothers. The tax is meant to brake spending by rich teams, and share the wealth with poor teams.
The NBA has a very complex pay system, with a soft cap and a luxury tax. The cap limits how much salary a team can pay in a year, but is "soft" because certain types of payments do not count against the cap. This is where the luxury tax comes into play. When teams exceed the cap, they pay a tax to the league. The money is redistributed in equal shares to teams that are under the cap. In effect, this means that the NBA plays Robin Hood, taking a bit from rich teams to help poor teams.
What's best for the NBA? Ultimately, whatever the league and players bargain. That said, they are not likely to move away from the cap and tax system; the question is how much money will be in play for the soft cap and tax.
Does the NBA need a "hard" salary cap and non-guaranteed contracts, similar to the NFL?
This would sure help the NBA because they could firmly control labor costs. Unlike football, they are unlikely to achieve it. Why? First, the NBA is a more star-driven sport with a smaller percentage of average or marginal players on a roster. Second, during the NFL lockout, players had nowhere to play. But basketball players are able to play in international leagues for decent money, so they have less incentive to cave on this issue.
NBA owners, including Charlotte Bobcats owner and former player Michael Jordan, say small-market teams are unable to compete, despite the league's luxury tax. In professional football, Green Bay, New Orleans and Pittsburgh are all small-market teams that are thriving. What can the NBA do to create a competitive balance?
This comparison explains why the work stoppage will likely be lengthy in basketball. Owners have no incentive to settle on players' terms. They will probably hold out until they get a model that looks more like the NFL.
Many star basketball players are turning to Europe as a way to escape the current labor strife. Considering Europe's economic difficulties, does that give the players much leverage to wait out a strike?
This is a new development in the labor relations of pro sports. It helps players because it provides decent income and enables them to stay sharp. It will likely make players less inclined to settle on terms proposed by the NBA.
How long do you see this dispute lasting? How likely is it that the season will be canceled in its entirety?
Get ready to watch lots of college basketball, as this has the makings of a long and bitter dispute. The NBA says its teams are losing money - so by not playing, many teams might be better off. Many players are off to Europe or elsewhere to play ball, so they are not missing any meals. When both sides get hungry enough, they will eventually be in a better mood to compromise. If college basketball and major league baseball take away enough NBA customers, these external threats might add some urgency to the talks - but that could take months.