By Jeffrey Standen
The NBA and its players appear unable to reach an agreement on the terms and conditions of labor. A number of proposals have been rejected. From available reports, the primary difference appears to center around the division of income. I suspect, however, that the division of income forms only part of the dispute; the owners have been seeking some very fundamental alterations in the structure of the league, including limits on individual salaries, terminable contracts, and a tightened salary cap. But even if the popular reports are correct and the revenue split is all that stands in the way of an agreement, the fact that the sides have been unable to arrive at satisfying division implies more is at work than simply recalculating percentages.
What could be emerging in the NBA is a complete re-working of league arrangements. The NBA, like most professional sports leagues, embodies a delicate balance between owners with profitable teams and those without, between players paid huge sums and those paid much less, and between agents on the inside and those on the out. There are a lot of moving parts here, and the threat of union decertification that has emerged in the last few weeks suggests that the whole edifice may be about to crash to the ground.
I suspect there is something important going on with the talk by players of decertification. As we’ve seen recently with the NFL, the usual purpose of decertification is to unleash an antitrust suit against the owners. But it appears that the NBA players who are pushing for decertification may not be targeting the owners. They may be targeting the union.
1. As a formal matter, decertification ends the union, after a period of time. With the end of the union comes the end of the owners’ collective exemption from antitrust law. This means that the owners’ ability to act jointly in setting the terms and conditions of labor would then be subject to antitrust scrutiny. Although the owners have some very good arguments to justify their collective action, the fact of the matter is that sports owners in general have not done well at the bar of justice. If these hypothetical antitrust suits were to be filed and proceed all the way to the merits, the owners could find many of their questionable labor practices ended, including the rookie draft, salary restrictions, including maximum salaries and the cap, and limitations on freedom of movement by both players and franchises. Decertification could radically change the league.
2. So decertification does provide a means to attack restrictions imposed by owners, albeit by a very long-term and unpredictable process. But decertification provides this means by eliminating the union. Might the intermediate step be the real goal? Might the players be better off without a union?
3. It depends on the player. Like other unions, the NBPA is organized around the principle of “one member, one vote.” Each player’s vote counts the same. This practice can be problematic in any union where members might have significantly disparate interests. Salary and tenure in professional sports varies markedly among players. In the NBA, star players typically make several times the salary of the journeyman. Arguably, the stars could make even more. The NBA is a league of stars, and with only a few players on the court at a time, stars determine winners and losers. Despite the salience of stars, NBA teams have deep rosters, high minimum wages, and carefully negotiated salary cap exceptions. All of these features are designed to funnel higher wages to veteran, league-average players. Thus, a lot of the money putatively earned by the stars is allocated to average players. The union exists for its majority, and the union’s business is to redirect money that would go to stars toward the union rank and file. In a workplace situation where salaries are so disparate, such an arrangement is a powderkeg.
4. The owners have a similar predicament. Most businesses are organized in such a way that the person who has the largest stake in the business is accorded the most control. Someone who owns 70% of a corporation, for instance, will not expect merely “one vote” among other owners in setting the course of the enterprise. Yet that’s exactly how the NBA, like other sports leagues, is arranged. The teams that generate the most revenue and thus keep the league afloat are given no more say in running the league than is the most inefficient, money-losing owner of the worst franchise. “One member, one vote” is not only an odd way to run a business; it condemns the league’s owners to a perduring state of squabbling among the wealthy and the poor. And the squabble has a theme: the poor want to take from the rich. The small-market owners want the big-market owners to send them a cut of their revenues. Because the owners need to be sure that any revenue-sharing arrangement is protected from antitrust attack, the owners use the periodic reopening of the collective bargaining agreement as an opportunity to reset revenue sharing agreement. Every labor battle contains an “owner battle” too. Like star players, highly profitable owners chafe in having to share their earnings with their less-productive brethren.
5. So the existence of the union sets up a class battle of the haves and have-nots (granted, among wealthy people). The practice of “one member, one vote” means the have-nots among both players and owners outnumber the haves, and will use the collective bargaining process to increase their earnings. Yet it doesn’t have to be this way. It is not written in stone that professional athletes must be represented by a union. Might the stars have had enough? Lebron James is paid only 13 million dollars per year (yes, not bad). But that’s 13 million per year for 82 games plus another pile of playoff games. On an open market, his salary would likely increase by several times. (For evidence, ten years ago, without a salary cap and without free agency, Michael Jordan was paid a salary over 30 million per year for a similar slate of performances.) The star players, and the “star” franchises, are leaving a lot of money on the table. I can’t imagine that sits too well with them, all this talk about unity and brotherhood notwithstanding.
6. Which finally brings us to the agents. They have been mostly invisible during the entire labor dispute. Yet they bear, as usual, the brunt of media displeasure, being blamed for fueling the complaints of the star players, holding up union approval, and generally standing in the way of the return of NBA basketball. (I don’t see why it’s wrong or nefarious for an agent to advise a star player that the player could significantly increase his earnings if only the union gave greater deference to the stars who generate most of the profits.) The process would be smoother if the agents were given a place at the table. The view that the agent is paid by the player and has interests that dovetail with the player is antiquated. The word “agent” is a misnomer. It is more realistic today to think of sports agents as placement professionals (the ubiquitous “headhunters” that are common in white-collar occupations). Sports agents represent numerous clients with similar skills who seek a limited number of positions. Although the agent answers to the player (and the union), their salary comes from the money paid by the team. (Some headhunters are paid directly by the business.) If there were no agents, it is probably not the case that all of the agents’ salaries would go to an increase in player salary; at least with respect to the journeyman, league-average player, that savings would likely accrue to the team. Thus, for these players, agent salaries are paid by the team, in effect. Why shouldn’t the agents negotiate the terms of their salary?
By bringing the agents directly into the process, the NBA would have a better chance at finding a place of provisional repose among its many competing elements.
Jeffrey Standen is associate dean and the Van Winkle Melton Professor of Law at Williamette University. He teaches Sports Law, Gaming Law, Evidence and Remedies. He is also the author of a blog called The Sports Law professor (http://thesportslawprofessor.blogspot.com/) He can be reached at jstanden@willamette.edu
