2011 NBA lockout

2011 NBA lockout2011 NBA lockout

Kevin Chu

BackgroundBackgroundThe previous Collective Bargaining

Agreement signed on July 2005 was set to expire on July 2011.

Did not want a repeat of the 1998-99 lockout.

Negotiations on a new CBA began in early 2011.

The owners and National Basketball Players Association (NBPA) could not agree on the split of Basketball-Related Income and how the salary cap should be implemented.

TimelineTimeline July 1: The lockout begins

September 23: The NBA canceled training camp, which was to begin October 3, and the first week of preseason games, which were to run October 9 through 15.

October 4: The NBA canceled the remainder of the preseason.

October 10: The first two weeks of the regular season canceled.

October 28: All games through November 30 canceled.

TimelineTimeline

November 14: The NBPA dissolves labor union into a trade association.

November 15: The NBA canceled all games through December 15. Players filed antitrust lawsuits against the NBA in California and Minnesota federal courts.

November 26: The NBA owners and players reached a tentative agreement to end the lockout.

TimelineTimelineDecember 1: The NBPA re-formed as a

union.

December 8: The new CBA is ratified, officially ending the lockout.

December 25: The first game of the season starts.

Points of ContentionPoints of ContentionThere were many provisions in the

new CBAI picked 6 points to show the owners

and player’s disagreements about the CBA.

1.Ending the lockout2.Split of Basketball Related Income3.The Salary Cap4.The Luxury Tax5.An Amnesty Clause6.The Mid-Level Exception

Ending the LockoutEnding the LockoutAlthough both sides wanted to end

the lockout, the players were more pressured for the lockout to end

For most players, their NBA salary is their only source of income. The Owners are all investors and real estate moguls who have other sources of income.

Owners: 10NBPA: 15

Split of Basketball Related Split of Basketball Related IncomeIncomeUnder the previous CBA, income was

split 57-43 between the players and owners.

The owners claimed that the league lost 300 million last year and 22 out of the 30 teams failed to make profit.

Owners wanted the players to only have 47%. The players compromised with 53% but the owners would not agree.

Owners: 35NBPA: 30

The Salary CapThe Salary CapTeam Owners wanted a hard

salary cap in order to reduce player salaries and to close to close the gap between rich and poor teams.

Players wanted a soft cap so they could get more money. The players were very adamant that there would be only a soft cap.

Owners: 20NBPA: 25

Luxury TaxLuxury TaxTeam Owners wanted to have a

higher luxury tax to stop rich teams from overspending and overpaying players.

Players wanted a lesser luxury tax so rich teams would be willing to overpay. The players believed that a harsh luxury tax was essentially the same thing as a hard cap.

Owners: 20NBPA: 20

Amnesty ClauseAmnesty ClauseTeam owners wanted to be able

a player and remove his contract from the team salary.

Players did not care too much and they would still be paid.

Owners: 10NBPA: 0

Mid-Level Exception(MLE)Mid-Level Exception(MLE)Teams over the salary cap could

still sign players will a Mid-Level Exception currently valued at $5 million.

Owners wanted to lower the MLE to $2.5 million and only allow it to be used every other year.

Players wanted to keep the $5 million MLE the old CBA had it at.

Owners: 5NBPA: 10

Owners NBPA

Ratify the Agreement 10 15

Basketball Related Income Split 35 30

Salary Cap 20 25

Luxury Tax 20 20

Amnesty CLause 10 0

Mid-Level Exception 5 10

TOTAL 65 50

AW protocolAW protocolThe Owners original AW without adding in the luxury tax add up to 45 while the Player’s AW add up to 50. So the Owners get a harsher luxury tax and it becomes 65-50. We will say the fluid item is the BRI, rather than the luxury tax. 65-(35x)=50+(30x)X=3/13So each side gets ~57.

Compare to Real LifeCompare to Real LifeMostly consistent with what

happened in real life. All of the arguments were fluid so

even if they “won” it would not be a complete victory.

Ex. The players wanted the keep the $5 million mid-level exception, but the MLE in the new contract varied between $3 to $5 million depending on the current team salary.

Impacts of the NBA Impacts of the NBA LockoutLockoutEstimated $1 billion in lost

television advertisement revenue.Estimated 400 NBA related jobs

were laid off.Sports bars and other sports related

venues lost customers. The season was shortened to 66

games with less time to rest in between games. Many team trainers and doctors said that this led to an increased frequency of injury.