FEATURE: The Sports Blawg with the Fordham Sports Law Forum
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AIR BALL: NBA Players Union Could Decertify Amidst Labor Dispute
Despite hopes that the NBA lockout was nearing an end, labor negotiations between the NBA and the players have yet to yield a new collective bargaining agreement (CBA). After extended talks on November 8th and 9th, the owners gave the players a last, best offer based on a 50/50 split of league revenues. If the players do not accept it, the NBA season will be in serious jeopardy.
The NBA work stoppage began after the league’s most recent CBA expired on June 30th. NBA owners initiated the lockout to negotiate a deal that gave them a greater percentage of the revenue. According to the owners, some franchises were in danger of not being able to meet their operating costs under the previous CBA. Not only are there no games during lockouts, but players do not get paid and cannot use team facilities, and front offices cannot make any personnel moves.
The two biggest issues separating the parties are the league’s salary cap system and the allocation of revenues between the league and the players. On the salary cap issue, the owners have called for a “hard cap” on player salaries. The hard cap system would set a uniform ceiling on the amount NBA teams could spend each year on player salaries. The last CBA included a “soft cap,” whereby teams could exceed the salary cap through a number of exceptions. Not surprisingly, the players are in favor of retaining the soft cap, but the league insists that it must have a hard salary cap to help reduce costs and improve parity. Because NBA players make less money under a hard cap system, they are vehemently opposed to it.
The sides also remain at odds over how to split league revenue. Under the last CBA, the players earned 57 percent of league revenues. Owners are demanding that number come down. The owners contend the NBA has lost more than $1 billion since the last CBA went into effect in 2005-2006, including $380 million in 2009-2010 and more than $300 million in 2010-2011. The players, on the other hand, want to keep that percentage around the same amount and have so far been unwilling to split the revenue pie 50-50, as was last proposed by the owners.
If negotiations continue to stall, the players could decertify the NBA Players Association. The public threat of decertification is a powerful weapon that the players’ wield because of the pernicious effect it tends to have on management and collective bargaining in general; decertification, after all, means that the union would lose its power to collectively bargain. Anticipating decertification, the league has already filed a federal lawsuit calling union decertification an “impermissible pressure tactic” that would have a “direct, immediate and harmful” effect on CBA negotiations.
The power of the decertification threat lies in the tension between United States Labor and Antitrust law. Antitrust law prevents business competitors from working together to restrain trade and/or competition. However, collective bargaining encourages the very type of behavior that the anti-trust law makes illegal. To resolve this conflict, a judicially created “non-statutory labor exemption” was established, which shields collective bargaining agreements and relationships from attack under antitrust law. This protection extends even after the CBA expires with one significant caveat: the collective bargaining relationships must still exist.
If the players vote to decertify the union, the collective bargaining relationship is destroyed. As a result, the league would no longer be shielded from antitrust law potentially subjecting it to a lawsuit brought by the players which could seek both an injunction ending the lockout and monetary damages. Because antitrust lawsuits allow for treble damages (three times), the risk to the owners is severe.
While the threat of decertification is undoubtedly a powerful negotiating tactic, the actual execution of union decertification would be devastating. Upon decertifying, collective bargaining would be over. There would literally be no union with which the owners could negotiate. It would mean a complete annihilation of the negotiation process and a protracted in-court legal battle between the owners and players would ensue. This action by the players would virtually guarantee the cancellation of the 2011-2012 NBA season.
At the moment, the players remain unionized. However, with the NBA Players Union rejecting what the owners’ claim was their “final offer” earlier today, it is looking increasingly likely that the players will in fact decertify. As NBA commissioner David Stern explained, “we are about to go into the nuclear winter of the NBA.”
With no further labor meetings scheduled between the parties, time is running out to save a portion of the 2011-2012 NBA season.