Posted: Thursday June 30, 2011 1:47PM ; Updated: Thursday June 30, 2011 4:40PM
Michael McCann
Michael McCann>SPORTS LAW

Burning questions as lockout looms (cont.)

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Commissioner David Stern claims 22 of the league's 30 teams are operating in red ink.
Commissioner David Stern claims 22 of the league's 30 teams are operating in red ink.
Neilson Barnard/Getty Images

6) Would the NBA consider suing the players first?

It's unlikely, but if the NBA is genuinely concerned about the players trying to obtain a more favorable forum than the Eighth Circuit, it could file a declaration action in the Eighth Circuit. The action would be filed before the players' association disclaims interest and before the players file an antitrust litigation in a more favorable federal circuit. The action would ask a federal trial judge in the Eighth Circuit to rule that antitrust law does not yet govern in the dispute. Even if the action fails, it may offer a tactical advantage: it would start the litigation process in a league-friendly federal circuit, and would require the players' to offer arguments to move the case to another circuit. The NBA filed such an action in 1995 during negotiations for a new CBA, so it would not be unprecedented.

7) The NFL lockout seems poised to end in the coming weeks, and it looks like the 2011 NFL season will happen. Shouldn't that give hope that the NBA lockout won't lead to games being missed?

The NBA is in much worse financial situation than the NFL. "While NBA players object to the league's claims that 22 teams are in the red, despite record TV ratings and attendance and perhaps the best NBA season in the post-Jordan era, it is clear the NBA's financial outlook is discouraging. Compare that to the NFL, where not one of its 32 teams could show it was losing money.

NBA owners thus seem more likely to fight long and hard for major concessions from players, which Ian Thomsen already discussed. NBA players may be correct that a large portion of the league's economic problems can be attributed to the lack of local TV revenue sharing among teams, but owners seem convinced that dramatic changes in player compensation are necessary for a sustainable NBA.

8) How can long can players go without earning income from their NBA contracts?

That's the million dollar question, and it clearly varies by player and by the timing of payments on each player's contract. Players who have saved money in preparation of a lockout and who enjoy other sources of income, such as income from endorsement contracts or business ventures, are likely the best able to withstand a lengthy lockout. Players who live extravagantly and who finance purchases based on the expectation of future NBA income may encounter serious financial woe. Players' contracts also vary in the timing of payments, with some owed payments over the summer; those payments will be barred by the lockout.

While it is hard to assess how well players would deal with a lockout, it's clear that the longer a lockout lasts, the more players would suffer financially and the more they would be inclined to accept terms sought by the league. It would be interesting to see if, after a lockout, the players end up with better or worse terms than those currently offered by the NBA.

9) But can't NBA players recoup their income by playing abroad?

To some extent, but teams abroad normally have roster limits on the number of U.S. players; it would be unrealistic to expect that all 450 (or so) NBA players would find jobs in other leagues. Even if they could, most would earn much less money than they earn playing in the NBA, where the average annual salary is around $5 million. Players also have to be worried about getting injured during a lockout, as their teams would no longer provide them healthcare. NBA teams could also seek to suspend or even void players' contracts if, after a new CBA is ratified, those players show up to work injured.

10) Won't owners suffer from a lockout, too?

Sure, in the sense that they will lose out on various sources of income related to the playing of NBA games, including ticket sales and broadcasting revenue. They may also suffer from diminished fan interest -- a phenomenon which arose after the 1998-99 lockout and which could lower the resale value of franchises.

On the other hand, owners of pro sports franchises are among the wealthiest of persons on Earth and most have varied and substantial sources of income. Also, if we accept the NBA's financial numbers as facts, then 22 of the 30 NBA owners would be better off not playing games. In addition, a more owner-friendly economic system would likely raise franchise values, perhaps considerably.

11) What's your best prediction for tonight?

The reality is that the two sides are nowhere near a deal, they are running out of time, and the NBA's best bargaining tool is the lockout. I see a lockout happening.

On a more optimistic note, the two sides have clearly made progress in recent days and neither wants to see games missed. I would be surprised if the players' association immediately disclaims interest in representing NBA players; unlike the NFLPA, which by agreement with the NFL had to disclaim interest prior to the expiration of the NFL CBA or would have been barred from doing so for six months, the NBA players' association is in no rush. If the two sides believe another month or so of bargaining can get a deal done, then decertification may not be the right path. Following the lead of NFL commissioner Roger Goodell and NFLPA executive DeMaurice Smith would seem to make much more sense: have commissioner Stern and NBPA executive director Billy Hunter meet one-on-one and get a deal done.

Michael McCann is a sports law professor and Sports Law Institute director at Vermont Law School and the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law. He also teaches a sports law and analytics reading group at Yale Law School. Follow him on Twitter.

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