Unionization on the NBA Unionization Term Paper

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The result is an increasing gap between the richest and poorest teams that would reinforce disparities around and earning power, concentrating productivity into monopolistic dominant teams with a concommitant reduction of competition in play and consumer price. The result is less competition for higher prices and restricted options for most employees.

Under a bargaining agreement negotiated with a players' union on the other hand, all employers could offer baseline salaries negotiated with players at various tiers, based on productivity, tenure or any legal conditions the teams collaborated to offer should the players agree, which could result in salary reductions, salary caps, various distribution of BRI revenue and perhaps reduced 'frictional cost' of having to bid for talent every season (Feldman, 2012, p. 1233). This stability could reduce turnover and search cost and thus slow ticket price increases, and then if players agreed to additional free agent conditions in the negotiated contract, leave additional revenue for enticing elite talent to enhance the drawing power of the necessary but lower-skilled core team. The players conceded to many of these very conditions in the 2011 negotiations prior to the impasse, and then dissolving their union and thus taking away the owners' ability to collaborate without incurring draconian penalties under anti-trust regulation. Furthermore, as long as the players are still represented by a union, even after the prior contract expires, the League has the right under NLRA either to uphold the terms of the prior, expired contract, or to impose the "last, best and final offer" immediately prior to declaration of impasse (Feldman, 2012, p. 1240). The moment the players decertify, however, the employers can define any terms they want, but the players can, and did, sue over any collaboration (Beck, 2011, n.p.). The League and teams had already preemptively sued for immunity for the lockout before the players' vote to decertify (Feldman, 2012, p. 1252).

The union and League reached impasse over the owners' ability to offer unlimited compensation for free agents above and beyond core compensation as per the prior agreement (Article XI, NBPA, 2009, p. 237). The players decertified after federal arbitration and filed suit under the Sherman Act because the League wanted to restrict the amount individual teams could pay the most-productive superstars, which could have the effect of increasing the lower-earning teams' ability to compete for elite talent (Beck, 2011). The NBA tried to argue that the League should be exempt from anti-trust prosecution on a number of grounds, but since both lawsuits were dropped, no new ruling settled the issue (Feldman, 2012, p. 1252).

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Ironically, the League ended up conceding to the union's final demand that free agents be allowed to negotiate compensation above and beyond contractual limits, which could be seen to reduce competition if the wealthiest teams could achieve higher income bidding up compensation for the most-elite players. The owners offset this by a revenue-redistribution tax on such spending, which will underwrite subsidies for lower-earning teams (Beck, 2011) along with players' earnings concessions achieved before the bargaining impasse. The players aimed to and achieved increased competitiveness for the highest-earning elite players, but the League aimed to and perhaps achieved increased competitiveness for the entire system, by relinquishing bargaining power to the most-competitive free agents above and beyond the collective agreement negotiated with the wider players' union. At the same time, shorter contracts under the new agreement would seem to increase player diversity across the various teams, while reducing employer savings from lower turnover and 'search' cost at the same time streamlining renegotiations under a blanket contract. These agreements required the players to reconstitute their union, which they voted for in due order by 1 Dec. 2011 (Sandler, 2011, n.p.). This entailed both parties first drop their competing suits, after both of which events the League and recertified players' union were able to sign the contract that allowed launch of a delayed and shortened 2011-2012 NBA season.

Conclusion

Both sides in the NBA-player dispute gave up concessions in order to field a season at all, after sacrificing revenue from missed games they both would have shared. The reason the two sides failed to reach agreement was over salary caps for the highest-earning players, which the League argued would increase competitiveness for the lowest-earning teams. The players forced the owners back to the table by voting to decertify their union, which achieved a different legal jurisdiction where the owners could not collaborate in setting employment conditions. The players found it worth agreeing to extensive earnings concessions in order to achieve a durable employment contract, but the owners had to capitulate to preserve their right to collaborate in much the same way. The owners ended up achieving free-agent compensation caps indirectly by penalizing teams instead of capping salaries, and the players recertified their union. Since both sides dropped their lawsuits as condition of agreement, the courts added no new precedent to the existing case law and so there is nothing to prevent the very same situation from arising again in six years when the first opportunity for renegotiation.....

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