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2011 NBA lockout

2011 NBA lockout. Kevin Chu. Background. The 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.

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2011 NBA lockout

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  1. 2011 NBA lockout Kevin Chu

  2. Background • The 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.

  3. Timeline • 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.

  4. Timeline • 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.

  5. Timeline • December 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.

  6. Points of Contention • There were many provisions in the new CBA • I picked 6 points to show the owners and player’s disagreements about the CBA. • Ending the lockout • Split of Basketball Related Income • The Salary Cap • The Luxury Tax • An Amnesty Clause • The Mid-Level Exception

  7. Ending the Lockout • Although 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: 10 • NBPA: 15

  8. Split of Basketball Related Income • Under 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: 35 • NBPA: 30

  9. The Salary Cap • Team 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: 20 • NBPA: 25

  10. Luxury Tax • Team 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: 20 • NBPA: 20

  11. Amnesty Clause • Team 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: 10 • NBPA: 0

  12. 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: 5 • NBPA: 10

  13. AW protocol The 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=3/13 • So each side gets ~57.

  14. Compare to Real Life • Mostly 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.

  15. Impacts of the NBA Lockout • Estimated $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.

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