Friday, March 11, 2011

Owning A Team Ain't All That

It appears today that the National Football League and its Players Association will be unable to conclude a new collective bargaining agreement, and an extended lockout will ensue. With the looming expiration of the NBA's collective bargaining agreement on July 1st, many pundits are predicting a similar work stoppage in pro hoops, and a possible cancellation or curtailment of the 2011-12 season, as happened in '98-99.

Without the players, what does assets a pro team owner "own"? Likely, you have an exclusive long-term lease with the best arena or stadium in town. You own all the intellectual property relating to your team's name, logo, colors, and so forth. You are party to various marketing deals with corporate sponsors. Finally, you are party to television and radio broadcast agreements. But without any players to populate your team and play games, all that will not get you much more than a cup of coffee. I suppose the team can still take revenue from jersey sales during a lockout/strike, but if a lockout were to drag on and the long-term viability of the league appeared questionable, merchandise sales would slow considerably, aside from sales of older vintage jerseys (aka "throwbacks", in the argot) to hipsters or serious fans.

What is to stop the NBA players from setting up their own league? Let us assume that star players like LeBron James and Dwight Howard were sufficiently charismatic that they could persuade at least a couple hundred NBA-caliber players to join them, and to find rich investors who could back the venture, and unbooked arenas that would associate with their venture. In other words, why shouldn't they form another ABA? Why shouldn't they own their own venture and draw all the residual profits?

[There are, of course, many minor-league professional hoops leagues in the United States right now, including one called the American Basketball Association with an unwieldy 60 teams. None of them has the world's best players, though; one organization has a monopoly on those guys.]

Basketball, with its flesh-baring uniforms and lack of helmets, naturally emphasizes individuals more than other team sports like baseball, hockey, or American football. Sure, soccer sets up the individual athlete for glory, particularly with the rarity of goals, but the television camera tends to take a bird's-eye view of the pitch, making each player's grimaces and bellows hard to discern. A basketball court, at 94' by 50', comprises about 7% of the surface area of a FIFA soccer field, the latter being about 100 meters by 64 meters. A roving cameraman can easily capture the blood, sweat, and tattoos of a hoopster, whereas soccer players just look small on television. Additionally, trends in cheap shoe manufacturing, easy communications technology, and favorable free-agent rules have helped to push individual basketball players into prominence relative to their team, much more so than baseball or gridiron players. So again, why shouldn't locked-out NBA players form their own league?

This recent article by law professor Michael McCann suggests, at Paragraph 10, suggests that locked-out NFL players could join other sports leagues, although he does not raise the possibility of the players starting their own league. In the NBA setting, it is important to note that under Section 9 of the NBA's Uniform Player Contract, each team effectively has the protection of a "non-compete clause": during the term of a player's contract, the team has the right to go to court and get an injunction prohibiting the player from playing "for any other person, firm, entity, or organization." However, it is unclear whether an NBA player contract would still be considered valid during a lockout. If the contracts are not in good standing during a lockout, then it seems that Section 9 would have no force. We should also note that many NBA players will become free agents on July 1st, though they are mostly middling players like Tyson Chandler and Nene Hilario. Those players certainly can escape the non-compete clause of Section 9, though, due to happenstance, the 2011 free-agent class would not be spectacular enough to support a financially sustainable new league.

It is unclear whether the non-compete clauses would be enforceable in court against Wade, James, Howard, Bryant, Paul, and the rest of the NBA's greatest stars, who would normally, without a lockout, be bound by valid contracts in 2011-12. [I welcome more advice from labor/employment law experts.] But why shouldn't they try? Should they fail, and should a new NBA labor agreement be concluded, it is unlikely that NBA owners would not welcome them back. The threat of a breakaway league is certainly a powerful negotiating position.

There would be other obstacles, too: Perhaps the existing TV networks with NBA coverage would refuse to do business with this new league, hoping to remain in good standing with the owners of the old "NBA" should the status quo ante return. But there are enough cable, satellite, and internet television channels these days that surely the new league could get distribution somewhere. The same arguments apply to the league's other business partners: corporate sponsors, apparel manufacturers, arenas. Surely some competitors might arise to fill the hollow if the old vendors and customers boycott the new league. The apparel manufacturers derive more oomph from their association with individual players, anyway.

Finally, would FIBA recognize the new league? This is not extremely important, as the new league could easily do business within the United States and Canada without dealing internationally. To orderly work with European (and, increasingly, Chinese) clubs for cross-oceanic movement of players, though, membership in FIBA would be vital. Likely, if the new league could prove viable for a couple seasons, FIBA would treat the old NBA as dead and buried.

Some will argue that the stars' competitiveness, sense of their place in history, and "respect for the game" would discourage them from such a yawning step. But what would cement their stature in time better than putting the mighty NBA owners out of business? Basketball with the world's greatest players is the same game, regardless of who runs the show.

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