• Blog >
  • Commentary on the NBA Lockout

Commentary on the NBA Lockout

On July 1, 2011, the NBA locked out its players.  This led to a labor battle that lasted for almost five months, resulting in the cancellation of about a quarter of the season.  The labor battle included unfair labor practices charges, mediation, extensive negotiations, the decertification of the players' association, and the filing of antitrust suits.
I was one of several members of a think tank assembled to help several sportswriters understand and comment on the legal issues in the labor dispute.  I wound up being quoted extensively in the media.  Here is a collection of excerpts from those articles.
As the negotiations reached a critical point and the cancellation of games became a real possibility, I was quoted on ESPN.com:
The time for posturing, equivocation and half-hearted offers is over. When this week's bargaining sessions failed to result in a deal, NBA owners set a hard deadline: An agreement needs to be in place by Monday or the first two weeks of regular-season games will be canceled.
David Holmes, a corporate attorney based in Houston and who provides legal advice for some of my lockout-related work, has been in similar situation many times before. He believes the critical point in the settlement process doesn't come until the client -- and the opposing party -- are put at risk and forced to make a real choice.
"The risk is not the lawsuit itself," he said. "Instead, it is the point at which the client is faced with a settlement option that, if turned down, might be genuinely regretted later."
If Holmes is representing a client with a claim for $1 million, his opening settlement offer might be $950,000, with the defendant offering $25,000.
"No one is at risk yet," he says. "My client will nearly always be willing to roll the dice on going to court instead of taking $25,000. Conversely, unless my case is airtight and the slam dunk of all slam dunks, the defendant will be willing to risk going to court instead of paying $950,000."
Saying "no" at this point doesn't come with any risk. It's not a real choice -- nothing is at stake yet.
As time passes and the court date draws nearer, the settlement offers are going to change. One or both parties will be put at risk, because more is at stake. There is now a downside to making the wrong choice.
"The point at which this happens is going to depend on the relative strength of the case," Holmes said. "If I've got a 50/50 case, and the other side offers $250,000, I have to start seriously discussing the pros and cons of the offer with the client."
Holmes says there may be a litany of reasons to take the offer rather than roll the dice. "For one, the client gets paid real money he can use," he said. "The lawsuit is over, and being in a lawsuit is not fun. We don't have to go to court. We don't have to face a jury. We don't run the risk of a judge or a jury seeing things the other way. If we win, we don't have to endure a lengthy appeal. It's over today, and the client can move on to more productive pursuits. If I'm charging an hourly fee, the client doesn't have to pay me anymore."
So saying "no" now comes with potential consequences. That's a real choice.
"Until you get to that point," says Holmes, "you don't really know how you feel about the case. You don't really start asking the hard questions."
What does this have to do with the NBA labor negotiations? The players had to make their first real choice this week.
"The risk started when the owners put something on the table that the players might regret saying 'no' to," Holmes said. "When the owners were demanding a $45 million hard cap or offering the players 46 percent of revenues, it was easy to say 'no.' That's not a real choice. It's just a formality."
Once the owners' offer increased to 50 percent, it became a different ballgame. Holmes, experienced at negotiating in these situations, thinks NBA commissioner David Stern made a strategic error.
"At that point, the players needed to absorb the offer and think about what they really wanted to do," he said. "I fault Stern for taking so long to get to that point. When he finally got there, it was the end of the day and the players who were present were already locked into a 'no' answer. They didn't have time to truly come to grips with a real choice."
Many of these comments were also quoted in Hoopsworld:
As the dispute headed to federal mediation, I was quoted again on ESPN.com:
Unable to resolve their differences after two years of pre-lockout negotiations and 107 days of work stoppage, the two sides in the NBA labor dispute have enlisted Cohen, director of the Federal Mediation and Conciliation Service (FMCS), to help break their current impasse. Cohen is talking separately with both sides on Monday, and then bringing everybody together on Tuesday to try to hammer out their differences.
. . . .
Mediation can help in these situations. “I've been in a lot of mediations that I thought were hopeless, only to see a mediator pull it out,” said David Holmes, a Houston attorney who has been in this situation many times before.  “A mediator like Cohen is going to cut through that nonsense and focus on what both sides have to lose from a lost season. He is going to make both sides face that reality.”
. . . .
Will Tuesday’s session proceed according to this script, with the sides emerging after a long day smiling, shaking hands and clutching an agreement? “In order for a mediation to succeed,” said Holmes, “both sides need to have something to lose.”  Holmes has seen cases where one side has nothing to lose because the case is a slam dunk, and there is no compromise position possible.
In cases like that, the mediation might last only a few minutes. But this situation is completely different from that sort of worst-case scenario. “Both sides do have something to lose here,” said Holmes. “A canceled season is a no-win scenario for everyone.”
. . . .
All this gives Cohen room in which to work. “These are the sorts of things that a mediator can bring up to the owners,” Holmes said. “I've been on the receiving end of this sort of speech more than once, and it is sobering for both me and my client to hear a neutral party spelling it out. Cohen can say to the owners, ‘What if you're wrong and the players don't crater?’"
The success of Tuesday’s mediation will rest on Cohen’s ability to get both sides to step away from the cliff. Even though the owners have a long-term advantage and the players will likely wear down first, an extended lockout -- and especially a canceled season -- is a nightmare scenario for both sides. Cohen will need to get each side to see that it has underestimated the resolve of the other side, and that a compromise position is infinitely preferable to the alternative.
The success of the mediation, and perhaps the NBA season, will rest on Cohen’s ability to do just that. Finding two sides that want to settle is easy. Finding a compromise both sides can live with is much harder.
“I've been involved in stuff a lot more contentious than this that settled in mediation,” said Holmes. “It's not guaranteed to succeed by any means, but this is a very positive development.”
As the union moved toward decertification, I was quoted on ESPN.com:
So why would the players explore decertification now? Such a move would be like throwing a grenade into the negotiating room. "We aren't talking about decertification as a negotiating tactic," said David Holmes, a corporate attorney based in Houston. "We're talking about war."
After the union decertified, I was cited as a contributor to this article on ESPN.com:
Thankfully, the lockout finally ended, and the season resumed.  Nonetheless, we are likely to see more sports labor disputes as the owners and the players fight over the eyepopping amounts of money that are generated by professional sports in this era.
David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes