Bloomberg News

NBA Talks With Players Union Collapse; Federal Mediation Fails

October 21, 2011

Oct. 21 (Bloomberg) -- Three days of federally mediated labor talks between the National Basketball Association and its players union ended with no agreement, increased acrimony, no further talks planned and more lost games a virtual certainty.

The league and the National Basketball Players Association met for about five hours yesterday after the owners concluded Board of Governors meetings earlier in the day. NBA Commissioner David Stern did not attend the talks after leaving the owners’ meetings with the flu.

George Cohen, director of the Federal Mediation and Conciliation Service who oversaw the talks, said afterward that the two sides “have not achieved an overall agreement, nor have they been able to resolve the strongly held, competing positions that separated them on core issues.”

“No useful purpose would be served by requesting the parties to continue the mediation process at this time,” Cohen said in a statement.

The mediation lasted more than 30 hours over three days, and yesterday marked the 45th time the NBA has met with the union in the past 2 1/2 years to discuss a new labor deal, according to NBA Deputy Commissioner Adam Silver. The NBA locked the players out 113 days ago when the last deal expired.

Cohen said he would be willing to lead future mediation and both sides were complimentary of his efforts despite the failed results.

The sides are 2 1/2 percent apart on how to split basketball-related income from a league that took in $4.3 billion last season, Silver said after the talks broke off. That amounts to about $100 million per season.

Both Proposed ‘Bands’

Coming off a campaign in which Stern said the league lost about $300 million, the players -- who made 57 percent of basketball-related income in the last deal -- are willing to take less. The owners are now offering 50 percent, while the players are asking for 52.5 percent, according to Silver. Both sides also proposed “bands” that would shift the percentage depending upon the league’s financial performance.

“They made it clear that if our position was that we were unwilling to move beyond 50 percent, there was nothing else to talk about, and that’s when the discussions broke off,” Silver said.

“You guys were lied to earlier, it’s that simple,” responded union President Derek Fisher at a separate news conference that followed.

The talks deteriorated shortly after the owners returned from the Board of Governors meetings, as Portland Trail Blazers owner Paul Allen, the billionaire co-founder of Microsoft Inc. who is not a member of the owners’ labor-relations committee, attended the mediation, according to union attorney Jeffrey Kessler.

Small-Market Teams

Allen’s Trail Blazers are one of many small-market teams, and the union has said it’s these teams’ owners who are the most steadfast in not acquiescing.

“We were told Paul Allen was here to express the views of the other members of the Board of Governors, and that view was, ‘Our way or the highway,’” Kessler told reporters. “We were shocked.”

With Stern absent, Allen’s presence was intended to show that the owners had no intention of agreeing to anything above a 50-50 split of basketball-related income, Kessler said.

“Paul Allen said almost nothing,” he said. “We were told what Paul Allen’s views were. He was a silent but prominent presence in the room.”

With the first two weeks of the regular season -- originally scheduled to start Nov. 1 -- already wiped out, Silver said he would consult with Stern and the other owners before announcing the cancellation of more contests. Stern suggested in interviews leading into this week that more games were endangered if a deal wasn’t reached.

‘Very Tough Day’

“It was a disappointing last 30 hours,” said Peter Holt, the labor-relations committee chairman who owns the San Antonio Spurs. “We’re sitting here with no meetings scheduled. Hopefully we can get back to the table. Certainly a tough day, a very tough day.”

Billy Hunter, executive director of the union, said the league gave players a “take it or leave it” demand to accept a 50-50 split after the union already agreed to give back $1.1 billion over six years as compared to the last deal, and concessions regarding the system the teams play under.

“We’ve made concession after concession after concession, and it’s just not enough,” Hunter said. “We’ve fought too long and we’ve made too many sacrifices to get where we are.”

For Silver, the conclusion was a surprising one.

Toward Fifth Month

“I was, for whatever reason, a little bit more optimistic going into today than I had been in earlier sessions,” Silver said. “Obviously I was disappointed and sort of maybe overestimated where it turns out we were.”

Stern has said the league lost almost $200 million from the canceled preseason, and that each two weeks of wiped out games mean hundreds of millions more in losses. This could force each side to dig in deeper in a labor fight now headed toward its fifth month.

“It could be tougher than it has been in the past to get back together,” Holt said.

--Editor: Rob Gloster, Nancy Kercheval.

To contact the reporter on this story: Mason Levinson in New York at mlevinson@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net


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