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NBA’s Collective Bargaining Agreement – Beneficial or Not?

By Riten Dhawan

Larry Bird, one of the greatest players in basketball history, throughout his illustrious career, accumulated career earnings in the sum of $24 Million. Markelle Fultz, entering his third season having played a total of 33 games, has already earned over $25 Million. Bird played in the 1980s whereas Fultz is currently playing. Over these three decades, the stark change in total player earning has been brought about through continuous changes in the collective bargaining agreement, a document regulating the terms and conditions of NBA players’ employment. The collective bargaining agreement is routinely amended with the agreement of the National Basketball Players’ association and the league itself.

The NBA’s CBA has allowed for greater negotiation rights for the players themselves, who now enjoy a greater share of the profits earned by franchises, in addition to various other clauses which have proven to be mutually beneficial to both teams as well as players. The economic impact that a player has on a franchise cannot be understated, especially for teams based in smaller markets such as Cleveland and Oklahoma. Lebron James, one of the best players in the world, is one such player whose presence on a team has proven to be extremely beneficial in economic terms to the city he was playing for. As per a 2017 study, when Lebron’s was playing for the Miami Heat and then the Cleveland Cavaliers, there was a 13% rise in established bars and restaurants in a 1 mile radius of the stadium where the respective teams played. This rise also led to 23.5% rise in employment. The NBA collective bargaining agreement allows teams to pay their own players much more than other teams, increasing their chances of retaining their player instead of losing them to big markets such as Los Angeles and New York. Klay Thompson signed a max contract with his resident team, the Golden State Warriors, worth $190 million, over $40 million more than he could have earned had he signed for another team. Retaining high value players also allows teams to increase their revenue from ticket and merchandise sales. There are also losses faced with regards to tourism lost when a high profile player leaves a team.

Similarly, the collective bargaining agreement allows the NBA to maintain competition in the league. Through implementation of a singular salary cap for multiple teams, the league essentially ensures that richer owners cannot flex their financial resources to sign the best players for more money. This rule also ensure that teams can only sign a limited number of superstar players as such players command higher salaries than other players and the more superstar players a team signs, they more the teams cripple themselves with respect to flexibility in roster construction.

One of the biggest advantages of having a collective bargaining agreement, however, is the financial stability it provides to NBA players. NBA players often leave college after a single year to play for the league, which leaves them without a formal degree. This greatly limits the career opportunities for them post retirement. The cba allows for constant increases in the salary cap along with greater freedom for players to choose the deal that benefits them best in terms of finances. Players now get a higher share of the revenue from TV rights of the NBA, which has greatly enhanced their bargaining power with the NBA. Due to clauses such as this, the CBA has greatly improved the future financial outlook for NBA players.

There are two primary criticisms of the NBA collective bargaining agreement. The first is that the CBA is unjustly favorable towards superstar players who get a disproportionate amount of the money from the salary cap. For example, players eligible for a super-max extension are eligible to sign a contract worth 35% of a team’s salary cap. That leaves only 65% remaining for the other 14 roster spots. While there is no doubt that superstars get much more money as when compared to normal role players, the collective bargaining agreement as a whole has allowed NBA players to earn much more than they used to have. Fringe players would barely be earning a $1 Million per season if the CBA were not framed as it is now where many role players command contract worth $12-15 Million per season. Another argument used against the CBA is the possibility of lockout-shortened seasons. While lockouts are an extreme possibility, there have still been four lockouts to-date, with the 1998-99 lockout lasting for over 6 months and the 2011 lockout lasting over 8 months. It is true that lockouts can severely affect revenues and TV right deals. However, lockouts usually occur when one side of the bargaining agreement feels the terms are too unjust and the other side is unwilling to compromise. Financial losses are not an excuse to deny either side just clauses in the agreement and the rare probability of the occurrence of a lockout make it a trivial argument at best.

The collective bargaining agreement has reaped several benefits to both the NBA league as well as NBA players. The NBA is one of the richest leagues in the world and the CBA ensures a situation where the two stakeholders charged with ensuring the league’s success reach compromises that present a win-win situation for everyone and further the NBA’s continued prosperity.

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