Sunday, October 23, 2011

HEAT Check: Is the NBPA Strategy in the NBA Lockout Irrational?

NBA reporters and analysts that say the players should give in to the owners are missing three key points.

Decision-Making Is Not Rational
Any attempt at rational analysis of the NBA lockout that focuses on how much money the players are losing misses a key finding from behavioral economics: “Decision-making is not often as rational as traditional economics argues.”

That was a quote from Chapter 1 of Stumbling On Wins written by sports economists David Berri and Martin Schmidt. In the chapter, they explained that decision-makers in professional sports make the same mistakes over and over again because they have bad information.

In terms of the NBA lockout, though, the decision-makers have better information than the reporters, broadcasters and bloggers because they’re the only ones that have seen the financial information provided by the NBA (supposedly).

So who’s making an irrational decision: the decision-makers in the NBPA with the best information available or the outsiders without that information that decide to ignore behavioral economics and tell the NBPA what they should do?

See how it sounds? A little unrational. Fake ass fans like to act so dramatical...

NBA Owners’ Financial Losses
The NBA propaganda machine likes to point out that the players will lose more money during the lockout than they would gain if the owners accepted the concessions the NBPA made in their proposals.

The players were paid $2.1 billion for the 2011 season. That’s $2 billion they will never see if the NBA locks them out for an entire season.

NBPA Vice President Etan Thomas reported analysis showed a lockout would cost the owners $1.2-1.5 billion (see No. 5 in this blog post). That’s $1.5 billion they’ll never see if they lock the players out for an entire season, but the NBA propaganda machine doesn’t bring it up much.

The difference between the two groups' losses is that the NBPA was never going to get that $2 billion because the NBA always planned to lock them out for the season unless they gave the owners what they wanted in a new CBA. The NBPA knew that over two years ago and prepared for it. Fans can read about the plan prepared for the players and see evidence of it's execution.

The NBA, on the other hand, had complete control of the situation. They chose to give up $1.2-1.5 billion.

The obvious argument is that the owners will make up that lost revenue by getting a bigger chunk of change from the next CBA, but there’s no guarantee the NBA will get the money they want from the players.

Why is that?

NLRB Is the NBPA’s X-Factor
The NLRB case filed by the NBPA is the wild card the NBA can’t beat.

If the NLRB finds the NBA guilty of “Refusal to Bargain/Bad Faith Bargaining”, then it can result in a federal court forcing the NBA to end the lockout, play the season under the expired CBA and send the owners’ dreams of "an opportunity to make a few bucks" up in smoke. legal expert Lester Munson reported on Friday that sources say the NLRB appears ready to act on the NBPA case.

What was that sound? It was David Stern shitting bricks.

Maybe the NBPA decision-making isn’t so irrational after all.

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