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A Study in Conflict Analysis
Founded in 1946
3rd-most lucrative sports league in the world
$3.384 Billion in basketball-related income in 2006-2007
NBA Owners
NBA Structure
NBA Players[Unionized]
CollectiveBargainingAgreement
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000
1954
AverageSalary
Owners were frustrated Players salaries were increasing
Salaries
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000
1954 1976
AverageSalary
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000
1954 1976 1983
AverageSalary
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000
1954 1976 1983 1991
AverageSalary
Salary Cap: Maximum amount a team can spend on player salaries
Calculated as percentage of league’s income.
Example:• In particular year, League brings in $3 Billion• Salary cap agreement is set as 50%• 50% of $3 B = $1.5 B• Divide $1.5B by 30 teams = $50 M
1983: Salary Cap Introduced
“Soft” Salary Cap – Teams have exceptions, and can find loopholes.
Owners would ideally implement “hard salary cap”, but the players would never accept such a plan.
“Soft” Salary Cap
Star players were demanding large contracts. If one owner refused, another would accept.
Teams were spending too much to be competitive.
Salaries Revisited
Example:1996Shaquille O’Neal7 years, $122
Million
March 1998 – June 1998
Owners vote to re-open the collective bargaining agreement.
Owners insist on “luxury tax” – 100% tax on every dollar spent over salary cap.
Players reject, they want to keep the current system, or slightly decrease salary cap percentage.
The Conflict
i. NBA - Owners/Commissioner (David Stern)
ii. NBPA/Players Union (Billy Hunter)
[Billy Hunter][David Stern]
1. Implement new Collective Bargaining Agreement
2. Accept NBPA counterproposal3. Lockout the players 4. Use replacement players if at an
impasse
1. Accept owners’ plan2. Table counterproposal3. Reject proposal/Strike
NBA
New Plan N Y N Y N Y N Y Y N Y N Y
Accept Counter Y Y N N Y Y N N Y N N Y Y
Replacement Players
N N Y Y Y Y N N Y N N N N
Lockout N N N Y Y Y N N Y N N N N
NBPA
Accept Owners’ Plan
N N N Y Y Y N N Y N N N N
Counterproposal N N N N N N Y Y N Y Y Y Y
Strike N N N N N N N N Y Y Y Y Y
Decimal … 2 3 4 … 29 30 31 32 33 … 95 96 97 98 99 …
NBA
New Plan N Y N Y N Y N Y Y N Y N Y
Accept Counter Y Y N N Y Y N N Y N N Y Y
Replacement Players
N N Y Y Y Y N N Y N N N N
Lockout N N N Y Y Y N N Y N N N N
NBPA
Accept Owners’ Plan
N N N Y Y Y N N Y N N N N
Counterproposal N N N N N N Y Y N Y Y Y Y
Strike N N N N N N N N Y Y Y Y Y
Decimal … 2 3 4 … 29 30 31 32 33 … 95 96 97 98 99 …
NBA
New Plan N Y Y N Y N Y Y N Y N Y
Accept Counter Y Y N Y Y N N Y N N Y Y
Replacement Players
N N Y Y Y N N Y N N N N
Lockout N N Y Y Y N N Y N N N N
NBPA
Accept Owners’ Plan
N N Y Y Y N N Y N N N N
Counterproposal N N N N N Y Y N Y Y Y Y
Strike N N N N N N N Y Y Y Y Y
Decimal … 2 3 … 29 30 31 32 33 … 95 96 97 98 99 …
NBA
New Plan N Y Y N Y N Y N
Accept Counter Y Y N N N N N Y
Replacement Players
N N Y N N N N N
Lockout N N Y N N N N N
NBPA
Accept Owners’ Plan
N N Y N N N N N
Counterproposal N N N Y Y Y Y Y
Strike N N N N N Y Y Y
Decimal … 2 3 … 29 32 33 … 96 97 98 …
10 possible states remain
1 2 3 4 5 6 7 8 9 10
NBA
New Plan Y Y Y Y N Y Y Y N Y
Accept Counter N N N N Y N N N Y N
Replacement Players
N N Y N N N Y N N Y
Lockout N Y Y N N Y Y N N N
NBPA
Accept Owners’ Plan
Y Y Y N N N N N N N
Counterproposal N N N Y Y Y Y Y Y Y
Strike N N N N N N N Y Y Y
Decimal 17 25 29 33 34 41 45 97 98101
NBA NBPA
NBA
New Plan 10 -7
Accept Counter 6 5
Replacements -5 -7
Lockout -3 -4
NBPA
Accept Owners 10 -7
Counterproposal 6 5
Strike -4 -3
Initial weightings
Both parties in favour of signing a contract rather than moving to strike or lockout
Preference Vector was created from option weightings
Equilibrium predicted at State 4
NBA
x x E x x x x x x x Overall stability
r r r u u u r u u u Player stability
1 2 4 6 5 3 8 7 9 10 Preference vector
4 4 2 6 8 8 UI’s
6 9
NBPA
r r r u r r r u u u Player stability
5 9 4 8 6 10 7 1 2 3 Preference vector
4 4 6 7 UI’s
8
Equilibrium predicted at State 41 2 3 4 5 6 7 8 9 10
NBA
New Plan Y Y Y Y N Y Y Y N Y
Accept Counter N N N N Y N N N Y N
Replacement Players
N N Y N N N Y N N Y
Lockout N Y Y N N Y Y N N N
NBPA
Accept Owners’ Plan
Y Y Y N N N N N N N
Counterproposal N N N Y Y Y Y Y Y Y
Strike N N N N N N N Y Y Y
Decimal 17 25 29 33 34 41 45 97 98 101
Adjusted option weightings for NBA and NBPA
Resulted in new equilibrium states
New option weightings
NBA takes tougher stance
NBA NBA New NBPA Old
NBA
New Plan 10 10 -7
Accept Counter 6 3 5
Replacements -5 0 -7
Lockout -3 0 -4
NBPA
Accept Owners 10 10 -7
Counterproposal 6 3 5
Strike -4 -1 -3
2 new equilibriums
NBA
E E E E Overall stability
r r r r r r r r u u Player stability
1 2 3 4 6 7 8 10 5 9 Preference vector
4 8 UI’s
6 10
7
NBPA
r r r u r r r u u u Player stability
5 9 4 8 6 10 7 1 2 3 Preference vector
4 4 6 7 UI’s
8
New option weightings
NBPA takes tougher stance
NBA NBPA Old NBPA New
NBA
New Plan 10 -7 -10
Accept Counter 6 5 7
Replacements -5 -7 -7
Lockout -3 -4 -1
NBPA
Accept Owners 10 -7 -10
Counterproposal 6 5 7
Strike -4 -3 0
1 different equilibrium
NBA
E E Overall stability
r r r u u u r u u u Player stability
1 2 4 6 5 3 8 7 9 10 Preference vector
4 4 2 6 8 8 UI’s
6
NBPA
r r r r r r r u u u Player stability
5 9 4 8 6 10 7 1 2 3 Preference vector
4 6 7 UI’s
8
Revised option weightings
NBPA misinterpreted preferences of NBA
1st level hypergame
NBA NBA by NBPA NBPA
NBA
New Plan 10 10 -7
Accept Counter 6 0 5
Replacements -5 2 -7
Lockout -3 2 -4
NBPA
Accept Owners 10 10 -7
Counterproposal 6 0 5
Strike -4 0 -3
NB
PA
perc
eiv
ed
gam
e
NBA
E ETrue overall stability
E Overall stability
r r r u u u r u u u Player stability
1 2 4 6 5 3 8 7 9 10 Preference vector
4 4 2 6 8 8 UI’s
6 9
NBA as perceived by NBPA
r s s r u r u u u u Player stability
3 2 1 7 6 10 4 8 5 9 Preference vector
3 3 7 7 10 7 10 UI’s
2 6 6 8
4
NBPA
E E Overall stability
r r r s r r r u u u Player stability
5 9 4 8 6 10 7 1 2 3 Preference Vector
4 4 6 7 UI’s
8
Conflict settled at state 6:
Eventually, the NBPA revised their counter-proposal and resubmitted
The NBA acceptedthis new proposal
NBA
New Plan Y
Accept Counter N
Replacement Players
N
Lockout Y
NBPA
Accept Owners’ Plan
N
Counterproposal Y
Strike N
Season was salvaged (shortened schedule)
Irrevocable loss of TV ratings Estimated loss of $500 million in
player salaries
Practice?
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