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NBA contract talks highlight negotiation failures

9/30/2011

For the second time in the past several months, a major professional sports league has entered a lockout between team owners and the league's player's union. However, unlike the National Football League's stalling, which was resolved with a new collective bargaining agreement in July, the National Basketball Association's holdout may not reach a resolution for a prolonged period of time.

The NBA's contract talks between player representatives and owners have been rocky, with both sides unwilling to compromise on certain terms of use. The largest issue is the league's salary cap, which several teams have been continually going over with payrolls. While these teams do pay a luxury tax for spending more than the limit, many team owners are pushing for a hard cap to be placed in the form of a "supertax" that would charge teams increasingly hefty fines for every dollar spent over $70 million, $75 million and $80 million. Player reps are against this move, claiming it would be a deal breaker for their side.

Currently, only the Los Angeles Lakers, the Orlando Magic, the San Antonio Spurs and the Boston Celtics have more than the league's $70 million salary cap committed to their rosters for the upcoming season, whenever that may be.

While this point remains the largest issue on the table, neither side has been willing to acquiesce and accept a deal in order to resume the upcoming season. In fact, the 2011-2012 season looks so unlikely to take place that many star players have already signed deals to play overseas.

Business owners may want to remember this fact in their own negotiations. If they take too hard a stance and drive potential partners away, those partners may move elsewhere.