Labor Pains

In every dispute between Major League baseball players and owners before 1994, it was a simple case of good and evil. The owners seemed intent on exploiting their unique monopoly with a plantation mentality towards players. Players, led by union chief Marvin Miller, simply wanted to be paid what the owners deemed they were worth.

By 1994, players had achieved a competitive labor market system over the rotting corpses of old ownerships. The remaining Lords of the Realm attempted to roll back some of those gains, locking the players out and cancelling the World Series. In that case, the owners were merely 90% wrong, the players 70% so. That they managed to share 160% of blame tells you everything you need to know about that dispute, which ended in the nearly complete dissolution of the owners' position ... yet again.

What was the difference between 1994 and all the other labor-management dustups? It's simple, really. The free market -- one in which information flows freely and buyers have choices -- is a magical concoction that has made Westerners the richest, freest people the planet has ever hosted. But the free market is not perfect. It particularly unravels around the edges, where millionaires and billionaires decide each other's salaries in the board rooms of public corporations, and where those bereft are commended to their own wiles without the information or the choices that advantage the rest of us.

Professional sports are a unique set of businesses. Teams compete against each other in the most direct way, so that miniscule differences in quality are  printed in the paper each morning for all to appreciate. The leagues are closed cabals in which fierce competitors are also collaborators. In basketball and baseball, the labor market is the product. Finally, whole regions of the country identify with these businesses in ways that CVS or McDonalds or even Ford must view wistfully.

In other words, sports are different. For the reasons above and several others you can probably discern, they need a different kind of labor model, still based on the free market, but with some significant controls that limit company risk and enhance return on investment.

Are you listening NBA players? You face two technicals from the owners and a flagrant foul from the fans unless you wise up and make some hefty concessions in contract negotiations. Your situation is not MLB's and it's not the NFL's.

For one thing, NBA teams have opened their red-stained books. Thousands of people fill arenas in Cleveland and Sacramento and Atlanta and elsewhere dressed as empty seats. At the same time, teams routinely skirt the cap rules designed to constrain salaries and provide a level of parity. Like baseball, the NBA is becoming a league of elephants and mice.
 

The players are uniquely positioned to accommodate the league's demand for a harder cap and lower salaries, because they actually need to make less money. A study by the Toronto Star in 2008 found that 60% of NBA players are bankrupt five years after retirement, despite an average annual salary of $5.36 million. Unlike the brutes of the gridiron, cagers don't sacrifice their bodies  or suffer truncated careers. Hoopsters don't need more money because they can't handle what they have.

Witness the perfect storm for owners: they're losing money and are willing to sacrifice the season while players are addicted to every penny they get. It's an imbalance not just in the balance sheet, but in the balance of power. And not for nothing, it also means that fans will side with the struggling franchises over the bling-bedecked players.

Want to keep the golden goose alive, ballers? Give the owners most of what they demand and laugh all the way to the bank. You might have to sell one of your cars, but you're going to lose it anyway in the Chapter 9 filing.

b