For the Love of the Game: The Role of Communication within the NBA Labor Dispute

9 Sep

As the NBA Player’s Association and team owners met for just the second time since the NBA July 1 lockout, the sense of urgency to get a deal done is finally setting in. However, this lockout is a very complicated issue, and certainly not one that will be handled in two or three discussions. With all of the media coverage that has spawned as a result of the lack of actual basketball, the average fan is still largely in the dark about why basketball is not set to be played.

The primary problems break down to the following:

  • NBA owners collectively lost $400 million in the 2010-11 season.
  • The only way to reverse this trend is to cut costs.
  • The most important variable costs owners deal with are players contracts.
  • Players do not want to take less money.

Of course, other political issues exist, but at the root is the money problem. This impasse reached by the Player’s Association and the NBA owners reminds me of a traditional prisoner’s dilemma. Both sides are incentivized to make decisions that lead to a non-ideal outcome; however, if each side were to talk and coordinate its decisions more effectively, each side could achieve a better solution. The dilemma can be broken down as follows:

As displayed in Figure 1, the dominant or preferred strategy for each firm is not to concede because of these reasons:

  • The owners would rather make $10 million or no money at all.
  • The average player would prefer the $7 million that he made last year.
  • However, they would be willing to take the $4.5 million from going abroad.

The Nash equilibrium, or the likely outcome, is a lockout because both sides’ strategy is not to concede. In any prisoner’s dilemma, the problem is a lack of communication. If communication existed, the prisoners would have the ability to mutually choose the right decision.

The NBA is not a prison; communication in this setting is actually required. This is what makes the NBA’s situation so interesting. The problem in this case is the lack of honesty in communication. The players and the owners both want the same outcome whether they admit it or not.

The reason that owners have a team in the first place is because they are die-hard basketball fans. In reality, most owners would be willing to pay $13 million to have a basketball season next year – in the case of someone like Mark Cuban this number is probably closer to $130 million. On the other hand, the NBA players alternative of international play may be similar monetarily but certainly not on a psychic level. NBA players grew up watching Michael Jordan. They grew up dreaming of wearing an NBA logo and being celebrities in truly the most American sense of the word. NBA players would rather play here for less; they just don’t want the owners to know.

The players and owners have certainly not discussed this reality in the few meetings they have had. Without communicating their symmetric goals, both sides are putting themselves in a proverbial prison cell. As the recent debt ceiling debacle displayed, the NBA is not alone. These disputes can get ugly, especially when egos are involved. In these types of situations, each side must meet more frequently in order to establish a trusting relationship. Only once this relationship is established can honest communication take place. This communication is imperative to the NBA’s future. So if you happen to know any owners, players, coaches, or even a waterboy, send this message their way. I can relate to both the owners and players in that I want the NBA in 2012.

This problem is ever-present in bureaucratic America today. Let’s just hope the S&P doesn’t downgrade the NBA to the NB.

by Dylan Glenn

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