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NBA owners play “ultimate game” poorly, so players won’t cave

Oct 12, 2011, 12:52 PM EDT

derek Fisher AP

I have been asked this question a number of times in the last 48 hours — why don’t the players just take the owners 50/50 offer and get back on the court?

Because the players see the offer as patently unfair. You can argue all you want that if they took the owners last formal offer — where the players would get 47 percent of the league’s basketball related income, down from 57 percent in the last deal — that they still would make more than 99 percent of Americans. They still would be paid handsomely, more than you and me, to play a game. Doesn’t matter, the players see the offer as unfair.

That’s where the owners have bungled the negotiations, said University of Notre Dame Finance Professor Richard Sheehan. Yes, the players are the ones losing in the short term, no doubt. But Sheehan, who wrote  “Keeping Score: The Economics of Big-Time Sports” said that doesn’t matter if they believe the offer is unfair. It’s a tested economic principle rooted in the “ultimate game.”

“Economic evidence suggests that the more intransigent the players believe the owners’ position is, the less likely they are to settle — even when it’s in their best interests,” Sheehan told ProBasketballTalk.

“Why?  The best evidence comes from what economists call ‘the ultimatum game.’  In that game two players must interact to decide how to split some amount of money, say $100. The first player chooses the split while the second player makes the decision to accept or reject the offer. No counteroffers are allowed. If the second person rejects the offer, neither player receives anything.  If the second person accepts, they split the money as the first person had offered.

“From an economically rational perspective, the first person should offer something very small, for example $1 from the $100.  The second person would be better off with $1 than with nothing — which is what the second person would receive if he/she rejects the offer.  But when the game has been played, offers like the $99/$1 split are typically rejected. That is, unfair offers are rejected even when it is advantageous for the offer to be accepted.

“At this point, frankly, I don’t think it really matters what the owners think or want,” Sheehan continues. “The players may yet give in to their demands, but the longer the players hold out and the harder the line the owners draw, the more the players are going to view the owners’ position as being fundamentally unfair and may refuse any package other than what the players have proposed.”

It comes back to how big a win the owners want — and they want a thumping, a 50-point win. They want a larger percentage of the overall pie and they want dramatic system changes. They want it all.

And they have provided the players no way to call the negotiations a win for them. These are very competitive players who need to feel they got something out of this, so far David Stern and the owners have not provided that out.

Until they do, until the players see the deal as fair, we will not see basketball. It’s that simple.

  1. therealhtj - Oct 12, 2011 at 1:47 PM

    Kurt, your bias towards the players becomes more and more blatant with every post. How about the fans? What do we gain by rehashing the same lousy system that simply puts a few more bucks in the owners pockets while the players will continue getting stupid contracts with no recourse.

    Small market, big market – it really doesn’t matter. A well run team will be a well run team. Unless you’re lucky enough to draft an NBA superstar, all the money in the world won’t buy you a championship. But sign one lousy contract, and count yourself out of the running for the duration.

    • stangz11 - Oct 12, 2011 at 4:26 PM

      Agreed. The bias is completely obvious and the players should take the 50-50 split regardless. Trying to defend them from taking a fair deal is nothing short of ridiculous. The owners, in my opinion, aren’t being greedy; the players are. After all, they’re the ones who want the bigger slice of the pie. Besides, the more money that goes to the league means more money spent on fans (improving stadiums, maybe lower ticket prices once revenue comes up). If the players take it what are they going to do with it? Go buy 3 Ferrari’s? If they REALLY wanted to play, they would have accepted a 50-50 shake awhile ago.

  2. slowclyde86 - Oct 12, 2011 at 2:26 PM

    Kurt, your shilling for the players is becoming embarrassing. Seriously.

    The players have not accepted the offer because they have not felt any real pain yet. The lost checks have not not hit their individual accounts. In the end, be it in three months or 1+ years, they will accept what the owners want because they really have no other options. Go play overseas? Start their own league? Leverage their extensive non-basketball related skills? Please.

    The owners have all the leverage. All of it. “Fair” will have nothing, absolutely nothing, to do with the final settlement.

  3. savocabol1 - Oct 12, 2011 at 3:06 PM

    Holy crap I wish I would get the last three mins of my life back from reading this. This site is going downhill fast. You interviewed a professor at a college to tell you that having some of something is better than having nothing at all?

    Wow.

  4. thetooloftools - Oct 12, 2011 at 4:38 PM

    This is by far the stupidest story I have read yet on this situation. Nothing else is even close.

  5. bosutton - Oct 13, 2011 at 12:27 AM

    Yeah, it’s totally stupid to explain the pyschological underpinnings of why people react the way they do to a deal. I mean that’s totally off topic.. oh, wait.

    Savocabol1 – the professor said it was rational from an economic point of view to take any amount of money, but this is consistently shown not to be how humans act. This is pretty clearly related to the state of the lockout.

    • slowclyde86 - Oct 13, 2011 at 9:26 AM

      bosutton: “Yeah, it’s totally stupid to explain the pyschological underpinnings of why people react the way they do to a deal. I mean that’s totally off topic.. oh, wait.

      Savocabol1 – the professor said it was rational from an economic point of view to take any amount of money, but this is consistently shown not to be how humans act. This is pretty clearly related to the state of the lockout.”

      Nice to know Kirt’s second handle is bosutton. Dumbest. Article. Ever.

      • yanivvinay - Nov 9, 2011 at 4:28 PM

        oh sport blogs, where meatheads and nerds bump uglies into some horribly innane conversation. Yea, the article states the obvious. Does anybody realize that these guys are just throwing out articles to help keep their own jobs? Theyre kinda going to lack content when the one thing they are allowed to talk about is locked out. fast forward a month and the script is still the same.

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