Monday, November 14, 2011

NBA Players Reject Owner Deal and Explaining Disclaiming Interest

News broke today that NBA players have rejected the NBA's CBA proposal and have moved to disclaim interest.

You may have heard the term disclaim interest and decertification thrown around in the NBA and NFL context. They are different but have the same result.

Disclaiming interest arises when the Union terminates its representation of its players. On the flip side, decertification is when the players walk away from the Union revoking its ability to negotiate on their behalf.

The net effect is the same: the Union is dissolved, the players are on their own and the players can bring antitrust lawsuits against the NBA challenging its ability to have its teams get together and impose restrictions on the NBA marketplace, such as the NBA draft and free agency rules.

Remember that under antitrust law, competitors (which the NBA teams arguably are) can't get together and set restrictions on players. However, before decertification/disclaiming interest, these antitrust violations are found inside the protective bubble that is the CBA. That means players cannot sue because these conditions are agreed upon by the Union and teams. However, decertification/disclaiming interest has the effect of bursting the protective CBA bubble setting the antitrust violations free, thereby affording players the opportunity to sue the league for these antitrust or competition law violations.

Disclaiming interest may be the better option for players since it's instantaneous. In contrast, decertifying takes time (formal vote; 45 to 60 day wait).

One must wonder why this wasn't done months ago. In any event, we have now entered Phase 2 of these negotiations. This isn't the end of the season as it may ultimately be a way for players to gain some leverage. However, this isn't a positive development. NBA offers are expected to get worse, and many owners think the last 50/50 revenue split offer was too high to begin with.

Stay tuned.

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