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.