Mendoza School of Business

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

Published: October 12, 2011 / Author: Kurt Helin



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.

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Topics: Mendoza