This has all come about because the current Collective Bargaining Agreement - the contract that determines what share of team income the players are paid - expires on July 1st. With players and owners at loggerheads over the details of the new CBA, the owners will proceed to lock the players out with no pay until a new contract is agreed upon.
The contract outlines how basketball income is split between the team owners and the players. The expiring deal sees the players earn 57% of basketball income. The owners have said that this simply cannot continue, and want to reduce the split to 52% for the players. With 22 of 30 NBA teams currently running at a loss, the current agreement must be changed or several teams will face being sold, relocated or even extinction.
The owners contend that at the present, with a $58 million "soft" salary cap, the teams cannot afford to continue. The current soft cap is a very complex system that allows teams to pay their players more than the cap allows in certain circumstances. This is done with the aim of allowing the teams to keep their better/more popular players, so increasing local fan support. In other US Sports, a hard-cap is used which has very few exceptions. The NBA team owners would like a hard-cap to be implemented to prevent players' salaries getting out of control. The players counter that this would prevent them from playing where they wanted to or earning as much money as they should be. This at present is the main obstruction in an agreement being reached.
When a "lockout" occurs, the players are effectively frozen out. They do not get paid, they do not get bought nor sold. This is well and good during the summer off-season (players are not paid normally in summer) but becomes a real issue once the Summer League and pre-season training camps are due to begin. The 2011 Summer League is already cancelled due to the ongoing dispute, next on the chopping block will be the training camps. If the two parties still cannot reach a deal, pre-season games (the single biggest earner for owners) will be cancelled. Just a few weeks after that, the Regular Season begins and if no deal is reached, once again, the games will be cancelled and the league will enter dangerous territory.
The 1998-99 NBA season featured just 50 games instead of the usual 82 due to the first 32 being cancelled due to a previous collective bargaining agreement expiring. In 2004-05 the league came close again to losing games as the 1999 agreement had to be re-negotiated, giving us today's version.
With the league enjoying viewer ratings at near record levels, losing games would be the worst possible scenario. The final game of this season posted an 11-year high in viewer numbers. If the league were forced into missing games, it's popularity would be so badly damaged that it could take another 11 for it to recover. The American hockey league had to cancel the entire 04-05 season and has yet to reach the level of popularity it once did.
All this week, NBA officials, including commissioner David Stern, and the Player's Union have been in negotiations to get a new agreement signed. However, last week, a league spokesman stated that the two sides were "99 miles apart" leading to speculation from some experts that the league could lose anything from a handful of games at the beginning of the year to skipping the entire 2011-12 season if it meant saving some teams from falling out of existence. Owners, players, experts and fans can only hope that they can reach an agreement.
You can find more information on the NBA's salary cap and it's many complex exceptions here.
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