1998–99 NBA lockout

• 1. Introduction

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  The 1998-99 NBA lockout began on the 1st of July 1998, and for 204 days the sport of professional basketball in America came to a halt. No practices, no trades, no games. Not even the Christmas Day matchups that had been a league tradition since 1947. What started as a disagreement over salary caps and contract ceilings eventually threatened to wipe out an entire NBA season. Who would blink first? Could the players' union hold together? And what would the shutdown cost the league in fans, television ratings, and trust?

• 2. The Money Problem

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  By the 1997-98 season, player salaries had climbed to 57% of basketball-related income, well above the 48% split that the previous agreement had called for. NBA owners claimed that 15 of the 29 teams were operating at a loss that season. The players' union disputed that figure sharply, insisting only four teams had finished in the red.

  The salary cap had been part of the league's collective bargaining structure since 1983, but it was riddled with loopholes. The most consequential of these was the "Larry Bird exception," named after the former player who was among its earliest beneficiaries. That rule allowed teams to spend beyond the cap to re-sign their own players, driving the value of top contracts sharply upward.

  Owners pointed to a specific contract as the tipping point: a six-year, $126 million deal that Kevin Garnett had signed with the Minnesota Timberwolves. No young player, in the owners' view, should be able to command that kind of money before proving himself over a full career. They wanted a modified pay scale for rookies and the end of unrestricted free agency after only three seasons.

  The players' union pushed back across the board. Around 22% of NBA players were earning the league minimum during 1997-98, and those players wanted a raise, not a cap. The National Basketball Players Association opposed limiting individual salaries and was especially resistant to any changes that would weaken the Bird exception, which had been a tool for better-paid veterans to maximize their earnings.

• 3. The Lockout Begins

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  Negotiations broke off on the 22nd of June 1998, and the lockout started nine days later. Teams could not hold workouts, meet with players, or conduct any player transactions for the duration of the work stoppage.

  Grant M. Hayden, writing in the Hofstra Labor and Employment Law Journal, characterized the NBA's move as an "offensive lockout" -- a strategy in which an employer pressures workers toward a settlement on management's terms rather than waiting for a strike.

  One early and symbolic consequence was felt on the international stage. USA Basketball, the national governing body for the sport, excluded NBA players from the United States team that competed at the 1998 FIBA World Championship. A squad of lower-level professionals and amateurs went in their place.

  Negotiations did not resume until August 6, the first formal session since the lockout had begun. At that meeting, NBA commissioner David Stern and a group of owners walked out after the players' union presented a proposal that included increased revenue sharing between teams. Progress stalled entirely in September, when 24 exhibition games were canceled and training camps were postponed without a new date set.

  October brought the first genuinely historic threshold. On the 13th, the league officially canceled the season's first two weeks, and then 99 games scheduled for November were lost as well. It was the first time in NBA history that regular-season games had been canceled because of a labor dispute. An arbitrator named John Feerick ruled on October 20 that owners did not have to honor guaranteed contracts during the lockout, which gave management added leverage at the bargaining table. The league's television contracts also required broadcasters to pay the NBA even when games were not played, providing another financial cushion for the owners.

• 4. A League in Crisis

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  Christmas 1998 came and went without NBA basketball, breaking a tradition that stretched back to 1947. The 1999 All-Star Game, which had been scheduled for the 14th of February 1999 at the First Union Center in Philadelphia, was also canceled. The NBA later awarded Philadelphia the 2002 All-Star Game as a form of compensation.

  The atmosphere inside the bargaining sessions had turned openly hostile. At an early December meeting, commissioner Stern and NBPA executive director Billy Hunter became involved in what CBS News described as an "extremely heated, expletive-laden screaming match." Both men left the table, and both suggested publicly that the entire season might not be played.

  To fill the void, 16 NBA players organized an exhibition game on the 19th of December in Atlantic City, New Jersey. The organizers originally planned to share proceeds with NBPA members, but that arrangement drew enough controversy that the money went to charities instead.

  On December 23, Stern set a firm public deadline: he would recommend canceling the entire season if no deal was reached by the 7th of January 1999. A "final" owners' proposal was put on the table at a December 27 meeting. It was not accepted. The sides met again on January 4, and the players presented what they called their last offer. The owners turned it down. Stern began discussing the possibility of using replacement players for the following season.

  Cracks were appearing inside the players' union itself. Highly paid stars were seen as the ones most exposed to the disputed salary limits, while rank-and-file members had less at stake in the specific fight. Agent David Falk, who represented NBPA president Patrick Ewing along with nine of the 19 members on the union's negotiating committee, was considered among the most influential voices in the players' camp.

• 5. The Deal That Ended It

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  On the 6th of January 1999, NBPA members gathered in New York City to vote on the owners' proposal, which the negotiating committee had recommended rejecting. Players including Shaquille O'Neal and Hakeem Olajuwon pressed for a secret ballot. Others made clear they simply wanted to get back on the court. Kevin Johnson said that most players "were just ready to fight Wednesday at our meeting if an agreement hadn't been reached."

  Faced with a fracturing union, Hunter chose to return to talks with Stern rather than hold the vote. On January 6 -- the day before Stern's self-imposed deadline -- the two men reached an agreement. The NBPA ratified it that same day. The NBA Board of Governors ratified it on January 7.

  The deal was signed by both parties on January 20, formally ending the lockout after 204 days. Most observers regarded it as a victory for Stern and the owners. Stern acknowledged making concessions; Hunter said the parties "both blinked."

  The terms reshaped how players were paid. Maximum salaries were set at between $9 million and $14 million per year, depending on a player's years of service. The NBA became the first major sports organization in the United States to place a ceiling on individual player salaries. A rookie pay scale tied salary increases to draft position. The Larry Bird exception survived, but annual pay raises under it were capped. Two new exemptions -- tied to "average" and "median" salary levels -- gave teams a way to sign one player each even if they were already over the cap. Teams that exceeded the cap could still do so, but had to pay a luxury tax on a dollar-for-dollar basis if overall league salaries crossed a specified threshold. The league minimum salary was raised to $287,500, an increase of $15,000. Players were guaranteed that their salaries would account for 55% of league revenues over the final three years of the agreement, though any percentage above that would trigger a pay reduction. Drug testing was expanded to include marijuana and performance-enhancing substances, with testing set at once per year.

• 6. What It Cost

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  The 1998-99 NBA season began on the 5th of February 1999 and ran for only 50 games per team instead of the usual 82. Across the league, 464 regular-season games were lost.

  A CBS News-New York Times poll from October 1998 captured the public mood. Most fans said the lockout had not changed their view of professional basketball, but 29% reported their opinion had grown more negative. Fans backed the players' union over the owners by a 36-29 margin; the general public supported the owners 24% to 22%. A quarter of basketball fans said they did not know enough about the dispute to take a side, and 45% of the general public said the same.

  Media commentators were notably unkind to both sides. Sportswriter Tony Kornheiser called it a fight "between tall millionaires and short millionaires." Newsweek ran a piece calling the lockout "an incomprehensible and unconscionable dispute between rival gangs of millionaires." Time's Bill Saporito concluded that each side had suffered financial losses and reputational damage.

  Hayden, revisiting the dispute from a labor law perspective, called the lockout "rather pedestrian" and said it had made "no noteworthy contributions to legal doctrine." He did observe that the episode may have deepened public skepticism toward unions generally, suggesting that "the NBA lockout may have strengthened the view of many that unions are out of touch with their lives and thus have little to offer them."

  Average game attendance during the shortened season fell to 16,738 fans per contest, down 2.2% from the 17,117 average of the 1997-98 season. Ticket sales dropped nearly another 2% in the early months of the following season and stayed below 17,000 per game for three straight seasons after the lockout. Television ratings fell for three consecutive years as well.

  Play on the court suffered too. Players had little time to get into shape, scoring dropped by roughly four points per team per game on average -- the lowest total in 20 years -- and field goal percentages fell while turnovers rose. The lockout also coincided with Michael Jordan's second retirement from the game, removing the player most responsible for driving the league's popularity surge during his career. The combination of shortened season, diminished play, and the absence of Jordan made recovery slow.

  In the years that followed, the maximum-salary structure the lockout produced had an unexpected effect: a growing share of players signed contracts at the maximum level. Younger players like LeBron James opted for shorter deals that preserved flexibility in both team selection and future salary negotiations. The agreement ran until 2005, when a new six-year CBA was reached without a work stoppage. The next lockout arrived in 2011 -- the fourth in league history -- and lasted roughly five months before a settlement was reached, cutting each team's 2011-12 season schedule by 16 games.