Why the NBA's David Stern loses either way

November 22, 2011: 10:58 AM ET

NBA commissioner David Stern has has made several classic negotiation mistakes during discussions with the players association.

By Shelley DuBois, writer-reporter

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David Stern

FORTUNE -- When a bunch of millionaires get together to complain about what seems like marginal shifts in income, no one looks pretty. This month's case in point: the latest scuffle between the NBA's players association and the teams' owners.

The negotiations have actually been rumbling for about two-and-a-half years. Owners have been trying to figure out how to make their teams more profitable -- they say some are losing money. The two sides have ping-ponged over how to split revenue and other financial details. Last Monday, the players, represented by their lawyers, refused to accept an agreement put forth by NBA Commissioner David Stern, who represents the league's team owners. Among other sticking points, the two sides disagreed about how to allocate players' pay. Owners want tougher rules on salary caps; players, of course, don't.

The roadblock has sparked both players and owners to take legal action that could ensnare the NBA in litigation and sink the 2011-2012 season. The players already missed their first paycheck last week, and they will keep losing money with every missed match. The owners lose money on lost games too, but many want to hold out for an agreement that will better protect the profitability of their franchises.

Even though there are plenty of angry wealthy people involved, one person stands out as the poster child for the lockout. For this one, says University of Minnesota sports management professor Stephen Ross, "The fall guy is going to end up being David Stern."

It is, after all, Stern's job to speak for the owners during a conflict. But the commissioner, who declined to comment for this story, has made key mistakes while steering this discussion. That's too bad, according to Chad Seifried, a sports management expert at Louisiana State University's kinesiology department. "If you think about David Stern's legacy, he's certainly known as one of the great commissioners that we've had in professional sports," he says.

See also: NBA failure gives private equity a black eye

Stern has served as commissioner for close to 30 years and has overseen major changes at the league. Last year, the NBA generated almost $4 billion in basketball-related income, a twenty-fold increase since Stern took over as commissioner in 1984. Yet, it's hard to keep a healthy running dialogue with players for that long, and Stern has antagonized many, leading up to the current stalemate. Hard feelings about this lockout, Seifried says, could tarnish Stern's career.

While both the players and the owners would flunk out of Conflict Resolution 101, Stern has made classic negotiation mistakes during discussions; not necessarily in the terms he's presenting, but in the way he's presenting them.

"I wish the union hadn't done this," Stern told SportsCenter last Monday, regarding the players' decision to disband their union to file anti-trust lawsuits. "Their timing is not very good, and their rhetoric is almost humorous. [They] seem hell-bent on self-destruction and I think it's very sad."

That sounds like finger-pointing. Leaders who think they're coming across as no-nonsense often come off as condescending, says Chris Voss, an adjunct professor at Georgetown's McDonough business school. "David Stern says the players are going to miss paychecks," Voss says, "but the players already know that, so they take that as a threat."

If Stern were to say instead that he understands that players are concerned about job security during what tends to be a short career, that would start to ease tensions without coming across as capitulation.

A productive discussion starts when one side accurately restates the other's argument, Voss says. By saying, "I understand that you are upset because of 'X,'" you put the other side in a position where the only response they can say is "yes, that's right." It's a tiny tweak, and it actually doesn't change the content of the message, but it helps quiet some of the emotional noise around a discussion.

Voss used to handle hostage negotiations for the FBI and has since founded Black Swan, a business advisory firm that specializes in negotiations. "In the law enforcement world, we had negotiation teams talk to someone in a situation where they're surrounded by police who were basically saying, 'surrender or die,'" Voss says. "That was really counterproductive."

At this point, both players and owners enmeshed in the NBA talks will be embarrassed if they back down. The players might even feel like their autonomy is threatened, Voss says: "People will fight really hard, at a detriment to themselves, for the right to say no." And the owners falsely assume that players won't make a decision that will hurt them financially, like taking legal action that threatens the season. But many are often wiling to risk financial suicide over public humiliation, Voss says.

Financial suicide is relative, of course. And the people hurt the most by the stalemate are non-player NBA employees and fans. "Your diehard NBA fans, they won't defect," says University of Minnesota's Ross. But most fans watch sports for the drama of the game, he adds, and they will take their discretionary dollars elsewhere if the lockout continues.

Fans tend to be forgiving after the millionaire bickering ends. They forgave the NFL after commissioner Roger Goodell sealed an agreement this summer with the NFL player's association, ending a nearly five-month-long lockout. And Stern himself navigated an NBA lockout during the 1998-99 season; it ate into the schedule, but the issues were resolved with enough time for each team to get in 50 games instead of the normal 82.

Stern's job isn't in any immediate danger, especially if the owners feel well-represented during the rest of these talks. Everyone involved understands that lockouts happen in professional sports, and they are always a bummer. Still, Seifried says, "I would definitely elevate this as one of the uglier ones we've seen." And despite all he has done for the league, that's ultimately on the commissioner.

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Shelley DuBois
Shelley DuBois
Writer - Reporter, Fortune

Shelley DuBois writes on management issues for Fortune.com. Before joining Fortune, she was a producer for National Public Radio's Science Friday and worked for Wired. Shelley has a graduate degree in science, health and environmental reporting from New York University. She lives in Brooklyn.

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