In a big victory for NBA owners, an arbitrator Monday rejected the union's grievance that 226 players with guaranteed contracts should be paid during the lockout.
The decision by John Feerick came on the 111th day of the lockout, which has caused the league to cancel the first two weeks of the regular season.
With negotiations stalled and the sides far apart on the main economic issues, the ruling strengthens the owners' bargaining position.
No longer do they face the prospect of having to pay more than $700 million in salaries to the players they are barring from work.
"We are pleased with the arbitrator's ruling," NBA chief legal officer Jeffrey Mishkin said. "Unfortunately, it does not get us any closer to a deal with the union's leadership."
"Only negotiations will end our current impasse and lead to a settlement of our dispute. This is yet another defeat for the union's strategy of litigation instead of negotiation."
The union claimed the absence of lockout language in the standard player contract meant the owners were liable for guaranteed salaries.
The owners argued the right to withhold pay by imposing a lockout was a tenet of labor law.
The ruling means players now face the reality of not being paid until the dispute is settled at the bargaining table. Until now, they had been holding hope a verdict in their favor would pressure the owners to soften their stance and come to the table with a better offer.
Union officials did not immediately comment.
The sides are fighting over, among other things, the amount of revenues owners will devote to salaries. Concerned by salary expenses that are outpacing revenues, the owners imposed the lockout July 1 and have vowed to achieve a new deal that sets a definitive limit on payroll costs.
The sides haven't bargained since last Tuesday, when the players proposed a "tax" on the highest salaries to help slow payroll growth.
The league responded Friday with a counterproposal incorporating the tax, but at a much lower threshold and with much higher rates. The union responded by saying it was a "step backward," and the sides have been waiting to hear from Feerick since.
There seems little possibility talks will resume this week. The union has scheduled a meeting of its entire membership in Las Vegas for Thursday, and the union's agents advisory committee will meet with the union's leadership in Las Vegas on Wednesday.
"We've got to get a sense of where the players are, what they consider to be reasonable and what they're willing to do in order to get the season to commence," union director Billy Hunter said before Feerick's verdict was known.
After holding a six-day hearing over the summer that included a nine-day break to accommodate the vacation plans of commissioner David Stern and deputy commissioner Russ Granik, Feerick had 30 days to rule.
He took all his allotted time, plus an additional day becaus his deadline fell on a Sunday.
The union filed the grievance just hours before the lockout was imposed July 1. Although Feerick's jurisdiction expired along with the collective bargaining agreement, he ruled the union had beat the deadline and he was entitled to hear the case.
Most players were to receive their first paychecks Nov. 15, although a dozen or so had clauses entitling them to be paid over the summer. None has received a paycheck.
Feerick, a Fordham law professor, ruled in the controversial Latrell Sprewell case in which he reduced the player's one-year suspension for attacking his coach and reinstated his contract.
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