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NBA Owners Must Pay Locked-Out Players’ Union $37 Million Licensing Fees

National Basketball Association owners must pay the players they locked out $37 million even if the season is canceled.

Team owners owe the players the money under marketing agreements that allow the NBA and its sponsors to use the players’ likenesses in advertising. It also precludes the union from using its own logo in commerce.

The group license ends after the 2012-13 season and is separate from the labor contract, which expired July 1. NBA spokesman Mike Bass confirmed that the league is required to make the payments.

Owners locked out players when the previous collective bargaining agreement expired. They and the players can’t agree on how to share revenue from a league that generated about $4.3 billion last season. The NBA says its teams lost a collective $300 million last season, a figure disputed by the players.

The payments will help fund the union’s lockout war chest, according to National Basketball Players Association spokesman Dan Wasserman.

According to the union’s 2010 LM-2 filing with the U.S. Department of Labor, the league made four licensing payments of about $7 million each. The first was in August, followed by others in November, February and May. A separate logo payment of $9 million was made in September, according to the filing.

Union’s War Chest

The license money usually is distributed evenly to the league’s 450 players, or about $62,000 each. The player representatives the past two years, however, voted to put the licensing payment into a fund to be used in the event of a lockout, Wasserman said in a telephone interview. In past work stoppages, the player representatives have chosen to put the payments into the war chest.

NBA owners receive broadcast rights-fee payments from their television partners even if games aren’t played. The money, more than $900 million, would have to be repaid to Walt Disney Co.’s ABC and ESPN and Time Warner Inc.’s TNT, Commissioner David Stern has said.

The league and teams removed player images from their Web sites when the lockout began. Bass said at the time that NBA officials didn’t think it was appropriate to be using the images.

To contact the reporters responsible for this story: Scott Soshnick in New York at ssoshnick@bloomberg.net; Mason Levinson in New York at +1-=212-617-4753 or mlevinson@bloomberg.net.

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net

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