By Matt Krasnoff

What makes professional athletes so valuable? Why do teams pay salaries of over $20 million each year to some players? Why was UPS able to operate during a nationwide strike in 1997, but the 1994 World Series was canceled due to a players’ strike?

We look at 7-foot basketball players and don’t think about just how special they are. If those guys go on strike — well, let’s just say it won’t be as easy to replace them as it was to replace UPS workers.

Unlike most business practices — where unionizing is discouraged in order to suppress the power and voice of the laborers — professional sports have been able to form unions and engage in collective bargaining since the establishment of the National Labor Relations Act (NLRA) in 1935. This gave the athletes individual bargaining power, which is derived from their unique talents that are unmatched in other industries.

Lockouts rarely occur in business. It is not often that owners of a company afford to force labor to stop working — they would simply be losing money due to lack of production.

But this is not the case with professional sports.

The Cleveland Cavaliers have had the best record in the NBA during the last two regular seasons. They have also been home to one of the game’s most well known stars, LeBron James. However, the Cavs have lost nearly $20 million in each of the past two seasons, and are projected to lose anywhere from $10-15 million when this season officially comes to a close.

The current Collective Bargaining Agreement (CBA) for the NBA expires at the end of the 2010-2011 season. Commissioner David Stern feels that a new deal must work to make up for the substantial loses from the past CBA. In April he claimed that, “the current business activities do not support the current expense structure that (the NBA) has.”

In an attempt to restructure the old deal, Stern has called for the owners to drop the players’ salaries from 57% to 45% of basketball related income (BRI).

Clearly, this wasn’t going to fly with the players.

The decrease in salary may not greatly affect the likes of LeBron James and Chris Bosh. But my boy Billy Walker — who refuses to sign an agent in order to save money — could lose out on some real cash if the players take that much of a hit.

A few days ago, NBA Players Associate executive Director Billy Hunter distributed a podcast to his union membership. He feels that Stern’s claims that the league has suffered losses of $400 million are “inflated and inaccurate.”

With many owners losing money, and the two sides clearly at a stand still, a lockout appears to be lurking. Players would go from making a record average of $6 million a year to making absolutely nothing. This in turn creates leverage for the owners, as many would consider missing a season under the old CBA financial success.

The NFL is also approaching the final year of its CBA. There have been rumors looming of a potential lockout, as this league also sees its players and owners butting heads. The owners want to place a tax on free agency, but proposed an extremely high tax that the players did not like.

However, after an interview with Dr. Rodney Fort — an internationally recognized sports economist —I was assured that the likelihood of a lockout is extremely slim. Since the NFL operates under a “league think” principle in which teams share a large portion of their revenue, owners would lose too much money by locking out the players.

Dr. Fort believes that the players’ union will receive pressure from the lower paid players to settle on a tax, because those players cannot afford to miss games.

The practices of collective bargaining and free agency have completely altered the way athletes and owners approach sports. Players and franchises can move cities to make more money, while owners can stop league play because they feel they’re getting the short straw of a deal.

If this summer is going to remind us anything, it’s that we can’t forget in the grand scheme of things, this is all still a business.