(CNN) -- The NBA began a lockout of its players early Friday, a statement from the league said.
The lockout will continue until a new collective bargaining agreement is reached with the National Basketball Players Association.
"The expiring collective bargaining agreement created a broken system that produced huge financial losses for our teams," said Adam Silver, the NBA deputy commissioner.
"We need a sustainable business model that allows all 30 teams to be able to compete for a championship, fairly compensates our players and provides teams, if well-managed, with an opportunity to be profitable."
The season was not profitable for most of the league's 30 owners and they need some cost-cutting help from players, NBA Commissioner David Stern told reporters.
The league lost as much as $300 million in the 2010-11 season, Stern said, according to the NBA's website.
Owners could not agree to the players union call for an average $7 million player salary in the sixth year of a new labor deal, Deputy Commissioner Adam Silver said.
The current salary average is about $5 million.
"While today's decision by the owners to lock out the players is unfortunate, our players will continue to stay focused on a fair outcome," said Derek Fisher, president of the NBA Players Association. "We will continue to negotiate and work toward a resolution that will bring the fans the game they love so much."
Both sides have described the negotiations as cordial.
The last work stoppage occurred in 1998.
Negotiations are expected to resume over the next two weeks.
CNN's Samuel Gardner contributed to this report