The governing body late last week threatened not to pay contracted players beyond June 30 unless the proposed remuneration overhaul was accepted.
CA chief executive James Sutherland demanded the players accept the offer in a blunt email, as the impasse with the Australian Cricketers' Association (ACA) looked no closer to resolution.
The latest flare-up casts doubt on what team Australia could field after June 30, with a two-Test series scheduled in August in Bangladesh ahead of a home Ashes showdown with England later in the year.
"Clearly, we are disappointed that CA are threatening the players," Nicholson said in a statement.
"It's also a window into the nature of CA's behaviour in these negotiations so far.
"There is incoherence and aggression in what we have experienced at the negotiating table from CA."
Nicholson said this was shown by CA's attempts last week to offer some top players multi-year deals only to threaten them the following day.
"However, despite these threats, the players affirm their offer to participate in independent mediation," he added.
"The point lost on CA is that the players will not respond to threats, whilst broadcasters and sponsors need certainty."
Nicholson said it was time for CA to sit down in mediation for the good of the game, instead of making unnecessary threats and creating uncertainty.
He added that his organisation had been in touch with cricketers on Friday to brief them on the latest situation.
He raised fears long-form players could be lost to Twenty20 if the current financial model was not retained.
"It's about being a partner in the game. It's huge for the players. We all feel we have a genuine role in growing cricket," Handscomb told The Sunday Age newspaper.
"We're putting ourselves out there in public, playing and promoting the game all the time. The revenue-share model helps us feel that we're really part of the successes or failures."
Australian fast bowler Pat Cummins on Saturday tweeted on social media in response to the email: "Players are staying strong #fairshare".
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