Some More NBA Lockout Thoughts

By:
Published: August 10, 2011

I’m back in American soil, and not surprisingly, the lockout is still in full swing. According to David Stern the NBA and the Players Association are “at the same place” that they were on July 1st. Billy Hunter says there is a better than 50-50 shot that there won’t be a season at all this year, and the sides are still around 800 million dollars apart annually on how revenue will be split. Hunter added that “something has to happen that both of us can use as leverage to save face.”

There’s no real face to be saved here except yours and those like you, Billy. You told the players they were going to get another insane deal, and instead they are going to have to settle for a great deal. If you had set them up for the reality of the situation, you wouldn’t need to save face because you could just negotiate based on the economics. Now, you can only admit you were wrong, get the best deal you can, and make sure that the people you’re supposed to work for (the players, not the agents) don’t lose their paychecks this year.

You can’t acknowledge that an employer has lost money for years while their workers have been paid exorbitant salaries (yes, six-plus million dollars a year on average for eight or nine months of work is exorbitant), and also not acknowledge that your concessions have to be big. The 160,000 million reportedly offered still puts the owners right around (with many still below) their break even point, while the players are making around two billion a year.

The owners should have relaxed their stance on guaranteed contacts, called a “blood issue” by Hunter, if, and only if, it was part of a larger deal that included huge concessions by the players relative to the last CBA in terms of revenue distribution. Giving in on guaranteed contracts was a good faith gesture/really dumb move on the part of the owners, and the response they got from the Players Association was a predictable, “Thanks, but we already had that. Now give us the other two things we used to have.”

That leverage could have been combined with a back down from a hard cap to a soft cap, maybe a higher minimum salary, a small cut off the top of any new TV contracts, a beneficial tweak in the Basketball Related Income formula, free iPhones or whatever in order for Billy Hunter to save face while pushing a big financial concession to the Players Union. It’s really unfortunate the league threw a big piece of the package away right off the bat. It could have been “face saving”. The move made little sense at the time since they were already heading for a near-certain lockout, and even less sense in hindsight.

This is going to turn into a very public, very messy PR battle, and the side that wins is going to be that which has the best message. Giving up public talking points that make the average fan cringe, like guaranteed contracts, will only make it harder for the league to leverage big financial concessions by the union. If and when the season doesn’t start on time, the message the league could put out is simple– We’re losing lots of money, we have no way to ensure that guys like Eddy Curry will even attempt to be a good player after signing huge contracts, and there is a huge gap in spending from the top to the bottom making the league less competitive. That kind of stuff resonates with the average fan.

Now, the owners are trying to get additional bargaining chips by reportedly trying to include individual endorsement money in the overall Basketball Related Income formula, a clear shot at agents. I get their point, but fans aren’t exactly going to rally behind that. It just enhances some peoples’ perception that owners are greedy billionaires looking to get the poor little guy.

David Stern

For all the good stuff Stern has done (and there is a lot of it), negotiating on major deals has likely been where he has had the least success. Looking back, the CBA, which was viewed as favorable by the league in 1999 and 2005, was in reality not, and the current TV deal is hundreds of millions below market value even in this deflated economy. If Stern loses again, it’s going to tarnish his long term legacy as one of the best GM’s in NBA history.

One thing he can add to his list of bargaining points is an offer to cut league salaries for anyone making over the new NBA average by an equal percentage to the cut that players take in salary. There just can’t be more than a few of them, and let’s get real– any player or employee making over five million a year can afford to throw a little back as part of a grand deal. I’ve seen countless comments about league officials’ salaries now, so it would definitely look good to address that the cuts the league is looking for in salary are across the board for high income earners, including Stern himself.Plus, the employees likely will get back any financial concessions by getting paid salaries this year.

The league and players can designate a committee to appropriate the money taken from their salaries. They can use it as they see fit to support local NBA communities by doing things like donating it to charities that buy tickets for underprivileged fans, building local courts, and funding or subsidizing local basketball programs. That kind of stuff benefits the game and the fans, which both sides seem to have lost sight of at some point.

One thing the average player should take note of

Hey there, average player.

Your career is 5 years or so at this level. Let’s say the average normal person works around 40 years or so. You sitting out year of your career will cost you one fifth of your total lifetime basketball earnings. That’s like the average person not working for eight years because their employer only offered to pay them an incredibly awesome amount of money, and not an completely insane amount of money.

Don’t let your agents and representatives, who have more to gain as a group from taking a hard stance than any individual player, fool you into thinking it is sane or expected for employers to pay their employees millions upon million of dollars if their company is not turning a profit. Look at the facts and make your own decision.

Surely that point must resonate with you. Employees across the country have taken cuts in stride when their employer is losing money, especially if the impact of not taking those cuts have such far-reaching negative consequences for the communities in which you live. This is one of those times. Owners have worked with you for decades to make the sport popular worldwide, and thousands of players have become rich in the process. They aren’t looking to screw you over, just to get a fair piece of the action that they so obviously were essential in creating.

To quote mW, “I’m usually rooting for the individual against The Man. Not here. The facts just don’t bear it out.”

17 comments
lancebrou68
lancebrou68

man i miss u guys, great read joe i just been preparing myself for the worst by trying to become unattached to the nba. if the players take heed to what the facts are then maybe there's hope, and maybe with a little help from the euroleague and china the NBPA will start cracking soon.

Dee Ford
Dee Ford

Parity? Competitive Balance? Hard cap won't change it. Studies have been done: http://wagesofwins.net/2011/08/10/nba-owners-do-not-understand-competitive-balance/ The problem with competition in the NBA is that they're are so few true superstar players. There is not enough to go around for 30 teams. The teams that have them tend to win, the ones that don't tend to lose regardless of market size. San Antonio and OKC are more successful than the Clippers and Knicks. Blame on high school or college... but we're not developing players like we used to in America. that's why their are so many Euro players getting drafted

da ThRONe
da ThRONe

Once again I blame the lack of polished stars on the length of the season not the lack of talent. First the season wears down on 7'+ guys. If we played a 52-56 game season guys like T-Mac, Brandon Roy, Greg Oden, Andrew Bynum etc. would be healthier longer. Guys like Yao Ming and Shaq would stay around longer and their prime years would be extended. Then there's guys like Anthony Randolph, Tyrus Thomas, Sebastian Telfair, (or any other super talented player) time to work with their position coaches to polish their game during the season, so they don't have to commit in the summer. But even if every NBA player were stars some would be better than others. If there aren't rules that limit the cream of the crop from teaming up there will still wouldn't be any parity in the league.

Joe Gerrity
Joe Gerrity

I've read all the studies you have, and they all fly in the face of what I still believe to be true. Dave Berri is a good guy who makes some good points, but I disagree that his analysis of the past allows him to predict anything more than that if we continue down the same path, things will stay the same. Also, normally I'm a guy who will say "stats, stats, stats", but in this case we haven't even seen the stats that I'm looking at when I determine success, namely NBA titles, conference titles, and playoff wins. How many times in the past 20 years has a small market team that didn't spend through the roof won a title? You have the Spurs, and... (maybe the Rockets? I don't remember how much they spent) If the Hornets 15 million extra dollars to spend right now, they could sign better players. In what crazy world does that not translate to a higher probability for more wins? If the Lakers had to enter next season, they would have to ditch some players. Assuming all GM's are equal, and their number one weapon being money, a GM will do more with x+1, than they can with x. Fact is, there hasn't been a hard cap, and until there is one it's incredibly hard to rule out that it will increase the competitive balance considering what we know about spending, regardless of what the stats say about spending when there isn't a hard cap.

Dee Ford
Dee Ford

That's the thing about the NBA though, parity has never really affected the popularity. Last year's numbers across the board were as high as they ever been BECAUSE of the intrigue of the BIG 3. Only 8 teams have won titles in the last 30 years. Some of the most memorable times in the NBA was during the dominance of Magic and Bird or MJ winning 6 titles in 8 years. The NBA chose to market stars and fans identify with them. Basketball is an exciting game, even moreso live. It doesn't get much better than a good playoff game -- even in the NFL. I do think parity matters to the owners on the outside looking in. That's understandable but it's not the players fault. Instead of the hard cap, the league would be better off pursuing contraction. Eliminate about 6 teams and go from there.

da ThRONe
da ThRONe

This is what I don't understand about these so call studies. In basketball unlike any other team sport each individual players have bigger impacts then the other sports. So if you can afford to spend more it less likely there will be parity in the sport.

Dee Ford
Dee Ford

Let's go back to 1998 - 99 for some perspective. There was a general consensus that the CBA deal was a big victory for OWNERS. They wanted and got COST CERTAINTY. 1. Cap on rookie salaries 2. Cap on max salary per season (1st American sports league to institute this) 3. Reduced contract lengths from 7 years to 5 Add to the fact that the OWNERS know players get 57% of BRI, how could you be losing so much money every year? Now the biggest absurdity now is how the owners blamed the loses on player salaries - a fixed cost that has only grown in proportion to revenue. There's even a checkpoint -- the Escrow tax that withholds 8% of players salaries to make sure that they don't exceed 57% of BRI. So in reality, players get 50% -- not 57%. Now the owners should have been honest because we know that the recession has affected almost every industry. I have no doubt that variable costs have rose considerably. Planes, fuel for the plains, hotels, administrative salaries, etc... I think the players realize that concessions need to be made to account for this. I'm thinking that their current 54.3% of BRI will eventually go down to 52%. That's roughly $250 - $280 million rollback on salaries. Not what the players want, but it's fair. The thing is, it's not really the lost money for the owners. It's personal since the LeBron decision. They want to make the players (like Carmelo) pay for thumbing their noses at teams. They want to drastically cut salaries and severely limit free agent movement. It's totally ridiculous Think about it... how many of you would willingly reduce your salary by 25% AND agree to a 10 YEAR SALARY FREEZE when REVENUES ARE GROWING. Yeah players make millions but they don't have to be dumb to sign deals that nobody in their right mind would. As for guaranteed salaries.... what would players have left if they gave that up given the concessions that they made in 1999? Also, I look at as an investment. Players invest in players in hopes of winning. It's like stocks or real estate, or whatever investment. There are no guarantees and you don't get your money back if your investments tank. Hell look at Hollywood... Cowboys and Aliens? Are you serious! Harrison Ford is still a great actor but the movie flopped and producers have to eat it. They don't get to demand the money back

Joe Gerrity
Joe Gerrity

You sure ask a lot of questions that I don't think you want to really know the answers to. ex- Add to the fact that the OWNERS know players get 57% of BRI, how could you be losing so much money every year? answer- because it's incredibly expensive to market and operate an NBA franchise in a dwindling economy, and they are paying out 57% of their revenues to a tiny little fraction of the people they directly and indirectly employ (that's around 2000 for the Hornets), people who they can't even look at as a long term investment because they hold just about all the leverage. Look at the Carmelo situation. In what way is that a reasonable way for an employee (being paid 10's of million of dollars) to act? That behavior rubs fans the wrong way, and the only one paying to get them back is the owner. The player just walks the hell away to greener pastures where he can do it all over again if he wants. And you saying it's personal is just another talking point the PA puts out. It's business, first and foremost. 17/30 teams lost money last year. I can't even fathom seeing that number and saying "The thing is, it’s not really the lost money for the owners. It’s personal since the LeBron decision." Give me a break. Really most of what you are arguing is from the perspective that the last CBA should be a good starting point for negotiations (hell, you even go back to 1999), and I completely and 100% disagree. The last CBA absolutely sucked for the owners, and the fact that anyone on the players side thinks that is a good starting point is tantamount to how out of touch with financial reality they are. As for this- "Think about it… how many of you would willingly reduce your salary by 25% AND agree to a 10 YEAR SALARY FREEZE when REVENUES ARE GROWING." (?) If my employer opened up their financial documents, and said, "We invest X, we get a negative return, and it's been this way for a long time. You have been made rich many times over, and we want that to continue to be the case, but we just can't keep paying you an average of 6 million a year. We can offer you 5 instead, and we'll keep guaranteeing your deals, and we'll compromise in the form of a firmer, but still soft cap.", then I would day, HELL YEAH OK! Let's get this season started on time so I don't miss out on getting paid. Make no mistake, this fight is the agents vs the owners. They are the ones who stand to gain and lost the most long term. As I said up top- You can’t acknowledge that an employer has lost money for years while their workers have been paid exorbitant salaries (yes, six-plus million dollars a year on average for eight or nine months of work is exorbitant), and also not acknowledge that your concessions have to be big. The 160,000 million reportedly offered still puts the owners right around (with many still below) their break even point, while the players are making around two billion a year.

da ThRONe
da ThRONe

Ok so whats the point of a contract if it's not guaranteed. I agree the players aren't being realistic about the concessions they will need(and most likely will break down and make), but it's completely unfair to give one side the ability to terminate a contract while the other party isn't given equal say. I think they should have max 5 year contracts with the last two year ETO's so both sides have the option to walk away from the contract. Fair is fair I can't believe the NFL players didn't push for a system where some of their contract is guaranteed.

42
42

Many contracts have termination clauses in them. They are still contracts. Just as owners don't have to offer silly deals, players don't have to sign not-fully-guaranteed deals. These exists. Dallas took advantage of one last season, actually, and it made a great deal of difference.

dbeard06
dbeard06

Good points by all. The guaranteed contract are a huge problem. If any of us underperform on our job, we take the hit on salary or get canned! These players are basically milking the system. They are getting paid off franchise revenue that comes from the FANS. So in essence, we are paying for crappy underperforming players. This will not work anymore. The fans should not have to bear the weight of carrying contracts like James Posey and Rashad Lewis anymore. You should get paid based on performance. Period. If the players want guaranteed contracts, then the owners should shorten contract terms. No more 5 and 6 six year contracts for 1 year of a good performance. And to address parity, a hard cap has to go in place. If the players want guaranteed contracts, then the owners have to guarantee that no 1 franchise can buy up all the superstars and leave the other markets with leftovers. The NFL works because of parity and the excitement of surprise contenders. The NBA does not and will never have that without some sort of hard cap OR (and I will keep saying this) NON GUARANTEED CONTRACTS!!!!!!!!!!!!!!!!!!!!!!!

Dee Ford
Dee Ford

@dbeard06 The fundamental thing you have to realize is that players get 57% of BRI. So regardless of whether contracts are guaranteed or not, the players get the same amount of money. The owners would pay the same -- it would just be redistributed. That's why the Owners conceded the guaranteed contracts -- the % of BRI supersedes it. So they are focusing on changing the split where the players would get 36% in the Final year of the deal They'll happily guarantee contracts and laugh all the way to the bank if they get that split.

da ThRONe
da ThRONe

The problem with your example is your job can't force you to stay on your job either. Just like you can get canned at any moment you can resign at any moment and go to that company's competition if their offer is better. This is why contract are signed in the 1st place. Just because the NFL players are getting screwed doesn't make this the right anwser. I agree there should be a solid cap, but there should also be revenue sharing amongst the owners as well. I think the problems with the league are deeper than the issues being discussed. I feel the NBA needs to focus more on maximizing profits for all teams. They should market more teams instead of the same few, and I would take it a step futher and say the season should be reduced. I even wrote a journal about it. http://www.hornets247.com/journals/2011/07/23/why-82-games-are-too-many/

Bywater
Bywater

You can't blame the players for liking guaranteed contracts, and they'd be fools if they ever gave any ground on those. Don't forget, some owner has to offer the ridiculous contracts the players sign. If I sign a 4-year contract, but the owner can unilaterally cut me after year 1, how was it a 4-year contract? Shouldn't the players have the option of getting out of the contract as well (like, if the owners promised to get good, but didn't)? Why not just have one-year contracts for everyone if you're not going to guarantee contracts? It seems to me the owners need to figure out if they want to be an NFL-like revenue-sharing league, or an MLB-like all-for-one league. Until the owners figure that out, the players don't really have anyone with whom to negotiate.

Dee Ford
Dee Ford

Why would players give up guaranteed contracts? It's their biggest asset and leverage in negotiation. But this whole situation won't be resolved until the owners come to their senses. These owners are just plain retarded when it comes to what they are demanding.

42
42

Why, because they may not get paychecks at all if the full value is guaranteed over the life of the contract. It's a negotiation, and each side needs to defend what is precious while getting the other to agree overall, if not point-by-point. So let me ask you this: What should they get IF they give up guaranteed contracts? And: What would you change about the contracts to keep them guaranteed? Shorter max term? Less salary? Everything up to x million is locked in but y million is performance? Something else? Welcome.

James Grayson
James Grayson

Something that I feel is worth noting, and that you sort of brought up, is how can we ensure that our investment will live up to it's hype? If you invest in something and it goes wrong, usually the best course of action is to cut your losses and get out ASAP. Not with guaranteed contracts. You are stuck with that crappy, injury prone, non-caring type of Eddy Curry player that's just riding along with the money. Those in favour of the players don't seem to understand this key point. In the NFL (and I'm not trying to say these are the same systems so get off my back) when a player under-performs and just doesn't work anymore, a team cuts him and takes a lesser hit against the cap and runs with the losses they've already made by signing the player in the first point. If you don't fulfil the performance expectations of your contract you should be cut and the rest of your deal is therefore over.