Blog Entry

Labor update as NBA heads for 'ugly' lockout

Posted on: June 27, 2011 11:55 am
Edited on: June 27, 2011 12:12 pm
NEW YORK -- The NBA owners' planning committee is meeting by conference call Monday to tackle one of the most significant sticking points that have kept the league's imperiled labor negotiations from progressing toward any chance of a deal: revenue sharing.

The committee, led by chairman Wyc Grousbeck of the Celtics, had been scheduled to meet last Friday in conjunction with a full-blown bargaining session with players, but the session was rescheduled.

The status of owners' work on a revamped revenue sharing program -- and the sharing of that information with the National Basketball Players Association -- is viewed as paramount to any slim chances the two sides have of progressing toward a new collective bargaining agreement by midnight Thursday, the expiration of the current deal. Commissioner David Stern last week disputed the union's assertion that owners have not shared "one iota" of their revenue sharing plan, and the upshot was this: not only can owners and players not agree on the league's financial losses, they cannot even agree whether revenue-sharing information has been shared with the players.

The owners' full Board of Governors is scheduled to meet Tuesday in Dallas in preparation for either one last push toward a deal or the lockout that executives on both sides have viewed as all but inevitable for the better part of two years. The owners and players are tentatively scheduled to convene in New York Wednesday and/or Thursday to take one final stab at making a deal. If enough progress is not made to at least prompt an extension of the negotiating deadline, owners are prepared to impose a lockout at 12:01 a.m. ET Friday. The Board of Governors could conduct a procedural vote Tuesday in Dallas to authorize the labor relations committee to lock the players out, although Stern said such a vote could be taken at any time and wouldn't have to be done in person.

At the Tuesday meeting, the labor relations committee -- led by Spurs owner Peter Holt -- will update the full board on the progress in collective bargaining talk with the players. That presentation should take about as long as it takes Tony Parker to get to the basket from the foul line. Despite bargaining sessions in Dallas and Miami during the NBA Finals, and three sessions last week in New York, the two sides appear no closer to a deal than they were in January 2010 -- when owners first presented a draconian proposal calling for a $45 million hard salary cap, the elimination of fully guaranteed contracts, and a more than 33 percent rollback of player salaries.

Owners have since moved about $650 million annually on their salary demands, offering to guarantee players no less than $2 billion in salary and benefits over the life of a 10-year CBA. They also have relaxed their insistence on banning fully guaranteed deals -- though contracts would be for a maximum of three or four years under their proposal, as opposed to the five- and six-year deals free agents can sign under the current CBA, with the extra year in both cases going to a player re-signing with his current team.

Owners also made what they portrayed as a significant concession in offering a "flex cap" concept with a $62 million target for all teams and a top and bottom range to be negotiated with the players. The NBPA rejected this proposal during a week filled with incendiary rhetoric, with union president Derek Fisher of the Lakers calling it a hard cap in disguise and saying it was a "total distortion of reality."

The players have made two significant economic moves during the recent talks, first offering to take a $318 million pay cut over a five-year deal and then raising that offer to $500 million. Stern referred to the latter move as "modest," infuriating union officials and galvanizing the players to the point where more than 30 of them showed up at Friday's bargaining session at the Omni Berkshire Hotel wearing NBPA T-shirts with the word "STAND" printed on the front.

The players also were rankled by the league's offer of a flat $2 billion in annual compensation in the owners' 10-year proposal. Not only do the players oppose a CBA of that length, they also allege that they would not regain their 2010-11 mark of $2.17 billion in salary and benefits until the final year of the owners' 10-year plan. The owners' offer to phase in their salary reductions -- first for two years, and then for three -- was viewed by the players as a non-starter because they would receive less than 50 percent of basketball-related income (BRI) by the midpoint of the deal and would be below 40 percent in the final years. The players currently are guaranteed 57 percent of the league revenues, which are expected to come in at $3.8 billion for the '10-'11 season.

Players also viewed the owners' request to keep the approximately $160 million in salary collected by the league in an escrow fund for the '10-'11 season as part of their most recent proposal. Money earned by players under the existing CBA should be "off the table," according to Fisher, who said this request by the owners "speaks to their arrogance." League officials were dismayed by Fisher's comments and believe it would've been more productive for the players to reject the idea during negotiations rather than air it publicly.

But a key tipping point in bargaining could be what revenue-sharing details the owners come forward with this week. Owners have long rejected the players' request that revenue-sharing be collectively bargained, but the players believe many of the issues owners have addressed with regard to improving competitive balance could be satisfied by redistributing revenues from successful to struggling teams. In Friday's bargaining session, the Celtics' Paul Pierce crystallized the players' perception that owners have cloaked their determination to slash salaries behind the more benign concept of competitive balance.

"If it’s about being competitive, let’s come up with a system we can all be competitive in," Pierce told the owners, according to Suns player representative Jared Dudley. "If it’s about money, that’s a different story that we’re talking about."

Although NBA owners have enhanced their revenue-sharing plan in recent years, the league continues to have one of the most inequitable systems in professional sports, with big-market teams holding enormous advantages because local gate and broadcast revenues are not included in the revenue-sharing pie. Owners view the current luxury-tax system as akin to revenue sharing, but it is not enough to address the disparity between teams like the Knicks and Lakers, who make more than five times what teams like Memphis and Minnesota bring in through ticket sales. Those glamour-market teams also enjoy local broadcast deals that exceed some small-market teams' total revenues, according to a person familiar with league finances.

It has been difficult for the NBPA to justify the massive salary reductions the league is seeking without knowing how owners plan to address this enormous disparity among teams. One option at the NBPA's disposal would have been to file a request with the National Labor Relations Board seeking a ruling that revenue sharing should be a "mandatory subject" of collective bargaining. Sources say union officials have opted not to go this route and instead have trusted the owners to come forth with an effective and transparent approach to getting their own financial house in order before getting further salary concessions from the players.

After declining to make a counter offer to the owners' latest proposal Friday, the players have put the onus on owners and league negotiators to reveal their revenue-sharing plans as part of the next scheduled bargaining session in New York. As of Monday, sources said NBPA officials had no plans to travel to Dallas for an additional bargaining session.

In any event, it may already be too late to get a deal in place and avert a lockout. Even if the two sides unexpectedly made significant progress Wednesday and Thursday, there would not be enough time for lawyers to craft a new agreement before the deadline. In that case, the league would impose a moratorium on business while final details were hammered out and the contract was drafted.

But far more likely is that both sides will be unwilling to move off their most recent positions until the pain of a work stoppage is experienced.

"They've got to go through the process," said a person who has been heavily involved in past labor negotiations. "It's going to be ugly."

Since: Sep 22, 2006
Posted on: June 29, 2011 4:42 am

Labor update as NBA heads for 'ugly' lockout

The owners are greedy in this way:  they are seeking to guarantee profits, when it is, essentially, their own fault IF (and to me, it's a big IF) they're actually losing money.  For instance:  New Orleans proves that it cannot or will not support a basketball franchise, so it moves to Utah, becoming the foolishly named Utah Jazz.  Shortly thereafter, the owners sell another franchise to Charlotte, netting each owner a few million dollars in the process.  Charlotte proves it cannot or will not support a franchise.  Owners' solution: move the Charlotte franchise to New Orleans, and grant Charlotte a new franchise.  There's no way that's on the players; that was sheer greed on the part of the owners, raking in the franchise fees and then trying to get more public money to keep their franchise in town.  Another instance:  two brothers buy a franchise failing in Kansas City and move it to Sacramento, getting an exemption to the league's rules on "territory" of franchises in the process.  (Golden State, remember, protested the move on grounds that a franchise in Sacramento would cut into their market and render both teams less viable.)  But, the Sacramento Kings are to be part of a sporting Disneyland: publicly financed arena out in the middle of a Grand Prix race track, with other (MLB?) sports soon to follow.  And now ... well, the Grand Prix never came off, the Maloof brothers are losing money on their other businesses and (if you believe some newspaper reports) pulled money out of the Kings to try and make ends meet, yet they're threatening to move the Kings if they don't get more financial help.  Tell me the owners aren't greedy.

The owners, most of them billionaires making far more money than a player will ever be able to--Mark Cuban's fortune bears the same relation to Kobe Bryant's salary that your salary has to Kobe Bryant's salary, only in reverse.  The value of NBA franchises has doubled, and in some case tripled over the past decade.  The "poor girl" who INHERITED the Pistons was complaining because she could only get $450 million for it--still $100 million more, I believe, than her father had paid for it.

I, for one, find it hard to believe that all but four or five franchises are losing money.  Prove it, say I, don't just claim it.  With TV money, a salary cap, publicly financed stadia, sky-high ticket prices, parking and concessions revenue ... it's got to be fairly difficult to lose money.  Baseball, without the collective bargaining and with a steroids scandal, a bunch of non-competitive teams, crazy owners (yes, you, Mr. McCourt) and probably even more ridiculous salaries, seems to be doing just fine.  Why can't NBA owners?  Are they REALLY losing money?  How?

 Player salaries, right now, account for 57 percent of basketball revenue.  Look at how they define that term.  Does basketball revenue cover all the revenue streams owners have coming in from the product?  No.  Add to that how inequally it is spread, and you have the problem: owners want to be protected against their own silliness in trying to assemble a contender (i.e., handing out foolish and usually guaranteed contracts to attract players) AND they want to be free to run their business the way they want.  You cannot have it both ways; that's greed and collusion.

The players are just trying to get paid what the market will bear, the same as you or I would.  Do they want to make as much money from their talents in the few years they have?  You would, wouldn't you? 

Since: Jun 28, 2011
Posted on: June 28, 2011 2:14 pm

classic dispute

I know everyone says the players are greedy and they already make an average of 5 million a year.  That's a lot and something the regular working men and women can't fathom.  With that said however, the players argument has merrit.  If it's a competition issue between franchises with 4 or 5 clubs making 3 or 4 times more than the poorest clubs, it seams only right to bring forth a revenue sharing plan to the negotiation table.  If I'm in the players union I'm not accepting a cut to my pay and contract length without knowing for certain what the shortage of revenue will be after the revenue sharing plan is in place.  That is just not good business.  The owners can't in good faith set there new revenue sharing plan based on the models of the weakest teams.  If they are able to mmediately make those teams operate in the black, then add revenue sharing on top of it, it pushes the numbers to an unequal distribution of revenue in the new CBA.  The players know it and they should stand their ground on this point.  to me this seams like an easy fix that wouldn't require a full season lock out.  The owners are going to have to be forthcoming with their revenue sharing plan between franchises in order to come to an agreement with the players on a player/franchise revenue sharing plan.  What's fair is fair.       

Since: Aug 18, 2006
Posted on: June 28, 2011 12:17 pm

Labor update as NBA heads for 'ugly' lockout

Where are you #s to back this up?  Thought I have no doubt that there are some illegal massage parlors, I find it hard to believe that the revenue of all illegal Asian massage parlors = the 9 bil in revenue the NFL generates.  If they are not paying taxes, how do you even know how much it generates?

Since: Mar 13, 2007
Posted on: June 28, 2011 9:45 am

Labor update as NBA heads for 'ugly' lockout

And for everyone who says "if you don't want to sign a player to a huge contract, you don't have to". You are correct, but also stupid. That team will have absolutely no chance to be competitive in the league today. Then nobody comes to games or buys merch and you lose money anyway. And leagues have a cap floor that you have to be above, so it's not like you could be really cheap anyways. So what are the owners to do? That is why there needs to be some form of a cap, otherwise the NBA might as well be scripted.
not only that but when player A (superstar demands new contract and bigger sallary

then player B (superstar but not so good demands a contract comparable)

and all of a sudden you have a trickle down effect

and now almost every athelete is overpaid

thats a trend starting when players like shaq take theyre 20 million dollar offer and scoff at it insisting they are worth more

still trying to argue the owners are greedy?

btw how can the owners be greedy if they are almost all losing money...

Since: Sep 22, 2006
Posted on: June 28, 2011 9:34 am

Labor update as NBA heads for 'ugly' lockout

Crimeny, they're BOTH greedy.  They both know that the economy stinks, that people cannot or will not pay the inflated prices they've evolved over the past decade, that guaranteed contracts have been bad for the league as a whole (if not for individual players), and that there are many, many franchises in trouble--some because they are "small market" and some because they just shouldn't exist at all (New Orleans, Charlotte).  Both sides know, in effect, that the pie is shrinking, but they want a bigger slice of it.  Eventually, after an ugly lockout, they'll make nice just like the NFL players and owners will, because a few sensible people will realize that killing the goose that lays the golden eggs is just plain stupid.  We'll see "basketball revenue" redefined to include at least gate, if not TV deals; we'll see shorter guaranteed contracts, a flexible cap with floor and ceiling, and all the other things that make sense.  I'd like to see contraction as part of the deal, but that's not coming.  But BOTH sides are still barely removed from maximum demand programs; it's going to take a while.

Since: Dec 27, 2007
Posted on: June 27, 2011 10:29 pm

Labor update as NBA heads for 'ugly' lockout

Labor update as NBA heads for 'ugly' lockout
 More hype from the hypemaster. Write an article when it matters. Will this be a first in your lockout post Carmelo series? God help us all.

Since: Aug 1, 2009
Posted on: June 27, 2011 10:04 pm

Labor update as NBA heads for 'ugly' lockout

Capstone has this correct. The players are going to lose big time if it's not resolved quickly. At least the Owners are trying to make concessions however slight they may be. Players need to realize they are the ones who need to make the biggest steps, otherwise it's going to be quite awhile before we see any basketball. There needs to be a cap plain and simple, I'm sorry but the players are the ones being greedy here.

And for everyone who says "if you don't want to sign a player to a huge contract, you don't have to". You are correct, but also stupid. That team will have absolutely no chance to be competitive in the league today. Then nobody comes to games or buys merch and you lose money anyway. And leagues have a cap floor that you have to be above, so it's not like you could be really cheap anyways. So what are the owners to do? That is why there needs to be some form of a cap, otherwise the NBA might as well be scripted.

Since: Apr 27, 2011
Posted on: June 27, 2011 9:33 pm

Labor update as NBA heads for 'ugly' lockout

Scrooge has a point. players are making more money then clubs make. Factor in also the lack of pairity. Only 4 maybe 5 clubs have a legit shot at the title. Granted 16 teams make the playoffs but only a few have a real shot. With the tough economy many are not gonna pay for high tickets, concessions, parking and such. Even those that can afford it arn't gonna pay consistantly to watch a team that has no shot. Many clubs lack star power because the players have to much control to dictate where they will play. Such as the big 3 of miami, and anthony manipulated his way to Ny.

Since: Mar 29, 2009
Posted on: June 27, 2011 9:20 pm
This comment has been removed.

Post Deleted by Administrator

Since: Sep 11, 2006
Posted on: June 27, 2011 9:14 pm

Labor update as NBA heads for 'ugly' lockout

and if your wondering why the nba isnt making a profit

its because the players are making more money then the teams are earning, this is because most people either cant afford to go the games or choose not to because the product (players) arent good.

The owners gave out this overpaid contracts so they are to blame and noone else 

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