Negotiated salaries declined $100 million
Posted on: July 22, 2011 6:36 pm
Edited on: July 23, 2011 12:38 pm
The NBA and National Basketball Players Association released their salary and revenue figures for the 2010-11 season, and the numbers were good: a 4.8 increase in basketball-related income (BRI), just one year after the league experienced essentially flat revenues in the wake of the worst economic downturn since the Great Depression.
But we're in the summer of lockouts, and each side will use the numbers to support their own negotiating positions. The joint news release from the NBA and NBPA made the point that player salaries and benefits also increased 4.8 percent, and that player compensation increased 16 percent over the six-year collective bargaining agreement that expired July 1.
A couple of points: Of course player compensation increased 4.8 percent to $2.076 billion. The CBA had a negotiated 57 percent guarantee to the players, which as part of bargaining for a new CBA they offered to lower.
UPDATE: Second, according to people familiar with the BRI meetings that concluded Friday in New York, the players will receive all of the 8 percent of salary that was held in escrow for the first time under the six years of the previous CBA. In fact, negotiated salaries declined by about $100 million to $2.02 billion last season, their lowest level since the 2006-07 season.
The audit also confirmed what key figures on both sides have expected for months: salaries fell short of the players' designated percentage by more than the $162 million that was held in escrow. As a result, the owners owe the players money for the first time under the previous CBA's escrow system. They'll be writing checks totaling $26 million on top of the $162 million in escrow that will be returned, sources said.
So the entire 4.8 percent increase in player salaries was due to the negotiated 57 percent guarantee -- which the players have offered to reduce in a new CBA -- and the full escrow withholding being returned to the players, and then some.
As part of the old rules, the league withheld a certain percentage of salary (8 percent last season) and would keep a portion of it or give it back so player salaries and benefits equaled 57 percent of BRI. In every prior year of the CBA, negotiated salaries -- the contracts offered by owners and signed by players -- rose and the owners kept most or (as in the case of the 2008-09 season) all of the escrow.
What does this mean? Well, to some degree, it means that owners became more judicious in the contracts they doled out. On another level, it means that many teams -- like the Kings and Timberwolves, who hovered near the league-minimum salary, and the Pistons, who did not make a single roster transaction last season -- simply folded up the tents in anticipation of the lockout, a looming ownership change, or both.
Neither league nor union officials would address the details behind the BRI numbers released Friday, but I can already tell you what the NBA's point about this would be: 1) negotiated salaries are irrelevant when the BRI guarantee gives the money to the players anyway, and 2) the costs to generate that 4.8 percent increase in revenues are so steep that the league can't do business anymore.
That's why we're in Day 22 of the lockout. A deficit reduction compromise and debt-ceiling deal almost certainly will come out of Washington, D.C., before a resolution to the NBA's labor impasse. Come to think of it, it better.