Blog Entry

Talks blow up with ultimatum, Wednesday deadline

Posted on: November 6, 2011 2:55 am
Edited on: November 6, 2011 2:03 pm
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NEW YORK – With another ultimatum, artificial deadline and accusations of fraud and bad-faith bargaining, the NBA labor talks blew up again early Sunday. This time, they appear to be careening toward a point of no return.

After eight more hours of talks under the direction of a federal mediator, league negotiators delivered a proposal around 1 a.m. ET and informed the players’ association it has until the close of business Wednesday to accept it or receive a far worse deal.

Union attorney Jeffrey Kessler, singled out by David Stern as the one who rejected virtually all the compromises the commissioner said were proposed by mediator George Cohen, described the league’s tactics as “threats” and characterized the NBA’s description of its economic proposal as “fraud.”

“Today is another very sad day for our fans, for our arena workers, our parking-lot attendants, our vendors,” union president Derek Fisher said. “A very frustrating, sad day.”

League negotiators essentially offered the players a 50-50 split of basketball-related income, their obvious target for weeks. The offer was tweaked into the form of a 49-51 percent band for the players’ share – the same band discussed informally Oct. 4 at a key meeting that fell apart over the split of revenues between owners and players.

In the league’s proposal, the players would receive 50 percent of revenues (net about $600 in expense deductions, as in the previous system) if revenues grew as projected – 4 percent a year. Stern and deputy commissioner Adam Silver portrayed the band as capable of delivering a 51 percent share to the players if there was, as Stern described, “significant growth.”

But Kessler -- speaking with Fisher in the union’s press conference in the absence of executive director Billy Hunter, who was “under the weather,” according to an NBPA official – said it would take the “wildest, most unimaginable, favorable projections” for the players to ever receive 51 percent of revenues.

“The proposal that this is a robust deal at 51 is a fraud,” Kessler said. “… You can't get to the top of the band.”

The players, who received 57 percent under the previous six-year deal, proposed a 51-49 split in their favor – with 1 percent going toward a fund for benefits for retired players, such as health care, life insurance and pensions. The league never responded to that proposal, union officials said. By going from their previous proposal in which they would've received 52.5 percent, the players moved about $60 million in the first year of the new deal and nearly $400 million over six years. The owners remained in essentially the same place they’ve been economically since Oct. 4.

“They've been consistent for weeks,” Kessler said.

“We made the moves that we needed to make to get this deal done on the economics,” Fisher said. “It just doesn’t seem to be good enough for this particular group of team owners.”

Stern said the proposal will be on the table until the close of business Wednesday, after which the owners will forward a new proposal to the players offering them 47 percent of BRI and an NHL-style “flex cap,” two items the players previously have rejected.

“Hope springs eternal,” Stern said. “And we would love to see the union accept the proposal that is now on the table.”

But while the economic gap between the sides – once 20 percentage points apart – has now shrunk to 1 percent, the implosion early Sunday was as much related to system issues as money. But looking at those issues makes it cruelly implausible that they’d lose a season and squander billions of dollars over their differences.

"With the system issues that we felt like were left open, that we felt like were significant, that we must have in order to get a deal done, they did not go very far at all in trying to close that gap," Fisher said. "And we just did not get the sense that they really had the intent on coming in here tonight to get this deal done. Because there was every opportunity to do it. We were prepared to stay here until the sun came up to get this deal done."

The two sides could not bridge the gap on key aspects of the luxury tax system, specifically the penalty for teams that stay over the tax for three years out of five. The league reduced its offer from $1.50 additional tax for such teams to $1, while the union is holding firm at 50 cents additional tax on the first $10 million over the tax level and $1 after that. The punitive impact would only be felt by a handful of teams that historically have spent at those levels.

They also differ over the length and amount of mid-level exceptions that can be used by tax-paying teams. The players want tax-payers to be able to sign players to four-year mid-level deals starting at $5 million every other year. The league proposed two-year mid-level deals starting at $2.5 million every other year.

Non-tax-paying teams would be able to sign players to mid-level deals starting at $5 million, with the length alternating between four and three years each season under the owners’ proposal. The players want straight four-year mid-level deals for non-tax-payers.

The luxury-tax “cliff” experienced by tax teams, by which they felt the full brunt of going slightly over the tax level by losing all the tax money they would’ve received had they stayed under, also was addressed in the owners’ proposal. The league offered that such teams would receive half the tax money squandered by going from being a tax receiver to a tax payer.

The league has not relented on its insistence that tax-paying teams be forbidden to execute sign-and-trade transactions, which the union argues -- when coupled with the other system restrictions -- would dry up the market for free agents in a way that imitates a hard team salary cap.

"They want it all," Kessler said. "They want the system where tax payers will never be in the marketplace and that for repeat tax payers, it's going to be like a hard salary cap. And those deals are not acceptable for players today, and it's not acceptable for future generations of players. ... The players will not be intimidated."

Nonetheless, the players now find themselves at a crossroads that could determine whether there is a 2011-12 season by Wednesday. Can Fisher and Hunter, notably absent from the post-meeting news conference as Kessler fanned the flames, determine whether they can sell essentially a 50-50 deal to more than half the union membership? A deal with no hard cap, with guaranteed contracts, with mid-level deals scaled back mostly for tax-paying teams, and with salaries rising to nearly $3 billion in 10 years despite an initial 12 percent reduction?

If not, the union appears almost certain to dissolve – either through a decertification petition or a more expeditious but legally riskier disclaimer of interest – either of which would throw the talks into chaos and imperil the entire season.

“We’re not going to talk about other options,” Kessler said.

Stern said the threat of decertification is “not an issue that we're focusing on at this point.”

“We are trying to make a deal with the National Basketball Players' Association,” he said. “They are the duly authorized representative of the NBA players. That's a good thing, and we hope to make a deal with them.”

Fisher said he would communicate with the players and "assess our situation. … But right now, we’ve been given the ultimatum. And our answer is, that’s not acceptable to us."

In the end, the truest words spoken early Sunday morning came from Kessler, who said the owners' tactics were "not happening on Derek Fisher's watch. It's not happening on Billy Hunter's watch. It's not happening on the watch of this executive committee."

If the players successfully decertified, none of the aforementioned would be in power. 

A decertification petition requiring the signatures of 30 percent of union membersship would put the union on approximately a 60-day clock before an election is held to disband it -- and that's only if the National Labor Relations Board authorizes the election. Typically, the agency does not when a union has an unfair labor practices charge pending.

The mere signing of the petition by 30 percent of the union would not by itself cease negotiations since the union would remain in power until the election, which wouldn't happen before January -- if at all.

That leaves two months for cooler heads to prevail. But really, the stopwatch has been set for four days -- 96 hours to spare chaos. Of all the inflammatory words spoken after this latest fiasco, the words "best and final offer" were never among them.

That's legal mumbo-jumbo for this: There's still time to end the asshattery, if everyone's heads return to a place where oxygen is available.

The clock is ticking. 
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Comments

Since: Mar 23, 2009
Posted on: November 13, 2011 5:07 pm
 

Talks blow up with ultimatum, Wednesday deadline

Do the players need the owners?  Of course, it's not as simple as showing up the YMCA an playing basketball.  The NBA is a business and you need talented business men or women to run it. 

On the other hand I would change your anology.  If the owners are the goose that lays golden eggs then the players are the golden eggs and we're the farmers.   We're the one that feeds the goose and gives it a place to live because ultimately we're the ones that pay.   If that was just a goose laying goose eggs then right about now we'd be serving up for dinner.  We keep feeding it because it's laying golden eggs.




Since: Nov 9, 2011
Posted on: November 11, 2011 7:43 am
 

Talks blow up with ultimatum, Wednesday deadline

Some good points Mijunk2 on the second part, but I think you missed my point on the players paying themselves. The point about the players paying themselves was made because I just thought I would find it very interesting/humorous watching 450 or so players with all their egos, arguing amongst themselves, as to why some players get to make 15 million a year while others would only make two million or less, or why some players would get to play in LA or Miami while others would have to play in less desirable cities. Can you picture those two points and others, such as, do they give themselves contract for so many years or pay themselves by the month?  Also, how would they determine who plays and for how many minutes. I'm sure they all woud want to play as many minutes as they could. What about kids coming out of college. Would they keep the draft as currently done. Do you really think they would shower these new kids with the kind of money the NBA currently pays them or would they require them to prove themselves before getting paid really well. Would they want salaries to be based on performance. The questions go on and on.

Anyways, my points were meant to be simple. I would find it guite interesting/humorous watching them try to answer all the these questions and more, and that I really don't think they could do it. I may be wrong. I see the owners as the Goose that lays the golden eggs. The Goose is willing to give the farmer the golden eggs in exchange for grain and a nice barn to live in, but the Goose knows that it can live in the wild on her own if she has to. The farmer is the big looser with out the golden eggs. Just my view.  While your reply has some logic to it, it really didn't address whether you would think the players needed the owners as I suggest or whether you would find the meeting humorous.

thanks for the response




Since: Mar 23, 2009
Posted on: November 9, 2011 10:13 am
 

Talks blow up with ultimatum, Wednesday deadline

"they could pay themselves whatever they want"...

That's part of the problem isn't it.  We all want to be paid as much as we can.  Of course the folks writing the pay checks control that - good ol capitalism at it's best.  The various companies look at our talents and bid for our services.  The marketplace sets our salarey.

  Except of course with the NBA, NFL, MLB, NHL, etc.  With our beloved sports franchises we've decided that that capitalism doesn't work.  Owners apparently are just too stupid to be allowed to run their own business and have to have rules in place to keep themselves from going bankrupt.  And those rules will limit how much a player can be paid so owners can't hurt themselves.   

"...NBA closed up shop and started a new league where the top salary is $200,000, and lowered the cost of tickets 75% would the average fan still follow and support his favorite NBA team without any of the current NBA players on the team?"

I see a couple problems with the assumptions in that statement.  Beyond the obvious one that without an players union signing off on that it would be an illegal monopoly.

  First you've got to ask why the owners would want to lower the ticket costs 75%?  Although the owners may be too stupid to control themselves with player salaries they'll certainly well aware of how capitalism works for ticket sales.  They'll set the price as high as they can and still fill the seats.  They would much rather have the stadium full of people that paid 200 dollars or more per seat than people that paid 20.  People paying 200 per seat are also able to pay more for parking, don't balk at the 10 dollar beers, and they can buy more hats and tee-shirts.  

Second don't underestimate how much easier it is to market someone that actually has talent.  Would people still watch?  Probably but would it be as popular as it was?  I would have to say no.  Going back to the franchise values from Forbes ( in that other post ).. when the Heat signed Lebron heir estimated value went up 17% based incrased ticket and merchandise sales.  Meanwhile the estimated value of the Cavs dropped 26%.    



Since: Nov 9, 2011
Posted on: November 9, 2011 7:12 am
 

Talks blow up with ultimatum, Wednesday deadline

Some good points Mijunk2. However, I really think the players should pool their own money and start their own league.  Then they could pay themselves what ever they want and there would never again be a work stopage over salary disagreements. But, how would they ever decide on how much to pay themselves? Can you imagine what that Union meeting would be like? That is something I'd pay to see. Of course, the other big argument would be where they had to play. Fights would probably break out.

Bottom line is while I'd like to see the players own their own league, I don't think the players could do it. I think they need the owners and much more than the owners need the players. If the owners close up shop they will simply put their money to work some where else. If the players decide to close up shop what are they going to do? Play over seas? Although, that would be better than having to go find a reall job, I don't think most of the NBA players or college players dream about playing overseas for the next ten or so years. Then again, maybe I'm wrong.

Heres a question for a poll. If the NBA closed up shop and started a new league where the top salary is $200,000, and lowered the cost of tickets 75% would the average fan still follow and support his favorite NBA team without any of the current NBA players on the team?

One Vote Yes!



Since: Mar 23, 2009
Posted on: November 8, 2011 8:04 pm
 

Talks blow up with ultimatum, Wednesday deadline

"And by the way, nobody is spending anywhere near 200 million dollars on any team in the NBA... you're confusing the NBA with MLB.... "

The Knicks are valued at 655 million by forbes, the lowest valued franchise was the bucks at 258 million.  So yes, that's what they're worth. 

"bottom line is every single NBA owner is entitled to a profit for his investment. Every single NBA owner should at the very least profit as much as his highest paid employee or player."

Are you kidding?  lets start listing the problems with that statement. 

First they are not "entitled" to anything.  You "earn" a profit by hard work and talent and frankly a lot of luck.  The idea that the owners are "entitled" to a profit is the exact problem.  This is entirely their doing not because they signed a bad CBA but because they keep signing bad contracts.  If it's the player salaries that are causing them to loose money - dubious but not part of the question - then they shouldn't have signed the damn contracts in the first place.

Second I can't believe you think any of the owners is profiting less than their players.  Your first comment is the prime example of how crazy this second statement is.  Yeah a franchise used to be worth a lot less, but they've had an enormous increase in value and that increase is all the owners of course. 

Not to mention the fact the most of the owners are millionaires or billionaires.  you make it sound like the players are grossly over paid and the poor owners are living pay check to pay check.  Mean while back in the real world the poorest owner in 2005 had a net worth of 80 million  But only two owners had less then 100 million net worth.  That was in 2005, and now?  Over a dozen of them are on the Forbes 400 wealthiest Americans list. 




Since: Oct 14, 2010
Posted on: November 7, 2011 4:35 pm
 

Talks blow up with ultimatum, Wednesday deadline

Fisher says it's a 'sad day for fans, arena workers, vendors, and parking lot attendants.'  He should have gone on to say that those chumps don't matter when it comes to the huge amount of money the players want for the privilege of never working another day in their lives after basketball.  Fisher might have said, "I am making several thousand dollars an hour while the arena workers are hauling in $7.25 an hour.  If God had wanted you guys to have it easy he would have made you taller and greedier."



Since: Jun 25, 2009
Posted on: November 7, 2011 12:12 pm
 

Talks blow up with ultimatum, Wednesday deadline

Demand the owners loose money?  How about they demand that the owners stop sucking at what they do?  If they couldn't run the freaking business at a profit with the previous deal in place then why did they make that deal?  If they are new owners, then why didn't they read the books and figure out they couldn't make money?  Someone put a gun to their heads and force them to spend 200 mil for a team?

The owners obviously made a mistake signing the most recent CBA, it's now their option to lock the players out and wait until the players are ready to sign a deal that makes good business sense.   The old CBA is now expired, that's what contract negotiations are for.  The owners legally locked out the players and the players have every right to sit out if they don't agree with the owners or don't believe the league's offer is good enough to work for. Obviously in your mind since the owners screwed up years ago they should be obligated to continue screwing up and continue losing money, all of this so NBA fans can get their fix..... sorry, it doesn't work that way. And by the way, nobody is spending anywhere near 200 million dollars on any team in the NBA... you're confusing the NBA with MLB.... 

The issue isn't the owners can't make money, a lot of businesses are loosing money in this economy, the issue is the owners see the current economy as a opprotunity to squeeze the players and set themselves up for enormous profits once the economy rebounds

The issue is the owners are LOSING MONEY.... is it because of the economy?  It doesn't matter, nobody cares.  The bottom line is every single NBA owner is entitled to a profit for his investment.  Every single NBA owner should at the very least profit as much as his highest paid employee or player.   Anything less then that is a joke...

And the funny thing is, even with the 50-50 offer the owners made and the huge luxury tax penalties and player movement limitations as well as the restrictions on teams that go over the cap, overall the owers will still make far less then they should. At first they'll show a small profit, closer to the average NBA player's salary of 5 million dollars.  They have done enough to make this happen, the ball is now in the player's court. 

Take it or leave it....



 



Since: Mar 23, 2009
Posted on: November 7, 2011 11:50 am
 

Talks blow up with ultimatum, Wednesday deadline

Demand the owners loose money?  How about they demand that the owners stop sucking at what they do?  If they couldn't run the freaking business at a profit with the previous deal in place then why did they make that deal?  If they are new owners, then why didn't they read the books and figure out they couldn't make money?  Someone put a gun to their heads and force them to spend 200 mil for a team?


The issue isn't the owners can't make money, a lot of businesses are loosing money in this economy, the issue is the owners see the current economy as a opprotunity to squeeze the players and set themselves up for enormous profits once the economy rebounds.    &n
bsp;


     



Since: Jul 1, 2009
Posted on: November 7, 2011 11:00 am
 

Talks blow up with ultimatum, Wednesday deadline

I understand the lockout, I just believe the owners hold a lot more leverage. My point is that these players have absolutely nothing invested into the NBA except time. If they were stock holders with the team, or had any sort of monetary involvement with the league outside of what the earned, they would have a lot more leverage. Also, the PRODUCT of the NBA is the game itself, not the players. It's arguing semantics, but that's the case. The players are producing the outcomes and results of the game. Fans don't care if LeBron, Wade and Bosh are on the floor unless they are producing wins and championships. The product is the result and action of the game, not the peope doing it. I agree, a large percentage of people who watch the NBA with any regularity have a favorite player and follow that player's performance, but if my favorite player gets traded from my team and that team goes on to win a championship without a single notable player, I care about the win...not the guy. I argue that the owners are being made out to be these awful men of greed when what they are trying to do is make a profit, from a hugely profitable league, from their investment. It's not dilusion, it is what it is.



Since: Oct 3, 2011
Posted on: November 7, 2011 7:53 am
 

Talks blow up with ultimatum, Wednesday deadline

The story remains the same.  A classic case of SSDD.

I do hope the players cave and settle for being grossly overpaid.


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