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."