Posted on: November 6, 2011 2:55 am
Edited on: November 6, 2011 2:03 pm
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.
Posted on: November 4, 2011 3:00 pm
Edited on: November 4, 2011 6:46 pm
NEW YORK -- NBA owners will convene for a meeting of the full Board of Governors Saturday morning, hours before a critical bargaining session with the players' association, a person familiar with the meeting told CBSSports.com.
A representative from each team will attend the 10 a.m. meeting in Manhattan, setting the stage for a resumption of talks with the players at 4 p.m. that could determine if the 2011-12 season can be saved.
After about 50 players participated in a conference call Thursday with an antitrust attorney to discuss the possibility of involuntary decertification of the National Basketball Players Asssociation, league negotiators are facing intense pressure from hardliners in the ownership ranks. The New York Times reported Friday that Charlotte owner Michael Jordan is leading a group of 10-14 owners who are vowing to vote against any agreement that gives the players more than 50 percent of basketball-related income (BRI).
It was Jordan who, during the 1998-99 lockout, famously stood up in a bargaiing session and chastised late owner Abe Pollin when he told him that if he can't make a profit, he should sell his team. Now on the other side as an owner, Jordan is siding with a group of owners who do not want to negotiate beyond a 50-50 split -- even though the players already have agreed to shift $1.2 billion to the owners over six years. The $200 million-a-year reduction from their previous share of 57 percent addresses the majority of the $300 million the owners say they are losing annually.
UPDATE: But according to two people briefed on the decertification call, opinions among players participating varied on how valid an option it would be. Some players, such as Ray Allen, participated simply to become informed about the antitrust options at the players' disposal, one of the people said.
The stage is set for a powder keg atmosphere at Saturday's bargaining session in which owners could be even more dug in after losing a month of games. It also is possible that the owners' position could harden simply based on the fact that they do not want to be perceived as capitulating to the decertification threats, which have been organized behind the union leadership's back.
UPDATE: A source from each side said only the full bargaining committees are expected at the afternoon negotiating session, but the list of attendees is fluid and could change. But CBSSports.com learned that federal mediator George Cohen will, in fact, oversee Saturday's talks.
Posted on: November 3, 2011 7:01 pm
Edited on: November 3, 2011 9:56 pm
NEW YORK -- Declaring their unity and determination not to accept a bad deal just to save the season, officials from the National Basketball Players Association said Thursday they will meet again with league negotiators this weekend in hopes of reviving the stalled labor talks.
Bargaining will resume Saturday after NBPA executive director Billy Hunter called NBA commissioner David Stern and asked if he wanted to "take another stab at it."
“I don’t know that we’re going to accomplish much, but we’re going to meet,” Hunter said. “The only way we can get a deal is by meeting.”
The talks, which collapsed yet again last Friday over the contentious split of basketball-related income (BRI), were reignited after federal mediator George Cohen called Hunter this week. Cohen, who excused himself from the negotiations after they broke down Oct. 20, offered to “resurrect his services,” Hunter said.
Hunter said the union is fine with Cohen rejoining the talks, but was waiting for Stern to give the go-ahead. In any event, the two sides will reconvene Saturday in Manhattan with “no preconditions, none at all,” Hunter said. “I think it’s not wise or prudent for us to … let huge gaps of time go by and let the clock run and not meet. Because then we become more entrenched in our respective positions.”
UPDATE: Those positions became even more crucial, and the stakes were raised higher than ever, when Yahoo Sports reported that as many as 50 players were part of a conference call Thursday with an antitrust attorney to discuss decertification. It was one of two conference calls involving players held this week without the knowledge of NBPA officials, Yahoo reported.
Several All-Stars were included on Thursday’s call, in which participants reportedly drew a line in the sand at 52 percent of BRI for the players. If union negotiators dropped below that percentage, and/or the remaining system issues went the league’s way, it would be cause for a rogue decertification vote by players frustrated with the enormous concessions the union already has made, Yahoo reported.
Unwittingly within that prism of chaos, the NBPA's three-hour strategy meeting, attended by Hunter, union president Derek Fisher and members of the players’ executive committee, took on the distinct tone of a damage-control session once a small group of reporters was led into the room. Hunter said the union executives and players had spent only 15 minutes total this week -- including Thursday’s meeting -- addressing reports of a rift between he and Fisher, but spent more time than that addressing the reports to the media.
Fisher denied having unauthorized discussions with league negotiators in which he reportedly told them he could sell a 50-50 deal to the players, and Hunter denied having a confrontation with Fisher on the matter – as reported last weekend by FOXSports.com. Union vice presidents Keyon Dooling, Maurice Evans and Matt Bonner weighed in with impassioned support of Fisher, whom Dooling called “the best president that we’ve ever had as a union.”
“I think the questions need to start being directed toward Mr. Stern and the owners as to why this gap, if it's so insignificant, hasn’t been closed by them,” Evans said.
The owners were formally offering the players a 50-50 split after about $600 million in expense reductions previously calculated under the CBA that expired July 1. But Hunter, explaining for the first time why he walked out of last Friday’s bargaining session, said the league was attempting to use those system issues to “horse trade” from a 47 percent offer to the players up to 50 percent. And Hunter also said he’s heard “rumors” that when the two sides reconvene Saturday, the league may come back with an offer that is less than the previous proposal of 47 percent – which hadn’t officially been the owners’ position since at least Oct. 4.
According to multiple sources familiar with both sides’ negotiating strategy, the pivot point for Saturday’s resumption in talks hinges on the remaining system issues that are crucial to getting the players on board with a further compromise on BRI. Primarily, they are the owners’ proposal to forbid luxury tax-paying teams from using exceptions such as the Bird and mid-level and engaging in sign-and-trade deals; the luxury tax “cliff” that magnifies the expense for a team wading into the tax because of the swing that exists between receiving and paying tax money; and an increased tax penalty for repeat offenders, or teams that stay above the tax line for multiple years.
“It’s difficult to peg the number without knowing what comes with it, in terms of the system,” Fisher said. “And it’s extremely difficult to fully negotiate a system without knowing what the split will be. I think that’s why it’s gotten so hard and so dug in here in the last couple weeks.
“I don’t think any of us can begin to speculate on what our group – in particular, this group sitting at the table and our larger body – will be willing to agree to,” Fisher said. “We have a feel for what we need to present a fair deal.”
It is possible that the mere threat of decertificaiton, which would all but ensure a lost season of revenues for the owners, could provide a much-needed trigger point to move the negotiations forward Saturday. But it also has the potential to further fracture the union, pitting star players and their high-profile agents against the rank-and-file who are more willing to accept the best deal they can get now to salvage close to a full season of earnings.
“I don't think the battle is within our union,” Dooling said. “That's not where the rift is.”
But with various players tweeting this week about a desire to accept the best offer the union can get now in order to save the season, Fisher and Hunter are in an extraordinary position: defusing that angst and presenting a unified front while also holding the line on making significant further concessions when every negotiated aspect of the deal to this point has gone heavily in the owners’ favor.
The meeting Thursday at the union’s Harlem offices offered a window into the tension, frustration and responsibility that rests with Fisher and Hunter to close this deal in a way that satisfies current players who want to return to the court and others who will be affected by it for a decade or longer.
With Hunter being pressured by agents and star players who want him to hold firm at his current proposal of 52.5 percent – down from 57 in the previous deal – and with Stern also feeling Heat from hard-line owners, it is unclear whether the two men who ended the 1998-99 lockout with a private, all-night negotiating session have another season-saving deal in them. Or more important, whether they have the same authority each enjoyed in January of ’99, when they emerged with a handshake agreement on the very morning when Stern had threatened to cancel the rest of the season.
“I thought it was appropriate,” Hunter said. “I thought that we had given enough. … The signals that I thought I was getting, or that we were getting, were that they would be receptive to moving off their number. And when they went back to 47, then all of a sudden it became clear to me that that wasn’t the case.”
“Our platform has been reasonableness,” NBPA general counsel Ron Klempner said. “We're looking to come to them and to meet them. And just as people are asking us, ‘Well, the difference is so small, shouldn’t you just cut it and meet them halfway?’ The same thing is on them, and it's just not worth it for them. They really do have to come and meet us halfway.”
For this reason and others, it would be irresponsible to characterize a conversation by Fisher or any other union official about a compromised split of BRI since the number cannot be separated from the system issues that go with it – conversations that Fisher vehemently denied having, even though they would’ve been well within his rights as the union president. Indeed, Hunter acknowledged Thursday that NBPA outside counsel Jeffrey Kessler broached the topic of a 50-50 split on Sept. 8 as a way to feel out whether league negotiators were inclined to discuss a split in that “zone.” But to date, the players have not made a formal offer beneath their requested share of 52.5 percent.
“I think the biggest misperception is that it’s only about two percentage points,” committee member Roger Mason said. “Because it’s about much more than 50 or 52 or whatever. There’s still a system that hasn’t been addressed.”
Posted on: November 1, 2011 3:18 pm
While sources confirmed Tuesday that the NBA and National Basketball Players Association are discussing the possibility of bringing federal mediator George Cohen back into the bargaining process, we already have learned that this is no cure-all for the lockout.
Cohen spent more than 24 hours over two days refereeing the talks last month, only to see them blow up over the contentious issue of the BRI split. The same thing happened without Cohen on Friday, and while sources believe union chief Billy Hunter wouldn't have been permitted to walk away from the table with a line in the sand drawn at a 52-48 split in favor of the players, it's not clear whether Cohen would've been able to elicit enough compromise to keep the talks going.
So while bringing the mediator back into the room couldn't hurt, I have a better idea. To borrow a phrase from commissioner David Stern: mediator, schmediator. Breaking the impasse and securing a handshake on a new CBA so the NBA can reopen for business really only requires two people to be in the room:
1) Stern, and 2) Hunter.
It's time for the two men whose job it is to secure a deal to get in a room together and figure it out. It's time for Stern to tell Hunter how much wiggle room he has on his owners' 50-50 proposal, provided Hunter is willing to compromise on the Big Three system issues that remain. It's time for Hunter to tell Stern exactly what he needs to be able to sell a 50-50 or 51-49 deal to his players.
It's time for Stern and Hunter to throw each other a life raft so they can both paddle ashore holding both fists aloft in the universal gesture of victory. (Although, to do that, they'd need someone else to paddle. So they can bring Cohen in to propel the boat during the victory parade.)
This is how the 1998-99 lockout ended. Stern and Hunter ended it. On the day Stern had set for the rest of the season to be canceled, the two deal-makers pulled an all-nighter, and emerged on the morning of Jan. 7 to shake hands and end the 204-day lockout.
This one has endured a little more than half that time, but there's no need for any more. There are two people who can end this, and each one needs to tell his constituents that he intends to do just that. Stern and Hunter have been negotiating against each other for 15 years. They don't need a mediator, just an empty room.
Posted on: November 1, 2011 2:43 pm
As explained expertly by SI.com and the New York Times in recent days, much progress has been made on system issues that are crucial to a new collective bargaining agreement. But there are several subsets of deal points still unresolved, and many so-called "B-list" items that haven't even been broached yet.
It's within those issues that compromise finally will have to be reached to push the two sides closer together on the biggest sticking point: the split of basketball-related income (BRI).
The owners are dug in with their offer of a 50-50 split, while the players aren't budging lower than 52 percent. But not all 50-50 deals are created equal, and the key to breaking the revenue logjam will be tradeoffs that have to be made on the remaining open system issues.
There are three key issues that could be tweaked to entice the union to compromise further on BRI and/or compel the owners to move from their 50-50 position. They are as follows:
1) The punitive entry point for small- or mid-market teams considering "wading into" the luxury tax temporarily, which the union refers to as "the cliff." The obvious solution would be for the distribution of luxury tax money to be changed to eliminate the double-whammy teams experience by going from being a tax receivers to tax payers. Such a whiplash effect, in some cases, triples the cost of going for it with a modest move into the tax. For example, a team that is just below the tax adding a $2.5 million player results in a net cost of $7.5 million -- the cost of the player, the loss of $2.5 million in tax revenue from tax-paying teams, and the cost of the $2.5 million in tax that team would have to pay. Rather than a straight transfer of tax money from tax payers to non-tax payers, distributing the money as a revenue-sharing transfer based on need -- or using it for another purpose -- would flatten out the cliff and move the two sides closer to compromise.
2) The ability of tax-paying teams to use exceptions such as the Bird and mid-level exceptions. The players don't want tax-paying teams, which typically are big-market and/or high-revenue teams, eliminated from the pursuit of free agents through restrictions on their willingness or ability to spend that act like a hard cap. Owners have reluctantly agreed to leave the Bird and mid-level exceptions intact, albeit with shorter contract lengths. But the owners are digging in with their insistence on forbidding tax-paying teams from using these exceptions, which to the players means a smaller market for free agents.
3) Severe penalties for repeat offenders who spend multiple years over the tax threshold. While the owners' proposal for recidivism tax rates would accomplish their goal of reining in the big spenders, the players have been unwilling to accept restrictions that would further shrink the options for free agents in a system that, even as previously constructed, typically only had a handful of teams with cap space or the ability to blow through the tax threshold in a given year.
There are any number of small-ticket items still undecided that could be used for what the negotiators call "horse-trading" to close the gap on BRI. As I've suggested previously, one of them is increasing the players' share of licensing money -- which would have a net-zero affect on BRI since those funds already come off the top before the balance is split with the players -- and changing how that money is distributed so stars who sell a lot of jerseys and merchandise get a bigger share of the pie. Another item would be deal length and opt-out clauses; the players will accept a 10-year CBA only if they can opt out after the sixth and eighth years, while the owners want an opt-out after the seventh year.
But the aforementioned items are the Big Three of what's left to negotiate. It's pretty simple, really, from a bargaining standpoint. More player-friendly agreements on those three items may allow union chief Billy Hunter and president Derek Fisher to be able to sell less than 52 percent to the union membership. More owner-friendly agreements would require the owners to move off their 50-50 split. Something in the middle -- a little give, a little take -- could result in a range of percentages for the players' share of BRI. For example, if revenues come in as expected (4.5 percent growth), the players would get 50 percent. If revenues came in higher, they'd get 51 or 52, depending on how much growth there was. The scale could be tweaked based on the compromises made on the three A-list items.
"A very reasonable suggestion," one official involved in the negotiations told me.
There will be a time for reason, eventually. It's just that both sides need to understand how to get from here to there.
Posted on: October 27, 2011 10:52 pm
Edited on: October 28, 2011 12:58 am
NEW YORK – Setting up the next and most pivotal day in the NBA labor talks, negotiators will convene Friday with what commissioner David Stern described as “resolve” to finally close the gap and agree to the two key elements of a new collective bargaining agreement: the system and the split of revenues.
“I can’t tell you we’ve resolved anything in such a big way, but there’s an element of continuity, familiarity and I would hope trust that would enable us to look forward to (Friday), where we anticipate there will be some important and additional progress or not,” Stern said in a news conference Thursday night after a 7 1-2 hour bargaining session at a luxury Manhattan hotel.
“We’re looking forward to seeing whether something good can be made to happen,” Stern said.
After spending 22 1-2 hours over two days hammering out many of the details of a new system that the league believes will foster more competitive balance, the moment of truth has arrived – for the third time this month. Two times prior, the negotiators expressed confidence they were within striking distance of one or the other key issue – the system or the split – only to have the talks fall apart in spectacular fashion.
But according to several people involved in the negotiations or briefed on them, there has been a noticeable uptick in urgency to finally end the nearly four-month lockout, with the last realistic possibility to salvage games already canceled – and avoid canceling more – set to evaporate without a deal in the next several days.
In a moment of levity that also pointed to the importance of Friday’s bargaining session, Stern chimed in from the back of the room during union executive director Billy Hunter’s news conference when Hunter was asked when the important, difficult moves would be made to finally close the deal.
“Well, David Stern is sitting back there,” Hunter said. “I think he can probably tell you. Hopefully, sometime tomorrow.”
And right on cue, Stern shouted jovially from the back of the room, “Tomorrow!”
In another important moment from Thursday night’s separate news conferences – held only 18 hours after the 4 a.m. ET affairs earlier in the day – Stern was asked if the league was prepared to make another economic move Friday if necessary to get the deal done. The two sides are trying to agree on the framework of a new system of player contracts and team payrolls before proceeding with the final, most important, and interrelated piece of the negotiation: the split of BRI.
“We’re prepared to negotiate over everything,” Stern said. “We’re looking forward to it.”
The most recent formal proposals have the owners offering the players a 50-50 split of revenues, while the players have proposed a 52.5 percent share. The players received 57 percent under the previous six-year CBA. The split of revenues was not discussed Wednesday or Thursday, the parties said.
“We remain apart on both, so from that standpoint, we’re disappointed,” Silver said.
Hunter does not share Silver’s view that the split and system structure are unrelated, and those two viewpoints must collide one last time Friday with urgency to reach an agreement and preserve a full 82-game schedule at its highest point since the lockout began July 1.
“You definitely have to have some agreement on the system,” Hunter said. “Because if the system’s not right, then as we’ve indicated before, the number’s not going to work. And so the two are interrelated.”
But while there remain significant details to be resolved over a more punitive luxury tax system and other rules governing trades and contracts, Stern’s demeanor was decidedly upbeat after a second consecutive day of trying to bridge the bargaining gap in a small-group format that clearly has gained traction and momentum.
The rosters of negotiators were essentially the same as the 15-hour session held Wednesday into the early morning hours of Thursday. Stern, Silver, deputy general counsel Dan Rube, general counsel Richard Buchanan, labor relations committee chairman Peter Holt of the Spurs, Board of Governors chairman Glen Taylor of the Timberwolves, and James Dolan of the Knicks were joined by Mavericks owner Mark Cuban, who was flying through New York on his way home from Paris. Other than the absence of union economist Kevin Murphy (who will be present Friday) and the addition of vice president Roger Mason, the players’ contingent was intact with Hunter, president Derek Fisher, vice president Mo Evans, general counsel Ron Klempner and attorney Yared Alula.
Posted on: October 27, 2011 2:33 pm
Edited on: October 27, 2011 8:14 pm
NEW YORK -- As bleary-eyed negotiators reconvened Thursday in Manhattan after a 15-hour session that yielded progress on the difficult system issues needed to strike a deal, the next step is a precarious one: marrying a new system with a reduced split of BRI for the players in a way they can accept and, ultimately, ratify.
The two sides have been here before, and it's at this intersection of system and split where the talks have spectacularly blown apart before -- most recently, last Thursday, when the owners insisted on the players accepting a 50-50 split as a precondition for continuing negotiations.
With both sides recognizing that they have one last chance over the next few days to not only avoid losing more games but also, perhaps, salvage those already lost in a compressed, revamped 82-game schedule, the time for ultimatums and preconditions has passed. It is time for compromise and real, 11th-hour movement in both sides' bargaining positions. Without it, there will be no deal and there will be widespread, unnecessary economic carnage.
One of the interesting phenomena of this messy work stoppage is that, despite the public's knee-jerk reaction to blame the players and cast athletes as greedy villains, NBA fans have become educated about the issues and facts involved and seem, by and large, to recognize that the players have been in an untenable negotiating position. The owners have asked for an awful lot, and seem awfully determined to get it. But in exchange for agreeing to a reduction in their share of BRI from the 57 percent under the previous deal as a fait accompli -- and for openly and forthrightly negotiating certain system changes that the owners believe will help create more competitive balance and payroll parity -- the players need something in return. NBPA executive director Billy Hunter and president Derek Fisher need to bring a deal to the union membership by the end of the weekend that allows them to declare some measure of victory.
Here are a couple of ways that can happen, and unsurprisingly, they are interrelated, like many aspects of these negotiations:
It is clear that the owners' ideal BRI split is 50-50, but the time for seeking the ideal was July, August and September. It's late October, almost November, so there needs to be one final push from the owners on BRI to make the system changes more palatable to the players. It is the players, remember, who already have given up more than $1 billion over six years compared to what they would've gotten under a 57 percent system by offering to go as low as 52.5 percent. They players should be willing to meet the owners somewhere in the middle, but not all the way to 50 percent.
If this deal getting done hinges on the owners getting their 50-50 split come hell or high water, then I am scared for basketball humanity.
Here is how it can get done -- and, once again, silly me, I am being logical and sensible about this. The difference between the players' position of 52.5 percent and the owners' offer of 50 percent is approximately $100 million a year. As Hunter alluded to Thursday morning, there are tradeoffs to be made between system issues and movements in the BRI split -- in other words, an economic move by the owners would make some of the system restrictions they are seeking more palatable.
"We’ll continue to remain focused on some key principle items in our system that have to remain there in order for our players to agree to what is already a reduced percentage of BRI," Fisher said.
In other words: Work with me here, guys.
By reducing the players' share from 57 percent to 50 percent, the owners are seeking a 12 percent reduction in salaries -- from the $2.25 billion they would've received under the old system to $1.97 billion. There are thousands of ways to get there, but a key one that hasn't been discussed much would achieve a substantial amount of the further reduction needed for the two sides to meet in the middle without the affected players feeling it much -- if at all.
Both sides seem to have agreed to leave the structure of max contracts largely intact under the new agreement, meaning stars would still be able to get 25 or 30 percent of the cap, depending on the situation. But if players across the league are facing a 12 percent pay cut, why would max contracts be sacred?
Next season, there will be 22 players at or just below the max -- ranging in pay from $13.7 million (Kevin Durant) to $25.2 million (Kobe Bryant) for a total of $392 million. Since league negotiators are open to phasing in some of the system changes they are seeking to create more balanced payrolls, a 15-20 percent reduction in future max salaries -- say, 20-25 percent of the cap instead of 25-30 -- would result in approximately $70 million a year in future savings. That's nearly all of the annual difference between the two sides' economic positions.
While the vast majority of max players deserve what they get and more, they also earn tens of millions more through marketing and endorsement deals. If max players absorbed a bigger share of the reductions the owners are seeking, it would ease the bridging of the gap between 50 and 52.5 percent -- say, to somewhere in the middle, such as 51 or 51.5 percent -- and there's a way to do it without the star players feeling the reduction.
UPDATE: The NBPA annually receives licensing money from the NBA and typically has distrubuted it evenly among the league's approximately 420 players. Last season's share was $37 million, a person with knowledge of the arrangement told CBSSports.com. The NBPA has withheld the licensing money for several years and kept it in a fund to help players through the lockout. When the lockout is over, the money will be distributed.
Through giving players a share of licensing money commensurate with their own jersey and merchandising sales, the star players would receive some of the money given up through the reduction in max salaries. A negotiated increase in the amount of licensing money paid to the players would sweeten the pot, with minimal impact on the owners' share of BRI. Licensing money -- revenues from merchandise sold with team or league logos and/or player names -- is part of the approximately $650 million in deductions that come off the top of overall revenues before they are counted in BRI and split with the players.
So if you're among the next wave of max players to sign extensions -- Dwight Howard, Derrick Rose, Chris Paul, Deron Williams -- the haircut you'd take on the max salary could be minimized by a bigger share of the licensing money.
Sometimes, the solutions make too much sense.
Posted on: October 27, 2011 5:15 am
Edited on: October 27, 2011 12:49 pm
NEW YORK – After another marathon, 15-hour bargaining session that pushed past 3 a.m. ET Thursday, NBA and union negotiators emerged saying progress had been made -- and pointed to the possibility of not only avoiding the loss of more games, but recapturing those already canceled and having an 82-game season.
It’s beginning to look like time for push to come to shove and for the lockout, well into its fourth month, to have its best chance of coming to an end.
“This has been a very arduous and difficult day, and productive,” commissioner David Stern said after 4 a.m. in a conference room of a Manhattan luxury hotel. “(Thursday) is going to be just as arduous and difficult, if not more so. We hope that it can be as productive.”
The two sides are reconvening at 2 p.m., with National Basketball Players Association executive director Billy Hunter saying an 82-game season remains “possible” if a deal were reached by Sunday or Monday.
“We initially wanted to miss none,” Stern said. “It's sad that we've missed two weeks. We're trying to apply a tourniquet and go forward. That's always been our goal.”
But while the cataclysmic rhetoric that marked last Thursday’s breakdown in talks was gone and the focus was on saving games instead of losing more, officials on both sides cautioned not to draw substantial conclusions. While progress was made on several system issues – “small moves,” according to one source – the talks are back in the tenuous place where they’ve blown apart on several other occasions. Even if the complete menu of system issues can be resolved Thursday, the trouble in the past has come when the system has to be linked with the BRI split – or vice versa.
“I think depending on how much progress we make (Thursday), we’ll be in a better position to be more explanatory and definitive about the specifics of the deal,” Hunter said.
After the talks broke down last Thursday over the BRI split – with the owners offering a 50-50 split and the players seeking 52.5 percent – the two sides re-engaged almost immediately on Friday and continued talking through the weekend, Hunter said. The pressure was beginning to mount for both sides to avoid further cancellations and try to salvage the two weeks of games already canceled into a revamped, compressed schedule.
“If there was any hope of trying to recapture the lost games and be able to complete a full season of 82 games, then there had to be a way to get back and talk,” Hunter said.
The two sides discussed system issues exclusively Wednesday and into Thursday morning, not touching on the BRI split at all. One source warned, “They still haven’t gotten to the meat and potatoes.”
But the general feeling from both sides was that a level of determination to bridge the gap between the system proposals has reached a level of urgency not seen at any times during the two-plus years of negotiations. It is generally presumed that once the more difficult system issues – mainly the level and rates of a new, more punitive luxury tax system – are agreed upon, the economic negotiation would be easier to agree upon.
“A lot of the concessions or trades that you might be inclined to make have to have some connection to your understanding of what your ultimate number is,” Hunter said.
Fisher said there were “key principle items in our system that have to remain there in order for our players to agree to what is already a reduced percentage of BRI.”
The league and union negotiated in the small-group format that has yielded significant progress and less rhetoric in the past. Stern, deputy commissioner Adam Silver, labor relations committee chairman Peter Holt of the Spurs, Board of Governors chairman Glen Taylor of the Timberwolves and Madison Square Garden chairman James Dolan joined deputy general counsel Dan Rube and general counsel Richard Buchanan in representing the league. For the players, it was Hunter, Fisher, vice president Maurice Evans, general counsel Ron Klempner, attorney Yared Alula and economist Kevin Murphy.
League negotiators will convene via telephone with the rest of the owners on the labor relations committee prior to the 2 p.m. resumption in talks, but there will be no new parties in the room. Murphy, who has other obligations, will not be present for the union Thursday.
“There's no question that today was a better day than last Thursday,” Silver said. “I think it's too early, not just in the morning, but still in the negotiations to express confidence that we're at a deal. There's no question, though, that we did make progress on some significant issues.”
In a moment of pre-dawn levity after the second-longest bargaining session of the negotiations, Stern joked about the fact that he was not present last Thursday when the seemingly promising talks fell apart after an apparent “take-it-or-leave-it” ultimatum from Holt over proceeding with system negotiations only if the players accepted a 50-50 BRI split.
“It wasn't me,” Stern said. “I leave these guys alone for a little bit of time and all hell breaks loose.”
Could all hell break loose again? Sure; at this point, anything’s possible. But what was clear as the vacuums purred in the lobby and hotel staff began showing up for a new day’s work was this: The urgency to make a deal finally has arrived.