NBA Labor Proposals in Graph Form

With all the various descriptions of various NBA labor proposals out there, I thought it would be useful to put their numerical implications in a graph.

Below is the resulting graph I created using Excel, which shows where the NBA's revenue (gross "Basketball Related Income" or "BRI") projects to go, and how much money the players will earn collectively under various scenarios. The number are not meant to be exact, but, I think, do illustarate where things stand.

Spoiler

These scenarios include

Scenario 1. The Status Quo: Under the current system, the owners take the first $500 million of the gross BRI, and the players are entitled to 57% of the remainder. For example, this past year, the gross BRI was approx. $4.3 billion, and the players share was $2.17 billion.

Scenario 2. The Owner's Original Proposal: When the negotiation first started, the owners proposed a system under which, for the next 10 years, they would take the first $1.4 billion of the gross BRI, and the players are entitled to 50% of the remainder.

Under this proposal, assuming a $4.3 billion gross BRI, the player would get only approximately $1.45 billion or so, almost a 1/3 drop from what they would have gotten under the current system.

Scenario 3. The Owner's Modified "Flex Cap" Proposal: Recently, the owner offered a modified proposal, under which players would be guaranteed at least $2 billion a year for the next 10 years, but would not be expected to earn more than $2.17 billion for any of the next 10 years except for the last year or so.

The proposal also includes a $62 million "flex cap," which is not really relevant to the main issue-- i.e. how much players collectively make each year.

Scenario 4. The NBA Player Association's Proposal: The PA propose to modify the current system slightly, so that over the next 5 years, players get only 54.3% of (Gross BRI - $500 million). There may be additional concessons such as taking only 50% of the BRI above $4.3 billion, but such don't shift the graph much.

Note that this proposal only goest out 5 years because the NBA's TV deals expire in 5 years and the NBA PA expects the new deal to be more lucrative.

Scenario 5. Larry Coon's "Break-Even" Line: This is NOT either side's proposal. Instead, it's something that Larry Coon (CBA expert) said during a podcast: that NBA as a whole should be able to at least break even if the players take 52% instead of 57% of (Gross BRI - $500 million). As such, I created a line for this scenario. ​

I think the graph does a good job illustrating a few things about the negotiations:

A. The PA's proposal (the bright blue light) is pretty close to the status quo. Stern is probably right to call the give-back "modest."

B. The two proposals by the owners (the yellow and purple lines) end up with similar results over the 10-year run, except under the modified system, the players give back more in the last few years of the CBA where as under the original system, more of the give-back are front-loaded. the modified system does give players slightly more over the course of the 10-years, but the difference is not that large overall. As such, it's not suprising that the players are not moved by the owners's switch from the original to the modified proposal.

C. The two sides are pretty far apart as far as the numbers go. The bright blue line is not close to either the purple line or the yellow line.

By the way, below are the numbers I used for the graph.

Spoiler

Note: The nubmers are gathered from news reports and are not exact. However, as stated above, they do seem to capture the essence of where things are. I am using a projection of 4% revenue growth per year, which is approximately the number that both sides are reported to be using (It's probably a bit conservative, especially with reagard to years 6-10).

Also, the graph below is intended to show what I think is the range of potential outcomes:

Spoiler

Basically, the red lines are supposed to be the border between what's being offered by both sides. You can probably argue about the lower border since the graph is a rather optimistic about the owner's willingness to compromise by offering a "hybrid" of their two proposals where there is no "up front pain" and the players shares also get to grow with the revenue in the latter years.

I divided the area of potential outcomes intwo two parts by Larry Coon's "break even line". The bright green upper part are scenarios where the owners are not expected to break even (under Coon's analysis) solely as a result of the new CBA, the dark green lower part are scenarios where the owners expect to make a profit overall-- I am guessing the outcome will end up somewhere in this part of the graph.

 

1. Agreed. The Fan's don't really care whether the players take 50% of 47% of BRI. However, the Union and the League do, and that's the central question between them.

It's the question that is threatening to hold up the July 1 Free Agent signing periods and may even cost the league the next season. Fans do care about next season being cancelled (at least I do).

2. As to the other questions -- revenue sharing, cap level, hard vs. soft cap, etc., ability to dump an "Eddy Curry," etc.-- they'll be sorted out only after the "loot division between NBA and Players" question is first answered so that the league knows how big a pot of money it has to play with in order to set the rules around them.

As Paul Pierce is quoted to have said, these are two separate discussions.