[CBS Sports - Berger] Labor update as NBA heads for 'ugly' lockout

Yeah, most plebeian jobs aren't in a system where the franchises of the same business compete with each other, and it is exactly the competition that they are selling.

I take that you are for the right of rookies choosing whatever teams they want to play and abolish the draft because it is downright unlawful. I take that you are for the right of teams spending whatever they can afford and abolish the cap because it is downright unlawful to limit how much a business can spend on whoever they want to hire.

People still have this illusion that a sport league is a free market made up of 30 or so competing companies. The fact is, the league is essentially one single company. So it is not really a free market. Their real competitors are other sport leagues. That's where the free market is. The workers are free to go to other leagues if they don't like the current one.

 

Ok, ill give you a reason.

Im rooting for one side over the other because I want the NBA to prosper. I want to continue to enjoy the game. And if imbalances are not corrected, this may be in jeopardy.

When faced with basically two choices:

1) Are the players getting paid enough
2) Should 22/30 owners be losing money

It seems a simple choice.

 

Really wish I had enough time to put in a full response to this topic, but I'm slammed these days so I'll quick bullet....

Current CBA was made to hit the "happy split" for revenue, but:
-double recessions changed the happy split line as teams faced serious drop offs while players continued to enjoy 8% and 10% pay raises each year.
-the soft cap exceptions have all but created an uncapped market, with avg payroll being 115% of the cap (above the "happy split line")
-->The owners are absolutely right that they need serious pullback.

Revenue sharing is a thorny subject. It almost has to be augmented (right now, starving teams like the Kings see about $3M in lux tax distribution, or ~ 5% of their budget. To be competitive, the Kings, Bobcats, Hornets, and other low revenue squads would need closer to $20M each in the current system....or the avg payroll drop significantly (~ $55M) and have $12M in sharing.

But here's the rub - we like to think of the NBA as a singular entity, but it's really 30 separate businesses in competition with one another. Not just for the championship, but for profit. Just like upper middle class folks belly ache about their higher tax brackets, owners like Buss, Dolan, and Cuban don't like being told that they need to subsidize their lesser competition for the good of the game. There's already an issue in the MLB with the bottom dwellers intentionally spending rock bottom so they can stuff revenue sharing welfare in their pockets for profit.

Currently, the NBA is trying to pass a CBA where the bottom revenue teams determine the league wide cap (limiting factor) so that all teams are guaranteed to stay out of the red (without revenue sharing). The players rightfully are calling them out on that, since it means teams like the Lakers end up profiting ten times over (same high revenue, but costs halved) and the players see their current 57% share dwindle to 40% or less.
--->This is one area where the owners HAVE to give in if they want such major economic turnover.

The players know that the Flex cap will be a defacto hard cap once the last teams starting above it (Lakers) fall under due to new salary restrictions. And they are dead on correct that the "middle class" (really, the 80% of the NBPA that will never see $10M+ contracts) will suffer hugely. You aren't going to see a NBPA majority pass a CBA that crushes 80% of membership just so that 40 members out of 440 can enjoy huge dollars.

I've been saying for ever that the luxury tax works (only 6 teams crossed it this year, for everyone else it may as well have been a hard cap)....so tweak it and use it. Get your revenue sharing from it, get your pseudo-hard cap from it. Lower it and implement a $3 per $1 tax penalty. If the tax line keeps everyone in "happy split land" ($45M-$65M payrolls), you've got financial health and relative parity. If the Lakers, Knicks, Mavs, and Heat shoot over it, they pay a steep price* and subsidize the small market teams (to allow them to compensate).



* Lakers this year had a $92M payroll and $22M in tax for a $114M total. Pretend that's their spending line.
Put in a $3-per-$1 tax line at $65M, and
$92M would generate $81M in tax
or
to stay at their $114M total, payroll would drop to $77M
-->Either way, it will be a big stick for even for the biggest spenders and keep every one on a more even playing field.

 

They wouldn't be in business if the players didn't agree to limit certain freedoms available to most employees, such as plebeian ones. However, I'm not the one arguing for them to have a salary scale similar to plebeian employees.

I like the draft and have no problem with a cap, although baseball has clearly shown that a sports league can do just fine without a cap. And yes, both of these things are unlawful but the players association has agreed to them. Without their consent, the NBA wouldn't exist. This is another difference between them and plebeian employees.

There are no other sports leagues in the United States. And if the league is essentially one single company then they should have revenue sharing, right? All teams aren't losing money. Why should the players come out of their pockets to make sure owners don't lose money, as opposed to the other owners if the league is essentially one single company?

 

Nobody wants the league to fold, especially not the players.

The question is how the losses suffered by the teams can be addressed: Is salary cuts the only way to deal with it? Can teams cut their other costs? Can teams/players work to increase revenue? Do we expect the economic condition to improve so that teams won't be losing as much money next year or the year after that?

The players' offer is basically: We'll help you offset about half of your expected lossed over the next 5 years. You guys find a way to fix the rest. After the 5th year, the league will have a new TV contract, and we can figure the math going forward at that point. It's probably not sufficient, and probably not meant to be sufficient since it's only an early negotation offer.

As reflected in my graph, currently the teams are asking for much bigger cut from the players than what it would take for the league as a whole to break even according to a reasonable expectation of upcoming revenue-- the owners are negotiating for a substantial guaranteed profit. Similar to the players' offer, I understand this to be an early negotiation offer, not something they serioiusly expect the players to agree to.

I expect the parties to reach a settlement somewhere in the red area in my graph, i.e. between the owners' current proposal and what it would take for the league to break even.

 

Factually, it is 30 companies. Fans are just used to thinking of it as a single entity. Look at it like the US - we're all under the feds, but each state is responsible for their own budget.

Players don't get their paychecks from the NBA, they get them from their owners.

That's a big source of the ongoing gap in the talks:
The players look at the leaguewide revenue and say the revenue split should come from there. (Pure revenue sharing)
The teams look at what the red/black line is for each of the teams and argue that the split should lead to all 30 teams staying in the black. (no revenue sharing)

The answer has to meet in the middle. There's going to have to be some disparity, there's no point in making a huge profit if you have to divide it up and give equal shares of it to everyone else. But you also don't want to continue down the path of haves/have nots.

 

Fans are winners if a lockout actually happens. They can use their money on something else more meaningful to their life in the future like paying off mortgage quicker instead of purchasing those way over valued tickets in a bad economy.

 

The counter-argument here is that the players are taking the hit for poorly managed finances, as well. The entire pool will also be catering to the least performing club, to make all 30 teams profitable. That would just increase the profits of the already well to do clubs.

I agree with the proposal to have more aggressive revenue-sharing policies. Away team gets a cut of the gate revenue sounds simple.

 

New Podcast with Larry Coon: http://espn.kall700sports.com/wp-content/uploads/2011/06/Larry-Coon-6-29-11.mp3

 

And that's the players fault? Yeah sure let's force a player to stay in a city when he'll just tank the hell out of it. T-mac. Pippen.

 

Cannot believe people actually wants players to be forced to play for a team they don't want to. It's like myself being forced to stay at a job I don't like, or a Girl I don't want to be with. I actually think it's because the Rockets have no stars, or no one even close to being one, that people are bitter and upset.

The NBA is on a roll lately, with attendance up, ratings up over 20 percent and is still growing all over the world, it would be a stupid move to call a lockout.
It's a star driven league, as most sports are, as they are the ones who attract the fans.

Owners will be shooting themselves in the foot, and I don't think they care, as they want to push this as far as they can.

Anyone who is a fan of the NBA, and wants a lockout, really needs to re think his love for the game.

 

Nothing wrong with a Franchise tag, or eliminate the S&T and lower the salary available significantly if they want to switch teams.

DD

 

I agree there should be revenue sharing and I'd bet it's being discussed. However, even with perfect revenue sharing, the fact remains that all league as a whole is losing money, possibly as much as $300 million. So, without anything else, right now all that revenue sharing would do is to make every team suffer the same loss, rather than some teams losing a ton of money while others make a profit.

Basically, the math is that the league (i.e. all 30 teams combined) has $4.3 billion in revenue. The players salary and benefits total $2.17 bllion. The league's total non-player expenses (arena lease, debt service, coaches, cost of all other employees, etc.) total about $2.43 billion. So, with a revenue of $4.3 billion and expenses total $4.6 billion (2.17+2.43=4.6), the league as a whole is losing $300 million this year.

Yes, you may be right that the owners are to blame for letting the non-player expenses get up to $2.43 billion. Be that as it may, we are where we are now, and the real question is how do you get from here to a sustainable situation over the next 10 or so years.

Given that there are 3 components to NBA's profit/loss, there are three things you can do:

First, you can grow the revenue.

Second, you can control non-player expenses.

Third, you can control player salary and benefits. ​

Regarding the first item, there is pretty good news: Growth is happening already and is expected to continue. In fact, the NBA's gross revenue has been growing EVERY season since at least 2004/2005 (some years faster than others, the revenue in 2004/2005 was about $3.53 billion) and both the league and the NBAPA are anticipating at least 4% annual growth over the course of the next 10 years, which means that in 2021/2022, the league is anticipating more than $6.4 billion in revenue.

The problem is that both the expenses are growing, too, so you can still expect to suffer a loss without cost control.

Now, you might argue that what the owners need to do is to look into getting control over the non-player expenses first. True, but even if they do a decent job of controlling these costs, the current system is still unworkable.

Specifically, lets say that the teams manage to grow revenue by 4% a year, but manages to control the growth of non-player expense so that it only grows 3% a year or even 2% a year starting from current level ($2.43 billion), under the CBA as it exist now, the teams are still anticipated to suffer a loss over the next 10 years. So, something significant still needs to be done to player salaries in order to make the economics work.

 

So if the company across the street was offering you a chance to work from home, give you a car, and free air miles, you shouldn't be able to go because it will hurt the company you work for now?

 

In real life teams, If I break up with my GF(Team), I then should only be aloud to move on to another Girl(new team) that is half as good as my ex?

But my GF(Owner) is able to leave me at any time(Released), and also send me to any girl she wants to(Trade) without my consent.

What is this, the 1500's?

 

The bottom line is whatever people here think, there will NOT be an NFL style franchise tag in the NBA. The Players Union certainly don't want one and even the League isn't asking for one. The only type of "franchise tagging" proposed is essentially an extension of the current "Bird Right" system, allowing a team to designate a "franchise guy" and offer him more money than would be allowed otherwise under the rules. It's really a retention bonus rather than a restriction on where you can go.

Again, the NFL style "franchise tag" is NOT EVEN ON THE TABLE.

 

Here is some bad news.. Hope they work something out, cause this could drag on for a long time.

http://blog.mysanantonio.com/spursn...onroe-it-only-gets-harder-for-owners-players/

According to NBA executives familiar with the league’s strategies, once the lockout is in place, the owners will push for a hard salary cap of $45 million, the elimination of guaranteed contracts and ask that the players swallow a 33 percent salary cut.

The concessions made in recent weeks, including the “flex cap” of $62 million and a guarantee of $2 billion in annual player payroll, will be off the table.

If this seems certain to guarantee the loss of the entire 2011-12 season, it is because there are owners who think it is necessary for the long-term viability of the league.

 

Grandstanding.

The owners were asking for a economic concession equaling more than $8.5 billion. The "flex cap" proposal represents an improvement of less than $1 billion in comparison with the $45 million cap proposal.

 

There is something very wrong with all of those things. It will keep guys from switching teams, or hinder it. I like free agency. I would love for the Rockets to get good free agents as well.

I have no clue why folks think professional athletes shouldn't be able to play where they want eventually. In the NBA's case, players already have to be drafted to enter the league and teams can match what, their first post rookie contract if they want? There is no need to further restrict when a guy can make a good chunk of change on another team.

Oh, and eliminating the S&T means the old team will get jack when a free agent leaves. That will really help.

 

Also, lets say a player get drafted by the Clippers and find D. Sterlin morally corrupt and despicable. Why should he not be able to choose to leave when his contract is up? Why should, say, Blake Griffin be forced to essentially gift Sterling $10 million more a year?

The Spurs managed to keep the stars they drafted. You can't guarantee a guy won't want to leave, but you sure can increase your chances of retaining your guy and/or attracting players from elsewhere if you manage your team well even if you are in a small market.