David Falk (of all people) on the State of the NBA

I said "of all people" in the thread title because of how powerful a force this guy has been in the past in driving up player salaries. I guess he completely absolves himself of any responsibility for how the current NBA salary structure developed.

http://www.nytimes.com/2009/02/23/sports/basketball/23falk.html?ref=basketball

February 23, 2009
Powerful Agent’s Blunt Warning About Future of the N.B.A.

By HOWARD BECK
David Falk speaks in adages and anecdotes, every catchphrase and tale conveying a lesson from nearly four decades as an elite N.B.A. agent. The stories come in rapid-fire fashion, their themes accentuated by an All-Star cast of characters, including Michael Jordan, Patrick Ewing and David Stern.

As Falk intently delivers this oral history, the lessons coalesce in one stark, alarming prediction: the N.B.A. and its players are heading for a profound labor battle.

The nation’s economy is buckling. Too many teams are losing money. League revenue is flat, and the salary cap is about to shrink for only the second time in its history.

The N.B.A.’s system is broken, Falk says, and fixing it will require radical measures that almost guarantee a standoff in 2011, when the collective bargaining agreement expires.

“I think it’s going to be very, very extreme,” Falk said, “because I think that the times are extreme.”

How extreme? Falk said he believed Stern, the commissioner, would push for a hard salary cap, shorter contracts, a higher age limit on incoming players, elimination of the midlevel cap exception and an overall reduction in the players’ percentage of revenue. And, Falk said, Stern will probably get what he wants.

“The owners have the economic wherewithal to shut the thing down for two years, whatever it takes, to get a system that will work long term,” he said in an extensive interview to discuss his new book. “The players do not have the economic wherewithal to sit out one year.”

Falk’s comments will surely irritate the players union and many of his fellow agents. But then, his new book is called “The Bald Truth” for reasons beyond his smooth head.

In 35 years as an N.B.A. agent — and for much of that time, its most powerful agent — Falk has earned a reputation for brutal honesty. In fact, Chapter 3 of his book is titled, “Blunt is Beautiful — Stay True to You.”

In recounting the twists and turns of his career, Falk critiques N.B.A. owners, other agents, former clients and even his mentor, Donald Dell, who gave Falk his start at ProServ in 1974.

Nothing is as striking, however, as his bleak assessment of the N.B.A.’s economic system. Falk’s view matters more than most. Throughout the 1980s and ’90s, he was the N.B.A.’s top power broker, as the adviser to Jordan, Ewing, Alonzo Mourning, Dikembe Mutombo and a host of other stars. He sold his agency, FAME, for $100 million in 1998, but he reopened it in 2007 as a boutique agency.

Falk despairs over the current state of the agent industry, saying “there’s rampant cheating going on” and “the quality of the representation is low.” He blames the union, which certifies agents but provides almost no oversight. A union spokesman declined to comment.

While Falk is no longer the most active agent, he remains highly influential. He is still close to Jordan — now a minority owner of the Charlotte Bobcats — and represents a handful of stars, including Mutombo, Elton Brand and Mike Bibby. (His client list also includes Duke Coach Mike Krzyzewski and the former Georgetown coach John Thompson.)

Sometimes a foe of Stern, Falk is also an unabashed admirer, calling him “the greatest commissioner in the history of professional sports.” Falk does not seem nearly as impressed with Billy Hunter, the executive director of the National Basketball Players Association. The two have had a tense relationship. Falk foresees a rout in the next round of negotiations.

In a joint appearance during All-Star weekend, Stern and Hunter acknowledged the dire state of the economy and its effect on the N.B.A. Stern said publicly for the first time that the salary cap — which is tied to league revenue — would probably decline next season. Privately, league officials are bracing for a major decline in the cap in the 2010-11 season. Stern and Hunter said they had begun preliminary talks for a new labor deal.

Their conciliatory tone sounded promising, but Falk seemed skeptical. In his view, the union botched negotiations in 1998, which led to the three-month lockout, the only labor stoppage in league history. The union tried to stave off a luxury tax and maximum player salaries but ultimately had to accept both in order to strike a deal in January 1999 and save the season.

“The players lost 40 percent of their salaries, and they got a worse deal in January,” Falk said. “So as we approach 2011, my overwhelming feeling is, let’s not make the same dumb mistake as in 1998.”

The players, he said, must recognize that the owners have the ultimate leverage. Many are billionaires for whom owning an N.B.A. team is merely a pricey hobby. Some of them are losing “enormous amounts of money” and would rather shut down the league for a year or two than continue with the current system.

So Falk is urging the union to take a more cooperative approach.

“And if we don’t do that, in my opinion, there’s an overwhelming probability that the owners will shut it down,” he said.

Naturally, Falk has strong opinions about what is ailing the league. He believes too many average players make too much money, while the stars — Kobe Bryant, LeBron James, Dwyane Wade — do not make enough. Falk would eliminate the cap for the superstars and, at the other end, abolish the midlevel exception, which allows teams to give $30 million deals to role players.

Unlike most of his peers, and the union leadership, Falk is an advocate of the age limit, which Stern won during collective bargaining negotiations in 2005. Falk said the limit, now 19 years old, should be raised to 20 or 21.

His reasons are purely practical. The influx of underclassmen to the N.B.A. has eroded fan familiarity and the quality of play, Falk said. An age limit will create more polished and prepared rookies, while the N.C.A.A. provides free advertising for future N.B.A. stars.

“The single biggest factor contributing to the success of the N.B.A. over the last almost 30 years has been the N.C.A.A tournament,” he said, listing a dozen great moments in tournament history. “Every guy in that era, from ’79 to about ’95, who came in the N.B.A., all the fans knew on a first-name basis. It got to the point, when Duke won twice in the ’90s, people said they knew how Grant Hill wore his socks.”

Changes to the salary cap and the age limit sound like sacrifices from the player’s side. Falk does not see it that way. To understand his view, consider an early chapter from his own career.

Early in his relationship with Jordan, Falk offered to drastically cut his marketing fee in exchange for an upfront payment on his negotiating fee. Jordan was initially resistant, but he agreed when he realized the arrangement would save him $10 million over the long term.

As Falk tells it, his boss, Dell, was aghast. But to Falk, the gesture was about gaining Jordan’s trust and loyalty, which would pay dividends in the long term.

“There wasn’t anything better I could have done with $10 million at that time,” Falk writes.

That, essentially, is the message he has for the players union. The players and the owners have effectively been partners since the salary cap was instituted in 1982. The players’ earnings are dependent on the league’s financial health. And in Falk’s view, the players will have to make short-term concessions if they want the league to thrive.

“The only logical way over the next 25 years that players are going to make more money is to grow the pie,” Falk said.

Of course, in his opinion, the players will have little choice but to give the owners what they want. The situation, Falk said, is analogous to the negotiations he conducted on Jordan’s behalf with the Chicago Bulls in 1984. Jordan held all of the leverage, and the Bulls knew it.

Falk recalls the statement made by Rod Thorn, then the Bulls’ general manager, on the occasion of Jordan’s signing: “There was a lot of give and take in these negotiations. We gave, and they took.”