[CBS Sports] Biggest event for NBA this week is Tuesday, not draft day

jsmee2000 · Jun 21, 2011

Interesting long read...

http://www.cbssports.com/nba/story/15249908/biggest-event-for-nba-this-week-is-tuesday-not-draft-day

Biggest event for NBA this week is Tuesday, not draft day

By Ken Berger
CBSSports.com Senior Writer
June 20, 2011

NEW YORK -- With so many eyes on the NBA Draft this week, a far more important event will unfold in a Manhattan hotel conference room Tuesday -- a meeting of the minds that goes well beyond draft-night hits or misses.

A large contingent of NBA owners, players, lawyers, negotiators, economists and others wearing far more conservative suits that you'll see on the stage on draft night in Newark, N.J., will convene for by far the most important pro basketball event this side of the NBA Finals. Commissioner David Stern has raised the stakes for this crucial collective bargaining session, saying it will be apparent by the close of business Tuesday whether enough momentum and compromise exist to complete a new CBA before the current deal expires in 10 days.

"The clock is ticking and the runway is shortening," Stern said last week after the negotiating committees for both sides met for 4½ hours and emerged with agreement on little other than the need to take one more swing at bridging the substantial gap between the two sides.

The players made a small move Friday on the cut of revenues the players would get after the owners' three-year delay of a $45 million hard-cap system with maximum contract lengths of four years and about $700 million in salary reductions. The owners responded with what they viewed as a significant concession -- offering to drop their insistence on eliminating fully guaranteed contracts. While the players were skeptical of just how important this offer was, the expectation is clear: Sources say the players will submit a new formal proposal Tuesday, and the owners are expecting it to represent enough of a shift in their position to warrant further negotiation.

That's what Stern meant when he said last week, "Tuesday is a very important day in these negotiations."

Sources say the players' most recent proposal included an offer to accept less than 50 percent of additional revenues beyond a certain point in the new CBA. For example, revenues are expected to come in at close to $3.8 billion when the books are completed on the 2010-11 season, so the players essentially proposed keeping their current 57 percent of BRI (basketball-related income) up to that threshold while giving the owners more than 50 percent on revenues beyond that. The owners have yet to move off their insistence on excluding about $900 million of revenues from the players' share and a 50-50 split after owners pocket the difference. To call such a proposal 50-50 is less than half genuine.

But whatever the players propose Tuesday will have to go beyond tinkering at the margins. Whether it's enough depends on the negotiating dynamics, but also on the staying power of a ruse that has been perpetrated on basketball fans over the past 18 months. The idea that the big debate here is between the owners, who want drastic changes that will assure 30 billionaires the chance to make a profit, and the players, who seek to protect the salaries, benefits and work rules they've collectively bargained over the past quarter-century, is as false as it is intellectually dishonest.

The real rift, in fact, is among two distinct factions of NBA ownership. It isn't so much the haves vs. the have-nots, although that's part of it. The distinction that matters in these negotiations is among owners who've been there before and those merely acting like they have.

David Stern says 'Tuesday is a very important day' for the future of the NBA. (Getty Images)

Sources with knowledge of the negotiations confirmed to CBSSports.com what should be obvious to anyone paying attention to the squeeze owners are trying to put on players who have delivered a product growing by leaps and bounds in popularity, fan engagement and any other metric you can devise for the overall health of a sport: To this point in the talks, this hasn't been about owners vs. players, but rather owners vs. owners.

The old guard of loyal ownership that used to stand in lockstep with Stern during labor talks is largely gone: No longer can Stern count on the likes of Abe Pollin, William Davidson, Larry Miller and others to maintain labor peace so the proverbial goose can continue laying golden eggs. Out of the necessity that comes from being outnumbered, Stern has turned these negotiations over to a younger, more demanding generation of owners who've experienced life-changing losses in their core businesses, watched franchise values rise at a slower pace than ever before and are now seeking what they perceive as a birthright to profitability on the backs of the players.

The hawkish crowd that was the driving force behind the owners' initial draconian proposal -- the one that has left both sides so entrenched for so long -- is led by owners who bought their teams after the league's only work stoppage in 1998-99: Mark Cuban (Mavericks), Robert Sarver (Suns), Dan Gilbert (Cavaliers), Wyc Grousbeck (Celtics), Clay Bennett (Thunder) and Ted Leonsis (Wizards). All but Leonsis are on the owners' labor relations committee, though the late Pollin's successor has influenced the process, sources say. Leonsis also represents a minifaction of NBA owners who also own NHL teams, and thus aren't afraid of losing an entire season to a lockout. (Although, to these owners, I say, "When does the NHL season start? Oh, you mean, it happenedalready?")

These newcomers bought into a system that worked fine for them until the global financial crisis hit in 2008, causing them to reevaluate whether owning an NBA team should be a hobby or a money-making business venture. Collectively, they have driven the league's hard-line stance on reducing salaries, reining in player movement and fundamentally shifting money and power from the players to the owners as part of a 10-year labor deal that would achieve at least a 33 percent reduction in player salaries after a three-year phase-in period.

So while it might have been helpful for the players to propose something more substantive than adding another mid-level exception and awarding more draft picks to poorly performing teams, the idea that the onus is on the players to end this negotiating impasse is farcical. The onus should be on Stern to unite his two factions of owners, whose vastly different priorities and perspectives have thus far made a reasonable common ground impossible to achieve.

"Stern has been letting this cadre of owners lead the charge for months," said a person familiar with ownership dynamics. "At some point, he and the moderates will have to step up and say, 'We've tried your way for 21 months, and it hasn't worked. Now, you have to step aside and get a deal, because we're not going to damage what we've worked so hard to build.'"

Stern denied Friday that there is a rift among his owners, saying, "We don't differentiate between length of ownership." Asked if there is a difference in priorities among various factions of owners, Stern said, "No, none at all."

"There's a uniformity of view about what's needed and what's necessary for the league to operate in a way that 30 teams would have an opportunity to compete and 30 teams would have an opportunity to make a profit," Stern said. "And that has united all 30 teams."

But when Stern cleverly batted the ball into the players' court Friday, saying, "We're hoping that we will receive from them a proposal directed to the economics," it was viewed by some veterans of NBA labor wrangling as the commissioner's final gesture to the rogue owners' drastic negotiating position. If the players don't move significantly enough Tuesday, sources say, the league almost certainly will begin careening straight down the path to a lockout -- and perhaps to a changing of the guard in terms of which owners are driving the league's strategy.

The best hope for a deal -- this week, next week, next month or in September -- will come from what are described as the "moderates" among ownership -- starting with labor relations committee chairman Peter Holt (Spurs), board of governors chairman Glen Taylor (Timberwolves), Mickey Arison (Heat), Jeanie Buss (Lakers) and James Dolan (Knicks). All are members of the labor relations committee and are either loyal to Stern or protective of a system that is working for them. They sit on different sides of the big-market/small-market divide, yet fear equally the devastation that could result from a lengthy work stoppage.

Key owners who have not shown enough of their cards to be defined as members of either camp include Jerry Reinsdorf (Bulls), Herb Simon (Pacers) and Michael Jordan (Bobcats). A key figure in converting hard-line or undecided owners to the moderate camp will be Arison, who was hawkish at the start of past labor talks but eventually stood down and brought other owners on board to achieve a deal.

At that point, the debate will shift to finding a realistic middle ground that will inspire the players to give up something significant, as well as the issue that should've been addressed more heartily from the beginning: revenue sharing. Should teams like the Knicks, Lakers, Bulls and Nets (whose revenue picture improves dramatically with a move to Brooklyn) share revenues from lucrative local TV deals that in some cases exceed the total net revenues of some smaller-market counterparts? They'll be reluctant, but doing so would be better than losing hundreds of millions in revenues during a lockout. Should owners regret the missed opportunity to turn a struggling franchise, Sacramento, into a profitable one simply by letting the Maloofs move to Anaheim? Will the low-revenue teams ever trust the high-revenue teams to level the playing field -- regardless of how much the players are paid?

If it comes to this, the question will be whether the rogue owners will insist on a lockout as a last-ditch effort to implement their nirvana -- and whether Stern will let them take it that far. Some members of the league's negotiating contingent, including Stern and deputy commissioner Adam Silver, seem to understand how pointless and damaging it would be to follow the NFL's path -- from a lockout, to decertification, to an anti-trust lawsuit, to the federal courts and appeals courts. It's a winding, unfulfilling road that the NFL is still trying to navigate, while only now realizing the comparative merits of a negotiated deal over lawyering up.

But as far as where the onus lies Tuesday for this Game 7 of NBA labor talks? To say it is on the players is only partially fair. Yes, it would be nice to hear some new ideas from them, and to hear them from the union's oddly silent executive director, Billy Hunter, instead of from mid-level players trying to protect star-level pay for less-than-star-level resumes. But at this point, after 18 months of a bold strategy leading nowhere but in a circle, it would be productive to hear some new ideas and a realistic vision from the owners, too.

New ideas, and a new strategy, led by owners who are willing to prioritize the greater good of the cartel they willingly bought into over their own 1/30th of the pie. If we don't get a significant move from each side Tuesday, your NBA offseason will shift from the court to the courts -- at which point you will be perfectly justified to straighten your two index fingers and point one at each side.
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OkayAyeReloaded · Jun 21, 2011

Good article, thanks for posting.

Hopefully the NBA will realize that since they are not king of the hill as far a being the #1 sport in America and that if they lockout they will lose all the ground that they had gained after the first lockout.

The ratings are finally (like 12 years later) inching closer to the peak years during the Jordan era and before the lockout.

The NFL can afford a lockout really, because they are #1 and would still be at or close to the top after missing a season.

The NBA would be devastated and be like a hospital patient who finally started to recover from a long term illness, only to relapse and possibly hit a lower rock bottom (The league is great, but MJ and his ratings draw still haven't been topped. The Heat, Kobe included.)

The NBA is snowballing in popularity from a successful season(s), and will only get closer to being the #1 sport in the country since the NFL is hurting itself and fans will seek sports entertainment elsewhere during the NFL lockout.

I hope the NBA owners figure it out and doesn't repeat the same dumb mistakes that forced them to lose billions (for over a decade) in profit and millions of casual fans as a consequence of the last lockout.

Commodore · Jun 21, 2011

http://ken-berger.blogs.cbssports.com/mcc/blogs/entry/11838893/30170072

The essence of the system described by Stern was an NHL-style cap system with a targeted salary of $62 million per team and a to-be-negotiated range from a minimum to an amount above $62 million that teams could spend up to through various exceptions currently in place – such as the Larry Bird exception and mid-level exception. An escrow-like system would be used to adjust for teams coming in below and above the $62 million target. Unlike the current escrow system, through which 8 percent of players’ salaries is withheld and paid back if negotiated salaries fall short of 57 percent of revenues, Stern said owners would keep the escrow under the new system – making this, in effect, an 8 percent pay cut for the players in Year One.

In terms of the owners’ initial proposal of a $45 million hard cap, the latest offer from the league amounts to a $650 million move from their initial position. The basic structure of a 50-50 split of revenues – based on a modified formula with about $900 million in expenses deducted before sharing with the players – remains intact. The luxury tax would be eliminated under the owners' proposal...

...Deputy commissioner Adam Silver denied a CBSSports.com report that there were different agendas and priorities among owners based on market size and revenue. But the flex cap offer made by the owners Tuesday seemed to be a victory for high-revenue owners and the trend of forming superteams. Both would’ve been reined in by the original (and highly unrealistic) $45 million hard-cap system that owners initially proposed in January 2010.

The sliding salary band for teams, which essentially sets a league-wide cap with flexibility to deviate on a team-by-team basis above and below the $62 million target, also would put the onus on teams that have been reluctant to spend much above the current minimum payroll to spend in the hopes of enhancing their ability to compete.

“We believe as a league that there’s no question the data shows a correlation between salaries and success on the court,” Silver said. “And what we’ve said to them is we want a league in which all 30 teams can compete for championships. As another byproduct of that, it will raise more revenue, because greater competition will mean better business, for us and the players.”

But the players clearly view the owners’ latest proposal as little more than nuanced hard cap, which they adamantly oppose.

“It’s been characterized in different ways, but essentially they want to create a hard salary cap in our game, and we just don’t see it,” Fisher said.
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LCII · Jun 25, 2011

good reads. does anyone have more CBA/lockout articles? I've tried googling but most of it are very general and dont go into great detail about the issues.

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[CBS Sports] Biggest event for NBA this week is Tuesday, not draft day

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