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Contraction or Revenue Sharing

Discussion in 'NBA Dish' started by Clips/Roxfan, Jan 27, 2011.

  1. Clips/Roxfan

    Clips/Roxfan Member

    Jun 30, 2006
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    Contraction Article...

    It was right after the 2008 NBA season that I first heard Jerry West raise the idea of contraction, the notion that the league would benefit by eliminating some of its weak teams.

    “You look at some of these teams, the millions and millions of dollars they’ve lost, how can you call it a good year?” West told me.

    If you look at pro football and pro baseball, West said, “just about all of the teams do well. But if you look at basketball, three or four of the franchises are on their asses.

    “Contraction would probably be a good thing,” he added, “but it’s probably never going to happen.”

    West, of course, was speaking from experience, having gone from serving as an executive for the large market Los Angeles Lakers to filling a similar capacity for the Memphis Grizzlies, a struggling franchise in a small market.

    West was also speaking before the global economy suffered its major banking collapse that fall, a drop that precipitated the loss of better than 17 million jobs in the American economy alone.

    The financial health of the NBA is an issue that has concerned Lakers owner Jerry Buss for some time now. According to my sources, Buss has worked behind the scenes over the past two years, encouraging the league’s other owners to put up $20 million each to buy two franchises and shutter them.

    The issue is now moving front and center, as Jeanie Buss, the owner’s daughter who manages the business side of the Lakers, has begun setting the agenda for contraction while doing a publicity tour for her new book, Laker Girl.

    Joining her in setting that agenda is her boyfriend, Lakers coach Phil Jackson, who has likewise acknowledged that contraction could be an answer to difficult economic circumstances.

    The larger backdrop for this issue is obviously the current collective bargaining showdown that pits the NBA Players Association against the league’s owners. Many observers have projected that the NBA is headed toward a lockout next fall because the two sides can’t reach a new agreement for the league’s salary structure.

    The owners have long said their current economic format is unworkable, that the league is losing hundreds of millions a season. The players counter that such talk is just so much bargaining hype, that the NBA continues to rake in billions each year.

    West obviously saw this situation building two years ago when he told me, “You look at the propaganda that comes out of the league office and you know that a lot of that stuff is not true.”

    Then he quickly added that you still have to respect the owners “and what they’re trying to do,” which is guarantee the NBA’s long-term health.

    West’s is a voice respected by both sides of the showdown, players and owners, who face tough concessions in coming to terms.

    As for his prediction that contraction would probably never happen, it may have already started. The NBA’s purchase of the New Orleans Hornets this season has ignited speculation that the club might be shut down and its players dispersed.

    If the Buss plan goes into effect, it raises the immediate question, what team would be next?

    The only thing clear at the moment is the hard choices.

    The shuttering of two teams would have a major economic impact on their respective cities.

    It would mean the loss of jobs for 30 players, for two coaching staffs, for hundreds of support employees in marketing, sales and other front office functions.

    The loss of the $20 million put up by each NBA ownership is no small thing either. That would essentially serve as a draining of equity from each team.

    On the other hand, Jerry Buss, who made his fortune in real estate, has long been recognized for his astute management of the Lakers. He has been a visionary in many regards. The solution he proposes is a bitter one for many teams, but there are signs that his agenda is gaining favor.

    Even Miami Heat star LeBron James has mentioned contraction favorably, a development that only reinforces the fact that there are two classes of NBA players – superstars such as James and the remaining role players who need the collective bargaining efforts of the players association.

    While stars such as James will always get their millions, that’s not a guaranteed thing for the lesser players who make up the bulk of the league.

    Perhaps the biggest issue for such a plan would be the identity of the second team shuttered. Would the Los Angeles Clippers, long an embarrassment to the league, be on the short list?

    Is this a ploy by Buss to protect his own investment? After all, Los Angeles and Southern California have been hammered by the downturn. The film, TV and recording industries have been devastated in recent years.

    Can that market, large as it is, support two NBA teams?

    Jackson has already privately voiced concern about the dispersal of players from the shuttered teams. Would brilliant point guard Chris Paul wind up in a place like Orlando to create an unstoppable duo with center Dwight Howard?

    What about the meteoric young star of the Clippers, Blake Griffin, or some other major player for a weak franchise?

    Where would they go?

    Unfortunately, contraction is not a new concept to the NBA. In the early years of the league after World War II, franchises came to life, then died and quickly made their way to the hoops graveyard.

    That process itself created a paranoia among the remaining teams because it left a vacuum of fear. Would the richest teams, such as the New York Knicks, wind up manipulating things to get the top players? About the only thing clear this time around is that such paranoia will rise again. Whatever happens, it’s not going to be clean and it’s not going to be pretty.

    The real question is, is it necessary?

    Roland Lazenby is the author of Jerry West, The Life And Legend Of A Basketball Icon, published by ESPN Books.

    Read more: http://blogs.hoopshype.com/blogs/lazenby/2011/01/27/what-nba-teams-will-disappear/#ixzz1CGQFGWKE
    Revenue Sharing Article

    By Andrew Feinstein

    As NBA owners battle with the Players Association on a new collective bargaining agreement, they should get their own house in order and fix a revenue sharing system that's totally broken.

    Jan 17, 2011 - Going back to 1980, eight different NBA franchises have claimed the league's championship at season's end. In that same time span, 15 different NFL franchises have won a Super Bowl, 19 different MLB franchises have a World Series and 14 different NHL franchises have won a Stanley Cup. And of the NBA's eight franchise champions, all but two (San Antonio and Detroit) reside inside the NBA's 10 largest markets. While owners, employees and fans of the Lakers, Knicks, Bulls and Celtics may not give a crap about historical data like this, it should be alarming to the owners, employees and fans of 20 (or so) of the NBA's 30 teams.

    Supposedly, the NBA -- unlike Major League Baseball -- has a salary cap and a system in place to make the playing field even. But thanks to two major factors - first and foremost, a revenue-sharing system that shares television and licensing rights only and, secondly, player salaries that are totally out of control -- most NBA owners are losing money hand over fist. Hence why NBA owners have little incentive to keep the doors open next season while they duke out a new bargaining agreement with their players union. Conversely, NFL owners -- also on the precipice of a possible player lockout and/or strike -- have all the incentive in the world to keep their league going. After all, most NFL owners, like their fellow owners in Major League Baseball, actually make a profit each season.

    Because NBA owners share only national and international television and licensing revenue, teams get to keep every dollar they make in their local market, including their local broadcasting rights, sponsorship deals and ticket sales. In the NFL, ticket sales are split 60-40 between the home and visiting teams. In the NBA, the local team keeps every cent of the gate revenue. In Major League Baseball, a substantial percentage (perhaps as much as 35%) of each franchise's local broadcasting revenue is pooled for all teams to share. In the NBA, each team keeps every nickel of their local broadcasting revenue. Hence why the Pittsburgh Pirates are profitable despite being one of baseball's worst teams for 20 years on.

    Or, as SB Nation's Tom Ziller aptly put it recently: "If you want to make money in the NBA, you're better off sucking in L.A. than being excellent in San Antonio."

    And thus, the NBA needs its own version of Wellington Mara on the owners' side of the table as the owners and players negotiate a bargaining agreement that, in theory, will set the tone for how business is done in the NBA for the next 10 years.

    Mara, as most sports fan know, was the well regarded owner of the New York Giants who famously agreed to then-commissioner Pete Rozelle's concept that the NFL's television revenue be shared equally among all teams. With revenue sharing came competitive balance and a league that has operated as one business instead of 32 individual businesses has dominated the American sports landscape for nearly 50 years.

    Without a proper revenue sharing system in the NBA, one that extends beyond splitting only the national and international television and licensing revenue, the disparity between the haves and have-nots will continue, save for a few franchises willing to lose their shirts financially just to keep their teams competitive. Unfortunately, two of the NBA's big-market owners -- the New York Knicks ' James Dolan and the Los Angeles Clippers ' Donald Sterling -- are pariahs. The third, the Los Angeles Lakers ' Jerry Buss, appears to have checked himself out of the operations of his team and his son is (allegedly) running the show. And a fourth big-market owner, the Chicago Bulls' Jerry Reinsdorf, wasn't even willing to spend to keep Michael Jordan and crew in tact ... so we certainly can't expect him to be the ringleader of a new revenue sharing system among NBA owners.

    Some fans will cringe at this suggestion and others will applaud it, but the only owner I foresee being capable of being the NBA's version of Mara is the Dallas Mavericks' Mark Cuban. In many ways, Cuban has revolutionized the concept of sports ownership and say what you want about Cuban, but you can't argue with him being a visionary for professional sports as know it. Make that all sports, as Cuban is now trying to put together a much-needed, much-wanted and long overdue playoff system for the BCS. Cuban -- and only Cuban -- could bridge that gap between the NBA's 20 small market franchises and 10 big market franchises to come up with a system that produces true competitive balance on the floor and on the profit and loss statement.

    As a lifelong Denver Nuggets fan and season ticket holder, I'm acutely aware of the NBA's revenue sharing problems. In Denver, we're fortunate to have owners in Stan and Josh Kroenke who historically have been willing to spend north of $80 million on payroll to compete with the likes of the big-market Lakers, Mavericks and Rockets . But even when the Nuggets took the Lakers to the brink in the 2009 Western Conference Finals, the Nuggets were rumored to be losing millions of dollars (as in, more than $10 million) while the Lakers just added more millions to their pile of millions upon millions upon millions. If the NBA's current revenue sharing persists, the Kroenkes' belt-tightening is sure to come, likely resulting in a shoddy on-the-court product in Denver and one less team worth watching in person for fans in New York, Los Angeles, Chicago and Dallas.

    NBA owners can whine and cry all they want about player salaries crippling their economic model -- and make no mistake about it, those salaries are crippling -- but until the owners agree to an NFL or MLB-type revenue sharing system, slashing salaries by 30-40 percent only solves part of the problem. The NBA desperately needs a system akin to that of the NFL and Major League Baseball, and it will take a bold leader among the owners to get there.

    Who among today's NBA owners would make Wellington Mara proud?


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