NBA Owners Risk the Season … and Fans

NBA Owners Risk the Season … and Fans

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So it wasn’t just the BRI after all.

Player reps and owners emerged Monday evening after two days of intense negotiation to reveal: nothing.

As you know, this prompted Commissioner David Stern to cancel the first two weeks of the regular season and leave many basketball fans wondering how they were going to spend their winter evenings.

As of now, no further meetings between the NBA and the union are scheduled to happen.  Many on the union side believe that the cancellation of the season was “pre-ordained” by the owners and that negotiations could have been finished with any amount of effort.  Stern saw the talks a bit differently, describing the gap between the two sides as a “gulf,” adding, “We just can’t get over the system hurdles.” 

Deputy commissioner Adam Silver and the owners seek to rein in spending from teams in large markets who go above the salary cap each year, placing the smaller market teams at a competitive disadvantage.  The current system places a luxury tax on these teams, which is a dollar-for-dollar tax on money spent above a certain threshold set by the Collective Bargaining Agreement.  Teams such as the Los Angeles Lakers and Dallas Mavericks go over the threshold yearly, with the money paid being split evenly between the teams that don’t violate the threshold.  The goal of the tax was to discourage teams from exceeding the tax threshold, thus ensuring some sort of parity between large and small market teams.

So far, it hasn’t worked out.

The owners have proposed increasing the tax to as much as 4-to-1 and beyond for repeat offenders.  This is unacceptable to the players, as it would effectively function as a hard salary cap without calling it that.

“My attitude is, if it quacks like a duck and walks like a duck and it looks like a duck, it’s a duck,” executive director, Billy Hunter said. “… [W]e came up with proposals to stiffen the tax, but we do not want a hard cap. You can’t say, ‘OK, we agree we’re going to move away from a hard cap,’ but then do everything else that brings about the same result.”

There are several other issues that must be resolved, but the BRI split still is the most important.  As noted earlier, the owners offered a 50-50 split of the basketball-related income, with the players vowing to go no lower than 53%.  Most fans will ask, “why not just agree to the 50-50 split?”

When purchasing a team, owners also purchase the arena that the team plays in. Included in the BRI are ticket sales, concessions, television contracts, and parking.  Not included in the BRI is how the stadium is used the other 300 nights of the year.  Therefore, a league can claim $300 million in losses, when any smart businessman would never in a million years purchase a “business” that constantly loses money each year.  There’s no doubt that the smaller market teams aren’t making as much as the larger ones, but a better revenue sharing plan is essential to future growth for the league.  Revenue sharing is something that has nothing to do with the players.  At the conclusion of Monday’s talks, the owners pulled the 50-50 offer, going back to 46-47% for the players, putting us right back at square one.

Other obstacles standing in front of a new CBA and this season moving forward: the length of the CBA.  The owners want a 10-year deal, which would allow them to cash in on the new TV deal expected to kick in after the 2015-16 season.  Players want a 6-year deal, which would allow them to share in the growth of a league where they are the actual product.  The owners last offer was a 7-year deal, but with other things being taken off the table, who knows where they stand now.

Another point of contention is the mid-level exception, which has allowed mid-tier players a nice payday in the middle or end of their careers.  Last year’s mid-level exception was worth $5.8 million, with the players looking to reduce it to $5 million and the owners looking for around $3 million.  Owners also want the maximum length of contracts reduced from 5 and 6 year deals to 4 and 5.  Players have agreed to the changes in contract length.

What the players and everyone else must realize is that they are fighting against an opponent that doesn’t want to compromise, but win … and win big.  In his comments following the meetings, Commissioner Stern was quoted as saying, “”I say that we tried awfully hard. We made, in our view, concession after concession.”  This couldn’t be further from the truth. The owners have done nothing but take and take throughout the entire process.

Stern’s definition of concessions is, perhaps, to ask for a lot – then when you receive push back, return to status quo. Stern said “owners offered to preserve guaranteed contracts, no rollbacks on existing contracts, come down from 10-yr deal to 7.”  Those aren’t concessions!!  Stern further added that the offers going forward would get worse and worse as more games are missed.  Oh, boy.

So strap in NBA fans: this one isn’t going to be done any time soon.  Both sides have dug in, and are claiming they’re willing to miss the entire season to get a deal that’s fair to both sides.  I’d place the over/under on a deal getting done some time in December.  When those game checks start missing, the mid-tier players may blink.  The players just have no leverage in these talks.  We’ll see if they stand strong and for how long.

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