NBA AM: What Happened And What’s Next?
What Happened And What’s Next? Information from the last two days’ worth of labor meetings in New York between the Players and the Owners is still trickling out. The general consensus is despite almost a dozen more hours of invested time and negotiations it yielded almost no progress.
The NBA according to reports could suspend NBA training camps and postpone several pre-season games at some point today; meaning what seemed optimistic a few weeks ago is now doom and gloom. (Update: A press release was just issued confirming this decision.)
The NBA Owners did not move off their hard cap stance, which further emboldened the players who view a hard cap or hardened cap system as a no-go for their side.
Reports yesterday suggested the Owners proposed a salary system with economics below a 50/50 split for the players and from there the talks went sideways to the point that neither side would comment to the media.
It has long been the contention of League sources that if the NBA owners can get their share of revenue low enough, the Owners would concede on a hard cap. Some have viewed yesterday’s offer of a lower revenue split by the Owners as the doorway to a compromise, which would include a reduction in revenue shared with the Players but keep an open and flexible cap system, which the players desire.
The suspension of Training Camp and the cancellation of preseason games is noteworthy because that means for the first time in this process someone will lose money and first blood will be shed on the owners side. Players do not get compensated for Preseason and Camps, however owners do collect monies for those events in ticket sales and sponsorships.
Both sides say they will continue to talk, however there are no meetings currently scheduled.
Most fans look at that concept in amazement, wondering why both sides don’t just lock themselves in a room until a deal is reached, and mainly it’s because both sides are still on opposite ends of the spectrum. Until a middle ground of some kind is achieved, daily meetings to argue is not generally productive even with so much at stake.
So what’s next?
Both sides say they will continue to meet, but with blood officially in the water after games are cancelled, how will the Owners respond?
It’s been commonly believed that once monies were lost the Owners’ offer would go down, and it seems it might have done that yesterday.
Sources on the Players’ side laughed off the notion that they would have to make up any financial losses out of their end, saying that a fair deal is a fair deal regardless of when it is reached and the Players are not going to take a bad deal just to meet the calendar.
League sources point to November 16th as the next key date, because that’s when Players are scheduled to miss their first paycheck. Sacrificing non-compensated events means very little to the Players, their first pain occurs in November.
Reports say the NBA could cancel preseason games up to October 15th (confirmed), which gives both sides a few more days to try and find middle ground, but with both sides sticking to their guns and with no progress to speak of this week, it’s hard to imagine much progress will occur over the next few weeks.
Settle in, because this looks to be a long and bloody ride.
The Myth of The NFL: I spent a few days last week in Las Vegas at Joe Abunassar’ Impact Basketball Competitive Training Series and had a chance to sit and talk about the labor situation with easily a dozen veteran NBA players.
There is a common theme from the Players’ side that tends to trickle into the public debate on how to resolve the ongoing labor fight, and it generally starts with revenue sharing.
Let’s be clear, the NBA will have a new revenue sharing program to replace Luxury Tax and the current minimum revenue guarantee in place now. The new plan will insure greater sharing of revenue among the league, so a new system is coming.
The National Football League is the most lucrative sports league on the planet, and it’s almost twice as big as anyone else, especially the NBA.
Obviously what the NFL is doing is working as the league has an average salary of over $100 million per team and NFL players are signing $100 million contracts left and right.
The key to the NFL’s success is how they divide revenue. The NBA Players point to the NFL’s revenue sharing as the answer for the NBA but it neglects two core points.
First is the NFL collects the bulk of its revenue from national deals.
There is not a ton of local broadcasting revenue in the NFL outside of radio deals, meaning the bulk of the broadcasting cash comes into to the League and they trickle it out to the various teams.
Gate revenues and local ad dollars are shared, but the largest chunk of monies in the NFL lands at the league and are dispersed from there.
In the NBA it’s almost the opposite.
NBA teams generate the bulk of their money at the team level with local broadcasting deals. The national TV deals are a smaller chunk of total revenue.
It’s easier to say let’s share dollars you don’t have to collect. It’s a lot harder to justify sharing dollars you generate and more importantly pay the costs to generate.
The analogy I use is, it is one thing for your company to collect monies and share it evenly through the company. It is another thing for you personally to collect the monies and then write everyone else checks.
It’s going to feel like your money, rather than shared money. You did all the work to generate it. You took on all the risk and expense to generate it. That’s been the objection for years on revenue sharing, mainly because the teams that can share typically have the greatest costs.
The key issue in revenue sharing in the NBA versus the NFL, it’s how much money is generated nationally versus how much is generated locally. The NBA is disproportionally local.
The second issue that everyone overlooks in the NFL versus NBA debate is that the NFL can and does share revenue mainly because all of their teams can turn a profit if operated properly.
This is achieved thorough fixed expenses and a hard salary cap.
It’s easier to say let’s share revenue when everyone at the table can contribute to the fund.
The revenue share fund shouldn’t be welfare for bad teams. It should be a means to insure that a team that has a few rebuilding years doesn’t lose money. If a team doesn’t draw well at the box office, they are not shelling out cash from their personal pockets.
The NFL’s revenue sharing works, mainly because all the teams can turn a profit and all of the teams have fixed costs.
A common theme among NBA Players is that the NBA should adopt an NFL-type revenue sharing plan, yet they do not want to concede the mechanical tools that allow it to happen.
There is no doubting that the NFL’s economic system has allowed the league to flourish. However getting something similar in the NBA will be harder than anyone can imagine mainly because of how monies are collected and how steadfast the Players are in objecting to a hard salary system.
Both are interconnected and that’s why this is a complex issue that is harder to solve than saying “NBA teams should revenue share”.
The NBA has revenue sharing now. What’s needed is a more robust plan and to achieve that, the salary cap system has to change.
The Role Of The Agents: There has been some commentary recently suggesting the more powerful and influential Player Agents in the NBA would move to block an eventual labor deal if the deal reached gives back too much to the NBA.
This makes for great copy; however the reality of the concept is that Players Agents have very little say in what’s happening between the Players and the NBA. Based on conversations with a few dozen Players recently very few of them are listening to their agents on this subject.
That’s not to say the agents don’t have the ability to influence how their clients ultimately vote, but the truth of it is most agents don’t have nearly the power over their clients as some would want you to believe.
Agents struggle to get their guys on the phone, and now all of a sudden they have the power to get their clients to vote down an eventual paycheck?
It makes for great copy, but the truth is Player Agents do not have a vote in this process. By design at the Players’ Association level, they do not have a voice in the room or at the negotiating table.
During Union meeting Agents are generally in the hallway, so to say the Agents have the power to derail a deal is a little silly. They can certainly lobby their players with information and education about what’s at stake, but at the end of the day a vote on an eventual deal will take place on a player by player basis and the agents will be interested spectators just like the rest of us.
Not trying to minimize the influence Agents have over their clients, but to think Agents have the power to derail a labor deal is not true. It would take a bunch of players agreeing with their agents to block a deal, and at this point the Union seems like they have the players’ buy-in, good or bad, leaving agents outside of the process.
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