NBA Salary Cap Chat With Larry Coon 10/26/11

1. Jason

   Hey Larry,
   I’m having difficulty understanding the concept of BRI. The way i understood it was that its a split from revenue collected from gate receipts, arena concessions, arena parking revenue etc. But lets say for example if I work for Apple, the company pays me $60 000 a year as a computer engineer, similar to player’s recieving salary from their teams for playing…as an apple employee though i don’t get a percentage of the profit that they make from selling their iphones, i only recieve my individual salary as compensation for the work I do…so since that money belongs to apple…why should nba players even get a percentage of BRI…shouldn’t it belong to the team like all other businesses in the real world…shouldn’t players just be getting their salaries? Why do they even get a share of the BRI?

   • Larry Coon

     Part of it is unionization. Part of it is the industry — computer engineers are simply more fungible than NBA players. This gives the players the ability to negotiate for things they want, rather than get kicked to the curb as the owners hire replacements.

2. tony

   The owners and players have already met way way way more than they had back in 98 99. I sincerely believe the nba wants to make a deal relatively soon. If not why keep having negotiations? Back in 98 99 not as much urgency. The economy was way better. Jordan was retiring. Now the economy is awful and the nba is on the rise. Stephen a smith this morning on sportscenter said they would be more than foolish to not have a deal done by next week.

   • Larry Coon

     Whether it’s smart or foolish to make a deal really doesn’t have a lot to do with what will happen. I talk about some of the dynamics here:

     http://espn.go.com/nba/story/_/page/lockout-111013/how-prisoner-dilemma-relates-nba-lockout

     But I agree it’s a good thing that the sides are continuing to meet — and that they are slowly making progress. In addition to just meeting, they’ve tried things they didn’t try in 1999, such as mediation. But is this enough to overcome the lines both sides have drawn in the sand?

3. Omar

   Hi Larry. The NBA keeps saying they love the NHL economic model. However, the players do not, so they hired Donald Fehr to win back concessions. Why doesn’t Billy Hunter tell them that? Either make a deal with me now, or in 6 years, I’ll be gone and they will get a real hawk ala Donald Fehr and you’ll end up like MLB?

   • Larry Coon

     Whether they make a deal with Hunter now or not, in six years or so the CBA will be up for renewal again (the owners want 10 years, but they’re not getting it), Hunter will be gone, and the players association will have hired the best man they can find for the job. That person will negotiate with the NBA (likely Adam Silver as Stern’s successor), and the league will be confident they can win. There’s nothing that Hunter could threaten now that would change any of that — it’s a pretty meaningless threat.

4. Chris

   Did I read correctly that the owners still get the money from the NBA TV deals with TNT and ESPN even if there’s no games airing? If true, that hardly seems right.

   • Larry Coon

     They get the money, but if games are missed on the TV schedule (and don’t make those games up later) they have to pay the money back with interest.

5. Ruca

   Do you think LAC could get Dwight and Hedo by sending Bledsoe, Aminu and 2 first rounders (own and MIN unprotected) to ORL and Kaman to PHI (possibly sweetened with a 2nd rounder)? ORL would get Iguodala as well. It works capwise and I doubt ORL can get a better deal for DH.

   • Larry Coon

     The Clippers see the Minnesota pick as having tremendous value, and if they can’t use it to land a superstar, then they want to keep it for themselves. Dwight Howard would certainly qualify as the kind of player they’d like to get for the pick (as would Chris Paul). But I don’t think the combination you suggest would be enough — or even possible right now. The Clippers can’t trade both their pick and the Minny pick, because it can be conveyed to Boston in 2012-16. If they traded both picks (working around the Boston trade) they’d be in violation of the Stepien rule. As for players, I don’t think Bledsoe & Aminu would be enough for them. But Eric Gordon might be enough to tempt them.

     Finally you have to worry about salary matching, but we won’t know if it’d work under the rules until we have a new set of rules. The players want to significantly relax the salary matching requirements (and I think it’s a good idea).

6. Henry

   Steven A. Smith stated he thinks a deal could be done at end of week maybe even today? How close do you think sides are? Hunter stated players would think about 50-50 after system issues are fixed. Do you feel a deal is inching closer?

   • Larry Coon

     There are people in the media who are optimists about the labor situation, and there are others who are pessimists. They are going to see the negotiations going the way they want to see them going. There are some who have good access to information, and those who don’t. Again, optimists will try to spin any information they get in a way that it supports their opinion. That’s just human nature.

     There are also those who try to be objective, and really analyze the process (fed by information from those who are there) and get a clear picture of where they are, where they’re headed, and how long it will take to get there. I try to fall within this group, and I’m not very hopeful of it being solved this week.

     But again, I’d love to be wrong about this.

7. Carlos A

   If there is a amnesty clause and the bulls use its on boozer won’t they be under the cap and be able too signed howard if he becomes ay free agent!
   If it was to happen you think he would signed with the bulls!?

   • Larry Coon

     It’s impossible to answer a question like that right now, because we don’t know what the new system will be. I have no idea if the Bulls will be under the cap, because I have no idea what the cap will be.

     Howard won’t be a free agent until 2012 at the earliest. Right now the Bulls are committed to $54.3 million in 2012, including Boozer. If they drop Boozer and his $15 million salary, they’d be at $39.3 million. How much cap room will that equate to? What will be the maximum salaries, and how much will Dwight be able to command on the open market? Nobody knows yet.

     In the meantime, the new rules might give the Magic the upper hand in keeping him. Even if he wants to leave, he might prefer a trade in which he can sign an extension and avoid becoming a free agent. So if you want to waive Boozer just to set up your run at Howard, there are too many variables right now to make that a good idea.

8. Earl

   The players union has to think long term. If they lay down now they’ll be on their backs again in five years. It makes sense for them to draw a line now even at the cost of the season. Can the owners really afford a lost season every five years in terms of lost fans?

   • Larry Coon

     It’s not just the lost fans. In fact, for the owners it’s really less about the lost fans. They know that their fanbase will be hurt, but it will eventually come back — and that they can help it along.

     The bigger issue is the money. Anyone who says some teams would be better off NOT playing the season than playing it is simply wrong. It still costs the league a LOT of money to operate every year, even in a year in which games aren’t being played and players aren’t being paid. They still have to pay front office staffs, facilities costs, interest on their enormous debt, etc., etc. The league says it will lose $1.5 billion if the season is canceled, and that number doesn’t seem out of line to me.

     This is the players’ real leverage here — they can continue to say “no,” knowing that even though they’re losing income, the owners are spending a lot of money in the meantime.

9. Wil

   Larry, at what point would the players have been better off just accepting a 50/50 split? Also, I understand the players frustrations, but they seem to be showing their inexperience in business in how they have handled negotiations so far, agree?

   • Larry Coon

     It depends on what you mean by “better off.” The current players already lose more in 2011-12 through the cancellation of the first two weeks in the season than they’d gain with three extra points of BRI share. By mid-December they lose more than they’d make up over a six-year agreement. Individual players would need to play the entire six years to break even, but we know that more than half the players will be out of the league six years from now. Players are losing money they’re never going to recoup.

     But it’s not about individual losses. The players have two basic objections to the BRI split as a solution to the problem:

     1) Negotiations for a new agreement always pick up where the previous agreement left off. The players ended up at 57% in the last agreement, and that was their starting point in these negotiations. The more they give up now, the lower their starting point will be in the next negotiation. So what they do now doesn’t just affect this CBA, it affects the next one as well.

     2) The players see the biggest issues being in the teams mismanaging expenses not related to player salaries. If they let the league take it out of their salaries, then they won’t address the real problem. So if they agree to a six-year CBA with a 50-50 split, then six years from now the league will be saying they’re losing too much money at 50&, and the players need to come down to 40%. Or 30%. The players say they’re willing to help, but the owners need to address the real problem.

10. William

    Regardless of the lockout, do you think the season should be shortened anyway?

    • Larry Coon

      Why?

11. Eric B

    How many owners have to vote to approve the new CBA? And what percentage of the union has to approve it?

    • Larry Coon

      As far as I’m aware, on both sides it’s a simple majority.

12. mikus

    do u expect somekind of progress today?? and if magicaly the lockout ends today, when do u think the teams will start to go after free agents and trades?? thanks!

    • Larry Coon

      I think they could make some progress, but I really doubt they strike a deal by the end of the week.

      If they have a handshake on a deal today, it’ll still take a couple weeks to agree on all the fine details, get it all in writing, proof it, vote on it (by both sides), and finally sign it. In 1999 it took a couple weeks. Teams won’t be able to sign or trade players until the new agreement is finished and signed.

13. Joe

    Can we look forward to any system changes which will equalize leverage of players/owners when a play wants to force his way out? Namely, allowing teams to sign players traded for to bird contracts when they are over the cap.

    • Larry Coon

      The owners don’t like the kind of leverage players like Carmelo Anthony wield when they want to change teams. There have been various proposals to address it:

      1) Elimination of sign-and-trade. I think this is a good idea, but the players obviously value this provision a great deal, and will want to keep it.

      2) A franchise tag — either a “true” franchise tag (NFL style), or something more akin to glorified Bird rights.

      3) Making it so Bird rights aren’t traded with the player if the player is traded during his contract season.

      4) Providing teams with more spending power to retain their players.

      In the end, they’ll have to balance the players’ right to change teams as a free agent with the teams’ need to protect themselves. The best way to do that seems to be by giving teams the ability to provide extra incentives to coax their franchise players to stay,

14. Faizan

    People are being too optimistic for todays meeting. Last time we got hopes up = no deal. Lets be cautious

    • Larry Coon

      Yes. Cautiously optimistic. I don’t think they’ll have a deal this week, but I’d love to be wrong. I just don’t think the stakes are high enough yet. And if the league still has an 82-game contingency plan, as rumored, then that takes some of the pressure off.

15. SWAN

    Once they settle on bri and system what are the chances they actually do something that addresses league parity such as adjusting the draft?

    • Larry Coon

      People keep taking about rearranging or lengthening the draft — to which I ask, did the talent pool suddenly get deeper? There’s a steep drop-off in talent after the first handful of picks — after that, you just need to get lucky. If they add a third round to the draft, are there suddenly going to be solid players drafted who weren’t selected in the top 60? If the end of the first round is rearranged, are the players drafted 16-30 going to start having a big impact?

      I can argue that the best thing they could do is make the draft shorter, not longer.

16. Karl

    Have you heard anything more regarding Memphis and other cities looking into litigation against the NBA?

    • Larry Coon

      I hear they’re looking into their options — that’s all.

      The cities have a valid point. They paid for their arenas by issuing bonds. They owe payments on those bonds, and the money for those payments was supposed to come from income generated by the arena — which was the whole point of getting involved in the first place.