Salary Cap Chat With Larry Coon 10/19/11

1. Earl

   The season is lost, owners are putting on a show but they’ve never had any other plans. My football team will be playing in late January. Ever thought about becoming an expert on NFL contracts?

   • Larry Coon

     I’m a little more optimistic than you. The owners really want to make a deal — a cancelled season would be a disaster for them as well.

     And sorry, I’m a one-sport guy.

2. Daniel

   What are the percentages of different options to the outcome of the federal mediation?

   • Larry Coon

     Let’s see, what are the different options? Given the marathon session yesterday, I think we’ve eliminated the option of Cohen emerging after an hour shaking his head and muttering, “Well, that was a wasted trip.” So what options remain?

     1) A deal, either today or later this week (remember, they rearranged their Board meeting once, and they can do it again — this is more important).

     2) No deal, but significant progress on bringing the two sides closer.

     3) No deal, and neither side is willing to budge.

     I think Option 2 is the most likely here. At least 50% — maybe 75%. The next most likely option is that the gulf is still too wide, and neither side is willing to move. After that, there’s a small chance something gets done today/this week.

3. Sensei Of Soul - Chicago

   Having a background in radio, I’m familiar with the size of media markets, and therefore am tired of failing franchises crying “small-market”. New York is the #1 Media market and the Knicks as a franchise have a terrible history regarding the playoffs. Boston is #10 with ATL, WAS, HOU, DAL, and San Fran (near GS) ahead of them in market size and behind them in titles. It just so happens that the Celtics are a well-run business and brand and those other franchises put people like Isiah Thomas in charge of business decisions. Another well run franchise is the Spurs who are from the 28th largest market according to a recent Arbitron report (http://www.arbitron.com/home/m….
   Last I checked Donald Sterling and Jerry Buss own teams that play in the same market and even the same arena. So why are the owners blaming their mediocrity on market size and not holding themselves and their front offices accountable?

   • Larry Coon

     Market size does have an effect, but as you noted, it’s not the controlling factor.

     But you’re also focusing on media size vs. wins, and ignoring media size vs. profitability. Many owners are complaining that they can’t field a competitive team without diving significantly into the red.

4. Karl

   How hard do you think it will be to find a balance between revenue sharing and spending deterrents to fix the revenue disparity between franchises? Is that even possible because taxes as a spending deterrent are guesswork in economic principles.

   • Larry Coon

     It seems like it’s been pretty hard up ’til now.

     I like the idea of revenue sharing. I don’t like the idea of a luxury tax as a form of revenue sharing. The luxury tax is primarily a spending disincentive — its aim is to keep salaries down. But to have robust revenue sharing, teams would need to pay more tax — spending would have to go up. Plus compare tax payers with market size — teams like Chicago, in a huge market, rarely if ever pay tax.

     I think it’s better to level the playing field with direct revenue sharing — where the money going in & out of the system is based on the market size and the team’s ability to maximize it. Get that in place, and then (optionally) add-in a luxury tax as a spending disincentive, and the system will be much better.

5. Trevor

   Can you explain why the players care so much about system issues instead of just BRI? Players don’t get the exact amount of money in their contracts, they get more or less depending on whether the sum total of the players’ contracts is below or above the BRI. So, all contracts really guarantee is each player’s cut of the NBPA’s share of the BRI. What am I missing?

   • Larry Coon

     It’s true that the BRI split controls how much money the players get in the aggregate. But per-team, the system issues have a big effect. If there’s a hard cap — either a true hard cap or an effective one via a prohibitive luxury tax — the distribution of salaries will change. The stars will continue to get big money, and the minimum & rookie scale salary guys will continue to get their allotted salaries. But this won’t leave much for the rest of the players. The end effect is that the middle class will be squeezed out. This is an important issue to the players. Most of the lower-rung guys don’t have any delusions about signing a max deal, but most do see themselves signing a mid-level contract.

6. Nick

   Will the Kings make the playoffs this year?

   • Larry Coon

     I don’t think so. Too many teams in the West are better.

7. Matt

   What are your updated odds on whether there will be a season?

   • Larry Coon

     I tweeted last night before the mediation ended that before the session I thought there was a small chance of getting it done last night, and after 10+ hours, I thought there was a slightly larger small chance.

     I think the odds are still about the same. The mediator can help grease the skids, but if neither side is going to deal, there won’t be a deal.

     And this time, if they get to the season-cancelling deadline, I say there’s a 50-50 chance of saving it.

8. Matt

   Do you think both sides are bargaining in good faith?

   • Larry Coon

     I think they are. For both sides the financial and PR repercussions of a continued lockout are huge. I think both sides genuinely want a deal, and would love to get it done today.

     That said, neither side is going to take what they consider to be a bad deal in order to get it done. Did you hear Shannon Brown on the Stephen A. Smith show last night? He talked about the players refusing to be taken advantage of. The players also referred to a hard cap as a “blood issue.” There’s a lot of emotion here as well.

     Cohen’s best chance is to cut through all that, and make both sides see it as a pure business decision.

9. Nizar

   One thing missing about the whole small market vs big market debate: Living expenses are alot more in New York, than they are in Indianapolis! Of course they have to spend more, pay more, the cost of living is more.

   • Larry Coon

     I think there are indexes available to normalize for that.

     That said, I think the revenue differences overwhelm the cost of living differences.

10. tony

    Any chance the nba is just doing this to show the public hey we are trying but really in their minds they are thinking not yet we need to crush the players association?

    • Larry Coon

      I think they have in the back of their minds that their leverage increases over time. But I also think that they’d much rather have an acceptable deal sooner than later.

11. Tessa

    Lockout end today? Sick of answering this yet?

    • Larry Coon

      Yes.

      Only a small chance it ends today. A lot of people are thinking with their hearts, as one friend of mine put it this morning.

12. Henry

    What are chances a deal is made today? I heard they resolved 3 out of 4 main issues.

    • Larry Coon

      I wouldn’t go by what you heard. I don’t think anyone is getting the real story from the sessions.

      These things also don’t progress in a linear fashion. As Chad Ford wrote, building trust is a significant goal early in the process.

13. jamal minuent

    so are you saying there is no chance of a season in december ?

    • Larry Coon

      Let’s say they settle today — or at least by the weekend. It’d take a month to get everything done (finalizing & signing the agreement, free agency, training camp, abbreviated exhibition season), so we’d be looking at late November and a 70-75 game season.

      If mediation is unsuccessful, then I don’t see this getting solved before at least the end of November, which pushes the start date back to late December or early January.

14. Olan

    If there is no deal today, how much of the season do you expect to see? Any at all? Also, how relevant do you think an 82 game season is as a bargaining chip?

    • Larry Coon

      My understanding is that we’re already past the point where an 82-game season is a possibility. If mediation is unsuccessful, then I think we go all the way to the deadline for cancelling the season. At that point I think it’s a 50-50 shot.

15. Jake

    Do you expect Stern to announce more game cancellations today if a deal isn’t reached?

    • Larry Coon

      No. As long as the mediation is ongoing, or can potentially start up again, it would be damaging to cancel games. For the sake of progress, I think they delay any announcements.

      If the mediation ends without success, without real progress, and without a timetable for restarting, then I think they swing the axe once more.

16. Karl

    If Cohen pulls this off, what do you think gets named after him?

    • Larry Coon

      A lot of firstborn children.

17. Mike

    “where the money going in & out of the system is based on [...] and the team’s ability to maximize it.”
    How would you measure it? By comparing revenues to the market size?
    Also, how is it possible to talk for 30-40 hours without any real progress? What exactly are they talking about there?
    Do they repeat over and over the same statements or what?

    • Larry Coon

      The league commissioned a study a few years ago to evaluate exactly that. I’m not certain about their methodology.

      I imagine they’re making progress, but are they making headway on the showstopping issues? That’s the real question.

18. JA Sherman

    In light of the city of Memphis’ announcement that they are exploring litigation against the NBA if games are lost (and they cannot make their bond payments), what kinds of other litigation or financial moves do you see the owners making in order to survive the long winter? Thx

    • Larry Coon

      This is why people are wrong when they say the players have no leverage, or that some owners would rather not play the season than play it. Yes, under the old system they lost $300 million by playing the season. But they would have lost a LOT more had they not played it. A billion dollars is probably too conservative an estimate. The players have a LOT of leverage right now — just by continuing to say “no.”

      Okay, that’s it for today — thanks for the questions everyone!

19. Anthony Frazier

    Why are some owners so hell bent on taking out their bad decisions (see Eddie Curry) on players? Don’t they know if they sit the season out I believe a number of teams would be contracted. Do you agree?

    • Larry Coon

      This lockout has very little to do with bad decisions like the one on Eddy Curry. Remember, the players are guaranteed a specific percentage of revenue overall. The league didn’t pay Curry’s contract — the other players did, because THEIR salaries were lower as a result.

      I don’t think contraction is a real option right now.

20. Alex

    What’s the point of maximum contracts, as long as a salary cap of some sort exists? Wouldn’t less money be “wasted” if LeBron got more and Michael Redd got less?

    • Larry Coon

      That’s the problem — how do you ensure that Michael Redd gets less?

21. Jk

    Larry Dirk was robbed ending up fifth in ESPN’s rank, he should have been at least third. It was probably your fault, I bet you were the other guy that voted him 8, outside Royce Young!!!

    • Larry Coon

      Nope, I had him as a 10.

      Here’s the thing with NBARank — we weren’t asked to vote on players relative to each other. We were just asked to put them in tiers (on a 1-10 scale). Within any given tier, neither I nor anyone else had control of the ordering.

      If you’re distributing them evenly, then about 40 players should be ranked a 10. But I didn’t think an even distribution was appropriate. I thought the distribution should fall under a bell curve — one skewed toward the lower ranks. In other words, lots of 1′s and 2′s, and few 9′s and 10′s.I thought there should be fewer than a dozen 10′s.

      I categorized the 10′s as “franchise cornerstones on a championship-caliber team.” For me, that included Kobe, LeBron, Wade, Durant, and a few others. And yes, it also included Nowitzki.