Larry Coon:
Welcome to the chat, everyone! Looks like we’re on Day 55 of the lockout, with no news to report on the labor front.

I think Bledsoe can easily become a change-of-pace guard, as you mention, but he may still have the upside to become a solid starter. They have Mo Willams for at least another year (assuming there’s a 2011-12 season), so they have more time to let Bledsoe develop and see what they have, which I think is what will happen unless someone like Chris Paul falls in their laps.

It’s still too early to tell with Aminu, but I think he may not have as much upside. The Clippers apparently agree, and seem to be focusing their efforts on landing a front-line SF. If I had to guess I’d say that Aminu eventually gets dangled as bait in such a trade (although the Clips aren’t necessarily inclined to move him right now).
 

Larry Coon:
In talking to people on the player’s side, I still sense some belief that the owners are really bluffing to some extent — that come September 15 when it’ll become necessary to start cancelling games, they won’t actually do it. They think that revenues are going to explode and they owners won’t want to sacrifice that — not for what to a large extent is just a money grab. The people I’ve talked to actually believe this to a certain extent, so no — it’s not just posturing.

I don’t think that missing games will bettter the owners’ offer. I think it will make it worse. Once they start missing games the financial implications will be enormous, and the offers will go down as a result.
 

Larry Coon:
That’s been my problem lately — I have a zllion pages of notes sprawled out, and haven’t had the time lately to put it together in an article.

Tom Ziller already talked about some of the issues in his SB Nation piece. In addition to what he said, I think the Van Gogh analogy was disanalogous, because a Van Gogh doesn’t require a tremendous annual outlay of cash to maintain. A system like this isn’t sustainable if it requires such heavy annual cash infusion, so the investment valueof a franchise is compromised. You’re just left with the idea of buying an NBA franchise simply as a plaything, which isn’t realistic, and doesn’t represent the shifting ownership demographic (and the shift will increase as teams continue to appreciate).

Also, what’s good for the goose is good for the gander. If owners derive psychic benefits and should let those mitigate their losses, then isn’t the same true for players? Shouldn’t the owners say that the players derive psychic benefits which should offset the impact of their needed pay cut?

(Every time I read "psychic benefits" I picture Madam Zuza peering into her crystal ball and saying "I see financial ruin in your future….")
 

Larry Coon:
Do they deserve to make a profit? No.

Do they deserve the OPPORTUNITY to make a profit? Yes.

I think the league as a whole deserves the opportunity to make a profit, and if salaries are 57 percent of revenues and non-salary expenses are more than 43 percent, then that’s not going to happen.

And deserve or not, the system as it is isn’t sustainable. What’s going to happen over time if expenses continue to outpace revenues?
 

Larry Coon:
I think both the owners’ and players’ charges are longshots.
 

Larry Coon:
Last time I put food on my family, my wife wouldn’t speak to me for days.
 

Larry Coon:
It depends on the new rules, of course. For example, if sign-and-trade goes away, then cap room will become even more valuable.

But players have to want to come to Sacramento. How often has that been the case?
 

Larry Coon:
It’s an 8 percent cut in 2011-12, and hold at $2 billion for ten years (unless revenue increases exceed 4 percent).

If the players hold at $2 billion, then as revenues go up year-by-year, their percentage share will decrease.
 

Larry Coon:
I haven’t read much about the new league yet, so I really can’t comment knowledgeably on it yet.

But I will say that there’s an order of magnitude difference beween putting on a small, localized league with a handful of players, and being able to put on a large-scale league that brings in the kinds of revenue the NBA brings in.
 

Larry Coon:
As the NBA proposed it, a franchise tag would be less like what the NFL has, and more of a form of glorified Bird rights. It’d allow teams to designate one player who could get more money in a free agent contract. I didn’t hear whether they wanted this to apply to ANY free agent, or just re-signing free agents.
 

Larry Coon:
Since drafts are usually based on the records in the previous season, then they’ll need to come up with SOMETHING should there be no season. The system the NHL used is one possible starting point, but it’s not necessarily what the NBA would do. They’ll cross that bridge when/if they come to it.
 

Larry Coon:
Which proposal? As far as I’ve heard, the owners aren’t married to any specific proposal, but rather tossed out a number of ideas to see if any of them would gain traction. They talked about the idea of a $45M hard cap, and they talked about the idea of a "flex" cap, which is a hybrid soft-hard cap.

The final dollar amount of the cap depends on a couple factors — one is the players’ revenue guarantee. Another is how hard/soft the cap is. The softer it is, the lower it can be.
 

Larry Coon:
I think it’s a bit of a misnomer. None of the league people I’ve talked to referred to wanting a guaranteed profit. Rather, they wanted to get away from the notion of having to accept a guaranteed loss.
 

Larry Coon:
It’s like a game of  Let’s Make A Deal. You can choose the offer on the table, or you can have what’s behind curtain number two.

For the players, it’s always going to be a matter of deciding whether they’re better off taking the deal on the table (of course, after negotiating to bring that deal up as far as possible), or waiting to see if they can get a better deal later. For now, they think they’re better off waiting — and they still have the trump cards of their NLRB charge and the possibility of decertification.

At some point the balance might shift and they’ll determine that taking the deal that’s on the table is the better choice.

Larry Coon:
When Stern talked about it before, he said that there were a number of potential buyers, all of whom wanted to move the franchise elsewhere. He said he preferred to wait to find a deal with a buyer who would leave the team in New Orleans. I guess at least one such suitor has emerged, although they might want to wait for the labor situation to be settled.
 

Larry Coon:
But I’m talking league-wide. And for some markets, being in the red is orthogonal to basketball decisions.
 

Larry Coon:
Worked for the Lakers with Chuck Nevitt.
 

Larry Coon:
I need to see the guy playing against NBA-level competition before I can make that kind of pronouncement.
 

Larry Coon:
I think you nailed Aminu, but I think the jury’s still out of Bledsoe.
 

Larry Coon:
I like Kurt, and he’s got a very good basketball mind (and it doesn’t hurt that he’s a really good guy). I wish he’d get a shot in a better situation. He got the Minnesota team in the middle of a rebuild (partly on-hold due to the Rubio situation), and before that he got the Lakers team in a 50-game season and with Dennis Rodman to deal with.
 

Larry Coon:
I don’t think it’s inevitible, but I think the odds will increase. Hunter doesn’t want to go that direction, but the longer this goes without forward progress, the greater the pressure will be.
 

Larry Coon:
Nope, it’s a big deal in both sides’ minds. It’s one reason the league wanted to hold the players to a 10-year deal, and why the players want the next deal to expire before then.
 

Larry Coon:
He’s 7-5. How could he not be?
 

Larry Coon:
Way, way, way too soon. For me, at least.
 

Larry Coon:
There are ads on everything else, so I can see them biting the bullet on this eventually.

But if they did it now, it’d just be a band-aid on the current problem, not a solution.
 

Larry Coon:
I just grabbed some numbers I have for a recent season (not 2010-11), and local TV was about 13% of BRI, while national TV was about 22% of BRI.
 

Larry Coon:
No, that’s the whole point of restricted free agency. Once the player signs a contract with a new team (technically it’s an offer sheet at that point), his original team is given the opportunity to match the contract and keep him.

Larry Coon:
I think the lack of current activity has little to do with whether they’ll be able to salvage the season.

The pressure really doesn’t start to mount until around September 15, when it will become necessary to start canceling games, and won’t REALLY become stifling until November 15, when most players start to miss paychecks.

In the meantime, both sides are waiting to see what the NLRB does, and the league also has that lawsuit on the books.

These things always seem to come down to the last moment — which will be sometime in January, when they have to decide whether to cancel the season entirely. There will be a flurry of negotiation at the last minute, and I think it’s a coin flip whether they’ll be able to get it done in time to save the season.

So I think the chances of saving a full 82-game season are essentially nil, and the chances of saving a season at all are essentially a coin flip.

Larry Coon:
In order to answer this question we first need to wait & see whether restricted free agency even exists under the new CBA. If restricted free agency goes away, then your question is moot.

But for the purpose of discussion let’s assume that it doesn’t go away (which I think will be the case in any event). The answer is still "we don’t know."

As with the draft, it depends on what the two sides agree to do to handle this unique situation. Let’s say we lose the 2011-12 season, but the two sides come to an agreement in May 2012, which allows business to resume as normal in July 2012. The two sides could decide to count 2011-12 as if it never happened, so any qualifying offers that were made prior to July 1, 2011 will make the player a restricted free agent beginning July 1, 2012.

They could also do something like defining a window of time (such as the last week of June, 2012) in which teams are allowed to make qualifying offers, invoke options or ETOs, etc.) which take place on July 1. I like this option because it allows teams and players to make their decisions with certainty regarding the new rules, and not based on the uncertainty that existed in June 2011.

I suppose they could also take a "too bad" approach, and say that restricted free agency applied to the 2011-12 season and expired on July 1, 2012 (even though there wasn’t an acutal 2011-12 season), so these players are now unrestricted. I doubt they’d go this route, but it’s possible.

Larry Coon:
No, because the teams (and league) operate under Generally Accepted Accounting Principles, or GAAP.

Everything the league is doing is kosher per GAAP. The real problem is that what is correct under GAAP doesn’t necessarily make sense when trying to persuade the players that they should take less.

A case in point is interest paid on debt used to finance part of the cost of purchasing the team. GAAP allows them to count this interest as an operating expense — it is, after all, money that’s going out the door. The league says that as long as franchises aren’t overly leveraged (and they’re not), then this expense is a legitimate part of operating the league. And as I said, it IS money that’s going out the door.

The players are saying that even though GAAP says it’s an operating expense, it’s still related to the cost of purchasing the team, not of operating the team. And since they don’t share in the profits when a team is sold, nether should they help finance the cost of purchasing the team in the first place.

So it’s really a philosopical issue that runs deeper than one of who’s doing the auditing.

Larry Coon:
If 1999 is any indication, it’ll help veteran teams that didn’t have many changes to adapt to. In 1999 it was the Spurs. Maybe this year it’ll give the Celtics a better shot.
 

Larry Coon:
No. From what I heard they looked into it, but the premium costs were prohibitive.
 

Larry Coon:
 

Larry Coon:
There’s a balance between security and performance, and it’s going to be impossible to make everyone happy.

Teams have a legitimate concern with guys like Eddy Curry, who shut it down after earning their big payday. Teams should have a right to expect performance, and should have a recourse when players are paid for six years and only try for a year or so.

But what do you do with guys like Brandon Roy, who is no longer earning the full value of his contract, but through no fault of his own (in fact, through an injury that can be considered work related)?

Fairness tells me that Roy should still make his money while Curry shouldn’t. I’m just not sure how to codify this so that we get the right result in every case. A two-year team opt-out likely would be invoked for both these players, so Roy wouldn’t be protected as he should be.

This is one reason I’m in favor of shorter contracts. If the maximum contract length was three years, then nobody would be entitied to long-term guaranteed money in the first place, which eliminates the problem of this money going to underperforming players. It would also more closely couple pay to performance, which I think is a good thing. Not only would it address this issue, it’d also address the issue of star players continuing to earn megabucks at the end of their careers (such as Kobe Bryant earning $30 million at age 35).
 

Larry Coon:
I could argue that they wouldn’t get the first pick. It was the Clippers’ pick, which they traded. The Clippers didn’t trade their 2012 pick.

That said, this is a big reason why they wouldn’t just use the 2011 draft order. It’d be accommodating teams twice for the same bad season.
 

Larry Coon:
I think the total of 12 is arbitrary, but it’s been around for so long that it’s completely entrenched. They ARE making incremental progress — it used to be that a team could only sign a 13th player if one of their 12 was on the injured list (and what a coincidene that the number of NBA players with plantar fasciitis plummeted after this rule was changed).

That’s all for today, everyone. Talk to you in two weeks (I’m out of town next week).