Should NBA Players Take The Deal?
The next critical deadline in the ongoing NBA labor dispute is upon us, with Owners saying the Players have until close of business on Wednesday to accept the deal of suffer the consequences. Should the Players take the deal? HOOPSWORLD’s Bill Ingram and Eric Pincus takes sides and lay down the arguments.
The NBA labor standoff has already been ugly. We’ve already had about as much heated rhetoric from both sides as you would expect when the financial future of a multi-billion-dollar corporation is at stake.
In case you’ve been hiding under a rock, the biggest issue being discussed, indeed the sticking point, is the split of Basketball Related Income (BRI). Under the last Collective Bargaining Agreement (CBA) the Players received 57% of BRI, with Owners receiving 43%. Of course, since that deal was struck back in 2000 (and extended in 2005), the American economy has taken a dramatic shift. The prosperity of the 1990′s is gone, replaced by high unemployment, loss of savings, and less and less disposable income. The corporations still buy their suites, but the average fan is having a harder and harder time find the $250 it takes to bring a family of four to an NBA game . . .and that’s going on the cheap.
The Owners are saying they can no longer do business under the old model, and indeed, nearly every corporation in America is cutting back to make up for the lack of demand that comes from a down economy. Some owners have lost a great deal of money in their “real” jobs, and are thus trying to find a way to bring in money from their NBA franchises, something that hasn’t always been a consideration. Up until now, losing money . . .and often lots and lots of it . . .has been the only way to compete for a championship.
Now the Owners are looking to change this, and especially the small market owners who have little or no hope of competing with the larger markets. After all, how can the Indiana Pacers expect to compete with the Los Angeles Lakers when they have to sell out Canseco Field House three times to equal the income generated from one sell out at Staples Center?
These are the primary factors (though there are many others) that have led the Owners to the point where they are. They have offered a 50/50 BRI split, but aren’t willing to go much beyond that. Over the weekend the Owners did seem amendable to the suggestion of a federal mediator, which could have resulted in the players receiving 51% if certain conditions were met, but the Players rejected the offer.
At the end of the meeting NBA Commissioner David Stern told the Players they have until the close of business on Wednesday . . .take it or leave it. If they leave it, the next offer is a 47% share of BRI.
The players should take the current deal before it’s off the table and the next one is much worse. David Stern has been around a long time, and while he’s as cunning a poker player as you’ll ever find, he’s not one to bluff. Why would he? He’s holding all the cards! Twenty-two of the NBA’s owners will make more money if there is no 2011-12 than if there is, at least under the old BRI split. There are six NBA owners who also own NHL teams, and they are pointing to the fact that losing season helped make the entire NHL profitable again. The owners are not afraid of losing a season, and Stern knows the new CBA he brokers will be his legacy to the league after he retires. He wants to get this right, and he has most of the owners on his side.
In other words, the players cannot win.
Union President Billy Hunter is doing the players a disservice by telling them not to accept the current deal, largely because it’s going to hurt the vast majority of the league’s players. Sure, the superstars are more than willing to play chicken. The guys who hock underwear, soft drinks and fast food can well afford to go without their NBA paychecks for a season. But what about everyone else? What about the rank and file? The guys who make far less than maximum money and count on their NBA checks to support their families and maintain their standard of living?
Those players . . .probably 85% of the league . . .are going to be hurt if the 2011-12 season doesn’t happen. Sure, the Union has some money in escrow and Kobe Bryant has offered financial assistance to players who need it, but a few hundred thousand dollars here and there is nothing to a player who is losing millions of dollars over the span of a few months.
At the end of the day, we’re still talking about players getting paid millions to play basketball. Maybe it’s a few less million (in the case of the top stars), or hundreds of thousands less (to the rank and file), but it’s still a lot of money for playing a sport that most people play for free.
The Owners have put the best offer they are going to make on the table, and as you can see below, it pays significant increases every year.
Here is how the Owners’ deal looks:
Players were paid 2.176 billion in 2010-2011 in salaries and benefits on $3.817 billion in BRI on 4.8% growth. Assuming that growth rate continues (which it won’t if the lockout lasts much longer), here is how the new deal looks in dollars and cents.
Last 3.817 2.176
Year 1 4.000 2.176
Year 2 4.192 2.176
Year 3 4.393 2.197
Year 4 4.604 2.302
Year 5 4.825 2.413
Year 6 5.057 2.528
Year 7 5.300 2.650
Year 8 5.554 2.777
Year 9 5.821 2.910
The reality is, the Union doesn’t want to allow a general vote on this proposal because the majority of players would take it. They would take it and salvage the majority of the 2011-12 NBA season, also saving the league from the damaging long-term impact of a season lost. At the very least, all players should be allowed to vote on whether or not to take this offer.
Finally, the Union has a moral and legal obligation to explain to the Players how turning down this offer leads to a better one. That not being the case, the Union leaders should not simply walk away from the deal on principle.
It only gets worse from here.
The NBA and NBPA stand deadlocked with no labor deal, a month of cancelled games and the prospect of a lost season on the near horizon. Both sides met over the weekend but couldn’t bridge the gap.
Commissioner David Stern has since thrown down the gauntlet, threatening the league’s proposal will drop back to a 53/47 split of Basketball Related Income (BRI) favoring the owners with salary rollbacks and a hard cap if the players don’t take his most recent offer.
Representatives from all 30 teams will meet Tuesday to discuss their options.
Union leadership, including President Derek Fisher, have denounced the league’s proposal and has discouraged any talk of a player vote.
Nonetheless, there’s a wide range of opinions on how to proceed throughout the 400+ members of the union and there may be a serious movement to take the deal on the table, get back to work and most importantly get the cash flowing again.
The players have already lost a month of the season and while a portion may be rescheduled, some of that money has been permanently lost.
As painful as the process has been, the NBPA must tread carefully through the next few days. Although Stern’s threat may be foreboding and the idea of more checks being cancelled ever daunting, rushing to take a bad deal is something the players won’t be able to take back.
The owners are hoping the financial pressure is enough to get the rank-and-file to force the union heads to make a deal. From the league’s perspective, they’ve offered a reasonable compromise given their own internal schism between the smaller and mid-to-large market franchises.
The offer, as best detailed by Howard Beck of The New York Times, is functionally a 50/50 split (with some upside and/or downside based on growth projections in what could range a 49-51% band to the players) with a soft but restrictive cap.
If the players were at 52.5% and the league is trying to sell their proposal as 51%, the union is in turn working to educate their members that 50 is 50 is 50.
The cap on the high end is limited by a punitive luxury tax. The owners and players naturally disagree on severity but the exact range of the penalty for spending beyond the tax threshold can be resolved through compromise.
In coming down from the 57% stake in the prior Collective Bargaining Agreement (CBA), the NBPA is only willing to near 50% if they preserve three key items: guaranteed contracts, zero salary rollbacks and salary cap exceptions.
The owners have conceded on guarantees and rollbacks but they’re still short on exceptions.
Tax teams will have just half of their Mid-Level Exception (MLE) and only in alternating years. While teams over the cap will have $5 million to spend in free agency, those over the tax will have just $2.5 million to spend.
The league argues that the players will get the same income regardless of system because of the fixed BRI percentage but the league is taking away individual leverage from free agents as they seek the best possible contract.
A number of teams will be so wary of the tax; they won’t be able to retain their own players.
That in turn would make Bird Rights meaningless.
If the teams willing to spend via sign and trade are unable to because of the tax, where do the players turn?
Will there be sufficient money to go around? Will there be enough teams with cap space or do players find they have systematically given away all their leverage?
Naturally the superstars will be compensated. First-round picks will get their structure salary but what about everyone else in between?
The league is trying to force this deal through but what exactly is the Wednesday deadline? It’s artificial.
Obviously, the longer time passes, more will be lost by both the players and owners but just because the commissioner made a threat doesn’t make it any more significant than any other bargaining technique employed thus far.
The league will lose its most significant income once games on national television (ABC) are cancelled. That’s a refund check they don’t want to spend and more of a realistic drop-dead date the players might be able to leverage against the NBA.
While the owners have far deeper pockets, the players can decertify or disclaim the union and find leverage points in court. The NLRB has yet to rule on the NBPA’s claim that the owners haven’t bargained in good faith and while a significant outcome may be unlikely, why would the union take a bad deal before trying to exploit the NBA’s true weaknesses?
Decertification may be the nuclear option but the threat of it may be the necessary key for the union to get the right deal.
Everyone wants to get back to basketball but if this deal lasts 6-10 years and sets the precedent for all future agreements to follow, then it’s worth fighting for.
The players aren’t going to get another chance to do this right.
Don’t take the deal because of an empty threat.
You’ve heard the arguments for and against. Should the Players accept the deal and get the 2011-12 NBA season underway, or hold out for something else? Drop your thoughts in the comments section below!