The Window for NBA Peace is Open
It’s been almost two weeks since the NBPA disclaimed interest, rejecting the final NBA proposal, and morphed into a lawsuit-filing trade association.
Commissioner David Stern has said from the start that the league would need 30 days from a handshake to get the game restarted. Some of that time would be needed to ratify the deal, hold free agency, training camps and a few warm-up exhibition games.
The date circled on his calendar, from the start, has been Christmas.
Simple math says now is the time for a labor peace.
For die-hard followers of the NBA, the season never really ends. Basketball can entertain those inclined all year-round with the draft, summer leagues, free agency and the like. The “normal” fans, who outnumber the diehard by a tremendous margin, often notice the NBA when the games hit ABC for the first time each year on Christmas.
Stern and the owners do not want to see the prospect of having to refund any of that ABC money.
While the mechanism on how the NBA and ABC would work out the economics of lost games isn’t exactly clear, it’s a path the league wants to avoid.
If both sides can negotiate a 66-game season, all will be quickly forgotten and forgiven.
The question is – can they get past this stalemate?
HOOPSWORLD’s Steve Kyler recently broke down many of the issues on the table (NBA AM: Can David Stern Save Christmas? ). Resolution will not be easy.
While it’s technically possible for another January resolution and a 50-game season like in 1999, this weekend window may be the best chance the league has at restarting for the 2011/12 season.
Smart Move by Players?
The offer from the owners had come with a warning from Stern that the time for negotiation had ended, that rejection would lead the owners back to their hard-cap, 47% Basketball Related Income (BRI) share to the players, draconian proposal.
Stern did not use the word draconian.
It was actually the second-time he used that threat and many players took him at his word. Had the offer gone to a vote, the players en masse may have gone against their union and accepted the deal.
Instead leadership had enough support to take an alternative path, as detailed previously (NBA Side-Steps Forward in Offer to Players).
The easier move would have been taking the deal because it would have locked in a 72-game season and a clear end to the protracted negotiation.
The players chose the uncertain road via their disclaimer of interest. By doing so they gained power in the negotiation by calling the owners’ bluff, threatening Christmas (and in turn the entire year) along with what could be a long, expensive legal battle.
The odds of any suits between the players and owners going to verdict would be quite slim, but the possibility of $6 billion in treble damages going to the players (in a worst case scenario for the league) at least opens up some level of liability for the NBA.
The players didn’t take a bad deal (from their perspective), dropping down to the 50/50 split and giving on system issues that could hamper the ability of individual players to get the most out of the free agent process.
One goal for the owners has been to systemize parity (as much as possible) while the players believe they’ve already done their part on that front by giving up BRI. The owners collectively will be profitable and should be able to revenue share their way to parity.
If a deal is struck by the end of the weekend/Monday, the players’ move will have cost six additional games but landed a better deal than the one on the table two weeks ago. The NBA projects to bring in about $50 billion over what could be a 10-year deal (with a six-year opt-out). What’s losing $100-200 million in year given each side stands to earn about $25 billion each over the life of the agreement?
It’s pocket change.
That doesn’t change fan frustration, and certainly a lost season changes the math, but six games? The union may have made their best move yet by disclaiming when they did . . .
Why is Revenue Sharing So Crucial?
The players’ salary is based on BRI league-wide.
The Los Angeles Lakers have a new television deal with Time Warner Cable kicking in for the 2012/13 season that might raise BRI by $100 million a year. That in turn might lift the salary cap for every team by at least $1.5 million.
In other words, the player expense for each team would grow without a corresponding rise in income. As it is, if a team generates $90 million in gross income and spends $60 million on players . . . that’s nowhere near the 50/50 split for that individual team. There can be talk of relocation, contraction and other methods to try and even the playing field but the obvious solution at hand is revenue sharing.
The smaller market teams have been clamoring for some variation on a hard cap to curtail big-spenders, to essentially allow for all teams to come to the table with the same number of chips. The players have a real point that parity begins and ends with revenue sharing. The league is with them, but to a limit.
Equally, the owners have some real points in that the Lakers and other teams can shrug off luxury taxes and spend to their hearts’ content, but then there have been a lot of teams spending exorbitant salaries on the wrong players.
Some of it has more to do with having the right decision-makers in power, a la the Oklahoma City Thunder with Sam Presti. Of course the Thunder have benefited from the drafting of Kevin Durant and Russell Westbrook, just as the San Antonio Spurs did more than a decade earlier when they drafted Tim Duncan. Even Kobe Bryant came to the Lakers via the draft, albeit through trade. So did Dirk Nowitzki to the Dallas Mavericks (also a draft-day trade).
There are so many factors that come into play beyond spending power.
If the owners’ idealistic, systemized view hampers any deal with the players, then whatever parity is lost in compromise will have to be made up in revenue sharing.
The players just want to make sure that extensive luxury tax penalties won’t prevent teams from utilizing their Bird Rights, and that there will be a second team capable of making an offer to inspire their existing team to come up in salary when negotiating.
It’s not a matter of looking back and counting out how many tax teams used their full Mid-Level Exception (MLE) or executed a sign-and-trade. Rather, the players need to have some big-dollar team in their back pocket to use as leverage and push the market.
The owners counter by saying with shorter contracts (and raises), free agent opportunities will increase.
There’s a difference of opinion here but it’s not longer time to stand on ideals but to find the compromise within.
The players have a number of issues they’d like resolved to land at 50/50. The owners don’t have to meet all, but some. The players have to be happy with what gains are truly available in this brief window of opportunity.
As Kyler detailed in the aforementioned link, the Escrow Tax system is a big one. How much money can the owners withhold from checks to make sure the system reconciles to the 50% split? Is there a limit? Does it carry over to the next year? Something clearly needs to be in place otherwise it’s 50/50 in name but not reality. The counter is that players don’t want salary rollbacks snuck into the system via escrow.
The remaining battles are on exceptions and sign-and-trade, specifically in their availability to the tax teams.
The owners are conflicted internally given their views on parity but there’s room to give.
Once the major details are hashed out, both sides need to agree on a long list of B-issues.
Everything they need to reach a compromise is right in front of them.
Walk the path down the middle and get it done.