Sunday, October 24, 2010

NBA Armageddon 2011 – enjoy this year’s Hoop it Up


The 2010-11 National Basketball Association schedules tips off Tuesday night with marquee match ups featuring the Miami Heat visiting the Boston Celtics and the defending World Champion Los Angeles Lakers hosting the Houston Rockets. In NBA commissioner, David Stern’s, pre-season press conferences (two this year on Thursday and Friday) while not declaring war on the NBA Players Association he sent a clear and concise message to the NBAPA. The NBA owners intend to cut player costs by as much as 30% when the current collective bargaining agreement expires at seasons end. If ever there was a declaration of war between management and a group of players, suggestions of a 30% cut in salaries is a very bad sign.

It was not Stern who made the veiled threat to the players’ but NBA deputy commissioner Adam Silver who outlined the NBA’s economic woes.

“We pay the players 57 cents on every dollar, which by definition means it needs to cost us less than 43 cents on every dollar we generate.

“Even though we reported we have record season ticket sales over the summer and otherwise very robust revenue generation because of the built in cost of the system, it's virtually impossible for us to move the needle in terms of our losses.

“As we've said previously, our losses were roughly $380 million last season. We made a report to the Governors that said in essence we're going to lose in the range somewhere around $340, $350 million this season based on our projections.

“The answer to your question is there's no chance we can change the fundamental economics regardless of our success because it just costs us too much money to generate those sales.”

And the 30 percent cutback? Currently, NBA players are collectively paid $2.1 billion annually. “We would like to get profitable, have a return on investment. There's a swing of somewhere in the neighborhood of $750 to $800 million that we would like to change. That's our story and we’re sticking to it.” Stern announced following the league’s Board of Governors meeting Thursday.

Players Association executive director, Billy Hunter, said the union is bracing for a lockout after the season in the following statement regarding collective bargaining:

“The position expressed by the NBA [Thursday] is regretful, since in February 2010, the players unequivocally rejected the owners’ proposal which called for a hard cap, a 40 percent rollback in player salaries, unlimited expense deductions and the elimination of guaranteed contracts.

“The players and the union would prefer to work towards attaining a fair deal that addresses concerns raised by both sides and improves the game. But, if the owners maintain their position it will inevitably result in a lockout and the cancellation of part or all of the 2011-2012 season. The players and union will prepare accordingly.”

Stern was dismissive of Hunter’s comments when he spoke to the media Friday declaring: “I don't believe that Billy wrote that because he wouldn't threaten me with a lockout, and all I can say is that's what negotiations are for and we're looking forward to our next negotiating session.”

So let us fully appreciate what Commissioner Stern “suggested”. He did not believe a statement released by the NBAPA attributed to the NBA Players Association executive director Billy Hunter was said by Billy Hunter. You do not have to read between the lines to understand how much respect David Stern has for Billy Hunter and the NBA Players Association.

David Stern is one not someone who plays well with others, at least when it comes to managing the National Basketball Association. He is the emperor of basketball, a master at running the NBA. One of the not so subtle veiled messages Stern sent to the players – there exists a possibility the league would consider contracting franchises. Call it what it is, addition by subtraction.

In another “interesting” development, CBSSports.com learned that salaries may not be the only area cut as the NBA tries to gets its financial books up to speed with the explosion in popularity the league will experience this season. A person with knowledge of the owners discussions told CBSSports.com, the league "will continue to be open to contraction" as a possible mechanism for restoring the league to profitability.

The owners’ ongoing talks about competitive balance, profitability and revenue sharing have included the notion of whether teams are operating in "the best available markets," the person said, and whether reducing the number of teams from the current 30 would help improve the product and the bottom line.

Stern briefly addressed the issue of contraction Friday. When asked if there is a model or notion for changing the rules for revenue sharing and how might that look in the new CBA?

“It’s going on a parallel front, not in the CBA but along with the CBA, and that's something that's being handled by the Planning Committee chaired by Wyc Grousbeck of the Boston Celtics.

“But generally speaking, I think we're committed to a model that will, A, be more robust; B, has certain performance standards in it, and hence the issue of contraction gets mentioned because every team that's in the league has to be able to carry a certain weight, make a certain standard; and then we need to make them able to compete on the court and to have an opportunity to be profitable. Those are the three prongs that are going to guide the revenue sharing.

But it would be premature to do that finally without having some better idea of what the new collective bargaining agreement will be”

Contraction is a powerful tool for management to use in any labor negotiation. Is there a more powerful tool to use in terms of delivering a message to a group of athletes than the ‘threat’ of job losses? Major League Baseball had a plan in place to eliminate the Minnesota Twins and the Montreal Expos and while the plan never went anywhere, if followed, though would have provided MLB with some actual teeth in trying to deal with the MLBPA.

The same can be said if franchises go bankrupt and the league allows those teams to dissolve. Both the Ottawa Senators and Buffalo Sabres declared bankruptcy just prior to the 2004-05 NHL lockout. While both the Senators and Sabres are thriving under their current ownership, if NHL commissioner Gary Bettman had allowed the Ottawa and Buffalo franchises to collapse he could have broken the backs of the NHLPA and averted the crippling year long NHL lockout.

Stern, for his part made it clear – on the eve of the 2010-11 season, despite suggestions that a year from now the NBA may be in the midst of a lockout, he remains optimistic and has no real fears regarding the suggested $750 million cutback in player costs.

“You know, the number is a number that in some shape or form we had put out there back in February when we presented our proposal, our January proposal to the players, so I didn't think I was breaking new news about that. That was the task back in January.”

“But since I've been commissioner I'm allowed to be optimistic and not consider it a cloud because I've probably been in a dozen collective bargaining negotiations, the last 10 of which involve some of the same actors that are currently at this table. So we know we're going to get an agreement done, and we think that the enthusiasm of the season and the prospective growth that it will ultimately represent will enable us to sit down with the players and negotiate in good faith, and we both seem intent on doing all that we can to reach a deal.”

A reported $380 million loss last year and suggestions of losses this year between $340 and $350 million, is the NBA and David Stern pushing the panic button when it comes to negotiating a new CBA with its players?

“Well, I'm not going to say I'm not going to use the word "urgent." It's important. One of the things that we have found out ourselves is that as we work with our teams to keep the high level of sales and customer service of first class arenas and all the amenities of continuing escalation, even in prices of making our players secure and traveling them around the world by charter, that it has become much more expensive to do the same things that we have always done.

“And number two, the world has changed. The ability of the economic situation we're in the worst we've gone through the worst recession in the lifetime of anyone who's on this phone call, and it sobers people as to what additional investments or funding shortfalls they want to make to support their assets. And I'd say the combination of those two have caused us to say, okay, we need a reset that makes this viable so that we can work together with our players to share what we hope will be the continuing upside of an officially operated league.”

For their part, several NBA players made it clear they are getting ready for what they believe is the inevitable – a protracted NBA lockout.

"It's a major concern for both parties: the athletes and the owners," Pacers veteran point guard T.J. Ford told the Indianapolis Star. "I feel the NBA is at its peak right now. I don't think either party wants a lockout."

"I think everybody believes in Billy Hunter and I think they're going do their best job in getting the best deal for us," Ford said. "A lockout would not be good."

The NBA Players’ Association, The Providence Journal reported, briefed all the players during meetings over the summer in Las Vegas. When asked if there could be a lockout this summer, the Celtics’ Rajon Rondo answered: “I don’t know. I’m preparing like there is one. I’m saving a lot of money this year.”

Rondo added that “it would be great if we could get a ring, then a lockout, but I’m just focused on the season.”

While Rondo still has the bulk of his career remaining, Boston center Jermaine O’Neal is nearing the end of his. Basketball has been very, very good to him as he’s earned a reported $153 million over his 14-year career.

“I think the business of basketball is going to take care of itself,” said O’Neal. “The owners and the union are going to do what’s best for the game. At the end of the day if there are losses, I am sure the players’ union doesn’t want to see the losses the NBA is taking. As players we’re talking about it, but we can’t worry about it right now. We have 82 long games ahead and that’s the focus we have to have.”

O’Neal said he “anticipates that the (salary structure) is going to be the way it is now, with some adjustments, some tweaks,” but also expressed major concerns over what difficult negotiations or a possible lockout could do to the sport.

“It’s about when you get the hard-working, 9-to-5, Mr. Joe who is spending his last couple of dollars to come and support the league. We don’t want to turn the audience off,” he said. “As a player and as a fan of basketball I want the support from our fans to continue and not get turned off by two groups arguing about millions of dollars that they don’t have. They create the millions of dollars for us, so that’s the only thing that I worry about.”

“There’s a lot of negotiations that are going on, and I don’t really know how it’s going to end up,” the Clippers‘Chris Kaman told The Los Angeles Times. “They’re saying lockout. You just never know. You’ve just got to be ready and prepare yourself for that, moneywise.

“I’ve been saving a lot — looking out.”

For SportsBusinessNews.com this is Howard Bloom. Sources cited and used in this insider report: The Providence Journal

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