Sunday, October 30, 2011

NBA Armageddon 2011 – back to the future

A week ago the NBA’s labor negotiations blew up in everyone’s faces as talks broke off on October 21. The two parties met in marathon talks Wednesday and Thursday. On Friday, when it appeared the two sides might have been close to an agreement, talks broke down.

Heading into Friday’s meetings, it was believed that not only was a new labor deal about to be signed but the entire 82 game schedule would be played. Soon after the talks ended, NBA commissioner David Stern announced NBA games through November 30 were now cancelled and there was no hope the entire 2011-12 NBA schedule would ever be played.

“As you know, we've had, until this afternoon (Friday), a pretty good several days of give and take, a lot of things were reaffirmed, a lot of concessions went back and forth. We made some major progress on length of contract. Previously we had conceded on guaranteed contracts, that we had agreed that all players currently under contract would receive payment in full under their contracts, even if that took us above any pre agreed percentage. We had restored a variety of exceptions having to do with Bird rights and early Bird rights and non Bird rights for your veteran free agents and the like, and there was a lot going on,” Stern added.

“There were two or three open items left on the system issues, on which, as I said, we made good progress. Then we turned to the subject of how to divide basketball related income. I summarized the positions of the parties previously and said that the NBA owners were willing to go to 50 percent in their BRI on their percentage split of BRI, in effect a 50/50 split.

“Billy Hunter said that he was not willing to go a penny below 52, that he had been getting many calls from agents, and he closed up his book and walked out of the room. And that's where we are.” Stern said.

"Derek (Fisher) and I made it clear that we could not take the 50-50 deal to our membership. Not with all the concessions that we granted," Hunter said. "We said we got to have some dollars."

"We made a lot of concessions, but unfortunately at this time it's not enough, and we're not prepared or unable at this time to move any further," Hunter said.

Following the breakdown Hunter told the media that NBA owners lowered their basketball related income offer (BRI) to the players from 50% or 47% but then increased their offer back to 50% during Friday’s talks.

"We're here, we've always been here, but today just wasn't the day to try and finish this out," NBAPA President Derek Fisher added.

According to the two sides agreed on most of the mechanics relating to a new CBA but remain stuck on the BRI split. The pervious agreement had the split at 57/43 in favor of the players. The players who were steadfast that they would never go below a 53/47 split in their favor have now agreed to a 52.5/47.5 split.

Are we really talking about 2.5% and do the owners really believe a 50/50 split in BRI will result in a profitable NBA?

“Including enormous expense cuts in other areas by the League. I mean, that was something we've been talking about with the players from the beginning, that in essence we weren't suggesting we would move to break even or profitability on their backs, as they would say, that in order to change the economic model that underpins this league, we needed to reduce expenses across the board,” NBA Deputy Commissioner Adam Silver commented.

“Given that we pay out currently 57 percent of revenue roughly to the players, we made clear to them that cuts would have to come in their salaries, but there's that other 43 percent plus of expense, it's plus because we lose money, and we've told them that we were looking to cut costs in every other aspects of our business, and because those other aspects of our business are not controlled by collective bargaining agreement, we've been doing that over the last two years. And in fact, have lost hundreds of jobs in other areas, in those places where we had controllable costs.

“To David's point, the reduction to 50 percent along with other expense cuts in our business would allow us to move to profitability over time as revenue continues to grow.” Silver said.

The players fear remains a seemingly inevitable force that is drawing the NBA towards a hard NHL style salary cap.

"We've told them that we don't want a hard cap. We don't want a hard cap any kind of way, either an obvious hard cap or a hard cap that may not be as obvious to most people but we know it works like a hard cap," Hunter said. "And so you get there, and then all of a sudden they say, 'Well, we also have to have our number.' And you say, 'Well wait a minute, you're not negotiating in good faith.'"

Silver did his best to clear up the issue relating to a hard salary cap.

"We don't think it's a hard cap. ... We've all been wasting our time if they believe this is a hard cap. We've been spending literally hundreds of hours negotiating the specifics of a system, where they're now saying is the equivalent of a hard cap. We've been clear from the beginning from a league standpoint we would prefer a hard cap."

A grim David Stern made it clear Friday evening if the players expected things were going to be get better they had better think about that.

“We're going to have to recalculate how bad the damage is. We've lost approaching $200 million in the loss of the preseason, and we're going to lose several hundred million dollars more. So the NBA's offer will necessarily its next offer will reflect the extraordinary losses that are starting to pile up now, and you can assume that our offer will change to reflect the changed economic circumstances.”

True Hoops’ Henry Abbott asked a very good question – if a poll were taken of the entire NBAPA would the union support the actions of their current leadership or would they accept the latest offer from the owners and get back to work?

Abbott suggested that players had contacted him and told him they want to play basketball.

Hunter announced that all current NBA players will be sent $100,000 in ‘strike pay” but that’s a far cry from the $5.4 million the average NBA player receives. Hunter did acknowledge that NBA players wouldn’t be missing any paychecks until November 15 when they would have received their first checks from their respective teams.

What happens to that “all for one and one for all” among the players when that first paycheck doesn’t come?

Union vice president and Spurs forward Matt Bonner is one of the people charged with assessing the mood of the rank and file. He told ESPN that he believes the union is strong.

"As disappointing as today is, we made progress," says Bonner. "It's a process and hopefully it will continue again soon. In the meantime, I think the players are united and prepared to hold strong. We've made significant gives in every system issue and on BRI, so now it's the owners' turn to step up and make a move!"

When the two sides appeared on the verge of an agreement Friday many believed neither side could afford to miss an entire NBA season. That may be true but this is real.

NBA owners are billionaires and if reports are correct those NBA owners have lost hundreds of millions of dollars in the last few years. NBA owners want games played in their arenas, want to sell tickets and honor their sponsorship agreements.

At the end of the day – NBA owners will survive if the entire 2011-12 NBA season is not played. On the other hand the average NBA career has a finite number of years. The average NBA salary is $5.4 million a year. NBA players can’t afford not to play basketball.

It’s not a matter of if but when NBA players will be faced with the reality they are a lot like salmon swimming upstream and they’d better make a deal now before they die along the riverbank.

For Sports Business News this is Howard Bloom

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