The NBA is about to shoot itself in the leg. After a season where the league generated more revenue than ever before, when television ratings were the highest they had bee since the Jordan-era Bulls, the league next Monday will cancel regular season games.
Because they can’t figure out how to divide up the fans’ money. In the middle of a deep recession. It’s idiotic.
There is plenty of blame to go around, but know this — most of it belongs on the NBA owners and Commissioner David Stern. They are pulling the trigger, they will seriously damage the league for years.
Usually fans blame players when professional sports leagues go on strike or are locked out. The players are faces and names we recognize, and we know exactly how much they make — and we don’t relate to those sums. Even the NBA league minimum salary puts a player into the nation’s highest tax bracket.
But we don’t really know who the owners are (outside of Mark Cuban). And we don’t know how much money they make off their teams (which is hard to determine as teams are in tangled financial webs). They are faceless unknowns, big impersonal corporations (except when Dan Gilbert writes letters). We blame the players because we know and understand them in a way we don’t the owners.
However, the NBA players are the ones making the real concessions in these negotiations, not the owners. The players have tried to negotiate in good faith, the league has tried to bury them.
The real labor issue is the definition and split of “basketball related income” or BRI. It’s always about the money. BRI is basically all the money that comes into teams from national television deals, ticket sales, a percentage of in arena concessions and sponsorships, and so on.
In the old deal, the players got 57 percent of BRI in salaries. They have offered to reduce that down to 53 percent according to both the union and league. That is about a $160 million give back of real dollars from the players to the owners next season. David Stern said Tuesday (in a press conference shown on NBA TV) that is not enough.
“In order for us to have the robust revenue sharing that the owners want, and that the players want, we have to be profitable as a league,” said Stern, who has claimed the owners lost $300 million last season (a very debatable figure). “And there’s simply no way that ($160 million give back by players) makes us profitable.”
The owners started these negotiations trying to move the middle — the spot of compromise where a deal can be struck — by making outrageous demands. They wanted to roll back salaries of signed contracts, they wanted an NFL-style hard cap, they wanted no guaranteed contracts, and they wanted the players to only take 46 percent of the BRI. Basically, they wanted everything, they talked about radical changes.
There was Stern on Tuesday talking about all the things the owners have given back in these negotiations — they moved off the hard salary cap, the demand for non-guaranteed contracts and the salary roll backs. All things they didn’t have in the first place, all just give backs on paper. And they upped their offer to 47 percent of the BRI. A whopping one percent.
The players have moved $160 million, the owners $40 million in real dollars.
The middle ground? With the owners starting at 46 percent and the players at 57 percent, the average is 51.5 percent of BRI. The players have moved toward that but stopped because the owners have barely budged.
The owners are not a group trying to make a deal, that’s a group trying to steamroll the opposition. The owners know they have the leverage and they plan to use it. They are led by hardliners that made bad business decisions — overpaying for franchises, bringing in a lot of partners and leverage to do it — then complain they can’t make enough money on it. Certainly they deserve the chance to make a profit, but it’s not the players fault that a bunch of owners have huge debt service payments on their franchises. The owners want to make those payments on the backs of the players.
Stern said that they floated the idea “in concept” to the players of discussing a 50-50 split of BRI under the old definition, but the players rejected it. Sources with the union told Alex Kennedy of Hoopsworld that was not how things went at all. Know this — BRI is not total revenue, the owners get to write off expenses off the top, then the rest is divided up. So even that 50-50 is less than half of what the league brings in.
And the league is about to bring in a lot more money. The Lakers local television rights deal is about to jump from around $30 million a year to more like $150 million a year. The Celtics just inked a new deal, as did the Nets with the move to Brooklyn. Then there is the new national television deal in 2016.
The owners are going to see more money, they are just fighting to keep a larger share of it. The good of the game be damned.
In the end, it’s the fans that get screwed over in this. Well, the fans and the arena workers and others who depend on the league and now will be looking or a second job to keep a roof over their heads and food in front of their children. Arena workers are not making big money and they have no way easily replace that income.
Fans should be angry. Just know that it is the owners that locked the doors. It’s the owners not really moving in negotiations. It’s the owners that want to see how the players react when they miss a paycheck or two, so they will drag this out. The owners are trying to steamroll the union, not find a fair deal in the middle.
This lockout is on the owners, make no mistake about it.