NBA owners won. Big. But the players can live with it.
As the talk starts to build of all the little concessions the NBA players got in the last week to make an NBA labor deal happen in time for games on Christmas day, remember this:
The owners won.
In a massive way. This is an Attila the Hun sweeping through Eastern Europe kind of win — devastating and total.
David Stern and the owners came into these NBA labor talks saying they lost more than $300 million last season and $400 million the year before that. By getting the players to agree to what is in practice a 50/50 split of basketball related income (although the deal allows the players to get to 51 percent if revenue increases enough) the owners got the players to essentially accept a 12 percent salary cut that will cover those losses.
This will come to more than $3 billion back in the owners’ pockets if the deal lasts the full 10 years (both sides can opt out of the deal after six years). What’s more, the deal means the players will have shorter contracts with lower raises going forward. Plus, the system now ties the hands of larger market, bigger spending teams helping depress salaries that way.
The owners will tell you they didn’t get everything they wanted, some will vote against this deal. Those guys are fools — they got more than enough to balance their books. Combined with more robust revenue sharing — soon to be triple what it was — small market owners should be able to break even or turn a profit. They should be able to compete (they could before, ask San Antonio and Oklahoma City). If they can’t, well, it’s on them now. It’s not the system.
All that said, the players got enough small victories — and a couple key ones — that this is a deal they can live with.
Early in the lockout, PBT spoke with former NBA players union president Charles Grantham and he said the smartest move the union ever made, the thing they could not give up in these talks, was keeping the salary cap tied to league revenue. Early offers from the owners wanted to detach the two — players salaries would stay flat at about $2 billion a year and all of the money from expected growth in the league (such as a new national television deal coming in 2016) would go straight to the owners pockets.
The players won that fight. They will get a smaller share of that revenue, but as the league’s revenue grows player salaries will go up. Grow the game and grow how much money you make.
The other two hills the players were willing to die on were guaranteed contracts and a hard salary cap. The owners relented on those as well. Yes, the owners now have more ways to get out of bad contracts faster, and yes the new luxury tax rules make it much more costly for high-revenue teams to spend big, but the players won those fights on principle.
There were other small victories, such as getting the threshold to get to the 51 percent of revenue lowered to a makeable goal. The players got the extend-and-trade so their biggest stars can better control their exits from teams. They got a solid mid-level exception for tax paying teams.
That was enough. It needed to be enough because the players were going to start losing more money in salary than they were making back fighting over the scraps of this deal.
But this negotiation was all about the money, and the owners got a lot more of it. They won. The small market owners in particular should now be able to turn a profit. The players got a way to save face at the end but the owner won and won big.
With this caveat…
In 1999, after a lockout that lasted into January, the owners were thought to have won. They got a cap on max salaries, so that there would be no more deals like the one Kevin Garnett and Shaquille O’Neal had gotten. They got a percentage that capped players’ salaries in total at 57 percent. Everyone said the owners won, including the players.
A dozen years later, the owner were crying that the deal was unfair and killing them. You never know how things will play out. And you can bet in 10 years, when this deal formally ends, there will be owners saying what a bad deal this is for them and how it is killing them. Even if the fault is their own management.