March 22, 2011

Adrian Wojnarowski of Yahoo! Sports

Adrian Wojnarowski of Yahoo! Sports released an article yesterday on the labor fight between the NBA owners and their players. And while most of "fight" is media rhetoric back and forth there are some realities to the thought process that are almost unavoidable.

Players Association director Billy Hunter revealed to Yahoo! some of the commentary made by NBA Commissioner David Stern during the most recent meetings during the NBA's All-Star weekend.

Hunter for the most part kept to his script, and some of the concepts the Players seem to be hanging on are not only unrealistic, they are downright defiant in the face of some undisputed facts.

The NBA is losing money. Turn your head and look into the stands at almost any game in the league and you are going to see lots of empty seats. Furthermore look at some of the advertisers inside NBA arenas; have you noticed how many more local brands and businesses have found their way into prime ad space inside NBA buildings? It's because NBA teams cannot fetch nearly the dollars they could when the current labor deal was reached.

The Players Association responds to the NBA owners with pretty much the same comments.

Let's take a look at some of those comments.

"A Guaranteed Profit": 'I think every one of my owners should have a guaranteed $10 million profit per year.' According to NBAPA head Billy Hunter that is what NBA Commissioner David Stern wants for each of his teams. To be guaranteed at least a $10 million annual profit in whatever new agreement is reached between the owners and the players.

How is this unreasonable? Players want guaranteed monies. Why is it out of the questions that owner should get the same luxury? $10 million? That's all? I can see push back if Stern's stance was every owner wanted to pocket $50 million. Every owner in the league has a single player making more than $10 million; some have players making twice that. Even if the league gets its demanded cuts and restructuring, there would still be 60 or 70 players making more than $10 million each.

Let's face it, beyond the fan hype. Most NBA owners have $300 to $400 million invested in their teams. They shell out more than $100 million annually running their teams. Why is it unreasonable for them to expect a profit?

Teams that turn a profit spend more on support staff. They spend more on coaches and assistant coaches and they make decisions that are best for the basketball part of the business.

Teams that are losing money are finding ways to cut costs. They hire the cheapest coaches and they tend to sell off players rather than amass the best talent.

Equally teams that are turning a profit are not looking to relocate. Tell me the NBA wouldn't be better off if we didn't have to talk about the Kings and Hornets relocating?

Teams that turn a profit are going to be stable.

Not sure where you fall on this but a business that is turning a profit will be there for years to come. A business that is losing money is often days away from bankruptcy.

There is $4 billion in revenue coming into the NBA. There should be a enough for everyone, and to believe owners should lose money is a bit unrealistic.

"Nobody Forces Them To Sign Anyone.": "What they have is predicated on how they manage their teams. Nobody forces them to sign anyone," said Hunter.

The Players have long taken the stance that NBA teams are not forced to give out contracts. Really?

How would Oklahoma City Thunder fans have reacted if the team did not sign Kevin Durant to his new 5 Year, $85 Million contract? If ownership came out and said "due to economic concerns we have to pass on Kevin" would they be able to sell a ticket again in that market?

Let's face it; teams are more times than not forced into the deals they make. Sure the Minnesota Timberwolves didn't have to give Darko Milicic four years and $20 million, but does anyone really believe that $4.3 million to Darko is what's hurting the NBA?

What's killing the NBA is that teams often have no room to negotiate on a large number of players, mainly because it's a buyers' market. If you don't give Eddy Curry $60 million, the Knicks will.

Go back and read the article about Curry signing with the Knicks. It was lauded as a great deal for New York. Six years later, Curry is a joke.

Teams are often having to make commitments and decisions before guys are truly who they are going to be. Teams could try and build in exits, but players control that.

The Miami HEAT had to give LeBron James whatever he wanted in his deal, or he had four other suitors ready to counter.

The HEAT didn't have to give LeBron everything he wanted, but it's naive to believe they had any negotiating power in the situation and that's common for almost every free agent that matters.

Players and their agents set a lot more terms than teams do, so to say "nobody forces them" is a little disingenuous. Teams set terms on fringe guys, but major players build their own deals and set their own price tag.

The Bulls did not feel overly generous towards Luol Deng when they gave him $72 million, they had a choice to either give him those dollars or he'd have left the following year for Utah who was willing to pay him more than that in a sign and trade so the choice is meet the players demand or lose him.

Sure, smart management always helps the bottom line, but teams that pass on players and let key free agents leave because of money get killed for it and struggle to keep season ticket holders when they make money decisions and its naive for the players to ignore the fact that attendance and fan interest is directly tied to how teams manage their draft picks and their free agents.

And for the record, teams are forced to sign players. There is a minimum NBA salary, which is 75% of the salary cap. Teams are required to carry 13 active players, and encouraged to carry a 14th player or face financial penalty.

It is absolutely true, teams do not have to sign players, but look at how owners who do not spend are viewed by the fans and the media. Then flip the situation and look at how owners that spend like crazy are viewed.

Teams that don't spend are a joke, and teams that do are loved… its naive to think owners have a choice. Players set the prices. Players more times than not set the terms and owners have to say yes or no and live with those consequences.

"Every Basketball Player Knows About The NFL": "Every basketball player knows about the NFL and that's always been their biggest dread and concern," Hunter said.

NBA players for the most part have fully guaranteed deals. That's something they fought hard for and plan to continue to fight hard to keep.

But here is the thing. The NFL planned to pay its players $141 million per team this year before their Union walked away from the table. That's 60 plus guys making $141 million. That's not too shabby a cap number, until you look at the Lakers.

The 13 players on the LA Lakers are going to cost more than $113 million in salary and luxury tax.

Sure the NBA players are fearful of non-guaranteed contracts and a structure that allows for teams to cut underperforming or unwanted players.

But let's face it – the NFL is king and king by a long shot. The NFL brings in $9 billion in revenue, which is more than twice the NBA's $4 billion, with unmatched fan interest and TV revenue.

The NBA could be so lucky.

But let's be real for a minute. Who in the room thinks Peyton Manning ever gets cut? Brett Farve played into his 40's and made more than $13 million last season. Tom Brady? Adrian Peterson?

The guys in the NFL that are "victims" of the system are the same guys in the NBA getting non-guaranteed deals and being cut in January before their deals get locked in fringe non star players.

The NFL's system is not perfect, but there are hundreds of NFL players with guaranteed money on their deals, but the one thing the NFL system has done is create parity.

Of the 32 NFL teams, you could argue that 22 of them have an equal chance at winning a title each year if things break their way. In the NFL, teams that over spend rarely win and managing a team well and drafting and spending well matters most.

You can't tell me the NFL model is not better than the "how much can my owner spend" model which is what the NBA game has evolved into.

The truth of this is the NBA players don't like the idea of a NFL–style cap system at the current salary cap number of $58 million. If the NBA said we'll do a hard cap at $80 or $90 million, under an NFL style system, how many in the room think the NBA players would pass on that?

There are aspects of the NFL system that would be good for basketball. There are also aspects of the current NBA model that would be good for football.

The NBA owners are not seeking the NFL's system, in fact NFL players want the system that was in place to remain in place so what does that tell you.

Parity, accountability and flexibility are paramount to competitive sports.

Championships should be decided on how well you build and run your team, not how much your owner can spend. That's good for every sport, and even the NBA Players say it that way.

"I Don't Think He Has The Sway": "I don't think he has the sway that he once did," Hunter said of NBA Commissioner David Stern.

There is truth in that statement.

Go back and look at what the average owner in the NBA had bought into the league at in 1999 when the NBA had its last Lockout. That's number comes in around the $150-$250 million range. Today the average NBA owner has more than $375 million invested, with five NBA owners being at or near $400 million.

David Stern works for the Board of Governors, a committee of the 30 owners or their representative. There are certain powers and authorities granted the Commissioner and his office in running the day to day of the NBA, but when it comes to the Collective Bargaining Agreement, David Stern doesn't have nearly the clout as some people think he does.

He has been tasked with delivering a deal that insure franchise values go up, that players costs come down and if that means a prolonged work stoppage, that's something the owners have decided they will do.

This is not David Stern versus Billy Hunter as it's been in previous deals; it genuinely is the Owners versus the Players.

There has been some chatter in NBA circles that if Stern cannot deliver the deal the owners want he could be replaced.

There are those that say this is Stern's legacy agreement, that this will be his last Collective Bargaining Agreement and on the way out he needs to fix things that have spiraled out of control.

Regardless of your view on this issue, Stern is simply the point man for 30 owners that desperately need the system to change.

The NBA did not buy the New Orleans Hornets out of some loyalty to New Orleans.

The NBA bought the Hornets in order to avoid a NBA team defaulting on financing. Had the Hornets been allowed to fail, that would have sent a cascading ripple through every team carrying debt – which is almost all of them.

The Hornets were a big wake up call for The Owners; the system has to be fixed.

If David Stern cannot deliver the deal, he'll be replaced and as far-fetched as that may seem, there is a group of new-school owners that are carrying more than $2 billion in costs associated with the purchase of NBA teams and they have watched their franchise values drop. These are not David Stern's golf buddies; these are cutthroat business types that will not lose money over Stern.

The voice of dissention among the owners was very small during the last labor fight, now there is a larger voice that wants real change and David Stern is tasked with delivering it.

Billy Hunter may be absolutely right, on this subject David Stern may not have nearly the power people want to believe he has.

"A Small Number Of Teams Are Suffering" : "Our belief," Hunter said to ESPN's Henry Abbott, "is that a small number of teams are suffering, and their problems can be addressed through revenue sharing."

First, it's good to see the Players acknowledge that teams are losing money. Why any team should be losing money with $4 billion on the table is the issue. But saying it aloud – NBA teams are losing money - helps the discussion.

The Players contend that revenue sharing solves the problem, and it very well may. But sharing revenue when some teams do not turn a profit is bad business.

The NBA has said pretty clearly that a revised revenue sharing plan will be rolled out when the new labor deal is reached, because one affects the other. They are not independent of each other.

Also, revenue sharing when one team is paying $100 million in player costs while another is paying $50 million in player costs isn't exactly equitable either.

If as a league, the NBA can get to a point where every team is paying roughly the same number for players, then sharing revenues to insure profitability is smart business.

But asking the Lakers to give up their profits to fund the Magic's losses is a bit unrealistic and that's exactly what the NBA Players continue to suggest.

The NBA wants revenue sharing. This is not in debate. But what the NBA wants is revenue sharing after the playing field with player costs is leveled a bit.

Take a look at baseball, they have aggressive revenue sharing. The New York Yankees can either spend their profits on players or share those profits with the rest of the league.

For revenue sharing to genuinely work for every team, every team has to have profits to share or the ability to create profits to share.

If one team has a bad year, then profit sharing covers them, but when you have as many as 16 team losing money at some level, Revenue sharing alone is not the answer.

However it is an answer the Players put out because it shifts the focus away from their money to someone else's money.

Figuring out a way to share money, when both sides want an ever increasing portion of the pie, is hard. There is no right or wrong on this subject. It's finding a way for both sides to find a deal that works for them.

There is going to be rhetoric on this subject. There is going to be a media play that used to try and sway the public support one way or the other and the interesting part about it, is none of it will create a deal.

Recently a veteran NBA player, who was part of the last work stoppage in the NBA in 1999, said that the last deal was not reached through the media. It was not reached with large groups of owners and players. The last deal was reached when Billy Hunter and three players met with David Stern and three owners and the six people in that room worked out the deal that basically exists today.

Until the labor talks get to that point, the point in which six guys will lock themselves in a room, a deal will never be reached sniping in the press.

And all of the rhetoric to the side, a deal has to be reached. The question is how much damage will be done before both sides realize that whatever is said does not matter, until a deal is reached.

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