NBA players and owners stand at a difficult crossroads marred by money signs with hints of a 12-year-old ghost they thought they had buried.
Yesterday, June 30, 20011, the NBA’s collective bargaining agreement expired surrounded by preceding events that proved that it was no buried ghost but rather skeletons in the closets of arenas and mansions around the country.
Negotiations have occurred but the only thing the players and owners can agree on at this point is that a lot of money is at stake.
How much? Emperor David Stern has stated that the NBA has lost more that $1 billion since the current CBA was enacted in 2005-06. It lost $380 million in 2009-10 and more than $300 million last season.
That’s a lot of cheeseburgers.
In addition, 22 of the league’s 30 teams lost money last year.
National Basketball Players Association executive director Billy Hunter disputes these claims. The Washington Wizards’ owner Ted Leonsis stated that his team lost money despite landing the first overall pick in John Wall in the 2009-10 draft. The amount is unknown but even he was fined $100,000 for expressing his opinion on the CBA.
Regardless, even the players are stating that the league made more money than ever before last season resulting in higher contracts and the highest cap on salaries ever.
Hunter has stated that the players stand to loose around $2 billion if next season is cancelled. However, the owners don’t seem to want to share it.
There’s a lot at stake:
Right now, the salary cap is well, not really a cap. Think of it as a guide. If it is passed, owners must pay luxury tax to the league. Example: in 2005-06 the tax threshold was $61.7 million. That season, the New York Knicks had a payroll of $124 million, putting them $74.5 million over the soft cap. Knicks’ owner James Dolan had to dish that money out evenly to the other teams in the league that were under that cap.
As you can see, this rule of soft cap allows teams to load up on players they really can’t afford under a hard cap and the teams that don’t spend a lot of money on their rosters make money off of this shared revenue.
Does it now make sense why it’s so hard to land a large contract on the Memphis Grizzlies?
However, in 2005-06, the CBA enacted an amnesty rule, which allows teams to go around this tax if the player is waived. His contract is paid but the owner does not need to distribute any money to the rest of the league if they choose to let go of him.
Here, the players would like to keep the soft cap. Their contracts will stay high and the owners will have to pay the difference towards the luxury tax. The owners on the other hand would like a hard cap that would curb such contracts and make the league a somewhat level playing field.
Additionally, the owners are against the contract exceptions such as the amnesty rule. Other issues on the table are franchise tags like in the NFL and the Bird Rights, which dictate increases and decreases in pay, which can increase or decrease 10.5 percent the first season of a deal or 8 percent for the remainder of the contract.
Basketball related income is another point of disagreement. Right now, players earn 57 percent of that income that is derived from broadcast rights, gate receipts, sponsorships, proceeds from NBA properties, percentage of arena naming rights, suite proceeds, concessions, merchandise sales, etc.
The players want up to 64 percent of the cut while the owners would like to keep it where it is now. Last season, the BRI figure was $3.6 billion with players guaranteed $2.1 billion in salaries and benefits.
Next, we have the issue of revenue sharing. Surprisingly, both sides agree that there should be some form of revenue sharing in the NBA for teams that aren’t as profitable. In 2009-10, nearly $60 million was shared around the league. In this instance, it’s the owners that can’t seem to agree. The figure above is not enough to keep everyone’s head above water and the player’s want it to increase a lot more than some of the more successful teams are willing to share.
Guaranteed contracts are another talking point that has both sides split. Essentially, owners are sick of “bad” contracts that end with them throwing way too much money on underperforming players. It has been reported that these aren’t going anywhere though.
With so many teams losing money, Stern has introduced the idea of eliminating some of the teams in the league. Contraction is a long shot with so many teams either willing to sell or cities willing to put up the money for an NBA franchise.
There are other issues as well such as loosening of the league’s code of conduct and drug testing as well as pensions. Even the D League has come under the spotlight.
A lot of money is at risk as the league sits in limbo.
This lockout has even gone as far as to muddle the situation in Cleveland with their trade exception they landed from Miami last season. They have $14 million that they can use in a trade that would go against matching the trading team on salary. Rules state that they have until July 11 but even that needs to be debated.
So what’s next? Well, we don’t really know. In 1998, after the two sides broke off talks in July, they didn’t meet again until August. That meeting was 45 days later and only lasted 90 minutes.
The 1995 lockout only last 74 days without any changes in the preseason or regular season. Then again, in 1998, the league cancelled preseason games and a huge chunk of the season. Therefore, no one really knows.
No set timetable has been set at all between the two sides. So, as we sit on day one of the NBA lockout, we all have more questions than answers. Only one thing is for sure, they better get talking if we want to see some action on the hardwood this fall.
In 1999, the league was embarrassed. The first game of the season was a charity benefit held in Atlantic City for NBA players struggling financially. All the proceeds eventually went to worthy charities but only after public outrage. The Spurs won a title that even Phil Jackson said should have and asterisk by it and Michael Jordan retired for the last time as a Bull. Hell, even Shawn Kemp fell off the map as he couldn’t lay off the potato chips in the extended offseason.
It’s time for the league to get its head on straight and realize that this lockout could last a lot longer than even they know. Hunter himself explained that the 1999 one took five to six years to overcome. This is a money game we cannot even begin to fathom but I can wrap my mind around one thing: I want to watch some fucking basketball next season.