The following originally appeared at The Huffington Post. The idea of a players league has been discussed at the Wages of Wins network recently. This post – which introduces the Basketball Players Association League (or BPAL – credit Devin Dignam for the name) – offers some details on why this league is necessary and how it might work.

The 30 owners of the National Basketball Association have told the players to take a substantial pay cut. And if the players don’t agree, these players are not going to be playing in the NBA for a long time. Which means fans of the NBA are not going to see basketball played at the highest level for a long time.

Such extortion is not uncommon for NBA owners. Just ask the people of Sacramento. Earlier in the year it looked like the Kings were on their way to Anaheim. This move was motivated by the apparent unwillingness of the people of Sacramento to build a new arena for the Kings. When Kevin Johnson — former NBA player and current mayor of Sacramento — indicated he would find a way to publicly finance the Kings’ place of business, the owners of the Kings indicated they would postpone the move to Anaheim.

Unfortunately for cities that host an NBA team, this behavior is often the norm. Robert Baade and Victor Matheson have noted that since 2000, eight NBA teams have begun playing in new (or renovated) stadiums. As the following table indicates, the cost of these stadiums has exceeded $2 billion. Of this cost, $1.75 billion – or 84.1 percent — came from public funds.

Such public investment in private companies is hardly common in capitalism. Capitalism normally functions as follows:

•Owners provide capital (i.e. buildings, machinery, etc…).
•Workers provide labor.
•Capital and labor are combined to produce output. The revenue generated by this output is used to compensate owners for their contribution of capital and workers for their labor.
In North American sports, though, taxpayer funds are often providing a significant portion of the capital. But the returns to capital are given to the 30 men who own the NBA teams (again, who often are not providing a significant portion of the capital). And now, these 30 owners want to reduce the returns to labor.

In response, players like Deron Williams have indicated that they plan on taking their talents to Europe. There is another simple solution, though, that would actually allow people of North America to continue watching professional basketball at its highest level.

Once again, two groups are being extorted by the 30 NBA owners: cities and players. A simple solution is for these two groups to come together and form a new basketball league, which I am gong to refer to as the Basketball Players Association League (or BPAL). In the BPAL, the cities would act as owners. Already — as noted — the cities are providing much of the capital. In the BPAL that practice would continue. But instead of just giving the capital to the 30 men who happen to own the teams, the cities would keep the capital and earn the economic returns this capital generates. Meanwhile, the players would continue to provide the labor (and earn the returns generated by their labor).

If we look at population data from the Census Bureau, we already see a number of cities that could host a professional basketball team. For example, Salt Lake City — with a metropolitan population of 1.1 million — currently hosts the Jazz. The following metropolitan areas are a) at least as large as Salt Lake City, b) do not have an NBA team, and c) have hosted a team in professional baseball, professional football, and/or professional hockey: Seattle (3.4 million people), San Diego (3.1 million), St. Louis (2.8 million), Tampa Bay (2.7 million), Baltimore (2.7 million), Pittsburgh (2.4 million), Cincinnati (2.2 million), Kansas City (2.1 million), San Jose (1.8 million), Columbus (1.8 million), Nashville (1.6 million), Jacksonville (1.3 million), and Buffalo (1.1 million). In addition, Canadian cities like Montreal (3.6 million), Vancouver (2.1 million), and Calgary (1.1 million) could also be asked to join. And this list leaves out such places as Las Vegas or even Mexico City.

Of course, these are just the 18 places that don’t have a current NBA team. Once this league is established, one suspects many current NBA cities might decide to end their often one-sided relationship with the NBA.

In sum, there are many places the BPAL could operate. But would this new league be profitable? The NBA currently claims that owning a basketball team is bad business. Although such claims are widely reported in the media, examinations from Arturo Galletti (of the Wages of Wins Journal — see Here and Here) and Nate Silver (of the New York Times) casts serious doubt on the NBA’s claims. Furthermore, Joe Lacob — the newest owner of the Golden State Warriors — had this to say about the ability to make money on an NBA franchise:

This is an incredible business opportunity. Turning this into a winner No. 1 and running this business better in certain ways… Look, sports franchises appreciate 10% a year on average over three decades, the last three decades. There’s no reason to think this won’t appreciate in value. So that is the least of my worries. We will make money on this team in appreciation of value.

In reading this quote, remember Lacob is talking about the Warriors, a team that has missed the playoffs in 16 of the last 17 seasons (in a league where over half the teams get in every year). Given Lacob’s quote — and the analysis of Galletti and Silver — one suspects that the NBA is simply crying poverty in an effort to extract more money from their players.

With the BPAL, though, this behavior can end. The cities and players can come together and form a partnership that ends the practice of 30 men simultaneously extracting money from both workers and taxpayers. And fans can once again go back to watching athletes playing basketball (as opposed to watching basketball players in suits).

Let me close by noting that if the players get serious about this new league, this current lockout will end very quickly. The NBA owners appear to think that players are going to be forced give in. After all, there is only one NBA. But the scarce resource in this conflict is not the 30 owners. It really is the players.

Lacob reportedly paid $450 million for the Warriors. That franchise price only makes sense if LeBron James, Dwight Howard, Kobe Bryant, etc… come play his Warriors. If these players are all in a new league, Lacob will stand to lose much of his investment in the Warriors. And the same story will be repeated for the other 29 owners. Faced with potential loss of the one thing fans are willing to pay to see (i.e. elite basketball talent), one suspects the stand the owners are currently taking will crumble.

And when that happens… well, I still think the players and cities should form their own league. Either way, though, fans will once again get to see basketball played at the highest level in the world.

- DJ
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This has been my thinking from the beginning. The players really made the owners a fair offer. The owners are trying to squeeze the players now to ensure they make millions in profits when the new TV deal gets signed in 2016 (it was a bad TV deal for the league but the new one should add about $400-$500 million to the league revenue). If I were the players, I would make one final offer of rolling back salaries by 10%, shortening contracts a little, and demanding more revenue-sharing. If the owners still balk, then I would start working on creating a new league to open for the 2012-2013 season. I don't know if I agree with the whole city-ownership model, but it does seem to work in Green Bay. But all they really need are new owners willing to agree to a fairer deal. The players will likely lose money over the next 2-3 years, but after that, they probably will be making close to the same money as they are now and if they can get a direct piece of the new TV deal, the players will make even more money. Tell Stern to go screw himself and form another league is what the players need to be buying into.

Trust me, once those owners who just coughed up hundreds of millions to buy teams see their investment disappear, they will come back to the negotiating table with a better attitude.

Millionaires fighting with billionaires.

Phuck em; I'm going out to the courts and play pick up. Let them go watch themselves.

Nalod wrote:Many of those very players will be gone in 2-3 years and can't make that money back up.

Start a league in cities that have failed before?

Municipalities in this recession going to use capital to run entertainment franchises? Think about political backlash!

TV contracts?

I can see Entertainment companies like NBC-Universal or cable comanies doing it to create content.

With all the upfront costs associated when will the players actually see profits?

Good article but really not very plausable in my book.

Why can't those very Euro teams play some games here in the NBA arenas?

I agree that it probably could not be run by cities. THe players will have to find investors willing to layout the capital for each team. BUt there are plenty of empty areas around the country. Without expenses like the WNBA and other such things, the new league could turn into a leaner NBA.

It will probably never happen, but the players need to let the owners know that the players ARE the NBA. If the owners don't want to make a fair deal, the players will go do something else.

I also like the idea of Euro teams playing in America. In fact, that may be the most plausible option. Expand the Euro teams into American markets. It is basically what the NBA has been slowly trying to do, only in reverse.

tkf wrote:

Nalod wrote:Many of those very players will be gone in 2-3 years and can't make that money back up.

Start a league in cities that have failed before?

Municipalities in this recession going to use capital to run entertainment franchises? Think about political backlash!

TV contracts?

I can see Entertainment companies like NBC-Universal or cable comanies doing it to create content.

With all the upfront costs associated when will the players actually see profits?

Good article but really not very plausable in my book.

Why can't those very Euro teams play some games here in the NBA arenas?

i AGREE, and who would actually run the team and call the shots? thats right, we would have to elect GM's and Presidents to run the team.. stinky politics to the max... the only one that will benefit are the politicians.. do you think these guys will run the team to benefit the league, or themselves...

when it comes down to it.. the owners are a special group of guys. There are just not many people in this world with 400+ mil to throw into a franchise and then be told to expect losses because A) they are rich and B) the owners have been losing money, so just continue doing so.

THey have not been losing money, or at least, the ones with half a brain have not be losing money. Most of their losses are paper losses, not real losses, and the owners are going to reap a windfall once the current TV deal runs out. THe new TV deal is going to add $400-$500 million in revenue. There is no reason that, if player salaries are rolled back 10% and the owners did more revenue-sharing, each NBA team would not be profitable regardless of market, and that is before considering the new TV deal. THe owners are trying to us the recession as an excuse to get a sweetheart deal out of the players.

tkf wrote:

TheGame wrote:

tkf wrote:

Nalod wrote:Many of those very players will be gone in 2-3 years and can't make that money back up.

Start a league in cities that have failed before?

Municipalities in this recession going to use capital to run entertainment franchises? Think about political backlash!

TV contracts?

I can see Entertainment companies like NBC-Universal or cable comanies doing it to create content.

With all the upfront costs associated when will the players actually see profits?

Good article but really not very plausable in my book.

Why can't those very Euro teams play some games here in the NBA arenas?

i AGREE, and who would actually run the team and call the shots? thats right, we would have to elect GM's and Presidents to run the team.. stinky politics to the max... the only one that will benefit are the politicians.. do you think these guys will run the team to benefit the league, or themselves...

when it comes down to it.. the owners are a special group of guys. There are just not many people in this world with 400+ mil to throw into a franchise and then be told to expect losses because A) they are rich and B) the owners have been losing money, so just continue doing so.

THey have not been losing money, or at least, the ones with half a brain have not be losing money. Most of their losses are paper losses, not real losses, and the owners are going to reap a windfall once the current TV deal runs out. THe new TV deal is going to add $400-$500 million in revenue. There is no reason that, if player salaries are rolled back 10% and the owners did more revenue-sharing, each NBA team would not be profitable regardless of market, and that is before considering the new TV deal. THe owners are trying to us the recession as an excuse to get a sweetheart deal out of the players.

the players have pretty much backed off their stance that the owners are not losing money. do you have any information that they don't have? paper losses? not all of those losses are paper losses, and having a brain or half a brain has little to do with making a profit in the nba under the old CBA...

I am with Nalod and tkf. The author of this article is not in touch with reality and a player owned league would fail for any of ten-fifteen reasons that are easy to come up with if anyone invests the time.
I see the current CBA as being heavily tilted towardsthe players and guaranteed contracts are ridiculous dysfunctional thngs that should be abolished. The sooner the players wake up and realize they can't continue like this for very long the better it is for the league. Can some of them find jobs in europe? Sure..but the majority won't get a lot of money out there and since the players are unionized its the majority tat will vote to take cuts etc.

knickstorrents wrote:The players agreed that the owners are losing money, but to quote Derek Fisher "It's not because of the system". The subtext to that is - it's because the owners make dumb decisions, that teams lose money. And much of the losses are paper losses, where accounting tricks are used to lower the income that's shown (depreciation, interest expenses, etc).

I don't agree with that in most cases.. when salaries take up a majority of your revenue the owners have very little room for error.... and the NBA is not an error free business, especially when you are hampered with these guaranteed deals... these owners are not taking 40 mil profits and making them 40 mil losses.. these "paper" deductions are legal and the real culprit are miniscule gains before any depreciation or other "paper" transactions.. these owners have the right to make nice sizeable gains...

The owners are too greedy for there own good and I don't think this tactics are going to work in this age of information.

I personally think all the players need to do is point out that on the brink of true collapse, the NHL worked out a CBa were the players collect 54% of the revenues. Come on NBA, some of you owners own Hockey teams and the league is now stable with players making 54% but the NBA is losing money because the players make 57%??? I don't buy it.

tkf wrote:

loweyecue wrote:

tkf wrote:

TheGame wrote:

tkf wrote:

Nalod wrote:Many of those very players will be gone in 2-3 years and can't make that money back up.

Start a league in cities that have failed before?

Municipalities in this recession going to use capital to run entertainment franchises? Think about political backlash!

TV contracts?

I can see Entertainment companies like NBC-Universal or cable comanies doing it to create content.

With all the upfront costs associated when will the players actually see profits?

Good article but really not very plausable in my book.

Why can't those very Euro teams play some games here in the NBA arenas?

i AGREE, and who would actually run the team and call the shots? thats right, we would have to elect GM's and Presidents to run the team.. stinky politics to the max... the only one that will benefit are the politicians.. do you think these guys will run the team to benefit the league, or themselves...

when it comes down to it.. the owners are a special group of guys. There are just not many people in this world with 400+ mil to throw into a franchise and then be told to expect losses because A) they are rich and B) the owners have been losing money, so just continue doing so.

THey have not been losing money, or at least, the ones with half a brain have not be losing money. Most of their losses are paper losses, not real losses, and the owners are going to reap a windfall once the current TV deal runs out. THe new TV deal is going to add $400-$500 million in revenue. There is no reason that, if player salaries are rolled back 10% and the owners did more revenue-sharing, each NBA team would not be profitable regardless of market, and that is before considering the new TV deal. THe owners are trying to us the recession as an excuse to get a sweetheart deal out of the players.

the players have pretty much backed off their stance that the owners are not losing money. do you have any information that they don't have? paper losses? not all of those losses are paper losses, and having a brain or half a brain has little to do with making a profit in the nba under the old CBA...

I am with Nalod and tkf. The author of this article is not in touch with reality and a player owned league would fail for any of ten-fifteen reasons that are easy to come up with if anyone invests the time.
I see the current CBA as being heavily tilted towardsthe players and guaranteed contracts are ridiculous dysfunctional thngs that should be abolished. The sooner the players wake up and realize they can't continue like this for very long the better it is for the league. Can some of them find jobs in europe? Sure..but the majority won't get a lot of money out there and since the players are unionized its the majority tat will vote to take cuts etc.

yea, good post. I agree, the current CBA is heavily tilted towards the players.. I keep hearing about owners not running their business right, but in the world outside the NBA, if they have a non performing asset, they can move it and cut their losses.. but in the NBA, they could give a guy a 80 mil deal, the player gets hurt and the owner is on the hook for 80 mil.. even if the guy plays just 5 games a season.. yea, Iknow insurance kicks in, but have any of you ever seen the premiums of these policies? they are ridiculous from what I am told...

These players have only 7-10 years in most cases to make enough money to carry them for their entire life. There is nothing wrong with guaranteed deals. I think the players are willing to look at shortening guaranteed contracts by another year and the MLE should be shortened to 3 years instead of 5 years, but guaranteed contracts give players some security that they need and deserve and it is not always a bad thing for teams as it helps keep superstars on the team. Do you really want to go to an NFL type system where the owners back out of contracts they sign and players hold out. There are no holdouts in the NBA exactly because of guaranteed deals. If the owners have no obligation to honor contracts, then the players will feel they have no obligation to honor them either.

How many big salary players are we actually talking about with Max type money? 30-45? These are the names we think of but the majority of players are not the big money but the mid level area.

It think its fair to say some of those take guarantees when they actually could be gaining value, while some big money players do fall.

I like the idea for guys to develop and stick, and for "stars" to get paid, but perhaps with less years guaranteed. Play up to standards like they are getting paid then its all good, if not, you get released. NFL a player gets 2/3rds of their contract guaranteed.

Guys like Reezy, David Lee, and many others really do belong and should get paid.

The guys players 7-10 years are special, its the guys that only play a year or two that sometimes don't get opportunity I'd be more concerned.

TheGame wrote:

tkf wrote:

TheGame wrote:

tkf wrote:

Nalod wrote:Many of those very players will be gone in 2-3 years and can't make that money back up.

Start a league in cities that have failed before?

Municipalities in this recession going to use capital to run entertainment franchises? Think about political backlash!

TV contracts?

I can see Entertainment companies like NBC-Universal or cable comanies doing it to create content.

With all the upfront costs associated when will the players actually see profits?

Good article but really not very plausable in my book.

Why can't those very Euro teams play some games here in the NBA arenas?

i AGREE, and who would actually run the team and call the shots? thats right, we would have to elect GM's and Presidents to run the team.. stinky politics to the max... the only one that will benefit are the politicians.. do you think these guys will run the team to benefit the league, or themselves...

when it comes down to it.. the owners are a special group of guys. There are just not many people in this world with 400+ mil to throw into a franchise and then be told to expect losses because A) they are rich and B) the owners have been losing money, so just continue doing so.

THey have not been losing money, or at least, the ones with half a brain have not be losing money. Most of their losses are paper losses, not real losses, and the owners are going to reap a windfall once the current TV deal runs out. THe new TV deal is going to add $400-$500 million in revenue. There is no reason that, if player salaries are rolled back 10% and the owners did more revenue-sharing, each NBA team would not be profitable regardless of market, and that is before considering the new TV deal. THe owners are trying to us the recession as an excuse to get a sweetheart deal out of the players.

the players have pretty much backed off their stance that the owners are not losing money. do you have any information that they don't have? paper losses? not all of those losses are paper losses, and having a brain or half a brain has little to do with making a profit in the nba under the old CBA...

The owners claimed they lost $300 million. That is without any TV revunue sharing among the teams. If you reduce player salaries by 10% across the board that is about $174 million saved right there. You shorten contracts by a year, make some changes to MLE, and add in revenue sharing, that $300 million loss disappears. In 2016, the new TV deal goes into effect that will net the league an extra $300-$400 million. Given that the $300 million occurred during one of the worst economic recessions in the last 30 years, there is no reason to believe all NBA teams cannot maintain profitability in the future. The owners are just trying to use the economic downturn as a means to work a sweetheart deal for themselves to guarantee hugh profits once the economy gets humming again.

wow, the nerve of business owners who dump hundreds of million of dollars into their business wanting to get a nice financial windfall... who do these greedy bums think they are.. give the players 60% and take your losses you rich fools....

come on man... if I am an owner, I want to make money!!!! players are getting paid more on average than any other sport. guranteed money. How are the owners being unreasonable here?