The union accuses David Stern and the NBA of 'refusing to provide relevant financial information.' (AP)

The league and players’ union have not held any official negotiating sessions since the lockout began July 1. But they have spent plenty of time jostling in the press over the NBA’s claims that teams have collectively lost about $300 million per year on average over the last half-decade. This took the fun sport of basketball into the esoteric world of accounting, with the union (and some observers) claiming teams exaggerate operating losses by including interest payments, asset depreciation and other costs linked to the acquisition of an NBA franchises — costs the union insists don’t have much to do with the day-to-day cash operations of a team.

The league countered that franchise sales did not factor into final operating loss numbers, and that all the league’s financial records fell in line with Generally Accepted Accounting Practices (GAAP). Throughout the whole back-and-forth, the league reminded everyone that most private entities do not open their books to the public, but it did so for the union in unprecedented fashion as part of the larger negotiations.

But the players dispute that, according to the charging document in the unfair labor practices case it filed against the league with the National Labor Relations Board. They accuse the NBA of failing to bargain in good faith (something the league has denied), and “failing and refusing to provide relevant financial information … needed by the union to understand, test and analyze the NBA’s bargaining proposals as well as its asserted justification, based on financial weakness, for its grossly regressive contract demands.”

In other words: Stuff is missing, according to the union. But what stuff?

Lawrence Katz, the union’s lead attorney in the NLRB case and a partner at the law firm Steptoe & Johnson, described the allegedly missing material in an interview with SI.com. Katz said the union has asked for three sorts of documents, and that the NBA has either ignored those requests or responded with information the union claims does not fulfill the original requests. The categories, per Katz and another source familiar with the issue:

• Franchise valuation information. The union wants more data on how much teams are worth and how the teams determined those figures. The idea that franchise values generally increase in the long term regardless of short-term financial problems is an important issue for the union, because it could show the sport is healthy. The sale of the Warriors for a record $450 million last season — well above the team’s perceived value — is held up as proof of this, but other recent sales (the Bobcats, Nets and perhaps the Sixers) haven’t yielded those kind of above-value prices.

• Sales prospectuses. These are documents teams on the block prepare for potential buyers, according to Katz. The union would like to get its hands on these.

• Financial information on related-party entities. These are businesses owners control that are either directly or indirectly linked to NBA operations, according to Katz — things like restaurants and parking facilities. What actually constitutes a related business can be a contentious question as you get further away from the on-court product.

In addition, Katz said the union has made about 20 requests for various financial tidbits, and that the league has failed to respond adequately to those requests. He would not get into the details of those requests.

The league, for its part, continues to say it has disclosed more than enough. In a statement provided to SI.com, Tim Frank, a league spokesman, said: “We have provided the union with more financial information in collective bargaining and otherwise than probably any employer has in any industry –including audited financial statements for the teams and the league — and there is no evidence that the union has been impeded in any way in the bargaining by any supposed lack of information.”

The league added this: “We have responded to Mr. Katz’s baseless claims directly with the NLRB.”

The NLRB case is in its early stages and is in front on an official in the NLRB’s Region 2, which is based in New York. The board has interviewed several union officials so far, including executive director Billy Hunter, and it will ultimately receive paperwork from both sides. A high-level NLRB attorney will eventually sift through all the evidence and issue a recommendation about how to move ahead with the union’s case, Katz said. If that person recommends the board issue a complaint — the union’s goal here — the NLRB can essentially take over the case and file a suit against the NBA in federal court. At that point, the board can ask a judge to issue an injunction to halt the lockout.

That is all very far down the road, and the NLRB process will proceed concurrently with the broader negotiations — talks that could render the NLRB case moot if they go well.

http://nba-point-forward.si.com/2011/07/15/union-lawyer-talks-nbas-missing-records/#comment

franco12 wrote:Dolan may lose money on the Knicks, but MSG probably more than makes up for it. Now- what portion of the MSG cash comes directly or indirectly from the Knicks- that could certainly be debated.

But there is no way the owners are losing money- otherwise, why would any of these franchises be sold for the kind of dollars involved.

Exactly! Franchise values haven't dropped much at all. An NBA franchise is a great investment for most owners. How can they expect us to believe they've been losing so much money the last 5 years and yet there are people waiting to buy into the NBA in Vegas and other cities? After the Nets move they may want to add a new to NJ. If a city can't support a team then let them move or sell.

TheGame wrote:We need to start a petition to let the NBA owners now that we are not buying it, and they need to get back to the negotiating table and negotiate in good faith. If I have to go eight months without seeing a Knicks game, I am going to be pissed and will be holding back some of the money I would have spent on the NBA.

some of you guys act as if these owners owe us as fans or the players something.. they don't have to negotiate in "good faith" as you call it if it means backing out every legal deduction they can take.. they can simply say, we are tired of losing money, doesn't matter if it is 300mil, 100 mil or 75 cents... they can say as owners they take a lot of risk and want a better piece of the pie, therefore they would like a 55/45 split.. which I think is more than reasonable... Again, there isn't a league in this world that will pay these guys close to what they will be making even with 45% of the revenue down from their ridiculous 57%..... the focus has been so much on how much the owners are losing, when the focus should be on that they are "losing" money period..