Same pattern: Talks fizzle despite progress
2011 Lockout, Collective Bargaining Agreement | Comments

David Stern announced games through Nov. 30 are canceled and that there's no chance of a full season. (AP)

NEW YORK — You’re going to be angry because commissioner David Stern announced on Friday that games would be canceled through Nov. 30 and that “there will not be a full season under any circumstance,” even though the league and players are closer than ever to a deal.

You’re going to be worried, too, because Stern indicated that the league could pull back some of the things it has already offered in order to recoup money it will lose as games vanish. The union, he warned, could do the same.

And you’re going to be frustrated by this pattern:

• On Oct. 4, talks between the players’ association and league broke down in dramatic fashion when the union, perhaps prodded by the star players in attendance that day, refused to discuss an informal offer from owners to split the league’s $4 billion in revenue 50-50 — a reduction from the players’ 57 percent cut under the old deal. The two sides then fought over which one had really offered the 50-50 split, which obscured the progress they had made on the so-called “system issues” — the luxury tax, salary cap and other rules that would determine how much teams could spend on players.

• On Oct. 20, talks broke down again, in even more dramatic fashion, with the union claiming that hard-line owners had “hijacked” their last session with a federal mediator by issuing an ultimatum: agree to split revenue 50-50 or the meeting would end. The first two weeks of the regular season had already been canceled, even though both sides agreed they had made even more progress on the all-important system issues.

• And then Friday, talks broke down again, with union executive director Billy Hunter claiming that Stern had “snookered” the players by indicating a willingness to move after Thursday’s meeting but instead holding fast to the 50-50 demand. Hunter explained that the players would not agree to anything less than 52.5 percent of basketball-related income — the equivalent of about $100 million per year more than they would receive with a 50 percent share. While players remained unwilling to move on the issue, they stand to lose about $350 million in aggregate salary if they really do end up losing a month’s worth of games. And so the two sides parted early, angry yet again, even though both agreed that they made even more progress on the system issues.

That luxury tax roadblock I’ve been writing about all week, where the league proposed ultra-harsh penalties for repeat payers in order to discourage rich teams from blowing by the tax level every year? That’s basically gone. Deputy commissioner Adam Silver said after Friday’s press conference that the two sides have a “tentative agreement” for tax rates across the board. The union agrees privately and publicly with Silver’s characterization.

So, to sum up the NBA’s labor situation to date: Talks keep breaking down, even as the sides keep getting closer on everything but the revenue split. The season is at risk — and a chunk of it almost certainly lost already — because of intractable disagreements over only a few issues:

• The revenue split.

• The league’s proposal to ban taxpaying teams from signing free agents via the mid-level exception.

• The league’s proposal to ban those same taxpaying teams from acquiring players in sign-and-trade transactions — the sorts of have-your-cake-and-eat-it-too deals that sent Chris Bosh and LeBron James to Miami in 2010.

Billy Hunter and the players' union refused to accept anything less than a 52.5 percent share of basketball-related income. (AP)
The other system issues — Bird Rights, Early Bird Rights, the size of the mid-level exception, an amnesty clause, salary-matching rules for trades, bonus pools for guys on their rookie contracts, a more player-friendly restricted free agency system and all the rest — are either solved or close enough to a solution to get a deal done Friday. There are other issues, of course, including the age limit and the length of the bargaining deal, but fights over the big stuff have shoved those issues to the side. And when issues get shoved to the side, the easiest thing to do is just keep them the way they are and deal with them next time.

This is not to say the remaining issues are easy to resolve. The revenue split matters, both in terms of raw dollars and symbolism. The players’ move to drop their share of basketball-related income from 57 percent to 52.5 percent cuts their share lower than it has been at any point over at least two decades and already amounts to a giveback of nearly $200 million every season. What’s another 2.5 percentage points with paychecks flying out the window? Well, it’s $1 billion over a 10-year agreement, and it would represent a painful symbolic loss for a union that fought hard for its 57 percent in the last deal.

The players believe they drive the league’s popularity, and they would prefer the revenue split reflect that. It’s fair to ask if the union is ignoring the wishes of middle- and lower-class players — the fringe guys who might sign up for 50-50 today if it meant earning their full 2011-12 salaries. But the union isn’t necessarily wrong to fight.

And the exceptions for taxpaying teams matter in the sense that without them, it would be difficult for the glamour teams to be players on the free-agent market every summer. They could manage it by loading up on nonguaranteed deals that could be cut anytime, but the union knows how much that would hurt those same middle- and lower-class veterans.

“We cannot take taxpaying teams off the market for free agents,” union president Derek Fisher told reporters Friday.

The league, for its part, says it needs a larger share of revenue so that all 30 teams can turn a profit. It wants to take the mid-level exception from taxpayers in the (totally unproven) name of competitive balance, so that the Lakers and Mavericks and Knicks cannot sign ring-chasing veterans on the cheap — a harder cap, if not a truly hard one.

Yes, these remaining issues matter. But they do not matter enough to jeopardize a full season, to blow $4 billion in revenue, huge ratings, good will around the world and a ton of momentum heading into a new TV deal in 2016 that will (or would) blow away the current one. The two sides are closer than they’ve ever been, and you get the feeling that if the league did just a bit more bending — real bending, not phony bending via “concessions” from an initial offer that was laughably harsh — the union could shake hands and move on.
We’re not there yet, and the danger now is that the gap may widen as the sides dig in to make up for lost money with canceled games. How real is that danger? We’ll find out soon.

http://nba-point-forward.si.com/2011/10/28/same-pattern-talks-fizzle-despite-progress/

The implication that the players have done a lot of bending and that the owners haven't done enough misses the whole point. The owners were losing a ton of money at 57% and will be barely profitable at 50%. So in reality, even a 50-50 split could be a bad deal for the owners unless there is huge growth in revenue in coming years. That may be likely, but it's not guaranteed in this economy.

The NBA is NOT a wealth transfer system where the "super rich" owners are required give welfare checks to the "merely rich" players. It's a business where owners put up hundreds of millions of dollars of capital that could easily be invested in stocks, bonds, or other businesses earning them a lot more money instead. To make it worthwhile to own a basketball team, it has to have as good a chance of earning a profit as those other investments.

This is basic business 101.

Nothing else should even be on the table until the revenue split is at a level that makes it fairly likely that the owners in aggregate will make an adequate profit in the typical economic environment. Under that scenario, well run teams in major markets will do great, well run teams in smaller markets will do OK, and poorly run teams will lose money.

It's the players have to give more.

I know it's hard to root for super rich guys, but this is basic business and economics. The rich make investments, start businesses, and create the jobs and good/services for the rest of us. They do it to make even more money. If they don't make more, they take their ball and go home. The rest of us work hard, save, invest etc.. and slowly move up the ladder until we can become owners and on and on up we go. Just like MJ used to be a player and is now an owner etc...

martin wrote:I don't think i've put it out there on these forums, but everyone that asks me in person when I think the NBA season will be back has gotten a reply of: Xmas.

Baseball over, NFL dwindling down to last weeks, small NBA franchises who need financial help get a small break this season, lose some $ on TV deals for month of Nov and some of Dec but perhaps push some of the regular season games past April (but not full 82), get some concessions from players, change revenue-sharing model for teams, make sure there is enough money set aside for a 10-year outlook for NBA Euro teams... like that. Stern had this one planned out for EOY season start for prob more than a year.

NBA gets a big splash opening over the holidays at stadiums and on TV.

But really the players are at 0.

As are the owners.

Actually the Owners still have over head with nothing coming in.

But The players have no stake. They are fighting for as much salary while owners wrestle with operating costs.

Bottom line is what it is.

They negotiating and making progress.

Both sides making mistakes. Always happens.

NO bad guys, just math.

ItalianStallion wrote:" The two sides are closer than they’ve ever been, and you get the feeling that if the league did just a bit more bending — real bending, not phony bending via “concessions” from an initial offer that was laughably harsh — the union could shake hands and move on."

The implication that the players have done a lot of bending and that the owners haven't done enough misses the whole point. The owners were losing a ton of money at 57% and will be barely profitable at 50%. So in reality, even a 50-50 split could be a bad deal for the owners unless there is huge growth in revenue in coming years. That may be likely, but it's not guaranteed in this economy.

The NBA is NOT a wealth transfer system where the "super rich" owners are required give welfare checks to the "merely rich" players. It's a business where owners put up hundreds of millions of dollars of capital that could easily be invested in stocks, bonds, or other businesses earning them a lot more money instead. To make it worthwhile to own a basketball team, it has to have as good a chance of earning a profit as those other investments.

This is basic business 101.

Nothing else should even be on the table until the revenue split is at a level that makes it fairly likely that the owners in aggregate will make an adequate profit in the typical economic environment. Under that scenario, well run teams in major markets will do great, well run teams in smaller markets will do OK, and poorly run teams will lose money.

It's the players have to give more.

I know it's hard to root for super rich guys, but this is basic business and economics. The rich make investments, start businesses, and create the jobs and good/services for the rest of us. They do it to make even more money. If they don't make more, they take their ball and go home. The rest of us work hard, save, invest etc.. and slowly move up the ladder until we can become owners and on and on up we go. Just like MJ used to be a player and is now an owner etc...

very well put... I think you really don't even have to root for the owners or be pro owner to see their point.. this is about survival of the league and the owners protecting their investments... This is also not a re-negotiation, the owners are not asking for the players to give back... that CBA is done.. this is a negotiation.. the owners are offering the players "X" amount of dollars.. the players are demanding "X" amount... in the end, this is a business, the owners want to maximize their investments, they have every right to do so..