But, amazingly, the NBA's labor negotiations broke down when no money was at stake. Both sides have made various proposals in which active NBA players will make the same precise amount over the life of the deal, guaranteed not to waver even a single penny.

The league may well come to regret not having taken up the players on their last offer.

With the money essentially agreed to, the entire season is in jeopardy because of a nasty fight over "system issues" the NBA says it wants in order to give 30 teams a shot at the title, but that the finest experts insist would do little if anything to get that done.

The players fought hard on system issues because they have real things at stake -- from the ability as free agents to join a team where they'll be happy to the years of guaranteed income they'll be able to secure.

The owners, though, are tanking the season in the name of a victory that would make owners of also-ran teams feel like they'd have a better chance of winning ... without actually improving their chances of winning.

The essential measure of competitive balance in sports leagues is called "Noll-Scully" named in part after Stanford economist Roger Noll. He is unimpressed by the NBA's proposed system changes that he says would have, he says, "little effect" on parity.

He's in lockstep with every other noted expert who has commented publicly, including David Berri, who has studied the subject intensively across all major sports and found that of all historic attempts at harder caps "none of these institutions had any statistically significant impact on balance in any of these leagues."

British economist David Forrest says "the evidence isn't there."

Even the NBA's own expert on the economics, armed with all kinds of evidence tying payroll and on-court success, admits there is, at best, weak evidence to suggest harder caps have led to greater parity in other leagues.

The NBA itself saw no improvement in competitive balance when it became the first major American sport with a salary cap in 1984.

The NBA owners have put the season at risk, however, pursuing the idea that this time things are different, and that controlling the spending of the Lakers and Knicks is the key to making the Bobcats and Bucks better.

It would be a mighty shame to lose a $5 billion season, and the warm feelings of hundreds of millions of fans, to this weak analysis.

For the players: job quality

If the owners had accepted the players' last proposal, they would have won a 12 percent reduction in current player salaries, as well as a host of wins on systems issues.

The NBA's soft salary cap will be harder, that's for certain. The luxury tax will be steep. The various exceptions that make the cap hard will be smaller and available to fewer teams. It will be harder for every NBA free agent to gain leverage, and many experts suggest the richest teams will spend far less than they used do. Because of the steep luxury tax, one analyst says the league will have a de facto hard cap of $80 million.

Remember that the money issues have been settled -- all players in aggregate will be getting what they get each season, 50 percent of the league's basketball-related income -- if the league will agree to the players' system issues. So those constraints are not designed to save owners money. But players are worried about something very real: that those changes may reduce their job security.

For instance, ask your financial planner if a five-year, $30 million contract is the same as five consecutive one-year, $6 million deals.

That second one is only as good until you get injured, fall out of favor, stop working hard, or lose all your playing time to a new rookie.

Players are worried that the new harder cap will make more players' jobs more insecure. There are also worries that the new deal will hurt the league's middle class, pushing a greater share of earnings to those making a lot and those easily replaced players making very little.

For the owners: the feeling of competitive balance

If the total money paid to players is set in stone, and if owners are creating a new revenue sharing system to get that money where it needs to go to prop up the NBA's weaker businesses, why on earth would the league still be willing to cancel a multibillion dollar season to get a better deal?

The league has said from the start that they want to make it easier for bad teams to become good. They want more close games, and they want seasons to begin with long lists of contenders. They want less predictability, which leads to higher TV ratings, and more money.

(I have long suspected this talk of competitive balance was a ruse, both because there is not evidence anything like it has ever worked, and because the league is ignoring the system tweak that might make a real difference: Letting stars earn so much that no team could afford more than one. Noll calls the maximum contract rule "the biggest factor now causing adverse competitive balance," because it "allows a few teams to stack superstars. This exists solely because of ego issues concerning owners paying so much to a player and the median voter in the union buying the argument that it causes pay to be transferred to them.")

But who can call the owners a ruse now? Even in what Stern calls "the nuclear winter of the NBA," the league has yet to relent on these system issues.

Sources say the Bobcats, for instance, feel they lose so many games because they will never be able to afford the Lakers' payroll. But basketball is not baseball. The Bobcats have not been forced to give up top young talent to basketball's equivalent of the Yankees.

In fact, in the NBA, top players are paid below their market value throughout their careers -- first on strictly regulated below-market rookie deals, and then on below-market maximum deals. There is not a team that can't afford LeBron James. On the contrary, players like James consistently make their owners money -- the Bobcats would be lucky to pay such a player.

The problem the Bobcats -- and most consistently bad teams -- have is that they have made bad decisions, which is especially noticeable in the draft. From 2004 to 2008, Charlotte had a top 10 pick -- the holy grail of NBA assets -- every single year. They picked second, fifth, third, eighth and ninth. Picks like those are the way teams get superstars. They are the way small-market teams like the Thunder (thanks to Kevin Durant) and Spurs (Tim Duncan) have been able to compete with small payrolls.

And out of all that, the Bobcats got Emeka Okafor, Raymond Felton, Adam Morrison, Brandan Wright and D.J. Augustin. Only one of those players even plays for the Bobcats anymore, and none are centerpieces of any franchise. For the same money they paid their picks, the Bobcats could have employed Rajon Rondo, Joakim Noah and Nicolas Batum. Instead, the Bobcats' own decisions left better players to other teams. (Drafting far lower over the same period, the Lakers came up with a comparable haul of Andrew Bynum, Jordan Farmar and Sasha Vujacic, and many teams outdrafted the Lakers through the years.)

Maybe Rich Cho, the Bobcats' new GM, can fix that. But it's far-fetched to think a new collective bargaining agreement can. And so long as that is not fixed, the Bobcats will struggle to compete. The draft matters far more than payroll in determining who wins -- about five times as much, according to a tidy analysis by Tom Haberstroh.

There may be a certain tolerance out there for an NBA season lost to fixing a broken financial model. Everybody at least understands the idea that the league needs to be on solid financial footing. But with the money issues solved, it's unfathomable that we might lose a season chasing the unicorn of competitive balance.
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Abbott makes some good points. It seems incredible that the NBA is willing to lose the season over these "system issues." THe Bobcats are terrible because they drafted terrible, not because New York, Dallas, and LA stay over the salary cap.

The owners ideas haven't worked and aren't likely to work in creating competitive balance
The big reason is that the draft is the single biggest influence on a teams success and profitability
The players have not been unreasonable and as usual since 1984 the players have conceded to these owner rules and it has yet to have made the impact the owners intended

The owners screwed the season for no good reason. After the players came down to 50% the owners should've given a little on the system issues so we could have a season.

Good teams don't need those late 1st rd picks anyway.

ItalianStallion wrote:I think this guy is missing the point and all the evidence.

Does anyone on earth actually think "better market and the ability to go way above the cap and remain proifitable" didn't have something to do with James, Bosh, Amare, Melo, Boozer and eventually CP3 and Howard either leaving or considering leaving?

Does anyone on earth actually think that Charlotte and about 10 other teams could afford to pay 2-3 of these players and still be profitable?

Does anyone on earth think that the Thunder is going to be able to afford to keep Durant, eventually give a max contract to Westbrook, and huge raises to Ibaka, Harden and their other young stars and still make money?

Does anyone on earth think that Charlotte allowed Felton to walk and totally gave away Gerald Wallace for expiring contracts because they thought they were smart basketball moves. Of course not. They did it because they had to because they were getting buried in losses.

Everyone knows that drafting and management decisions are hugely important. They also know that the league will never reach balance. But the system rules will make the IMBALANCE less extreme by mitigating the advantages the big markets have because they are more desirable to players and can afford to pay a lot more and remain profitable.

Dude WHAT THE HECK? I just posted the example of the Spurs!!! The Thunder are a profitable team and thus more likely that they can keep their players! The Bulls also have a reasonable cap number! Teams are starting to follow the Spurs model.

If not, we won't be seeing NBA hoops for a looooong time.

The idiots.

November 17, 2011
The End Game Lands the N.B.A. in Court
By HOWARD BECK
David Stern tried optimism, transitioned to gloom and dabbled in threats before turning alarmist.

He promised “enormous consequences” in September and predicted an “extraordinary hit” in October, yet the negotiations kept faltering and games kept disappearing without a new N.B.A. labor deal. Last week, Stern, the N.B.A. commissioner, turned acerbic. And on Monday, apocalyptic.

As he surveyed the crisis before him — the canceled games, the failed talks, a looming federal lawsuit — Stern forecast a “nuclear winter.”

The players had just disbanded their union and announced plans for an antitrust lawsuit, which they filed the next day. With no union with which to bargain, and no hope for a quick resolution, Stern grimly suggested that the season might be lost.

“It’s really a tragedy,” he said Monday on ESPN.

It sounded like the end times. But this may simply be, at long last, the end game.

After months of dithering and prodding, bluffs, ultimatums and flimsy deadlines, the stakes are now abundantly clear, for players and owners alike.

They either reach a deal in the next six weeks, or forfeit the 2011-12 season, at a cost of about $2 billion to each side.

That threat has always existed, but it was mostly wielded by the owners, who were better positioned to withstand the loss. Some even viewed it as advantageous: After a canceled season, the league could practically impose any labor agreement it wanted.

But the scales may have tipped in the players’ favor with the filing of their antitrust complaint. The lawsuit is a long shot, and it could take months or years to resolve. Yet it is precisely that uncertainty that should prod the sides toward a settlement.

If the owners lose the case, they will face treble damages — perhaps $6 billion, based on a tripling of the players’ earnings for one season. Legal experts disagree on whether the players can win on the merits, but they generally agree that the risk to the owners is not worth taking.

“At some point, the sides are going to have to agree to sit down and talk while the threat of litigation is out there,” said Gabe Feldman, the director of the sports law program at Tulane University. “Because if they wait for the litigation to play itself out, this season — and seasons beyond it — may be gone.”

Underscoring the point: The case management conference for the lawsuit has been set for March 9 in San Francisco. If the 1998-99 lockout is a guide, the N.B.A. needs to be playing games by early February — with a deal struck in early January — to stage even a 50-game season.

“I don’t think anyone thinks that the intent of the lawsuit is to cancel this season and potentially future seasons,” Feldman said. “It’s to gain leverage in negotiations. That’s clear.”

Even the league’s poorest teams now have a seemingly easy decision to make. The Charlotte Bobcats lost an estimated $20 million last season, turning their owner, Michael Jordan, into a negotiating hawk. Yet that sum seems insignificant next to the threat of a multibillion-dollar judgment.

The risk-reward scale tips even further when one considers the concessions the players have already made. Before talks broke down, the players conditionally agreed to a $300 million annual reduction in salaries — enough to wipe out the N.B.A.’s reported losses — along with new restrictions on contract lengths, raises and team payrolls. The players’ move to accept a 50-50 split of revenues would mean a net gain of at least $3 billion for the owners over a 10-year deal.

Yet an array of relatively minor “system” issues derailed the agreement, and pushed the N.B.A. closer to a nuclear winter. The average fan would be mystified that any of these items could cost the N.B.A. the season.

For example, the owners want a higher escrow tax — a withholding on player salaries. Players disdain the tax. But it is merely a mechanism to ensure the 50-50 split — which the players have already (conditionally) agreed to.

The league wants to ban luxury tax-paying teams from using the full midlevel exception or from acquiring players through sign-and-trade deals. Yet by the league’s accounting, these methods have been seldom-used by taxpaying teams in the last six years. So why is either side still clinging to its position?

The owners and players are arguing over arcane rules that separate taxpayers from tax beneficiaries, rules that ultimately dictate their options in free agency. On every item, the question could be asked, to either side: Is this really worth it?

But the owners are convinced — as league officials have said many times — that they need both a new economic model and new restraints on the richest teams, to foster competitive balance. They have shown no willingness to take one without the other.

The players, having made every significant concession over the last four months, finally decided they had compromised enough. So when Stern served his final ultimatum — to take the deal on the table or have it replaced with a worse offer — they hit the panic button.

So all eyes now are on the district courts in Minnesota and Northern California, where two separate player lawsuits could determine the N.B.A.’s future.

“I don’t think the strategy, at the end of the day, is going to win,” Samuel Estreicher, a professor of labor law at New York University, said of the antitrust suits.

But it is the threat and the uncertainty that now drive the process.

“Who knows?” Estreicher said upon further reflection. “They may get a district judge to buy it.”