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Those terrible NBA contracts are not why there is a lockout

Jul 26, 2011, 7:40 PM EDT

ecurry_beard

Eddy Curry made $11.2 million last season to do nothing. Gilbert Arenas made $17 million and as three more years on his deal left. Joe Johnson just got more money than LeBron James. And the list goes on and on — did Luke Walton earn $6 million last season?

It is easy to talk about economic dysfunction in the NBA and point to the horrific contracts that seem to be on every team’s roster and say “if the team had just not given out that contract we’d be fine and there wouldn’t need to be a lockout.”

Wrong.

Tim Donahue has been doing a great series of stories on the lockout details over at the Pacers blog Eight Points Nine Seconds. In the latest installment looks at the good and bad contracts around the league in fantastic detail — then reminds everyone that those contracts, while bad for the individual teams, do not change the overall picture.

The players get 57 percent of the basketball related income that comes in to the league. No matter what the owners do.

In 2010-2011, negotiated salaries totaled about $2.02 billion. If my lists above are reasonable, about 37% of that sum was tied up in bad or under-performing contracts. If you assume that only half of that 37% can be considered “wasted” money (because those players of course did offer some production), it means the owners threw away about $375 million in salaries.

Yet, they still had to write a check for $26 million to reach their 57% promise to the players. What this means is that if the owners had made none of their myriad mistakes, they would have realized a savings of … wait for it …

Zero dollars. Yep.

Had the owners been as smart and efficient as they possibly could have been when signing players it would not have provided any savings whatsoever. It merely would have resulted in a larger check being written to the players — even after the escrow payout — to fulfill the 57% of BRI that players are guaranteed under the system currently in place.

I don’t agree with everything Donahue says — he suggests this negates the idea the owners want to protect themselves from themselves with this new CBA. Actually, they do want that, but it is separate from the BRI argument. They want shorter contracts and non-guaranteed deals (or at least ones with buyouts on the back end of deals) so they can get out of terrible contracts they agree to. They want a “get out of jail free” card on those bad deals we all know about.

Also, the cost of players did not force owners to increase spending on non-player expenses at a rate that was faster than revenue growth.

Still, being smarter about contracts would not change the bottom line for a lot of teams. Whether they pay it out in bad contracts or a supplemental check at the end of the season, they’d be paying out 57 percent of the gross to the players either way. Which is why we keep saying to watch the BRI split numbers as the negotiations move forward. Everything else — hard cap, contract length, guaranteed deals — are a slave to the BRI (and how the BRI is defined, the players want to keep it gross revenue, the owners want some expenses removed from it). When that is solved, everything else falls into place fairly quickly.

They are a long way from agreeing on any of that. But at least they are going to talk in the next few weeks.

  1. er0ck5 - Jul 27, 2011 at 12:11 AM

    57% of all revenue is, or was, quite the favorable deal for players. Wish the NBA and NFL didn’t have to haggle over that and split the revenue 50/50.

  2. diablito0402 - Jul 27, 2011 at 12:38 AM

    I dont know which contract is worse, eddie curry or gilbert arenas, wow.

  3. lee3022 - Jul 27, 2011 at 1:05 AM

    This point has been ignored by many writers. Since audited financial statements verify the more than $1.8B in losses this past contract (6 years) there is little question that 43% of the revenue to cover all other costs is a killer. No industry survives by paying such a percentage. The NFL has just gone from an effective 53% to 47% for their new CBA players’ money. The NBA needs to drop below 50% as well. The other point is equally obvious – revenue sharing has nothing to do with the BRI discussion. One affects the individual clubs withing the league profit/loss, the other affects the total profit/loss of the league.

    Players can stall this out, act like nothing is wrong, but they will not get more by waiting, more likely less since by then the owners will have broken the union’s back (12 months from now.) Determined owners will change this dynamic whether we like it or not. And you cannot blame them. Return on investment requires at least the opportunity for profit for every team (yes, that may require revenue sharing.)

  4. kcroyal - Jul 27, 2011 at 2:01 AM

    “Gilbert Arenas made $17 million and as three more years on his deal left.”

    A professional blogger bitching about professional players getting paid and sucking, all the while getting paid and sucking at his job.

    • henryd3rd - Jul 27, 2011 at 9:17 AM

      kcroyal complains about the players and a blogger bitching and getting paid while he up at 2:00 AM sending out moronic comments. By the way why would anyone with any pride want to be associated with a sorry organization like the Kansas City Royals? Get a life!

  5. cdog0o7 - Jul 27, 2011 at 4:02 AM

    “Zero Dollars. Yep.
    Had the owners been as smart and efficient as they possibly could have been when signing players it would not have provided any savings whatsoever. It merely would have resulted in a larger check being written to the players — even after the escrow payout — to fulfill the 57% of BRI that players are guaranteed under the system currently in place.”

    I understand the argument but its missing one crucial piece. With every wasted contract, contributing against a salary cap team, those teams are by definition a worse product than they would be if they had efficient contracts.

    The question becomes, would basketball be more popular, and thus contribute to a growth in overall net revenue, if ALL of the teams were better because they stopped wasting capped money on players like Eddy Curry, and Gilbert Arenas, and Luke Walton.

    What the owners spends on a given player does matter over the long term to a given franchise, and other franchises, regardless of the 57% the players get, because with every bad contract the quality of the product decreases.

    Do you mean to tell me that if the Knicks, over the last 10 years and through the Isiah debacle, were able to wipe out the bad contracts and pay guys proportionately to their ability level so that they could build a contender, would not help the league in terms of revenue?

    How about the teams that are losing a ton of money because of a lack of fan interest? If the Bobcats were a legitimate contender (like any NFL team can pretty much be any year), would not their ticket sales be higher and their tv ratings larger? How about the Kings, who raked it in in the early 2000s, but now are terrible because they signed guys like John Salmons to albatross contracts in the post Webber-Divac-Bibby era?

    It is counterintuitive to think that the 57% is the issue. The players are the product on the court. Watching less players like Luke Walton or Eddy Curry sit on the bench and provide no hope for even growth as a player would make fans more interested because potential sells.

    Also, and this is just a side point, but if the albatross contracts were gone – like the Jermaine Oneals (due to injury), or Gilbert Arenas’s, or Michael Redds – and the owners paid these essentially less than average players (due to either the amount of time they have actually played because of injury or because of declining skills) what their true value to the team was, wouldn’t that open the opportunity for better players to be developed and put on the NBA court. Assuming the number of roster spots on a team stays roughly the same – (13-15), more marginal investments in marginal players might not turn out to much, but have the potential of producing much more per dollar than Gilbert ever will be able to with his contract.

  6. jmunro43 - Jul 27, 2011 at 12:23 PM

    The NFL lockout ended with the owners looking like the villains, but I don’t know if the NBA one will end the same way. I saw a good interview with Dave Zirin (here: http://www.democracynow.org/2011/7/27/dave_zirin_on_nfl_players_remarkable) linking this with union politics, he said it was on one of the biggest union victories of any sort in years, not just in sports. It was really interesting, check it out.

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