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Blame falls on Stern, owners for loss of NBA games

Oct 4, 2011, 8:05 PM EDT

NBA And Player's Association Meet To Negotiate CBA Getty Images

The NBA is about to shoot itself in the leg. After a season where the league generated more revenue than ever before, when television ratings were the highest they had bee since the Jordan-era Bulls, the league next Monday will cancel regular season games.

Because they can’t figure out how to divide up the fans’ money. In the middle of a deep recession. It’s idiotic.

There is plenty of blame to go around, but know this — most of it belongs on the NBA owners and Commissioner David Stern. They are pulling the trigger, they will seriously damage the league for years.

Usually fans blame players when professional sports leagues go on strike or are locked out. The players are faces and names we recognize, and we know exactly how much they make — and we don’t relate to those sums. Even the NBA league minimum salary puts a player into the nation’s highest tax bracket.

But we don’t really know who the owners are (outside of Mark Cuban). And we don’t know how much money they make off their teams (which is hard to determine as teams are in tangled financial webs). They are faceless unknowns, big impersonal corporations (except when Dan Gilbert writes letters). We blame the players because we know and understand them in a way we don’t the owners.

However, the NBA players are the ones making the real concessions in these negotiations, not the owners. The players have tried to negotiate in good faith, the league has tried to bury them.

The real labor issue is the definition and split of “basketball related income” or BRI. It’s always about the money. BRI is basically all the money that comes into teams from national television deals, ticket sales, a percentage of in arena concessions and sponsorships, and so on.

In the old deal, the players got 57 percent of BRI in salaries. They have offered to reduce that down to 53 percent according to both the union and league. That is about a $160 million give back of real dollars from the players to the owners next season. David Stern said Tuesday (in a press conference shown on NBA TV) that is not enough.

“In order for us to have the robust revenue sharing that the owners want, and that the players want, we have to be profitable as a league,” said Stern, who has claimed the owners lost $300 million last season (a very debatable figure). “And there’s simply no way that ($160 million give back by players) makes us profitable.”

The owners started these negotiations trying to move the middle — the spot of compromise where a deal can be struck — by making outrageous demands. They wanted to roll back salaries of signed contracts, they wanted an NFL-style hard cap, they wanted no guaranteed contracts, and they wanted the players to only take 46 percent of the BRI. Basically, they wanted everything, they talked about radical changes.

There was Stern on Tuesday talking about all the things the owners have given back in these negotiations — they moved off the hard salary cap, the demand for non-guaranteed contracts and the salary roll backs. All things they didn’t have in the first place, all just give backs on paper. And they upped their offer to 47 percent of the BRI. A whopping one percent.

The players have moved $160 million, the owners $40 million in real dollars.

The middle ground? With the owners starting at 46 percent and the players at 57 percent, the average is 51.5 percent of BRI. The players have moved toward that but stopped because the owners have barely budged.

The owners are not a group trying to make a deal, that’s a group trying to steamroll the opposition. The owners know they have the leverage and they plan to use it. They are led by hardliners that made bad business decisions — overpaying for franchises, bringing in a lot of partners and leverage to do it — then complain they can’t make enough money on it. Certainly they deserve the chance to make a profit, but it’s not the players fault that a bunch of owners have huge debt service payments on their franchises. The owners want to make those payments on the backs of the players.

Stern said that they floated the idea “in concept” to the players of discussing a 50-50 split of BRI under the old definition, but the players rejected it. Sources with the union told Alex Kennedy of Hoopsworld that was not how things went at all. Know this — BRI is not total revenue, the owners get to write off expenses off the top, then the rest is divided up. So even that 50-50 is less than half of what the league brings in.

And the league is about to bring in a lot more money. The Lakers local television rights deal is about to jump from around $30 million a year to more like $150 million a year. The Celtics just inked a new deal, as did the Nets with the move to Brooklyn. Then there is the new national television deal in 2016.

The owners are going to see more money, they are just fighting to keep a larger share of it. The good of the game be damned.

In the end, it’s the fans that get screwed over in this. Well, the fans and the arena workers and others who depend on the league and now will be looking or a second job to keep a roof over their heads and food in front of their children. Arena workers are not making big money and they have no way easily replace that income.

Fans should be angry. Just know that it is the owners that locked the doors. It’s the owners not really moving in negotiations. It’s the owners that want to see how the players react when they miss a paycheck or two, so they will drag this out. The owners are trying to steamroll the union, not find a fair deal in the middle.

This lockout is on the owners, make no mistake about it.

  1. trbowman - Oct 4, 2011 at 8:43 PM

    Don’t know why everyone is slobbing over the players.

    Go owners, I say. Lock them out until you get a good deal for the NBA long term.

    • berto55 - Oct 4, 2011 at 9:09 PM

      Agreed, the players have no stake in it….the people show up (profits), player gets paid. People don’t show up, player still gets paid. Additionally, players have alternative (endorsement) opportunities. Think about it, what other business do the employees (yes D-Wade you are an employee and your boss may point a finger at you from time to time, get over it) receive 50% of the income or anywhere close especially when you consider how much is on the line for the owners (loss of millions of dollars).

      • aqzi - Oct 5, 2011 at 12:08 AM

        It’s not true that the players still would get paid if the league weren’t popular. That is exactly what the BRI concept addresses–it’s purpose is to ensure that the players have a stake in the growth of the league. The players get a certain percentage (last year 57%) of “basketball-related income” which, in effect, is money the league gets from television deals, ticket sales, etc. If the league saw a 10% dip in BRI, the players would get 10% less.

        It is true that players have alternative opportunities such as endorsements. For one thing, owners clearly have or had alternative ways of making money outside of the NBA. How do you think they got the money to own a franchise in the first place? I think you underestimate how wealthy each individual owner is, even relative to the players. Keep in mind that the average NBA player doesn’t get much endorsement money. Second of all, the endorsement deals are not necessarily dependent on the NBA. For example, there could be another league operating in much the same way. LeBron James signed an endorsement deal with Nike before he ever played in an NBA game, before he even was drafted.

        What other business do the employees receive 50% of the income? Certainly labor is the biggest expense of most, if not all, companies. Even so, the NBA relies on its employees an incredible amount compared to the typical company. While a typical company can hire a new office worker with the same skill set as the previous one in a week, how many people have the basketball talent to entertain millions of people? Very few. It is this reason that the players’ salaries make up so much of the leagues expenses.

      • berto55 - Oct 5, 2011 at 8:20 AM

        Wrong. Players in the NBA sign guaranteed contracts so attendance to them is irrelevant. Income would affect the salary cap and indirectly the next players due contracts, however, this is only based on the entire league and not individual team. Therefore if people don’t show up to the games and the concessions aren’t sold, the individual owner takes a bath. I disagree with the no endorsement opportunity, Steve Kerr, Bill Levingston, johnny Knox, all do promotional appearances around here and they are certainly not stars. Of course owners have additional revenue opportunities that come with their own risks, but so do you and I. Last, in this scenario, the very smallest number of employees are collecting the money. The concession workers, security, etc get relatively nothing.

      • berto55 - Oct 5, 2011 at 8:20 AM

        Wrong. Players in the NBA sign guaranteed contracts so attendance to them is irrelevant. Income would affect the salary cap and indirectly the next players due contracts, however, this is only based on the entire league and not individual team. Therefore if people don’t show up to the games and the concessions aren’t sold, the individual owner takes a bath. I disagree with the no endorsement opportunity, Steve Kerr, Bill Levingston, johnny Knox, all do promotional appearances around here and they are certainly not stars. Of course owners have additional revenue opportunities that come with their own risks, but so do you and I. Last, in this scenario, the very smallest number of employees are collecting the money. The concession workers, security, etc get relatively nothing.

      • aqzi - Oct 6, 2011 at 2:28 PM

        To address the question of BRI and what percentage the players take home, I direct you to this website: http://members.cox.net/lmcoon/salarycap.htm#Q15, which is the escrow section within Larry Coon’s encyclopedia on all things financial in the NBA.

        I’m not sure how you disagreed with what I said about endorsement opportunities. In my opinion, Steve Kerr is a pretty big name (five time champion, successful broadcast analyst and general manager). I can’t figure out who Bill Levingston is from a quick Google search so I doubt he is making much endorsement money. Johnny Knox apparently is a former football player.

        I completely agree that owners have additional revenue opportunities that come with their own risks and that the arena employees get relatively nothing compared to the players. There is a reason the players are paid so much though–they have a non-replicable skill set that the NBA depends on to garner revenue.

  2. jimeejohnson - Oct 4, 2011 at 8:44 PM

    The rest of the world could reap an unprecedented harvest of elite American basketball players. Hope the networks provide television coverage for these international games.

  3. jgib23 - Oct 4, 2011 at 8:45 PM

    There is at least one other owner you may have heard of….. Michael Jordan ring any bells? I could have just stopped reading at that point. Stern offered 50/50 and that is where it should be. The players will never be able to make up the money they lose. 57% of zero is a lot less than 50% of 4 billion.

    • Kurt Helin - Oct 4, 2011 at 10:30 PM

      fair point on Jordan.

  4. edcenter114 - Oct 4, 2011 at 9:03 PM

    “And the league is about to bring in a lot more money. The Lakers local television rights deal is about to jump from around $30 million a year to more like $150 million a year. The Celtics just inked a new deal, as did the Nets with the move to Brooklyn. Then there is the new national television deal in 2016.”

    Way to cherry pick for the players… Let me guess, since you interview players and not owners, and you want to be on their good side for when the league opens back up, you wrote this biased article.

    • Kurt Helin - Oct 4, 2011 at 10:29 PM

      Actually, all I want is basketball back. Just calling it as I see it.

    • hystoracle - Oct 6, 2011 at 1:16 PM

      Don’t see any small market teams in that list.

  5. barklikeadog - Oct 4, 2011 at 9:07 PM

    Uhhhh, the fans really don’t care.

  6. jgib23 - Oct 4, 2011 at 9:25 PM

    Also, this bs about the owners taking some off the top before splitting the pie. The players get a portion of concessions and naming rights, should the owners get a piece of LeBrons Nike endorsement?

    • Kurt Helin - Oct 4, 2011 at 10:29 PM

      The money off the top is for other building expenses tied to upgrades (usually). The split of things like concessions is pretty fair, the issue is when the owner also controls the building it is easy to move money from one pocket to another and claim poverty.

  7. Art Rondeau - Oct 4, 2011 at 10:02 PM

    Good article. Please read this for more about the NBA’s negotiating tactics, some irony about them, and potential damage they’ll cause: http://wp.me/p1qT5E-2U

  8. andyjcaldwell - Oct 4, 2011 at 10:04 PM

    Got to be kidding me… As a jaded Cavs fan that couldn’t even keep the best player in the league, with 8 years to put someone around him… Yeah I am still pissed….. I say go players, you are the value, not the stadiums, not the tv rights, they are Nothing without the players. If the owners overpaid for franchises, not the players fault. I would love to see the players organize a rogue league, set up the teams and host at other stadiums, bet they all sell out! And if they design their own jerseys and logos …. I bet they still sell!

  9. bearsandjazz - Oct 4, 2011 at 10:16 PM

    Kurt Helin…It’s Obvious who’s side you’re on but you don’t speak for the fans! Go owners…teams get stuck paying players that aren’t worth the money. Teams are losing money no matter how this author wants to spin it. I thought Demaurice Smith of the NFL was bad…Fisher is by far the most two faced person In This entire negotiation process. Players like kirilenko, arenas etc don’t deserve those contracts. The players don’t deserve 57%…”make no mistake about it” quote from the idiot above. This one is on the players, I hope the owners stay strong because 65% of the players will go broke in a year and that will force the players hand. Both sides are greedy with “our” money but the side with the biggest chunk is easily the most greedy when you look at what the big names have been doing to the teams that drafted them. I love the NFL and will do just fine without basketball. Wake me when you guys start playing ball and i’ll see if I’m interested but hey thanks I just eliminated money in this years budget. 20 games for two people… $40 per ticket x 20 games= $800 plus the 4 $8 beers per game. They are saving us money they can’t do with out. Hang in there owners!

    • wistonwilson - Oct 4, 2011 at 10:22 PM

      I like how you blame players for accepting lucrative contracts. I wonder if you would ever consider rejecting a salary raise? Nah, probably not. It would prevent you from buying a fifth beer.

      • flionlion - Oct 4, 2011 at 11:54 PM

        So if my employer offers me and my colleagues an outrageous raise in salary and then shuts the company down a few years later because it’s no longer profitable then I shouldn’t be surprised? And better yet I shouldn’t offer any major concessions to save my job?

      • berto55 - Oct 5, 2011 at 8:25 AM

        The difference is you are most likely an at-will employee and therefore when not doing what you were paid to do (score 30 a game) you can be fired.

    • helinhater - Oct 5, 2011 at 6:55 PM

      Actually, judging by the amount of Thumbs Down you idiots who keep saying “Screw the players” receive, I think it’s fair to say Helin is pretty spot on in regards to speaking for the fans.

      The bottom line of this situation is that the players are the product. Period.

      And the product is what provides a franchise with value.

      And the product is what guarantees a full house. And what packs a competing team’s house.

      There are so many of you chiming in on this site who are so gung-ho about the owners and we can all have our theories as to why be they racially or politically driven…

      But the point is, these owners bought their franchises, offered these contracts, agreed to the previous model…and now want everyone to erase their mistakes and start fresh…and they fully intend to make that happen because they have plenty of money and they dont care about the fans.

      Because the fans will come back for the product…and the product right now is still very good.

  10. mogogo1 - Oct 4, 2011 at 10:36 PM

    “…by making outrageous demands. They wanted to roll back salaries of signed contracts, they wanted an NFL-style hard cap, they wanted no guaranteed contracts….”
    _______________________________

    Hard to call these ideas “outrageous” when they’re already being done by other pro sports leagues. The NHL rolled back the salaries of guaranteed contracts by something like 25% with their last CBA while the other two have been standards of the NFL for years. Granted, the owners weren’t likely to get all these at once, but you always ask for more than you know you’re going to get; that’s how negotiations work.

  11. bearsandjazz - Oct 4, 2011 at 10:36 PM

    That’s not what I’m saying smart guy. In order for the product to be good you can’t just buy good machines…players are getting ridiculous contracts..good for them but it doesn’t mean they deserve it. Nice try at the insult though…I’m a hard working man and if i wanted a 5th beer id have one.

    • wistonwilson - Oct 4, 2011 at 11:45 PM

      Players deserve whatever the market is willing to pay for their services. If GMs and owners make poor financial decisions regarding the amount and duration of contracts, then they should suffer the consequences. Now, I understand that the current system needs some type of adjustment; however, your subjective interpretation (i.e. “worth,” “ridiculous,” “deserve,” etc.) fails to produce a logical argument that is convincing.

      What I find so upsetting about the lockout is the disconnect between the rhetoric and actions employed by Stern and the owners; they seek to catastrophize their current position in front of the general public to gain the support necessary to refuse a compromise. Furthermore, all this is done in the supposed name of preserving a viable and “profitable’ NBA. Yet their actions, which as they seem to me, are all directed towards crushing the Players Association and ensuring high profits for the owners.

      I don’t believe the NBA is like every other Fortune 500 company. Rather, stadiums are argued to be public goods and funded by taxpayers. Although the NBA isn’t given an exclusive monopoly, they are still given benefits that are denied to other corporations. This should be recognized by all parties (owners, players, and fans). Either the NBA should exist under the same legal statues as Coca-Cola, or we should all admit that the league has an ethical responsibility to the public to play the upcoming season.

  12. cosanostra71 - Oct 4, 2011 at 10:48 PM

    Just bring back the NBA. Both the players and owners are idiots. Players are entitled and should allow non-guaranteed contracts like pretty much every other professions in existence. Owners are greedy and should look towards themselves more rather than blaming all their losses on the players.

    Just bring back the NBA. Don’t make me watch the Ducks find new ways to disappoint in the playoffs and give me my Lakers.

  13. mojosmagic - Oct 4, 2011 at 11:10 PM

    I am for the fans. The fans who can’t afford to take their kids to see a game. Most teams are losing money and the league is rite with over paid stiffs. Teams can’t make normal trades and guaranteed contracts kill you. To make matters worse nobody cares much about the lock out and as far am I am concerned they would be better off going out of business and starting over fresh.

  14. flionlion - Oct 4, 2011 at 11:29 PM

    Kurt you’ve always been in the bag for the players….no surprise you wrote this terribly nonobjective piece.

    I’ll just make one point of the dozens I screamed out when reading this. The players have made the real concessions in these negotiations? Really? Teams have lost money for the past 10 years and even if you don’t accept the leagues numbers then fine…..Jordan has said the same thing and since he’s a god to you I assume you’ll take his word for it.

    So one simple question for you Kurt……how much money have the players lost in the last 10 years? Call Rashard Lewis or Gilbert Arenas if you don’t know the answer.

  15. akismet-9bfac212a93c64c2c1abe56138b8286a - Oct 5, 2011 at 12:06 AM

    I agree with Kurt. Go players!

    Here’s how it breaks down:
    The owners are the ones making the making (and losing) the money. The owners are the ones making (and not making) the decisions. The players on the other hand have no say in anything (don’t be fooled) other than trying to hype up their value which is what you’re supposed to do as a potential employee.

    Those of you who side with the owners need to understand that the players are individuals and deserve to be treated as such. Just because you think they get paid exorbitant salaries (I agree, its very high) for what they do, they wouldn’t get paid that much if A) they weren’t worth it, B) the money wasn’t available, C) the owners didn’t think they’d make money off of the deal, and D) All of the above.

    To the hawk owners of NBA teams: Don’t fool yourselves into thinking you’re trying to do the right thing. Its the players that the fans want to see. The players have already agreed to take less to help make up for YOUR bad decisions. Why can’t you just “own up” to your mistakes like real owners and stop making the fans and indirect employees suffer. Truth be told, millionaires own NBA teams. If you’re losing money, get out, dip into your millions and find another way to make more millions. You won’t get any sympathy from me or the fans.

    • deebasketballguy - Oct 5, 2011 at 12:22 AM

      In terms of investment markets, the owners have bought into a stable system. Most of the players money comes from guaranteed deals with TV, merchandising, and licensing.

      The owners have far less risky investment than other markets. Look at the Maloofs and Sarver.

      Sarver got housed in the real estate but BUT he didn’t sell the Suns. Why?

      The Maloofs sold off everything (Palms Hotel included) EXCEPT for the Sacramento Kings?

      Because there’s far more certainty in the NBA (owning a team). The NBA has actually grown in every year of the recent recession. The past season was the biggest revenue ever.

      What we’re dealing with here is greed. The owners see how the money and popularity will continue to grow. So this is about losing money, it’s about implementing a Wealth Re-Distribution system, that over the course of the next 10 years, will add about $10 Billion to the owners pockets.

  16. deebasketballguy - Oct 5, 2011 at 12:14 AM

    The argument that owners should be entitled to endorsement money is absurd. These players have conceded rights that most people on this blog who work at McDonalds will ever have.

    The players don’t even control their own image and likeness when they sign a contract.

    Can LeBron wear Nike apparel on the court? No, because the NBA has a merchandising deal with Adidas.

    Can Kobe negotiate his own licensing fee for video games? No, the NBA has a deal with EA Sports.

  17. badtimeoutcaldwell - Oct 5, 2011 at 12:20 AM

    Keep em locked out… Let the players find those”other jobs” out there in the real world that will pay them $10 million dollars. I love that they are “insulted” by a 50/50 split, when we all know they wouldn’t be able to find a job that pays them more than $60K / yr in the real world.

    I say the owners call their bluff. Truth be told that after a year, these guys would accept a deal giving them only 20% of the BRI. Why is that? Because 20% would still pay them $3 million dollars/ year, which is still more money than 99.99% of them would see otherwise.

    These guys have for all intensive puposes “won the lottery” by playing in the NBA, and now they are complaining… I love how they act as though they are being “exploited” when 30 years ago, guys were perfectly happy plaing for $200K / yr salaries…. now $5 million is an “insult”… whatta joke

  18. florida727 - Oct 5, 2011 at 7:48 AM

    Blame Stern? No. Stern is nothing more than a mouthpiece for the owners. The players need to realize they are nothing more than EMPLOYEES. Try going to YOUR boss this morning and telling him/her that you’re not going to do your job today unless they pay you, and your fellow co-workers, 50% of the company’s revenues, or even 50% of the profits. Let me know how that works out for you…

    • helinhater - Oct 5, 2011 at 7:01 PM

      Actually, if you’re mere presence guarantees your boss an additional 100 million more than he could other pull in, I’m willing to bet your boss might consider it.

      STOP comparing you current, mediocre situation to that of these players.

      THEY ARE NOT LIKE US. PERIOD.

      I hate to give Lebron any credit for his “miserable lives” comment but he is referring to people like you who have somehow convinced themselves that they are equals.

      You aren’t.

      The day you can perform in front of thousands of people and entertain millions upon millions (be it as an athlete, actor, musician, comedian, etc.) you can start comparing your situation to the players.

      But the HEAT cannot replace Wade & Lebron with some scrubs and expect you to still come to a game, buy fan gear, buy the NBA League Pass, and whatever else a fan might purchase.

      YOU ARE EASILY REPLACEABLE. YOUR COMPANY DOES NOT RELY ON YOUR PRESENCE TO MAKE THINGS GO. YOUR BOSS DOES NOT NEED YOU TO BE AT WORK SO HE MAKES A SIGNIFICANT AMOUNT OF MONEY.

      SO SHUT UP.

  19. fouldwimmerlaik - Oct 5, 2011 at 10:07 AM

    OOOOOOPS! I meant “they have been enjoying all of the rewards and none of the risk.” DERP.

  20. philosofly - Oct 6, 2011 at 1:24 PM

    Wow, I never thought I’d say this but Kurt is right. What’s even more shocking is all the “fans” posting comments taking the owners side. Then there is the ignorant comment about the players only being “EMPLOYEES”? What a load of bull!

    Kevin Durant is not exactly your local cart boy. If Kevin Durant and all his elite friends started their own league nobody would ever care about the NBA ever again! It’s the players who make this league possible, not the owners!! Sure, the league has logos we all love but that’s about it. It’s the players who put their knees, backs and blood on the line night-in and night-out over the course of a very, very demanding NBA season that often leaves players with 0 days to recover from the last game, that’s right, 0 days.

    Make no mistake about it, the owners and the Dictator Stern are definitely doing irreversible damage to the NBA. In fact, in case you haven’t noticed the players already have small leagues and tournaments in the works. What’s to stop them from forming 6 or 8 permanent teams in a new league? This is basketball we’re talking about, you need shorts, shirts, two hoops and a ball. You don’t need equip for every player, this is the EASIEST SPORT TO START A NEW LEAGUE!! Mark my words, WE WANT TO SEE THE PLAYERS PLAY AND WE DON’T CARE FOR WHO!

    The players deserve more money here and damn straight they should fight for it! If they don’t get it, and get it soon, they have enough money and star power (Dwight Howard, LeBron James, Kevin Durant, Melo, Kobe, D.Rose, Rondo, Blake Griffin, CP3, KG, Westbrook, Wade, Bosh, Amare, I think you get my point) to start a league that everybody WILL care about.

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