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Larry Coon CBA Chat Transcript from October 19, 2011

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As we noted yesterday, CBA guru Larry Coon held an online chat where he discussed a variety of topics. 

Salary Cap Chat With Larry Coon | Hoopsworld

Coon offers a lot of good answers to some very provocative questions, so it would be of benefit to read the whole thing. I've extracted a few below that I found particularly interesting.

Question: What are the percentages of different options to the outcome of the federal mediation?

Coon: Let's see, what are the different options? Given the marathon session yesterday, I think we've eliminated the option of Cohen emerging after an hour shaking his head and muttering, "Well, that was a wasted trip." So what options remain?

  1. A deal, either today or later this week (remember, they rearranged their Board meeting once, and they can do it again - this is more important).
  2. No deal, but significant progress on bringing the two sides closer.
  3. No deal, and neither side is willing to budge.

I think Option 2 is the most likely here. At least 50% - maybe 75%. The next most likely option is that the gulf is still too wide, and neither side is willing to move. After that, there's a small chance something gets done today/this week.

Question: Do you think both sides are bargaining in good faith?

Coon: I think they are. For both sides the financial and PR repercussions of a continued lockout are huge. I think both sides genuinely want a deal, and would love to get it done today.

That said, neither side is going to take what they consider to be a bad deal in order to get it done. Did you hear Shannon Brown on the Stephen A. Smith show last night? He talked about the players refusing to be taken advantage of. The players also referred to a hard cap as a "blood issue." There's a lot of emotion here as well.

Cohen's best chance is to cut through all that, and make both sides see it as a pure business decision.

More Q&A after the jump.

Question: Can you explain why the players care so much about system issues instead of just BRI? Players don't get the exact amount of money in their contracts, they get more or less depending on whether the sum total of the players' contracts is below or above the BRI. So, all contracts really guarantee is each player's cut of the NBPA's share of the BRI. What am I missing?

Coon: It's true that the BRI split controls how much money the players get in the aggregate. But per-team, the system issues have a big effect. If there's a hard cap - either a true hard cap or an effective one via a prohibitive luxury tax - the distribution of salaries will change. The stars will continue to get big money, and the minimum & rookie scale salary guys will continue to get their allotted salaries. But this won't leave much for the rest of the players. The end effect is that the middle class will be squeezed out. This is an important issue to the players. Most of the lower-rung guys don't have any delusions about signing a max deal, but most do see themselves signing a mid-level contract.

Question: How hard do you think it will be to find a balance between revenue sharing and spending deterrents to fix the revenue disparity between franchises? Is that even possible because taxes as a spending deterrent are guesswork in economic principles.

Coon: It seems like it's been pretty hard up 'til now.

I like the idea of revenue sharing. I don't like the idea of a luxury tax as a form of revenue sharing. The luxury tax is primarily a spending disincentive - its aim is to keep salaries down. But to have robust revenue sharing, teams would need to pay more tax - spending would have to go up. Plus compare tax payers with market size - teams like Chicago, in a huge market, rarely if ever pay tax.

I think it's better to level the playing field with direct revenue sharing - where the money going in & out of the system is based on the market size and the team's ability to maximize it. Get that in place, and then (optionally) add-in a luxury tax as a spending disincentive, and the system will be much better.

Question: Do you expect Stern to announce more game cancellations today if a deal isn't reached?

Coon: No. As long as the mediation is ongoing, or can potentially start up again, it would be damaging to cancel games. For the sake of progress, I think they delay any announcements.

If the mediation ends without success, without real progress, and without a timetable for restarting, then I think they swing the axe once more.

And lastly, this very poorly worded question (stage fright):

JA Sherman: In light of the city of Memphis' announcement that they are exploring litigation against the NBA if games are lost (and they cannot make their bond payments), what kinds of other litigation or financial moves do you see the owners making in order to survive the long winter? Thx

Coon: This is why people are wrong when they say the players have no leverage, or that some owners would rather not play the season than play it. Yes, under the old system they lost $300 million by playing the season. But they would have lost a LOT more had they not played it. A billion dollars is probably too conservative an estimate. The players have a LOT of leverage right now - just by continuing to say "no."