NBA Commissioner Adam Silver said something at a press conference Tuesday that really cheesed me off. Just weeks after NBA teams committed over $1.4 billion on the first day of NBA free agency and a total $2.6 billion overall, Mr. Silver informed us that one-third of the teams in the league are losing money.
"I don't know the precise number and don't want to get into it, but a significant number of teams are continuing to lose money and they continue to lose money because their expenses exceed their revenue. Even with revenue sharing, and fairly robust revenue sharing, when some teams are receiving over $20 million checks from their partners."
Losing money? Oh please Mr Silver, wouldn't spending it like a drunken sailor on weekend liberty be more accurate? I am obviously missing something here but one thing is abundantly clear....paraphrasing Tom Hanks line from the movie "Apollo 13"...
NBA fans, we have a problem. A big one.
Everyone has a list of "little things" that get under their skin and I am no exception. In fact, my list is possibly larger than most. For instance, I don't like it when one of my kids doesn't completely close the lid on the jelly jar and half of it turns into to grape flavored rubber and peanut butter chunks. I really don't like it when I am waiting to turn left at a red light and get stuck there because the motion detector misinterpreted the gap in traffic created by the clown that wasn't paying attention to the traffic signal because he was blabbing away on his cell phone... and if you really want to see a show, let the TV blink off at a critical moment in a Thunder game. There is just so much a man can endure!
My wife tells me I shouldn't let "little things" bother me and she is right.... it is frustrating when she is right...especially since she is always right... so add that to the list, but we are not talking about losing one solitary game here.
Adam Silver is setting the stage for something that will make the TV blinking out during a critical free throw pale in comparison. He is posturing for another row with the NBPA in 24 months and another possible lock out!
I naively believed the current CBA was a ten-year deal... which it is, kinda sorta... however, it turns out that either side can renege and call for a do over in just 6 years:
A. Term of Agreement
This Collective Bargaining Agreement (CBA) began effective with the 2011-12 season (December 8, 2011) and runs through the 2020-21 season (June 30, 2021). The NBA and NBPA each have an option to terminate the CBA after its sixth season (i.e., on June 30, 2017) by notifying the other party on or before December 15, 2016.
That's right folks, rather than anxiously waiting to see the current crop of NBA draftees enter their third season in 2017, you may instead find yourself concerned there will a season at all... for anyone... including you. I now know the reason a 6 year-deal is called a ten-year deal because I have stepped in enough of it in my Granddad's cow pasture.
In defense of Adam Silver, as difficult as that is, I must point out that he didn't fire the first salvo in this little drama. Current NBPA executive director Michele Roberts did some posturing of her own in comments made to ESPN The Magazine from her Harlem office in November. Her statements leave little doubt that she will go after much more than the current 50-50 split of BRI, basketball related income:
"Why don't we have the owners play half the games? There would be no money if not for the players. Let's call it what it is. There. Would. Be. No. Money....Thirty more owners can come in, and nothing will change. These guys [the players] go? The game will change. So let's stop pretending."
"I don't know of any space other than the world of sports where there's this notion that we will artificially deflate what someone's able to make, just because a collectively bargained policy that, in its current form, has constrained team spending in the NBA since 1984-85. It's incredibly un-American. My DNA is offended by it."
"I can’t understand why the [players’ association] would be interested in suppressing salaries at the top if we know that as salaries at the top have grown, so have salaries at the bottom. If that’s the case, I contend that there is no reason in the world why the union should embrace salary caps or any effort to place a barrier on the amount of money that marquee players can make."
Since Roberts fired the first shot, I will address her comments first. She's right, I wouldn't pay to see fat old billionaires playing ball, why should I? If I want to watch that I can see it for free at the local YMCA....and have... It's more entertaining than some of the comedies I have shelled out money to see at the movies and cheaper than a hot dog and a beer at a real game.
She is also correct when she said the game would change if the players go, but my question is, go where? Trying to make the same money they are now playing ball in the old neighborhood? Forming their own league perhaps so we could watch the drama surrounding the sordid topic of coin played out every single night?
While Roberts' point that the owners need the players is valid, that is a door that swings both ways. The players also need the owners. The players can score baskets but the owners know how to make money. Break the owners and you have killed the goose laying the golden eggs. Collective bargained policy doesn't artificially deflate what someone is able to make, collective bargaining is what contractually forces the goose to give up the golden eggs and the salary cap keeps the goose alive.
If the players can or even want to make it without the owners then do it, but I don't see the line to sign up growing with "marquee players" any time soon. Revenue sharing is evidently something they find as distasteful as the owners, otherwise they would be divvying up their endorsement money with their hard-working teammates. Spare me the lesson on trickle down economics because nothing trickles down unless it has to.
Adam Silver made some good points in his rebuttal to Roberts' November comments:
"We couldn't disagree more with these statements. The NBA's success is based on the collective efforts and investments of all of the team owners, the thousands of employees at our teams and arenas, and our extraordinarily talented players. No single group could accomplish this on its own. Nor is there anything unusual or "un-American" in a unionized industry to have a collective system for paying employees -- in fact, that's the norm.
"The salary cap system, which splits revenues between team owners and players and has been agreed upon by the NBA and the players association since 1982, has served as a foundation for the growth of the league and has enabled NBA players to become the highest paid professional athletes in the world. We will address all of these topics and others with the players association at the appropriate time."
Silver is right, NBA players are the highest paid professional athletes on the planet and there is nothing unusual about a unionized industry. What he conveniently sidesteps as he boasts that the players are the highest paid in the world is that most unionized industries have downsized their workforce dramatically over the last 50 years, an option that is unavailable in the sports industry. He couldn't disagree more with Michele Roberts comments for one simple reason. Fifty years ago General Motors was America's largest employer and paid their employees what would be $50 per hour adjusted to today's money. Now the country's largest employer is Walmart and if your lucky, they will pay you $10 per hour. The salary cap system forces the owners to split revenues they would not give up voluntarily and Silver knows it. If the owners could ship these jobs overseas, or outsource the work, or get robots to do them for less money they would do it in a heartbeat.
However, Silver makes a very strong point when he says that the cap system has aided in the growth of the league. Controlling costs have helped the league expand into smaller markets that sports like baseball avoid. Both leagues have a total of 30 teams, but the revenue requirements necessary for a baseball franchise to survive has limited the number of total cities in the league to 26 while the NBA is in 28 cities. When you consider Baltimore is only 35 miles away from Washington, there could be a case made that baseball covers only 25 market areas compared to the NBA's 28.
The salary cap system has also helped make the league more competitive. There will always be the have's and the have not's, but instituting a cap has helped distribute talent more evenly and in turn expanded the league's fan base....and "Let's be honest here", there is not much interest in rooting for a team that is basically the Washington Generals and without fans "There. Would. Be. No. Money" to quibble over.
Perhaps the comment Silver made on Tuesday about teams losing money would have carried more weight if he had not said this first:
The goal, of course, is to have a robust 30-team league, not just a league where teams [...] in large markets or owners who are willing to lose lots of money can have top‑notch payrolls. So I think it's very positive. The league is very healthy. I think owners recognize that and our owners are extremely competitive.
I'm confused, the league is very healthy or teams are losing money, you can't have both. Maybe Silver's next comment will help clear up matters:
We introduced, by the way, I should have said earlier, Tony Ressler to his new meeting, first meeting as the owner of the Atlanta Hawks. Somebody I've known for a while, but we're thrilled to have him in the league. Somebody else who has been extraordinarily successful in his primary business, come in to the league, going to compete hard to win. That makes for a very healthy league.
Nope, that didn't help either. Even when it could be argued that Tony Ressler could be buying a team he knows will lose money as a tax write-off for his primary business concern. More loss means more write-off, where is the problem?
Not to be outdone, Roberts gave the NBPA's response Thursday to Silver's claim that teams were still losing money:
"All of the data we have access to indicates that our business is thriving and will continue to do so in the near future. We agreed not to debate some of the finer points of negotiation in public, and aren’t going to change that approach now in response to some remarks from the Commissioner on Tuesday. We are, however, going to take him up on his offer to share the audited financials with the union. We also want to ensure that everyone understands the facts of this business:
"Under the CBA, we do not have a gross compensation system. The players' 50% share is calculated net of a substantial amount of expenses and deductions.
"New and renovated arenas around the league have proven to be revenue drivers, profit centers, and franchise valuation boosters. That has been the case over the past few years in Orlando, Brooklyn, and New York, to name a few. In some instances, owners receive arena revenues that are not included in BRI. Many teams also receive generous arena subsidies, loans and other incentives from state and local governments as part of their arena deals.
"Virtually every business metric demonstrates that our business is healthy. Gate receipts, merchandise sales and TV ratings are all at an all-time high. Franchise values have risen exponentially in recent years, and the NBA has enjoyed high single digit revenue growth since 2010-11."
The term BRI, basketball related income, gets thrown out there every time this subject comes up so it looks like that is the place to start. Roberts said the players' share is a calculated net of BRI rather than a gross compensation so I looked for clarification and found this at http://www.cbafaq.com/salarycap99.htm#12 :
12. What is included in Basketball Related Income (BRI)?
Basketball Related Income (BRI) includes:
- Regular season gate receipts
- Broadcast rights
- Exhibition game proceeds
- Playoff gate receipts
- Novelty, program and concession sales (at the arena and in team-identified stores within a 75-mile radius)
- Proceeds from team sponsorships
- Proceeds from team promotions
- Arena club revenues
- Proceeds from summer camps
- Proceeds from non-NBA basketball tournaments
- Proceeds from mascot and dance team appearances
- Proceeds from beverage sale rights
- 40% of proceeds from arena signage
- 40% of proceeds from luxury suites
- Proceeds received by Properties, including international television, sponsorship, revenues from NBA Entertainment, the All-Star Game, the McDonald's Championship and other NBA special events.
The NBA and Players Union are also working to replace BRI with a new definition of revenues, called Core Basketball Revenues (CBR).
So... apparently it is both, some of the items are net calculations but most of the list is distributed on a gross compensation basis. Looks like no matter what, we are only going to hear what either side wants us to so let's consider some facts. Under the terms of the old CBA, the players' cut of the BRI was 57 percent. According to Tim Donahue at 8points9seconds.com, the owners opened negotiations for the current CBA with an offer that reduced that cut to 40%, the players countered with 54.3% and both sides eventually settled on a 50/50 split.
BINGO! What is the problem? If two parties ever needed each other it is the NBA and the NBPA. The players don't separate from the owners because who needs the hassles that go with managing a league or a team (or sharing their endorsement dollars) unless they have to and the owners can't dump the players because they couldn't hit water if they fell out of a boat much less draw a crowd to watch them play basketball. Fifty-fifty.
So why all the posturing? Simple, a battle over the $24 billion TV rights deal the league worked out with ESPN and Turner Sports in October. Evidently the nearly $900 million per year kicker to their current cut of the BRI which included a 7% increase in revenues this year alone isn't enough, for either side. Wow! It's like a bad episode of Divorce Court!
Like I said at the beginning, I am obviously missing something. Teams are selling for as high as $2 billion and small market teams like my Thunder are spending $70 million for a player that will probably offer less defense than a cardboard cutout and Silver wants me to believe the league is losing money and Roberts says the players are getting short-changed.....
Yep.... it's official.... I'm cheesed. Both sides are to blame. I know I am just a simple country boy at heart, and I don't understand all the little nuances that go along with collective bargaining...but I know a smoke screen when I see one and I know a con job when I hear one and I definitely don't like it when someone lets their dog take a big crap on my front lawn and then tries to tell me its fertilizer.
The only sane response I have read thus far came from Lebron James when asked about the comments made by Roberts and Silver back in November:
"Our game is too good, it's too popular. Everyone loves our game all across the world and we don't want to get to the point where we have to have another lockout."
HERE! HERE! so sit down in good faith, hash out a permanent deal and quit playing Russian roulette with the livelihoods of the people that depend on you two getting along with one another and your fan base! In the long run you will pocket a fortune in attorney fees alone!