Blog Entry

Time to compromise; here are two to get deal done

Posted on: October 27, 2011 2:33 pm
Edited on: October 27, 2011 8:14 pm
NEW YORK -- As bleary-eyed negotiators reconvened Thursday in Manhattan after a 15-hour session that yielded progress on the difficult system issues needed to strike a deal, the next step is a precarious one: marrying a new system with a reduced split of BRI for the players in a way they can accept and, ultimately, ratify.

The two sides have been here before, and it's at this intersection of system and split where the talks have spectacularly blown apart before -- most recently, last Thursday, when the owners insisted on the players accepting a 50-50 split as a precondition for continuing negotiations.

With both sides recognizing that they have one last chance over the next few days to not only avoid losing more games but also, perhaps, salvage those already lost in a compressed, revamped 82-game schedule, the time for ultimatums and preconditions has passed. It is time for compromise and real, 11th-hour movement in both sides' bargaining positions. Without it, there will be no deal and there will be widespread, unnecessary economic carnage.

One of the interesting phenomena of this messy work stoppage is that, despite the public's knee-jerk reaction to blame the players and cast athletes as greedy villains, NBA fans have become educated about the issues and facts involved and seem, by and large, to recognize that the players have been in an untenable negotiating position. The owners have asked for an awful lot, and seem awfully determined to get it. But in exchange for agreeing to a reduction in their share of BRI from the 57 percent under the previous deal as a fait accompli -- and for openly and forthrightly negotiating certain system changes that the owners believe will help create more competitive balance and payroll parity -- the players need something in return. NBPA executive director Billy Hunter and president Derek Fisher need to bring a deal to the union membership by the end of the weekend that allows them to declare some measure of victory.

Here are a couple of ways that can happen, and unsurprisingly, they are interrelated, like many aspects of these negotiations:

It is clear that the owners' ideal BRI split is 50-50, but the time for seeking the ideal was July, August and September. It's late October, almost November, so there needs to be one final push from the owners on BRI to make the system changes more palatable to the players. It is the players, remember, who already have given up more than $1 billion over six years compared to what they would've gotten under a 57 percent system by offering to go as low as 52.5 percent. They players should be willing to meet the owners somewhere in the middle, but not all the way to 50 percent.

If this deal getting done hinges on the owners getting their 50-50 split come hell or high water, then I am scared for basketball humanity.

Here is how it can get done -- and, once again, silly me, I am being logical and sensible about this. The difference between the players' position of 52.5 percent and the owners' offer of 50 percent is approximately $100 million a year. As Hunter alluded to Thursday morning, there are tradeoffs to be made between system issues and movements in the BRI split -- in other words, an economic move by the owners would make some of the system restrictions they are seeking more palatable.

"We’ll continue to remain focused on some key principle items in our system that have to remain there in order for our players to agree to what is already a reduced percentage of BRI," Fisher said.

In other words: Work with me here, guys.

By reducing the players' share from 57 percent to 50 percent, the owners are seeking a 12 percent reduction in salaries -- from the $2.25 billion they would've received under the old system to $1.97 billion. There are thousands of ways to get there, but a key one that hasn't been discussed much would achieve a substantial amount of the further reduction needed for the two sides to meet in the middle without the affected players feeling it much -- if at all.

Both sides seem to have agreed to leave the structure of max contracts largely intact under the new agreement, meaning stars would still be able to get 25 or 30 percent of the cap, depending on the situation. But if players across the league are facing a 12 percent pay cut, why would max contracts be sacred?

Next season, there will be 22 players at or just below the max -- ranging in pay from $13.7 million (Kevin Durant) to $25.2 million (Kobe Bryant) for a total of $392 million. Since league negotiators are open to phasing in some of the system changes they are seeking to create more balanced payrolls, a 15-20 percent reduction in future max salaries -- say, 20-25 percent of the cap instead of 25-30 -- would result in approximately $70 million a year in future savings. That's nearly all of the annual difference between the two sides' economic positions.

While the vast majority of max players deserve what they get and more, they also earn tens of millions more through marketing and endorsement deals. If max players absorbed a bigger share of the reductions the owners are seeking, it would ease the bridging of the gap between 50 and 52.5 percent -- say, to somewhere in the middle, such as 51 or 51.5 percent -- and there's a way to do it without the star players feeling the reduction.

UPDATE: The NBPA annually receives licensing money from the NBA and typically has distrubuted it evenly among the league's approximately 420 players. Last season's share was $37 million, a person with knowledge of the arrangement told The NBPA has withheld the licensing money for several years and kept it in a fund to help players through the lockout. When the lockout is over, the money will be distributed.

Through giving players a share of licensing money commensurate with their own jersey and merchandising sales, the star players would receive some of the money given up through the reduction in max salaries. A negotiated increase in the amount of licensing money paid to the players would sweeten the pot, with minimal impact on the owners' share of BRI. Licensing money -- revenues from merchandise sold with team or league logos and/or player names -- is part of the approximately $650 million in deductions that come off the top of overall revenues before they are counted in BRI and split with the players.

So if you're among the next wave of max players to sign extensions -- Dwight Howard, Derrick Rose, Chris Paul, Deron Williams -- the haircut you'd take on the max salary could be minimized by a bigger share of the licensing money. 

Sometimes, the solutions make too much sense.

Since: Oct 28, 2011
Posted on: October 28, 2011 3:47 pm

Here's another compromise idea

here’s a thought – why don’t they break down the BRI by profitability? for instance, arison/dolan/buss are ready to play this minute. so they pay players 52.5% (b/c lets be honest they can EASILY afford it). next tier of owners pays 51.5%, ie cuban, grousbeck, allen, pollin, sterling etc. finally, the stingy ass owners (gilbert, sarver, maloofs, taylor, other small markets like charlotte/indy/milwaukee), the muthaf’ers who are HOLDING up this deal, pay their lousy 50% share like they want. the %BRI would be based on your annual profits, say you lose money, then you’re in the 50/50 tier. you break even or make a little bit, you rise to the next tier. the owners that are printing money hand over fist stay in the highest bracket. simple, no? money would be held in escrow until the end of the year, profits would be analyzed (help us kevin murphy to figure out truly which teams are hurting and which are just playing depreciation games or accounting gimmicks) and then teams would pay out their BRI% depending on how well they did INDIVIDUALLY.

in return, i would outlaw the selling of picks for cash (b/c its what sleazy owners do to save $$), i would divide the revenue sharing pie EQUALLY so that all owners are invested and benefiting, and add the 8 seed playoff idea (to discourage tanking and provide a little extra revenue to teams on the bubble). there might also need to be some penalty for losing money year after year i think, b/c that has to reflect poor management…lose a draft pick for 4 consecutive money losing seasons?

Since: Sep 20, 2006
Posted on: October 28, 2011 10:21 am

Time to compromise; here are two to get deal done

The problem is simple- The NBA lost $300 million last year, and stood to lose a little more each year under the current system. The players negotiated "concessions" that bring that LOSS down to "only" $100 million a year.

No business can sustain losing money, much less $100 million a year.

95% of that difference HAS to come from the franchises biggest expense- the $2.25 Billion in GUARANTEED money they pay the players.

Which revenue stream it comes from (BRI is variable, non guaranteed revenue) doesn't matter, but there is NO WHERE else it can come from, except players, who refuse to talk PROFIT sharing (because they know there is none in a loss), they want guarantees. Well, so do owners. The only way to GUARANTEE any salary, is if there is a guarantee of PROFIT, and that means guaranteed SALARY has to come down, about $100 million more a year. That's about $300 K for each player (they average $5 mil a year)... or $3.33 mil each for 30 "max contracts" and no one else in the NBA would have to take a cut at all.

There is no way you can convince me that a player making $5 million can't live on $4.7 million, or a player making $18 mil can't live on $14.7, especially if he makes an additional $10-$30 mil in endorsements....

The real bottom line is, the NBPA say they "need" something back from the NBA in the negotiations...and what they really mean is, their pride is getting in the way of the bottom line....The players just don't seem to understand there won't be any "negotiations" below the NBA profit margin anymore.

I would advise them that $2 Billion is salary is getting quite a bit from the NBA, and if they want to go to work making millions, they need to cough up the $100 million "chump change", the NBA HAS to have in order to have a CHANCE at making a profit, or they can sit at home with their pride.

Since: Sep 6, 2008
Posted on: October 27, 2011 8:51 pm

Time to compromise; here are two to get deal done

"the players need something in return. NBPA executive director Billy Hunter and president need to bring a deal to the union membership by the end of the weekend that allows them to declare some measure of victory."  Why?  Just because in the negotiation both sides are supposed to get the other to compromise more?  Just because NBA players won't be happy unless they get "some measure of victory" or, in other words, unless they win?  The only win here is a deal that makes all teams competitive and have a reasonable shot at an NBA title.  Why is the NFL so much more popular?  That's why.  The one thing I do agree with is that the so-called "stars" don't need to make 13.7 to 25.2 million per.

Since: May 25, 2007
Posted on: October 27, 2011 8:37 pm

Time to compromise; here are two to get deal done

I find it funny that people will spew venom towards the NBA whether it be towards the players, owners or the whole operation, then spend their time writing on blogs about not caring if the NBA plays or not. If that's the case then why do they take the time to read and respond to the story? If the college game is so much better, then why are there over 5000 Division One  players and only 400 or so NBA players? And if it is so much better why then are so many great college players such phenomenol busts in the NBA?

If a player in the NBA is a punk, slimeball or slug, odds are he was probably one in college to.  And as far as slimeballs go, is there any bigger pile of slimeballs than what passes as college coaches?

Since: Jul 23, 2011
Posted on: October 27, 2011 7:54 pm

Time to compromise; here are two to get deal done

Assuming that the two sides do get together, whether soon or next year, will lead to a fascinating case study about fans.  The NBA labor dispute has generated more than its share of venom on the part of fans.  My question is whether those who seem most bitter are former NBA fans or people who never followed the pro game and who resent the money and lifestyles that being an NBA player entitles these young, mostly African-American athletes?

When games are dominated by business considerations it's hard to remain in love with a sport.  In this instance, both sides seem to be rather tone deaf for the fan base.  Owners are losing money.  Players talk overtly about signing with their buddies to create a powerhouse team.  Competitive balance is a dream and the whole enchilada becomes hard to swallow.   Long term if there are not significant changes made in the way the players and owners operate professional basketball could deteriorate into a Harlem Globetrotter exhibition.  It's lots of laughs but it's not really competition. The saving grace for the 2010-2011 season was Miami cast as the villains.  But even L. James and friends can become boring after a while.

Since: Feb 29, 2008
Posted on: October 27, 2011 5:01 pm

Time to compromise; here are two to get deal done

Berger!  you need to get a job that has some value.  Who cares about the NBA.  Please stop writing these stupid stories.  Let the NBA fold,  I enjoy college basketball just fine.  Dont need the NBA any longer.  I a former 10 year season ticket holder and i quit. 

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