Blog Entry

The widening gap driven by the owners

Posted on: September 27, 2011 10:26 am
Edited on: September 27, 2011 11:09 am
By Matt Moore

When Ken Berger of reported Monday that the owners' latest proposal sought a 46 percent cut of BRI for the players averaged throughout the course of the deal, it was a sign of how far the two sides have to go, but not a doomsday prophecy. After all, that's a negotiation, right? One side high-balls, the other side low-balls, the two wind up somewhere in the middle. That the owners have come less way than the players is not a shock, they're the ones taking the more aggressive approach out of a demand from some of their representatives to solve what they consider huge problems. In short, they're driving a hard bargain. 

Bascially, the owners moved up from 39 percent to 44 percent to 46 percent while the players went from 57 percent to 54.3 percent (or as low as 53 percent according to some reports) according to reports. While the owners have moved further percentage wise, anyone that thought the split was going to wind up with the players giving back 18 percentage points of their cut was out of their minds. But there's an interesting wrinkle built into the proposal that comes from's David Aldridge. From Aldridge:
A source says last week's latest proposal from the owners to the players started at 50 percent of Basketball Related Income in year one of the (still) 10-year offer, and dropped into the mid-40s for most of the rest of the proposed deal. Is that better than the initial 61-39 owners' split offer back in February? Yes. But it is still not anywhere close enough to get a deal with the players. Hard to imagine this isn't exactly how the owners anticipated this would go, and that there won't be anything of substance to report until the first game checks to players go unprinted in mid-November.
via Time has come for stars to speak up more at bargaining table |

On the surface, this isn't anything super important. But the league is sticking to the same tactic it took in its June proposal. The goal of the owners is thought to range from insuring profitability to simply covering losses garnered by what they consider a combination of a broken system and the economic downturn. But if the latter is the case, why is that even with a conservative estimate for growth, the league winds up taking a bigger chunk as the revenues increase. The deal structure removes the players from the growth model. It's an employer telling a group of employees, "it doesn't matter if or how much you grow our company, you'll still make the same." It's a pay-raise freeze. Nothing puts the owners' position that the players do not represent what makes the league grow more than this. From Berger on Monday:
In its simplest form, Fisher's argument is that Steve Nash and Carmelo Anthony -- not Robert Sarver and James Dolan -- have generated record revenues, TV ratings and fan engagement for the NBA. And yet Sarver and Dolan -- not to mention Dan Gilbert and Peter Holt, labor relations committee members all -- want that pendulum to swing to the owners' side with a series of proposals that seek to shift the lion's share of revenues to them. The league's latest proposal last week, according to two people with knowledge of it, called for an average of 46 percent of basketball-related income (BRI) going to the players, who were guaranteed 57 percent under the previous deal.

The union's latest proposal, according to a person familiar with it, called for the players to agree to a salary freeze for the 2011-12 season -- no less than the $2.17 billion they earned last season -- and then reduce their share to 54 percent of BRI as a starting point in the rest of a six-year deal. Hunter has previously indicated a willingness to negotiate downward from that percentage, a gesture commissioner David Stern characterized as "on the road" to agreement on the economic terms of the deal.
via With owners split, NBPA aims to unite players, turn corner - NBA - Basketball

It's an odd approach. Instead of saying "we want to recoup our losses now, and when the economy likely recovers at least to some degree and you help grow the game, your share will improve," the league is instead saying they want their cake, the increased revenue provided by the star power of the players, and to eat it too, with a higher percentage of BRI. 

The bottom line is found in-between the cracks in the story. Both sides are starting to compromise, with the owners offering up more than they had previously just as the players have. But the league is still reconfiguring their offer to gain an advantage for every concession they make. It's compromise, but only in terms of how they get what they want, not how much. So if you're starting to think the owners are moving towards a more reasonable approach, don't bet on it. Just as Derek Fisher is spitting fiery rhetoric which won't help matters, the owners aren't taking down arms, they're just moving them along the castle wall.

Since: Sep 21, 2011
Posted on: September 27, 2011 3:16 pm

The widening gap driven by the owners

If the owners offer a flat 50% of BRI then wouldn’t the player’s salaries increase or decrease each year based on their "Star power"? That seems reasonable to me, you don’t get more ownership in a company the longer you work there (not including stock options instead of bonuses).

Since: Feb 3, 2010
Posted on: September 27, 2011 11:03 am

The widening gap driven by the owners

It's all part and parcel with negotiations.   If the owners offer a flat % of BRI, the players will argue (and have argued) that they shouldn't take such a drastic initial cut in salaries.  If the owners offer a sliding scale that doesn't result in such a dramatic initial salary cut, the players will argue (and have argued) that salaries should increase as the same amount as revenue.  In the end, I expect them to agree that the players will get 48% or perhaps 48.5% of BRI.   I just hope an agreement comes soon.

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