Blog Entry

Gap is $120M? Players would lose that in 10 days

Posted on: October 6, 2011 3:39 pm
Edited on: October 6, 2011 3:40 pm
 
Posted by Royce Young



As Ken Berger of CBSSports.com has reported, the gap separating the players and owners is somewhere in the $120 million range. That's it. From $8 billion down to around $2.6 million per team per year. That's nothing, it seems.

Right now, the players are firm at a 53 percent take of the Basketball Related Income (BRI). Owners have come up to (reportedly), 50 percent. And as Berger told us, each percentage point is roughly $40 million. So assuming all of that is lined up correctly, there's a gap of $120 million per season, or three percent in terms of BRI.

Again, that's not a whole lot of money in terms of the grand scheme. So the question is, is it worth it to the players to keep holding out instead of taking the owners' deal of 50 percent? As Larry Coon points out at TrueHoop, probably not.

Here's how it shakes out:
  • Next season, the total output from the league in terms of BRI is expected to be in the $4 billion range. That's billion with a "b".
  • Assuming the offer David Stern referenced is accurate, meaning the 50-50 split between players and owners doesn't take out owner expenses first, the players would see $2 billion of that $4 billion. You know, half.
  • If the players got what they wanted -- 53 percent -- that take would be roughly $2.12 billion. Which again, is about $120 million more than the 50 percent offer. Over a six-year deal which is the proposal, it's just a shade less than $800 million.
  • How much do players make in a week? All together, it's $82.4 million... per week. Here's how Coon puts it: "If we use the 1998-99 lockout as a guide, a canceled game costs each player 1/82nd of his salary. A full NBA regular season lasts 170 days, so each missed week represents 7/170th of a player’s income. So if a week’s worth of games is cancelled because they say “no” to the owners’ 50 percent offer, the players miss out on $82.4 million."
The money question is then, that $120 million the players say they won't back off for, how quickly would they lose that if they're missing paychecks because of a lockout?

Ten days. Ten... days. Join me now in punching the wall, won't you?

By Nov. 11, each player would have already lost the money they were trying to hold out for by going for a 53 percent BRI split. Does that make ANY sense to anyone? Look at it this way, using the grand scheme of the $796 million total the players are fighting for over a six-year deal.
Over a six year agreement, the players would burn through the $796 million in a little under 10 weeks. If they continue to hold out for 53 percent, and the owners hold firm at 50 percent, the players will reach the break-even point around December 16th. If the sides settle for 53 percent past that date, then the players would have been better off by taking the owners’ offer of 50 percent before games were cancelled.
Ten weeks? That's not even a full season! That's like mid-January! If the players hold out for 53 percent until January, it's pointless. They would've already lost that money!

Which is why it makes all the sense in the world for the players to just accept the deal they have in front of them. Because the longer this goes, and once games start getting missed, the owners gain a distinct advantage. Because once the lockout stretches into January, what incentive is there for the owners to uphold a 50-50 offer? Might as well drop it. This 50 percent will probably be as good as it gets for the players.

Hopefully they see that before Sunday night.

Via Welcome to Loud City
Category: NBA
Comments

Since: Nov 23, 2007
Posted on: October 7, 2011 6:47 pm
 

NBA is shooting itself in the foot....

This whole situation is a big waste.  If anything it is a competition between who will fold first and appear 'weak', instead of getting a deal agreed done.  What both sides fail to realize is that they BOTH will lose money if the season doesn't start on time.  The players will lose checks, and the owners will miss out on business related deals involving their teams and endorsements.  Not to mention the negative view fans will have if ANY games are canceled, and therefore losing even more fan support.  If the NBA came to a deal and worked together to make the NBA a worldwide moniker, the money they are squabbling about would be returned probably 2 or 3 fold.  The owners are looking at nothing but principle anyway, because most are them are strict businessmen give or take a Marc Cuban or two.  The players I'm sure wouldn't mind coming down just a little bit, for the simple fact that every player can't go overseas and make up for their loses.  Practice what you preach NBA and work together, and make 'amazing happen'.



Since: Jun 25, 2009
Posted on: October 6, 2011 6:46 pm
 

Gap is $120M? Players would lose that in 10 days

The players should take the 50/50 deal now if it is on the table, otherwise they are holding out for nothing unless the try to, by January, INCREASe there demand from 53% of BRI to a higher percentage which the owners will NEVER go for.

The more I think about it the more I say no chance, the players aren't going for it.  I think it's a fair deal under the circumstances, it guarantees the owners a small profit of a couple million each assuming the BRI at the very least stays where it's at and doesn't decrease at all, which is a reasonable assumption. And of course as revenue increases which everybody expects it will, everybody makes more money. 

BUT... in my opinion I can't see the players taking a 12 percent pay cut, which is exactly what a 50-50 split would mean to them today. Unions would sometimes prefer their membership loses millions in salary before they agree to take a step back or give in to the employer.

Maybe one of these days they'll figure it out. But until athletes figure out they aren't in control and they are employees and performers and nothing else, they'll be in positions like this every few years. 



Since: May 17, 2008
Posted on: October 6, 2011 4:31 pm
 

Gap is $120M? Players would lose that in 10 days

That $120 figure is for one season. The agreement will last for seven years (at least six), so it's really a minimum of $720 million and likely more considering that revenues are expected to increase every year.



The article addresses that (and actually puts the figure at $796million) and points out that the players, if they continue to hold out, would "lose" that money within 10 weeks: 

By Nov. 11, each player would have already lost the money they were trying to hold out for by going for a 53 percent BRI split. Does that make ANY sense to anyone? Look at it this way, using the grand scheme of the $796 million total the players are fighting for over a six-year deal.
Over a six year agreement, the players would burn through the $796 million in a little under 10 weeks. If they continue to hold out for 53 percent, and the owners hold firm at 50 percent, the players will reach the break-even point around December 16th. If the sides settle for 53 percent past that date, then the players would have been better off by taking the owners’ offer of 50 percent before games were cancelled.
Ten weeks? That's not even a full season! That's like mid-January!
The players should take the 50/50 deal now if it is on the table, otherwise they are holding out for nothing unless the try to, by January, INCREASe there demand from 53% of BRI to a higher percentage which the owners will NEVER go for.



Since: Jun 25, 2009
Posted on: October 6, 2011 4:16 pm
 

Gap is $120M? Players would lose that in 10 days

50-50 makes sense. I mean, it's a "partnership", right?  Oh wait, not it's not. Oh I mean wait, yes it is.  The players want a partnership where they become majority owners at 53 percent with zero risk !! YEAH !!!! Awesome !!!!!!!    On a serious note, this deal might be good for both sides in my opinion.   At 4 billion dollars and at a 50-50 split, the owners immediately stop losing money.  As a matter of fact they actually profit I believe something like 50 or 60 million dollars for the 2011-2012 season.  And with every year the NBA can increase their BRI everybody gets a raise, but most importantly the owners STOP LOSING MONEY.....  as for the players, a drop of 7 percent is an actual 12 percent paycut. BUT... if they help the owners grow the game at 5 percent per season, it'll take the players 5 years or less to recoup that paycut and get back to where they are today.  Either way the players still get rich and stay rich, but their bosses stop losing money..... how can a deal like that be unfair? 





Since: Oct 6, 2011
Posted on: October 6, 2011 4:03 pm
 

Gap is $120M? Players would lose that in 10 days

That $120 figure is for one season. The agreement will last for seven years (at least six), so it's really a minimum of $720 million and likely more considering that revenues are expected to increase every year.



The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com