Blog Entry

Economists: Lost season 'insane' for NBA players

Posted on: October 31, 2011 11:38 pm
Edited on: October 31, 2011 11:41 pm
 
Posted by Ben Gollivernba-lockout

Tuesday is November 1, meaning the NBA lockout will officially enter its fifth month. We've now officially reached the stage where we find out how much "principle" is worth to the NBA's players.

Why? Because paychecks will finally be missed. Because each wave of cancellations brings with it a known cost. Because the National Basketball Players Association will soon reach the break even point where it will be more beneficial -- purely in their financial best interest -- to cave to the NBA's revenue demands rather than to hold a hard line.

Put simply, the money lost in salary will soon surpass the potential money to be saved in continuing negotiations. Once that happens, this whole thing becomes about principle. 

Two economists writing on Grantland.com assert that the nuclear option -- a completely lost 2011-2012 season -- would be a financially "insane" eventuality for the players, even given the penny-pinching offer currently offered by the league's owners.
The split on BRI (Basketball Related Income) is supposedly the biggest point of contention. Players want 52.5 percent (down from 57 in the previous contract). Owners are “adamant” on 50 percent and started with an initial lowball offer of 37. Take the NBA’s 2009-10 BRI estimate of $3.6 billion; 2.5 percent of that is $90 million. Let’s say the life of the contract is 6 years. The total value of that over six years, with reinvestment, is around $500 million.

Is it economically worthwhile for the players to hold out for $500 million?

No. Total NBA salaries last year were over $1.5 billion, about three times the amount they are fighting over. Canceling a third of the current season would wipe out the gain of winning the extra 2.5 percent of BRI over the life of the new collective bargaining agreement. Canceling the whole season over 2.5 percent of BRI is insane for the players.

Can the players stop the owners from getting a deal that is much worse for them than the previous Collective Bargaining Agreement? No. What the players are willing to agree to is already materially worse than before. The only question that remains is how bad it will get. Does the players’ line in the sand over 2.5 percent of BRI make economic sense? No, not if they miss many games to achieve it.
The NBPA is being advised by a leading economist, so the union is not blind to this reality. In fact, despite all of their rhetoric about being willing to lose multiple seasons to preserve their achievements in previous negotiations, the example set by the financial overhaul of the NHL surely is fresh in their minds. The players will come down off of their current position. It's only a matter of when, and, also, how painful.

If the NBA makes anything more than a modest concession on the revenue split in the next two weeks or so, there's a solid chance this thing gets done. If not, things could get even uglier. The important takeaway point here though is that the NBPA's decision-making is still, after all these months, being guided by rational thought and not emotion. If we're still having this same conversation on Dec. 15, with no substantial movement from either said, then emotion will have won out. That would be terrible, horribly frustrating news for all involved. 
Category: NBA
Comments

Since: Dec 7, 2009
Posted on: November 1, 2011 7:25 am
 

Economists: Lost season 'insane' for NBA players

A strike is never a 'sane' option...i.e., during a strike, no one is making any money. If you can't find a common ground between 50% and 52.5%, it's not about money. It's about egos, and who can push around who. It's about setting precendents, too. All this focus on the 2.5% is probably smoke & mirrors to the other disagreements.



Since: Nov 1, 2011
Posted on: November 1, 2011 6:12 am
 

Owners should have stuck with 37%

The owners should have stuck with the first offer of37%. 
Stupid?  Yes. 
In the interest of fans?  No. 
In the interest of the general public?  Yes. 
College Basketball good?  Yes. 
The NBA as a sport?  Not really. 
The NBA players are and have been for years, just a group of squabbling kids. 
There are some that keep their self
established above the thug mentality, but sadly they are few.




Since: Aug 16, 2006
Posted on: November 1, 2011 2:42 am
 

Economists: Lost season 'insane' for NBA players

Whether Ben Golliver is an owner puppet or not is not relevant to his point. The point he is making is a statistical certainty. It's a fact! So, the slant of the auther makes no difference at all.

Bottom line is that we are reaching the point of no return. At this point the longer the players wait to cave the less money they will ALL get, and any chance of saving face, even a tiny amount, will be completely gone soon. If even half a season is lost, let alone an entire season, the owners will lower their offer with each passing day because they have all the leverage. The owners don't need the NBA. They know the players will cave first eventually. The owners don't want to continue owning the league as it has been so they would rather the NBA cease to exist indefinitely than continue at the old model. So because of that they will be as patient as they need to be to get what they want.

This is a fight that CANNOT be won by the players. The only question is how badly do they want to lose.

With each passing day the players are demonstrating how foolish they are.




Since: Nov 1, 2011
Posted on: November 1, 2011 1:48 am
 

Economists: Lost season 'insane' for NBA players

So is it "not" insane for the owners? Is it "sane" for owners to cancel the whole season for 2.5% of BRI? With the owners having the deeper pockets here, it would make more sense to note the pettiness of the owners in holding out over a "mere" 500 million. They can absorb it better than the players. They make more than the players from a season, which means they are losing more. Makes less sense for them to allow 500 million dollars to hold up the season. 



Since: Mar 20, 2007
Posted on: October 31, 2011 11:55 pm
 

Economists: Lost season 'insane' for NBA players

Keep in mind that Ben Golliver is an owner puppet, a stooge, a plant.  What he is not is an objective journalist.  Just giving every one full disclosure.


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