Blog Entry

NBA Lockout: The league's 'last, best offer'

Posted on: November 11, 2011 12:18 pm
Edited on: November 11, 2011 3:02 pm
 
By Matt Moore 

David Stern denied that the offer presented to the players on Thursday night was the league's "last, best offer" to Howard Beck of the New York Times. Beck attempted to follow up, because, well, if the players reject the offer and the league follows through with its threat to revert back to the so-called "cap reset" offer (47 percent BRI, a flex-cap, dragons, a dungeon, no cupcakes, etc.), they're not taking it, as Beck said, but Stern again dodged it. That was the point of this approach. The league's not threatening to cut off talks (they can't for fear of a lack-of-good-faith-barganing charge). This puts the onus on the players. "We're not giving you the worst offer, we're giving you a better offer than the worst offer. So you should take it, otherwise we'll only offer the worst offer." And they try and pass this off as benevolent. 

But the reality is that this is their last, best offer. The players can't accept 47 percent with a flex-cap, not without a court fight. They'll take that deal when the battle is truly lost, as opposed to mostly lost, which it is now. Consider that the players are surrendering $3 billion in their position which was extremely close to what the owners have proposed in the last week, but it's the systemic changes that continue to hamper the odds of a deal. The players have given so much, and the league wants just a little more. And at some point it's either surrender or fight. Talking is over. Deal or no deal. 

Decertification sounds great when pitched by an agent, I'm sure, but the realities are pretty dark for that course of action. It only really works as a leveraging tactic, considering that with the appeals process and the likely drag from the courts in proceedings as they would want this to be settled outside of their courtrooms and would encourage the parties to do just that, it would take years to complete. But if your options are that or lay down to be stepped on, a lot of players, especially stars with money in the bank, will opt for just that.

And so, like I said, this is the league's last, best offer. Or maybe its "last, not-nearly-as-sucky-as-what-comes-n
ext" offer.  So what exactly does it entail and where do we go from here? Here's the rundown of where the sticking points of a deal stand Friday morning according to reports. 

BRI
Everything in the proposal is based on a 50/50 revenue split which the players have finally conceded to if they feel the systemic changes are swallowable (indications are that they don't, but we'll get to that). It winds up costing the players close to $3 billion over the length of the deal compared to the prior deal which gave them 57 percent. That's a heck of a give-back, and yet still not enough for the owners. 


Mid-Level Exception

Ken Berger of CBSSports.com reports that the owners have "agreed to increase the mid-level exception for luxury tax-paying teams to three-year deals starting at $3 million. The exception, which was for two years starting at $2.5 million under the previous proposal, would be available every year for teams above the tax threshold." But there's a catch.
(T)he league's proposal would restrict teams from using a full mid-level exception -- four-year deals starting at $5 million -- if the signing itself pushed the team over the tax. Union negotiators want the mid-level restriction to kick in only if the team already is above the tax line before it uses the exception. The league's version is the one that is in the current proposal, according to a person who has seen it.
via Stern offers 72-game season, few alternatives - CBSSports.com.

So they've settled how much the MLE will be, but not whether you have to be over the tax already to be barred from using the full version, or if you would be barred from using it if using it would put you into the tax. If this sounds like an obnoxiously small detail, it is, but it also affects a great deal of teams and in particular serves as a disincentive from teams spending more to win, which obviously the players don't want for multiple reasons.

Super-Tax and Repeater tax

The luxury tax is being revamped as the "super-tax," in order to serve as a spending deterrent, either for restriction of player movement, cost reduction, or competitive balance purposes, depending on what side you're on. The previous structure was a simple dollar-for-dollar tax. So if you were $5 million over the luxury tax threshold, you paid $5 million in luxury tax.

The league's latest offer proposes an increase of .50 cents on the dollar for the first $5 million over, then increasing penalties. Here's the breakdown, courtesy of Berger: 

First $5 million in salary spent over luxury tax threshold: $1.50 tax on every dollar.
Second $5 million: $1.75 on every dollar.
Third $5 million:  $2.50 on every dollar.
Fourth $5 million and above: $3.25 on every dollar.

It's not know at this time if the union has accepted this rate, though it's clear they're not happy with that idea (or any of these, really). 

Then there's what's being called the "recidivist tax" or "repeater tax." The idea is that if a team spends above the luxury tax threshold in three out of a five-year span, it needs to be taxed additionally. The league has proposed the following structure: 

First $5 million in salary spent over luxury tax threshold (including standard tax listed above): $2.50
Second $5 million: $2.75
Third $5 million: $3.50
Fourth $5 million: $4.25

That's an incredibly steep tax for repeat offenders. To put this in perspective, Storyteller's Contracts shares this information: in the past ten years, the Knicks, Lakers, Mavericks, Celtics, Cavaliers, Suns, and Pacers all paid the tax in at least three consecutive years. Due to no tax being collected in 2005, another five teams (the Timberwolves, the Blazers, the Nets, the Sixers and the Raptors) would have narrowly ducked it. That's a huge percentage of teams this would have impacted, and the corresponding impact on spending would have been significant.

That's why the union wants the following structure:

First $5 million: $2.00
Second $5 million: $2.00
Third $5 million: $3.50
Fourth $5 million: $3.50 

That's a huge gap, considering in the last "stanchion" (as David Aldridge of NBATV described it Thursday night) would make for over a $9 million differential if the team spent all the way to $20 million over the tax threshold (the Lakers, for example, were $30 million over the threshold last season and would have been in the repeater tax. Close to $10 million from one team on just one level. That's a lot of dough.

So clearly this remains a big dividing point.

 Sign-and-Trade

Berger reports that the league may have softened on the limitations on teams in the tax using the sign-and-trade, but there is still some sort of structure in the current offer that deals with it. For the players, this was a big issue, and it's surprising the league didn't just concede on this considering it has been used just three times in the past decade by teams in the tax. But then, the league isn't conceding something. What else is new? 

ESPN.com reports that the owners have relented on the issue and that teams in the tax will be able to sign-and-trade players. That had to have been a concession for the big-market owners as well as playrs. 

Player contract length

This issue has been agreed upon. Previous limits were five years without Bird rights and six years with.  The new proposal which the players have agreed to is four years for non-Bird and five years with Bird. So it's a minor win for the players that they only lost a year, really.

Escrow

Via SI.com, the league wants the escrow pushed to 10 percent, where it was five years ago, up from 8 percent last year and the last few prior years.  The players want an 8-10 percent band. 

Salary floor

The salary floor under the previous deal was set at 75 percent. The owners have agreed to raise it to 85 percent, according to multiple reports.

Length of CBA deal

The league has granted a concession to the players to allow them to opt-out of the proposed deal after the sixth year, which is notable for its coincidance with the end of the NBA television deals. 

Etc.

The amnesty clause,  "stretch" exception," and length of time a team can match an offer in restricted free agency for a player have all been agreed to. 

There's more to discuss, including Bird rights, age limit, etc. Some are huge issues, some are small. But the reality is that while the two sides appear very close together, in reality, the players consider themselves very far apart. Reports flooded in Thursday night and Friday morning about upset agents and players, livid with the deal, saying nothing was granted of substance. If that proves to be the mood of the entire union, it's unlikely a vote will even see the light of day, much less an acceptance of the deal. That means decertification, that means lawsuits, and that means the loss of the entire 2011-2012 season. 

There's no more room to give, and it would appear the gap is still too wide.  
Comments

Since: Oct 16, 2011
Posted on: November 12, 2011 3:27 pm
 

NBA Lockout: The league's 'last, best offer'

  <span id="role_document" style="font-family: Arial; color: #000000; font-size: small;">David Stern Told S.I. Legalized Gambling on the NBA May Be a Huge Opportunity <!-- End of The Headline Section -->Boynton Beach, FL Saturday, April 17, 2010 <!-- Image Section -->  In May 1996, Horace Balmer, the NBA's vice president for security, had two speakers flown to Norfolk, Va., whose messages were even very disturbing. Michael Franzese, a former mob boss who fixed professional and college games for organized crime, and Arnie Wexler, who for 23 years was a compulsive gambler. Franzere said, ``I talked to the NBA rookies earlier this season . . . and it's amazing how many confided to me that they have gambling habits. I'm not going to mention their names, but if I did, you would know them" ``I personally got involved in compromising games with players, and it all came through their gambling habits.' ( THE VIRGINIAN-PILOT -May 11, 1996 )

Ten years ago, as a compulsive-gamblers counselor, I was asked to fly to New York to the National Basketball Association office in Manhattan and met with league officials, players and union officials, concerned about players' gambling. I was told, "We have a problem, and we're trying to find out how bad the problem is" Officials asked me to keep my calendar open for the spring of the following year and said to me that they wanted me to address every team and player in the league. They then flew my wife in, and we had a second meeting they asked us develop questions that were going to be given to the players to answer. "We need to know how big the gambling problem is in the N.B.A,"

When I hadn't heard from the N.B.A, I called and asked, "When do we start?" The talked were cancelled, and the response I got was this: "They said that the higher-ups didn't want the media to find out"

Some years ago, I was on a TV show with Howard Cossell (ABC Sports Beat). The topic was: Does the media encourage the public to gamble? David Stern, NBA commissioner said: "We don't want the week's grocery money to be bet on the outcome of a particular sporting event"

Yet on Dec. 11, 2009, commissioner David Stern told SI.com (the website for Sports Illustrated) that legalized gambling on the NBA "May be a huge opportunity"

I wonder how many addicted gamblers placed the first bet they ever made on an NBA game.

The National Gambling Study Commission said that there are "5 million compulsive gamblers and 15 million at risk in the U.S" Forty-eight percent of the people who gamble bet on sports.

Get the real scoop: Talk to me, Arnie Wexler, one of the nation's leading experts on the subject of compulsive gambling and a recovering compulsive gambler. I placed my last bet on April 10, 1968, and has been involved in helping compulsive gamblers for the last 40 years. Through the years, I have spoken to more compulsive gamblers than anyone else in America and has been fighting the injustice of how sports, society and the judicial system deal with compulsive gamblers.

Athletes may be more vulnerable than the general population when you look at the soft signs of compulsive gambling: high levels of energy; unreasonable expectations of winning; very competitive personalities; distorted optimism; and bright with high IQs.

It is time for college and professional sports to outline and execute a real program to help players who might have a gambling problem or gambling addiction problem. Yet college and professional sports still do not want to deal with this. They do not want the media and public to think there is a problem.

And over the years, I have spoken to many college and professional athletes who had a gambling problem. One NCAA study a few years ago reported: "There is a disturbing trend of gambling among athletes in college" You can't think that these people will get into the pros and then just stop gambling.

Compulsive gambling is an addiction just like alcoholism and chemical dependency, and all three diseases are recognized by the American Psychiatric Association's diagnostic and statistical manual. Nevertheless, we treat compulsive gambling differently than the other addictions. Society and professional sports treat people with chemical dependency and alcoholism as sick persons, send them to treatment and get them back to work. Sports looks at compulsive gamblers as bad people and gets barred them from playing in professional sports.

There are people in various sport's halls of fame who are convicted drug addicts and alcoholics, yet compulsive gamblers are unable to get into these halls of fame. In fact, as far as professional sports goes, an alcoholic and chemical dependent person can get multiple chances, whereas a gambler cannot. I have been fighting the injustice of how sports, society and the judicial system deal with compulsive gamblers for many years.

If colleges and professional leagues wanted to help the players, they would run real programs that seriously address the issue of gambling and compulsive gambling. Education and early detection can make a difference between life and death for some people who have or will end up with a gambling addiction.

One sports insider said to me: "Teams need to have a real program for players, coaches and referees, and they need to let somebody else run it. When you do it in-house, it's like the fox running the chicken coop. You must be kidding yourself if you think any player, coach or referee is going to call the league and say, 'I've got a gambling problem, and I need help.' "

The Wexlers run a national help line for gamblers who want help 888 LAST BET

Arnie Wexler ( )

Arnie & Sheila Wexler Associates

Boynton Beach FL

Office #: 561-2490922
Cell#: 954-501-5270

<!--- Contact Information -->  Arnie Wexler Arnie & Sheila Wexler Associates Boynton Beach, FL 561-200-0165<!-- Contact Information End --> <!-- This Section Displayes only in Details View -->




Since: Dec 5, 2006
Posted on: November 12, 2011 2:24 pm
 

NBA Lockout: Is it over?

Everything in the proposal is based on a 50/50 revenue split which the players have finally conceded to if they feel the systemic changes are swallowable (indications are that they don't, but we'll get to that). It winds up costing the players close to $3 billion over the length of the deal compared to the prior deal which gave them 57 percent. That's a heck of a give-back, and yet still not enough for the owners.
The old term voodoo economics comes to mind when I read the above. It is all about what the players have given up. Well here are the facts: NBA BRI last year was $3.8 billion. The old CBA was for 57% of BRI to players. The current offer is 50% of BRI. $3.8 Billion multiplied by 7% is $266 million. Ten years @ $266 million is $2.6 billion. The league has suffered losses of $300 million each of the last six years (the whole CBA just expired.) That equals $3.0 billion in losses if renewed for ten years. So how is it a concession for employees to agree to reduce their salaries to allow the league to survive? This is not a give-back. It is a common sense to take a generous offer that still provides $400 million in losses to the owners. It will not; it cannot get better.

On the system issues the analogy is government regulation. To the businessmen (owners) the regulation continually strangles what they would do to increase efficiency and plan methodically to improve their businesses. This is just like what is happening all across America today. Players want to go wherever they want and whenever they want. Fine for the Lakers, Knicks, Bulls, Mavericks and Heat. For any other fans - you are screwed. The players want mega teams to compete for the championship and second class teams to be cannon fodder for the big teams. Like the Washington Generals are for the Harlem Globetrotters. The owners are trying to achieve NFL style parity where any team in a ten year period can and does compete for a championship. The owners have been pushed enough. They have given $400 million in losses. They have given on hard caps. They have given on guaranteed contracts. All things the NFL has. They can give no more.


coodlink
Since: Nov 12, 2011
Posted on: November 12, 2011 11:56 am
This comment has been removed.

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Since: Nov 12, 2011
Posted on: November 12, 2011 7:42 am
 

NBA Lockout: The league's 'last, best offer'

Lock them out for the entire year and more if needed.  This whole lockout drama is better than an NBA game anyway.




Since: Sep 21, 2006
Posted on: November 12, 2011 3:10 am
 

NBA Lockout: The league's 'last, best offer'

King- you are uninformed. A fedral mediator, nuetral party, has verified the losses. They were and are very real. The fact of the matter is the whole system was out of control. These guys were way overpaid. This is a market correction to get the salaries back in line to where they should be. No more gauranteed  contracts for players who cant produce the results that they are paid for. The whole system had too many blights, too many people biting off and not enough to go around. Unfotunately, the players got spoiled and now can't seem to grasp the reality that they got over for a long time and that time is over.



Since: Sep 21, 2006
Posted on: November 12, 2011 3:00 am
 

NBA Lockout: The league's 'last, best offer'

An NBA Player's League? Sounds great! Would they pay those players a non-senisical 57% of the total profits and lose money year after year? I'd love to see that. You'd have another 400 Micheal Jordans, players who are finally enlightened as to what is all involved in running a business. They'd push a much tougher system than the one that they themselves oppose now; if they became owners. 



Since: Oct 7, 2011
Posted on: November 12, 2011 12:55 am
 

NBA Lockout: The league's 'last, best offer'

Such is the case now... "michael Jordan"



Since: Oct 7, 2011
Posted on: November 12, 2011 12:49 am
 

NBA Lockout: The league's 'last, best offer'

During this lock-out, much has been said about sympathy for players or owners... but not much for city economies lost, or money fans have paid toward the tickets the NBA owners are sitting on.  It is easy to say "just forget the season".  The fact is, in cities such as Oklahoma the promise of a new NBA team brought many new businesses to the downtown OKC area that will be out of business soon with no games being played.  You don't get many of those back. Trust was put in the NBA and the bottom line is, the players and owners are crying over very little compared to revenues lost by cities putting their faith in them.  

Most non season ticket holding fans do not know, that in order to get playoff tickets in April OKC season ticket holders as myself had to pay 20% to this season back in March and pay for the balance of the season within only a few months of that. They have all the ticket money paid in advance sitting in their hands and they have sat on that money offering only 1% APR interest paid back 30 days after each months cancelled games? I could have invested my money elsewhere rather than give the NBA a 1% loan!! The businesses with year long leases downtown get nothing.... but I guess they were gambling on the NBA. Actually, they TRUSTED the NBA!!!!



Since: Nov 7, 2011
Posted on: November 11, 2011 9:56 pm
 

Here is what is going to happen.....

Players are going to file decertification just like NFL players did.

Players are going to sue, just like NFL players did.

The NBA will prevail in the initial court challenges like the NFL did.

Lawyers finally give players honest advice that says they have no actionable causes against owners that can prevail just like given to NFL players.

Billy Hunter who is retired now calls Stern and tells him players are ready to agree if NBA will honor all voided contracts of players due to the decertification.






Since: Feb 2, 2007
Posted on: November 11, 2011 9:41 pm
 

NBA Lockout: The league's 'last, best offer'

Leverage ............. 

The players could start there own league. Sure it would be difficult for the present players to take the economic hit NOW. That being said, they could line out revenue sharing that would keep them compensated through the duration of their lives. 


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