Tag:revenue sharing
Posted on: October 20, 2011 12:01 pm

BRI, revenue sharing take center stage in talks

NEW YORK -- Setting up an important day in the NBA labor mediation Thursday, with BRI and revenue sharing in the spotlight:

* After more than 24 hours of federally mediated bargaining over two days, the two sides are right back where they were on Oct. 4 when it comes to the key issue of BRI split. Two people involved in the negotiations confirmed to CBSSports.com Thursday that the owners are back to offering a range of 49-51 percent for the players, with the percentage varying based on where revenues come in. This is where things were when a crucial session broke down more than two weeks ago, and we all know how that ended: Depending on who you believe, the players either rejected that informal proposal or countered with a band of 51-53 percent, which the league rejected. Either way, the economic negotiation has settled in the sweet spot that it has been heading toward ever since.  The final number A) more than likely will vary based on revenue trigger points, and B) is expected to wind up with the players receiving a share of between 50-52 percent -- the midpoint of the range each side is comfortable with, which we told you on Oct. 4 meant the two sides were only about $80 million-a-year apart. 

* With the owners' planning committee presenting its recommendations on a new revenue sharing plan to the full Board of Governors, the next step will be for the owners' labor relations committee to share the results with the players' executive committee Thursday afternoon when mediation resumes. While the owners have kept their revenue sharing plans separate from the collective bargaining talks, Thursday is expected to be the day when those two crucial topics unite. Before making any further economic moves, the players have been eager to examine the owners' revenue sharing plan as a way to ensure that the union doesn't bear a disproportionate burden of the economic and system changes owners are seeking. Commissioner David Stern has said the plan is to initially triple the revenue-sharing pool and eventually quadruple it. Shifting money from high-revenue teams to low-revenue teams is viewed as a crucial aspect of fitting the league's vision of a flatter payroll disparity into a CBA that already has significant economic concessions from the players built in.  

* Finally, as I examined here, the most prominent sticking point in the talks remains the method by which a reduction in player salaries will be linked up with a new system that seeks to create more competitive balance. Two mechanisms that I didn't mention in that piece could help: an amnesty clause and the escrow system. The latter already was in place in the previous agreement, while the former is a new concept proposed by the owners. Under the league's amnesty proposal, sources say teams would be able to waive a player and have up to 75 percent of his contract removed from the cap and tax, with the remaining balance amortized against the cap over the number of years left on the contract. The player would still be paid 100 percent of the guaranteed money owed; this would be an NFL-style cap management tool to help teams adjust to the new system. The escrow, which evens out any underage or overage in the players' guaranteed share of BRI, also could be used to account for existing contracts that would make it difficult for teams to comply with the lower cap. But this is a tricky one, since any amount paid to the players that winds up exceeding their assigned BRI percentage would have to be refunded to the owners. Union officials may view this as a salary rollback by a different name.

* So, right on cue, sports attorney Matt Tolnick has written a thoughtful piece detailing other solutions to the problem of marrying lower salaries to a more restrictive system. Writing for Hoopshype.com, Tolnick suggests two remedies: 1) Instead of requiring teams to be under a hard or harder spending ceiling (be it a cap or tax level) every year, they would simply need to meet the requirement on average over the course of four or five years; and 2) a rollback of existing contracts commensurate with the players' overall reduction in BRI percentage. The union has flatly rejected rollbacks, and the owners have agreed to back off on the concept. But it might just be the most equitable and simplest way to make all these moving parts fit together without causing a certain class of players (i.e. draft picks or free agents) to bear a disproportionate burden. 

How all of this plays out at the bargaining table Thursday is anybody's guess. But there seem to be enough good ideas to go around.

Posted on: June 28, 2011 6:43 pm
Edited on: June 28, 2011 10:20 pm

Next (and last?) CBA session Thursday

NEW YORK -- NBA owners and players will meet Thursday in Manhattan for perhaps their final bargaining session before a lockout is imposed, leaving little hope that an agreement can be reached before the 12:01 a.m. ET Friday expiration of the collective bargaining agreement.

The bargaining session will be smaller than the full-blown negotiation that was attended by more than 30 players last Friday. The owners' full Board of Governors met in Dallas Tuesday, and commissioner David Stern told reporters there that it was the union that asked to scheduled bargaining for Thursday as opposed to Wednesday.

A formal procedural vote authorizing the owners' labor relations committee to impose a lockout was not conducted. However, the board authorized the committee to "act in whatever way they deem appropriate," deputy commissioner Adam Silver told reporters in Dallas -- which, effectively, is the same thing. It's a moot point anyway; Stern said last week that such a vote was a mere formality, and owners clearly are galvanized to use a work stoppage as a means to achieve their goals of creating a new economic system that guarantees them profitability.

The owners and players remain hundreds of millions of dollars a year apart in their most recent proposals, with the players choosing last Friday not to counter the owners' most recent proposal in which league negotiators offered to guarantee players $2 billion a year in salary and benefits over the life of a 10-year deal.

The players want a much shorter CBA, proposing a five-year deal with $100 million per year in salary concessions. Aside from disagreeing over the most critical issue -- the split of the league's revenues (or basketball-related income, known as BRI) -- owners and players have taken irreconcilable positions on how the money will be distributed to the players. Owners have proposed what they called a "flex cap," with a midpoint of $62 million per team and an undetermined maximum and minimum payroll. The players have rejected the idea, calling it a hard cap in disguise.

While the key players in the negotiation continue plotting their end-game strategy with Thursday night's deadline looming, legal forces on both sides also were busy Tuesday weighing their options. If owners imposed a lockout, attorneys for the National Basketball Players Association would have to decide whether to follow the NFL players' strategy by decertifying the union and filing an antitrust lawsuit. This would be the nuclear option, and one both sides seem to want to avoid since it would turn the dispute over to the federal courts and waste valuable time. With a far longer season than the NFL, choosing the courts over bargaining would all but assure that games would be missed in the 2011-12 season.

Also, if the union decertified, owners and players would no longer be able to continue negotiating after the expiration of the CBA. If both sides decided Thursday that there was enough will to reach a deal, they could extend the deadline or continue negotiating even after the lockout was imposed. The latter would not be an option if there were no union.

It was not clear whether the players' tipped their hand regarding a reluctance to decertify by having more than 30 players show up at Friday's bargaining session with matching T-shirts with the word "STAND" printed on them. In any event, it is clear that each side has a legal option in its briefcase that it appears reluctant to use.

For the players, the union has thus far decided not to file a complaint with the National Labor Relations Board seeking a ruling on whether revenue sharing should be a "mandatory subject" of collective bargaining. While the league continues to assert that its $300 million in annual losses cannot be addressed through revenue sharing alone, union negotiators have been frustrated by owners' refusal to provide details of the league's revenue-sharing plans -- a position that has put the uncomfortable onus on players to accept significant salary concessions before the NBA addresses the competitive inadequacies created by the massive gap among high- and low-revenue teams.

Using league salary data obtained by CBSSports.com for the 2010-11 season and accounting for luxury-tax payments estimated to be paid and received, the gap between the highest-paying team (the Lakers, at more than $112 million) and the lowest (the Kings, at just under $42 million) amounted to $70 million -- more than the average payroll in the league.

For the owners, sources say the NBA's legal team does not seem inclined to file a pre-emptive lawsuit -- known as a declaratory judgment -- asking a federal court to rule that the work rules it has proposed do not violate antitrust law. Such a move would strictly be made to assure the NBA a home-court advantage by putting the case in a court that historically has been pro-management in labor disputes. If the players decertify and file an antitrust lawsuit first, they could do so in any jurisdiction where the NBA does business or has a team -- thus strengthening their chances of getting a pro-labor court.

Given all that, the court of appears to be heavily tilted away from the possibility of a deal by Thursday night. So if you like lockouts, pull up a chair and get your popcorn. 
The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com