Posted on: October 1, 2011 2:53 pm
Edited on: October 1, 2011 3:13 pm

NBA apparel sales to drop 50 percent in lockout?

Posted by Ben Gollivernba-lockout

In 2006, shoe and clothing manufacturer adidas signed on to be the official jersey and apparel supplier of the NBA, paying a reported $400 million over 11 years. Now roughly halfway through that agreement, adidas is about to hit some choppy waters thanks to the NBA lockout.

The Oregonian reports that while sneaker campaigns built around star players, like one launched by adidas for NBA MVP Derrick Rose this week, are expected to flourish like usual during the ongoing labor negotiations, industry analysts are predicting that sales of team apparel such as jerseys, shorts and other items will take a massive hit if the NBA cancels games during the 2011-2012 season.

The paper quotes two experts, Matt Powell and Marshal Cohen, on the subject. 
Apparel sales will be hammered by a lockout of almost any duration, a prediction that would be especially damaging to Adidas -- the league's official apparel provider. 

Look for 50 percent fewer sales of jerseys and other paraphernalia for the duration of the lockout, Powell said. 

And if the lockout lingers, the NBA, Nike, Adidas and everyone else in the basketball business will see declining sales across the board because of declining interest, Cohen said. 

In that event, Cohen said, "people aren't playing as much, not thinking about it as much." 
The NBA lockout has led to a league-mandated gag order with regard to contact between teams and current players, and team websites have been scrubbed of references to current players. The NBA's official store welcomes online visitors with the option of customizing a jersey of a fan's favorite team and does not have any images or links to players on its main page, although jerseys of current players are still available. Obviously this stands in stark contrast to usual practices, which would see highly marketable star players like LeBron James, Dwyane Wade and Kobe Bryant front and center.

While any NBA owner can calculate how much extra money he will take home if the Basketball-Related Income split is rejiggered or if games are missed and player salaries don't need to be paid, it's a much difficult proposition to gauge the longer-term financial impacts of a lost season. The secondary and tertiary spending on things like memorabilia aren't as important as ticket revenue or television revenue, but, still, tens of millions of dollars are at stake.
Posted on: September 26, 2011 9:06 pm
Edited on: September 26, 2011 9:09 pm

Report: Lawyers making millions off NBPA

Posted by Ben Gollivernba-lockout

As a society, we owe The Wire and Breaking Bad many things, but high on our list of debts is gratitude for their poignant, repeated reminder that the lawyers always, always, get paid. Maurice Levy and Saul Goodman would surely react with a knowing grin and a tip of the cap to the lawyers who are beaucoup Bucks off of the National Basketball Association and the National Basketball Playes Association.

AmLawDaily reports that the NBPA has paid millions of dollars for legal representation since 2005, and those numbers don't even take into account expenses incurred during the ongoing lockout, which are not yet public.
With neither party in the habit of discussing such matters, a definitive answer is almost impossible to determine. A review of documents filed with the U.S. Department of Labor by the National Basketball Players Association (NBPA) between 2005 and 2010 offers some insight into how much the union, at least, spent on legal fees for the last round of labor negotiations—and a taste of how much it could end up spending on lawyers in connection with the current talks.

All told, the NBPA spent some $2 million on outside legal advisers during the years in question, a period of relative labor peace that followed the implementation in July 2005 of the league's most recent collective bargaining agreement.

Figures for the NBA side aren't disclosed in the report but it seems reasonable to assume that they are spending in a similar ballpark and that both sides have had to ramp up spending in 2011 in preparation for the lockout, which went into effect on July 1, and the actual collective bargaining negotiations, which still have no end in sight.

The report notes that the union's most highly-paid lawyer, Jeffrey Kessler, earned $1.1 million during the 5-year period. Penciling that out to an annual salary of $220,000, you will be relieved to find out that he banked less than the rookie minimum. 

Hat tip: Zach Lowe on Twitter
Posted on: July 6, 2011 7:23 pm
Edited on: July 6, 2011 7:35 pm

TV networks to lose $1 B if NBA season lost?

Television networks are estimated to lose $1 billion in ad sales if the entire NBA season is lost. Posted by Ben Golliver. lockout

Everybody loses if there is an NBA work stoppage. The players don't get to follow their dreams, the fans don't get to enjoy the diversion and the owners don't get to experience the thrill of chasing a championship.

But the television networks, apparently, really lose.

AdWeek.com reports that the NBA's television partners stand to lose more than $1 billion in advertising revenue should the 2011-2012 NBA season be cancelled. 
ESPN/ABC Sports and TNT stand to lose as much as $1.25 billion in ad sales revenue if the labor dispute negates the entire 2011-12 NBA campaign. Indeed, the NBA audience has become so valuable that the postseason inventory alone accounts for nearly a fifth of the full-season take.

According to Kantar Media, ESPN/ABC and TNT took in $417.7 million in total ad sales revenue over the course of the 2010 NBA playoffs and finals. The going rate for a 30-second spot in the Celtics-Lakers series: $402,000 a pop.
For comparison's sake, numbers released by Forbes.com on Wednesday indicated that the NBA has lost nearly $2 billion over the last six seasons combined. Clearly, the stakes on all sides are very high.

One takeaway from this report: The conflict of interest for the NBA's television partner networks reporting on the progress of the league's labor negotiations is massive and probably hasn't gotten enough play. If you're wondering why there is so much doomsday talk concerning the stalled labor negotiations, realize that the voices predicting doom and gloom may very well be speaking of -- or at least influenced by -- their own financial stake in the matter.

With a billion dollars on the line, any amount of progress would feel insufficient until a deal is finalized, wouldn't it?
Posted on: July 6, 2011 6:05 pm
Edited on: July 6, 2011 6:41 pm

Report: NBA lost $1.8 billion over last 6 years

The NBA reportedly lost nearly $2 billion over the last six years. Posted by Ben Golliver. lockout

On Tuesday, we noted a back-and-forth between the New York Times and the National Basketball Association involving a dispute over how profitable the league has been in recent years. The Times used financial estimates provided by Forbes to conclude that the NBA could potentially be misrepresenting its financial losses; the NBA fired back by disputing the report in a statement, saying that the league had failed to turn a profit in each season of the recently expired collective bargaining agreement, concluding that its losses were "substantial and indisputable."

On Wednesday, Forbes.com reported that it has obtained new, audited financial information concerning the NBA's economic health. The new report references "net income," which it defines as income "after the deduction of all costs" that gives "a more definitive picture."
Sources close to the NBA labor negotiations have provided net income numbers for the league each year over the last five years, plus projected losses for the 2010-11 season. Given that the NBA is saying that they are running at a net loss, as opposed to the NFL, which is saying they are seeing profits declining, the NBA is compelled to open their books as part of labor law, and have done so. The following numbers are audited figures. If the projected figures are correct, the NBA will have lost $1.845 billion over the last six years...

The following shows the losses, as well as the number of teams that reportedly have run at a loss the last five years, plus projected losses for the 2010-11 season:

  • 05-06: 19 clubs ran at a loss, total losses of $220 million
  • 06-07: 21 clubs ran at a loss, total losses of $285 million
  • 07-08: 23 clubs ran at a loss, total losses of $330 million
  • 08-09: 24 clubs ran at a loss, total losses of $370 million
  • 09-10: 23 clubs ran at a loss, total losses of $340 million
  • * 10-11 23 clubs ran at a loss, total loss of $300 million
The release of these figures marks another step in the right direction for the league, as transparency with regards to their losses has become a hot button topic, especially this week. With that said, the top-level numbers don't do much to further the NBA's case in the public eye, other than to show that their claims of a "broken system" aren't entirely without merit.

The perception of the league's financial success (TV ratings, website traffic, increased ticket sales) may in fact badly outweigh the league's actual financial success. While it might not be fair, the burden of proof falls on the NBA to fully document and explain its position of hardship. Otherwise, the assumption from a public who can't relate to the sums of money being discussed is that the league is guilty of exaggerating their losses. Skepticism will continue until a full analysis of the league's books are allowed by an independent source. 

Posted on: July 5, 2011 11:19 pm
Edited on: July 5, 2011 11:24 pm

NBA: We lost money in every year of last CBA

The National Basketball Association has released new specifics about its financial struggles. Posted by Ben Golliver. lockout

On Tuesday, we noted a New York Times analysis of the National Basketball Association's finances which concluded that data collected by Forbes makes it seem that perhaps the league isn't in as dire a shape as it claims to be.

Later Tuesday, the Times printed a statement from the NBA which said the figures used "do not reflect reality" and shed new light on the league's financial struggles.

The statement, attributed to spokesman Tim Frank, said the NBA has incurred "substantial and indisputable losses" and reiterated that the league's books have been shared with the National Basketball Players Association. 

Here are a few choice cuts.
The N.B.A. and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years. 

The league lost money every year of the just expiring CBA. During these years, the league has never had positive Net Income, EBITDA or Operating Income.

Ticket revenues have increased 12% over the 10 year period, not the 22% reported.

In 2009-10, 23 teams had net income losses. The losses were in no way "small" as 11 teams lost more than $20M each on a net income basis ... Our net loss for that year, including the gains from the seven profitable teams, was -$340 million. 
As of yet, the NBA has not made its books available to independent media analysis. Its claims are therefore unverifiable. There will be skeptics until (if?) that last step is ever completed. 

Just because they are unverifiable, however, doesn't necessarily mean they are totally unreliable. What the NBA is admitting too here is pretty striking. Year after year of losses. A plurality of teams losing money. A third of the league's teams losing lots of money. All this despite rising ticket revenues and a solid television deal.

Given all of this new math, solely blaming the players, whose salaries are tied to Basketball-Related Income, simply doesn't add up. Increasing transparency as the league has seems only to only increase the questions the owners should be asking of each other.

Here's three questions for starters. To what degree do they need to protect themselves from themselves when it comes to spending on player salaries? How much does revenue sharing need to increase? How serious are they, really, about a hard cap system?  Those are big, hard questions that will eventually require sacrifices and compromises from someone.
Posted on: June 30, 2011 5:33 pm
Edited on: June 30, 2011 6:12 pm

NBA Lockout: David Stern says 'I'm not scared'

NBA commissioner David Stern says he is not scared of an NBA lockout. Posted by Ben Golliver.

Following a bargaining session in New York City on Thursday, NBA owners informed the players that there would be a league-wide lockout, effective at midnight.

After that announcement, NBA commissioner David Stern and his deputy, Adam Silver, addressed reporters in a televised press conference.

Stern was asked what scares him about an upcoming lockout, which could result in a work stoppage and missed games if the two sides are not able to reach a compromise and create a new collective bargaining agreement.

Stern said, "I'm not scared, I'm resigned to the potential damage that it can cause to our league. As I said earlier, all of the people who earn a living from our league, as we get deeper into it, these things have a capacity to take on a life of their own. You never can predict what will happen."

During the 2010-2011 NBA season, the league enjoyed record television ratings and website traffic. A lockout, some fear, could damage that progress made and turn fans off.

Here's video of NBA commissioner David Stern saying that he is not scared.

Posted on: June 30, 2011 3:13 pm
Edited on: June 30, 2011 5:22 pm

NBA owners to players: lockout starts at midnight

The NBA owners have informed the players that there will be a lockout. Posted by Ben Golliver.


CBSSports.com's Ken Berger reports from New York City that the NBA owners have informed representatives of the National Basketball Players Association that they will be instituting a lockout, as no deal was reached on a new collective bargaining agreement.

This decision was expected, given the lack of progress during recent negotiating sessions. The two sides had until midnight Thursday to negotiate a deal that would have avoided a lockout. The lockout will officially begin at 12:01 AM eastern time. Berger reports that the two sides have not yet scheduled any future bargaining sessions.

Berger also reports that the players union "has no plans to decertify as of now and will continue to negotiate, according to a source." That decision will allow the two sides to continue negotiating.

Berger quotes Derek Fisher, president of the NBPA, regarding a "last-ditch proposal" presented to the owners on Thursday: ""It was met with the reality that we'll probably be locked out tonight."

He also quotes Billy Hunter, Executive Director of the NBPA: "I've been anticipating this lockout for the last two or three years, and now it's here."

The Associated Press adds these additional details.
Despite a three-hour meeting Thursday, the NBA and its players could not close the enormous gap that remained in their positions. The CBA was due to expire at midnight.

All league business is officially on hold, starting with the free agency period that would have opened Friday, and games eventually could be lost, too. The last lockout reduced the 1998-99 season to just a 50-game schedule, the only time the NBA missed games for a work stoppage.

The sides remained far apart on just about every major issue, from salaries to the salary cap, revenues to revenue sharing.

Players, who previously offered to reduce their salaries by $500 million over five years, considered the owners' proposal for a "flex" cap, where each team would be targeted to spend $62 million, a hard cap. Although the league said total player compensation would never dip below $2 billion over the life of its proposed 10-year deal, that would amount to a pay cut for the players, who were paid more than $2.1 billion this season in salaries and benefits.

Owners also wanted a reduction in the players' guarantee of 57 percent of basketball revenues.
NBA commissioner David Stern told reporters in a televised press conference that the players suggested that the two sides should "start from scratch" in their forthcoming negotiations.

"The players on the way out suggested to us that when we reconvene maybe that we should start from scratch. Maybe there are things that we should think about that we haven't thought about before. I don't mean to suggest [the league's current offer] is 'off the table' in any threatening way, it just hasn't done the job. The question is what does it take on both sides to get the job done."

Stern also said: "I'm not scared, I'm resigned to the potential damage it could cause to our league."

Here are live updates as they come in from New York City regarding the labor negotiations.

Yahoo! Sports quotes NBPA representative Matt Bonner: "We tried to avoid a lockout. Unfortunately we could not reach a deal."
CNBC.com reports that Billy Hunter, the Executive Director of the NBPA, said: "Their position was that we're too far away... the gap is too great." The site also quoted Hunter on the decision not to decertify the union: "I just don't think it's necessary."

The New York Post reports that Hunter expects the two sides to meet "in two weeks" to continue their negotiations. The paper also notes that the players association has requested "documentation" from the owners.

The Salt Lake Tribune quotes Utah Jazz guard Raja Bell on the union's resolve: "We're not going to crack."

This post will continue to update throughout the day as news breaks.
Posted on: June 29, 2011 10:30 pm
Edited on: June 30, 2011 1:12 am

NBA Lockout Primer: questions and answers

A quick primer to get you up to speed on the NBA lockout. Posted by Ben Golliver. 


If you think the upcoming NBA lockout and potential work stoppage boils down to billionaires and millionaires fighting over who gets to make money off of a game, I wouldn't argue with you.

Despite more than a year of rhetoric from both sides, charges that the game's economic model is totally flawed and needs to be revamped and threats that an entire season could be lost, the labor situation facing the NBA boils down, first and foremost, to dollars and cents. NBA owners are looking for a larger share of the pie, less financial risk and a more equitable playing field; the players are mostly aiming to maintain the status quo, which includes a healthy share of league revenues, lengthy, guaranteed contracts and a soft cap system that helps prop up player salaries.

The league's teams are represented by NBA commissioner David Stern, deputy commissioner Adam Silver and an ownership panel. The players are represented by NBA Players Association Executive Direction Billy Hunter, NBPA president and Los Angeles Lakers guard Derek Fisher, and other board members.
To get an idea for what the two sides are arguing about and where they stand on each of the major issues, let's break it down item by item.

1. Split of Revenues 

By far the biggest issue facing this labor situation is the division of overall revenues. In the NBA, revenues are referred to as Basketball-Related Income. Under the current system, the players take home 57% while the owners are left with 43%.

Over the last year or so, the owners have raised a number of reasons they feel their share should be bigger: costs associated with stadiums, additional expenses incurred through long-term debts, the rising costs of travel and so on.  The NBA has claimed that 22 of its 30 franchises lost money this past season.

The easiest way to fix that problem, of course, is to drastically reduce costs associated with players. In other words, by cutting their salaries significantly. Options on the table: rolling back future salaries of previously agreed to contracts, reducing the length of contracts (less years = less money) and reducing the amount of guarantees in a contract (allowing an owner to get out of a bad contract more easily or more quickly). It goes without saying that the players are opposed to all of those ideas on principle, given that they represent major concessions to what they have previously negotiated for themselves.    

2. The Type of Salary Cap

Unlike the National Football League, the NBA operates under what is called a "soft cap" as opposed to a "hard cap." In a hard cap system, there's a spending limit that you cannot exceed on player salaries. Once you hit the maximum salary amount, you can't add players without subtracting current players by trading or waiving them. In a soft cap system, teams are able to exceed the salary cap in a number of ways. In the NBA, the most common way to exceed the salary cap is to re-sign your own players to large contract extensions. The NBA also has salary cap exceptions which allow teams that have exceeded the salary cap to sign additional players. These include the mid-level exception, which allows every team  over the cap an extra salary slot that is equal to the average player salary in the league, and the veteran's minimum, which allows a team to fill out its roster with low-dollar salaried players.

The NBA owners have proposed switching the league's salary cap to a hard cap system. This would have the effect of limiting spending overall, as owners would not have the ability to employ their exceptions or sign their star players to lucrative extensions without making cuts from the rest of their roster. Under a hard cap system, if you wanted to sign a star player to an extension, you would have to make room by getting rid of other players first. For example, if the Memphis Grizzlies wanted to sign Marc Gasol this summer, they would have to trade away some of their current players to make it happen.

A soft cap system is ideal for the players. It keeps salaries high, gives them good options in free agency and allows them to be rewarded for their loyalty if they decide to stay with their current organizations when they become free agents. It's worth noting that some teams -- especially big-spending teams -- are going to be opposed to a hard cap system. Star-laden teams with large payrolls like the Miami Heat, Los Angeles Lakers and the New York Knicks would be difficult, if not impossible, to build in a hard cap system. The Lakers have the highest payroll in the league, in part, because they have signed stars like Kobe Bryant, Andrew Bynum and Lamar Odom to big-dollar extensions.

The NBA has enjoyed booming popularity this season, in large part because of the success of the Heat, which was built on acquiring multiple, high-dollar free agents. Switching to a hard cap system could kill that golden goose. Still, many owners are pushing to level the playing field when it comes to spending because large-market teams are able to shell out significantly more dollars because their revenues -- in the form of television deals and the like -- are so much greater. One possible compromise that has been raised is a "flex cap" system, which would firm up the current system a bit but still allow for some exceptions.

A balance will need to be found between protecting the owners' ability to retain their own players while also protecting them from being able to spend so recklessly that they are not able to turn a profit. The players believe this boils down to the owners simply needing to exercise greater restraint. The owners believe the system needs additional measures because spending big -- way too big -- has become necessary to put together a winning team. 

3. Revenue Sharing

There's no better way to illustrate the difference between large markets and small markets in the NBA than to look at the TV deals. In 2007, the Portland Trail Blazers reportedly signed a 10-year agreement with Comcast Sports NorthWest to carry their games for $120 million. In February, the Los Angeles Lakers announced a reported 20-year, $3 billion deal with Time Warner Cable. In other words, the Lakers will receive more revenue in the first year of their deal than the Blazers will over the duration of their decade-long deal.

Currently, the league has a system of revenue sharing that redistributes money from teams that exceed what is called the "luxury tax." When teams spend significantly over the salary cap, they pay a dollar-for-dollar tax to a league-wide fund that gets split up and sent out to all the teams that didn't spend significantly over the salary cap. 

Generally speaking, small-market teams argue that the large-market teams couldn't succeed and profit as greatly as they do without the league structure and all of its teams. Therefore they believe large-market teams should share a great portion of their revenues. The large-market teams believe their organizations and brands are the ones generating the revenue and therefore believe they shouldn't need to share those revenues with small-market teams. By and large, the players are mostly indifferent on this issue. They care less about how the owners divvy up their money and more about what slice of the Basketball-Related Income pie they receive themselves. 

NBA commissioner David Stern has said he wants to create an atmosphere where all 30 teams can compete for a title. That's been taken to mean that the NBA will expand its revenue sharing system. It's possible that the revenue sharing discussion would come after the first two issues mentioned above are resolved.

4. Tertiary Issues

Every time these two sides get together to negotiate, smaller issues arise. In the past, these have included things like the dress code, the institution of a one-and-done rule which mandates players attend college for at least one season, and the inclusion of an amnesty clause, which allows owners to achieve some financial relief on a contract that currently exists.

This time around, the owners could push for an expanded version of the one-and-done rule which would require two years of attendance in college. The players generally oppose that revision -- and the current rule -- preferring that high school players be eligible to enter directly into the NBA Draft pool. 

Both sides could be in favor of an amnesty clause as the owners receive financial relief and the players would be paid in full and able to seek a new contract if it is used.

A franchise tag, which would increase a team's ability to keep its own high-demand free agents, has also been rumored.
The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com