Posted on: August 5, 2011 10:35 am

There are ways around China rule to block players

By Matt Moore

In the ever-escalating battle between those who do and do not think that players heading to China to play is a viable option, we have some new developments. 

First there was a report last weekendthat the Chinese government and CBA (that's Chinese Basketball, not Collective Bargaining) officials were working on a rule change to prohibit opt-out clauses from being included in any contract for an NBA player during the lockout.  Many skeptics of the "China plan" ho-ho-ho'd the development, laughing off the absurdity squashed beneath the ruling of such a powerful entity. On Wednesday, noted Chinese basketball site NIUBBall.com reported that teams are examining ways to circumvent the ruling, essentially because they don't really care what that powerful entity says. The quick answer? Why not just make an agreement with the player to release them instead of instituting a formal contract provision? From NIUBBall.com:
The answer is unclear, which is why teams are growing more and more convinced that they can negotiate an under-the-table agreement with players that would guarantee a return to America after a set period of time or after the lockout ends. To remain in line with CBA policy, the team would then sign an official one-year deal consistent with the CBA’s rules prohibiting an out-clause, which would be turned in to and approved by the league office. After the player left, the team could point to the official contract and state a variety of reasons for why the player left — breach of contract, injury, inability to adapt to China, etc. — and claim no responsibility for the player’s departure. With a league approved contract on file in league headquarters, there wouldn’t be any way for the league to prove foul-play.

“Since word of the new rule got out, the common thinking to get around this has been to write up two contracts, the real one [that has been negotiated with the player] and the one that is officially filed with the CBA,” said another general manager speaking anonymously. “We feel we can absolutely get a deal done with a player privately. Once the lockout ends, we’ll just release him. Then, after he’s gone, we’ll pull up the one-year contract that is on file with the league.”
via NiuBBall.com » Teams searching for ways to get NBA superstars to China

So now the question becomes whether players can trust their Chinese teams to uphold terms of the under-the-table agreement, and what response the CBA would have to breach of contract if the team did not wish to pursue any action against the player. Oddly enough, the CBA should learn something the NBA is already very familiar with: the teams make the rules. It doesn't really matter what the organizing body says if the teams that comprise the league choose to ignore it. 

People are still very doubtful that there's enough money in China to make the trip worth it to players, but again I'll ask about the sponsorship money. Salary money to NBA stars is often the lowest total they get in a year, at least in a per-hour manner. And the financial ramifications of building a base in China go far beyond this season. Developing that by playing there for a year will cement income for years to come. It's tapping a wide-open market that they can only barely scratch in the offseasons, and yet they try to anyway, like Kobe Bryant, Carmelo Anthony, and Chris Paul's Chinese tour a few weeks ago. Imagine that potential augmented by actually playing for a local team.

One thing that has been confirmed by NIUBBall.com is that the contract offer for Dwyane Wade from one of the clubs, reported by a local newspaper earlier this week, was denied by the team's general manager. Wade's the kind of player you can't believe will go overseas, based solely on his injury history. Kobe Bryant is older, and has had knee, finger, and ankle injuries in the past two years and is still in better shape than Wade physically. Bryant's also much more likely to ignore sound medical advice and go off of what he "feels."

But still, no one's signed in China. The cupboard is full (or bare, depending on how you look at it). So clearly the rush is not on. There will continue to be questions about how this whole thing will work out, and the only thing that's truly certain is that no one really knows. We're in uncharted territory, feeling our way through just like the players, the NBA, the CBA, and its teams.  
Posted on: August 1, 2011 2:47 pm

Did Al Jefferson cause the lockout?

By Matt Moore

When Carlos Boozer's time with the Utah Jazz mercifully came to an end last summer, the Jazz had a number of options with what they wanted to do. They could pursue some free agents to fill in the blanks and plan for the future. They could hoard the cash and wait for a rainy day. Or they could make a trade to acquire a quality player.

The Jazz gambled on the latter, acquiring Al Jefferson for pieces to pair with Deron Williams. The Jazz started off lookings pretty solid, a near-guaranteed playoff team. They beat the Heat!

Then the wheels fell off. Then the bottom dropped out. Then the wagon caught fire and flew off a cliff and everyone died. And that's how we got a lockout.

The end.

Okay, not really. Let me explain, though. From the Salt Lake Tribune:
The No. 11 highest paying team on the planet, according to Harris? The Jazz, who shelled out an average of $5.8 million per player and had a total payroll of about $75 million.

“The fact that the Jazz are 11 is … kind of counterintuitive,” Harris said.

The Jazz declined to comment for this story. But Chief Executive Officer Greg Miller acknowledged in April that Utah rolled the dice during 2010-11 and lost “quite a bit” of money, while General Manager Kevin O’Connor has often praised the Miller family’s willingness to spend what it takes to compete in the modern NBA.
via Utah Jazz nearly topped the world in average payroll | The Salt Lake Tribune

So the Jazz pumped more money into the Jazz than the season prior. Sure, but it was only $3 million more. (The Jazz paid out $71.9 million in 2009-2010.) That couldn't have made that much of a difference, could it? 

Well, when a move goes awry like that, the effects start to trickle down.  During the season, interest dwindles (along with folks not coming out of principled loyalty to Jerry Sloan),which affects ticket sales, sponsorship money, merchandising, and all other sources of revenue (many if not all of which are included in the BRI-- Basketball Related Income --  the split of which is being debated in these CBA talks). The Jazz failed to make the playoffs, which meant the Jazz lost all the revenue from their playoff participation, which they obviously had to be counting on. All of this in an ongoing recession which sees everyone evaluating where their money is going. So now you've got the crux of the issue. 

Of course Al Jefferson didn't create the lockout. But the Jazz' situation around their decision to invest in Jefferson (right as it seemed at the time) speaks to the complex elements in play that go beyond "the system's broken." It's not teams that spend a lot which is hurting the league outright. It's teams that spend a lot and don't create enough revenue to cover its investment. It's also in part teams which don't spend a lot and then lose a lot. But what's the biggest factor, there? Teams which make certain decisions which either don't pan out off of huge investments, or don't create revenue because there has been no real drive to do so. You can't just cut spending while still losing income and expect to profit. That's not really a salient business model for these times. 

So when we talk about how the system is "broken," we're really talking about how the system creates catastrophic endings for perilous decision making. This doesn't mean that the entire model is flawed, it means that two things need to simultaneously occur: teams ability to hold onto more revenue in the split needs to be assured (which the NBPA has been amiable to), and teams need to exercise better business practices to increase revenue and not put themselves in a position to fail, then complain when they fail. Al Jefferson seemed like a great move at the time, but it wound up not working out. That's part of business. But if Jefferson gets more in sync with the system and flourishes next to Devin Harris and the next wave of Jazz players, it could wind up being good in the long run. And in those years, the Jazz will cover their losses and pull profit. 

NBA teams shouldn't face economic disaster whenever they make a bad signing or trade. And the Jazz should be encouraged as a small-market team that was willing to spend. But this is the cost of it being a free market, and allowing for competition. We don't want everyone assured of equal success. That provides no incentive for improvement or innovation. And the last thing we need is a fleet of Donald Sterlings walking around. 

Posted on: July 18, 2011 10:47 am
Edited on: July 18, 2011 1:50 pm

Chris Paul says the lockout is not about stars

Posted by Matt Moore

Chris Paul is not like a lot of the other NBA stars. Most of them only became interested in the lockout within the last year and a half (really All-Star 2010). Paul's been active for years in the executive side of the NBPA. And unlike a lot of stars, who are simply looking to protect the deals they've already signed, Paul's a free agent in 2012. He has the most to lose personally from this lockout and a potential restructuring of salaries. But in an interview with Business Week, Paul made it clear that he believes this lockout is about the good of the many, not the good of the few. From Business Week:
There’s a cross section of players on the executive committee, which has to represent everyone. I felt there should be a guy with a maximum contract to give perspective. [Paul will be paid $16.3 million by the New Orleans Hornets next season.] Whatever sacrifices have to be made are worth it to make sure we get a fair deal, a deal that represents the whole. Some kids go to college knowing they’re only playing one year before turning pro, and it was fitting that the last meeting we had with the owners came the day after the draft. We’re standing up for those players because they don’t have a say-so. We’re their voice: It’s a big brother mentality.
via Chris Paul on Risking a Lost NBA Season - BusinessWeek

Paul also talks about how the players have a responsibility to future generations of players, making the lockout seem like more of a moralist argument than a business deal. And Paul's right that players that aren't in the NBPA have no way of protecting their future. At the same time, the players need to make sure they don't overdramaticize the conflict any more than they have. This is a business deal and should be treated as such. 

But with Paul taking this kind of stance, publicly, it speaks to the resolve of the players. If it's just individual players looking out for their individual interests, there's a lot that can go wrong to fracture the union. But with the players looking to not only protect past work and present prosperity, but also the future, that becomes an ideological approach, which is much more difficult to crack. But in the end, this comes down to money, which is what always talks. The owners know all they have to do is survive and stretch out the lockout as far as the player's resolve will take them. It's a war of attrition, even if the players are rallying around their flag to stay the course. 

Posted on: July 15, 2011 5:52 pm
Edited on: July 17, 2011 6:59 pm

So you want to win people's support: NBA Owners

How can NBA owners win the public relations battle during the NBA lockout? Posted by Ben Golliver.


On Thursday, Matt Moore took a look at how NBA players can curry favor from the general public during the ongoing NBA lockout. His plan included circling the wagons, being honest and educating fans and taking the high road. All great ideas for any negotiation, especially one as high-profile and public as the NBA's.

With the players' PR plan in place, how about the owners? What can this group of billionaires due to help gain support, if not sympathy, for their plight? 

Let's start off by acknowledging that this is an impossible task. The common man cannot relate to the billionaire. It's impossible. The gap is too wide, the lifestyles are too different, the realities are too disparate. Likewise, the billionaire, no matter how hard he tries, cannot put himself in the common man's shoes. Once your income hits the eighth or ninth digit, a bubble forms around you that is impervious to real, everyday struggles.  When people are hired to pick up your dry cleaning or answer your telephone or manage your Twitter account, it's over. There's no going back.

The goal for the NBA owners, then, shouldn't be unrealistic. They don't need to come off like Santa Claus. Instead, they just need to appear a little bit less like Montgomery Burns. Right now, the general air from ownership and the league is that it doesn't much care for the public relations side of this battle. It has remained very quiet, refused to open its books publicly and responded to only a few accusations with prepared statements. Otherwise, pretty much total silence. 

In that vacuum, the players have shined. They've put together funny spoof commercials, shown off their skills in pick-up games and camp across the globe, continued their massive presence on social networking sites and done a very good job of communicating their desire to not miss any games. Put all of that together, and the owners have a tough uphill battle to climb.

Here are five things they should do to get started on the public relations war:

1. Pledge To Protect All League Jobs

The No. 1 complaint against any professional sports team owner who locks out players is that he is greedy. That's the No. 1 complaint because it's pretty much always true. There's no good, direct answer to that question. The owners have made it clear they want more money, significantly more money, and that makes them look greedy.

A good work-around solution: Do what you can to make the players look greedy. Put all the pressure and attention on players' salaries -- they make millions to play a game -- while doing whatever you can to make yourself look like a philanthropist. Encourage your teams to increase their efforts in the community. More camps! More hospital visits by team employees! More everything! Then, to cap it all off, pledge to protect all jobs -- within the team and at the league level -- throughout the duration of any work stoppage. 

See what that would do? It would isolate the players, making them look like the bad guys. "We're all over here doing our jobs and protecing our hard-working employees and their families while you guys make so much money it threatens to put us out of business!" The general public highly values loyalty and commends those who put their employees' interests before their own. 

Oh, wait. Wait. You're telling me the NBA announced less than two weeks into the lockout that it's laying off 11% of its workforce and then said it was due to a desire to cut costs? In other words, because the league wanted to keep more of the money it was generating? Oh boy. We're off to a rocky start here. 

2. Don't Make Idle Threats

Appearing tough is very, very important during a negotiation. You can't blink first. You've got to make it clear that every word that you speak is to be taken seriously and every demand you make must be met or the entire deal is at stake. Those are basic negotiating principles. Whatever you do, owners, do not make idle threats. If you say that you will take an action if something happens, you have to take that action when that something happens, or you look both soft and like you're blowing smoke. Your credibility gets crushed and the other side has no real incentive to take any of your other demands seriously. 

Unfortunately, the NBA has failed this one too. As soon as the lockout went into effect on July 1, the league made it very clear that a gag order was in place. No team employees were to make public reference to a current player or they would risk a $1 million fine. In addition, the NBA scrubbed its website of references to current players. 

Granted, that's a fairly ridiculous and petty decision, but it was their decision. What's happened since the gag order went into effect is even worse. Minnesota Timberwolves president David Kahn mentioned multiple players during a press conference streaming live on his team's official website. Dallas Mavericks coach Rick Carlisle mentioned multiple players during a radio interview. Both were clear violations of the supposed gag order and yet the NBA has tap-danced around whether it will fine the offenders as threatened. Guess what? Until someone gets fined, and fined big, violations of the gag order will continue ad nauseum. Each time a coach or team executive accidentally steps out of line, the NBA looks less and less in control and united.

In the public's eye, they start to look like they're full of it. Why should the Average Joe believe the NBA is losing millions of dollars a year if the league won't follow through on its promise to fine people? Say what you mean and mean what you say. Hammer the offenders or offer a really, really good explanation for why you didn't. Otherwise, the impression is that you're tough-talking bullies who don't need to be taken seriously.

3. Take The Lead On Meetings

This is an easy one. Fans do not want to miss games whatsoever. The players seem committed to doing whatever it takes to not miss games. At least some portion of the owners seem content to miss a whole season. That's a huge public relations black eye.

The best way to fix it? Go way above and beyond to make it clear that you're willing to meet to negotiate at any time and place. No two-to-three week breaks after the lockout is imposed. No waiting until the players start to feel a pinch in the fall. No delay tactics. If you're seriously committed to potentially losing a season, you absolutely have to be able to point to your track record and say, "Look, we did everything in our power to prevent this from happening. We killed ourselves to make a deal." Get up early, stay late, use videoconferencing tools, use subcommittees. Whatever. It. Takes. If you want a new, restructured economic system then you must do everything in your power to prove your commitment to the goal. 

Missing a season would be a bitter pill to swallow, but it will be 10 times worse if it happens without continued negotiations and contact between the sides between now and the start of training camp. The general public hates billionaires and millionaires arguing over money. But the general public really hates billionaires and millionaires who can't even be brought to the same table to argue over money.

4. Use The Past As A Guide For The Future 

The NBA just completed a Collective Bargaining Agreement that both sides, obviously, signed off on. The owners chose to lock the players out because they felt an overhaul was necessary. Other than repeating a desire to guarantee a profit to its teams and increase competitive balance, the owners have not done a good job of communicating exactly what portions of the framework need to be reworked, and why. An important ingredient in this communication is explaining what didn't go according to the owners' plan at the time.

While the league has maintained that it won't conduct negotiations in public, finding a way to present the flaws or unexpected outcomes from the previous deal would help the general public have a much better idea of where they are coming from. Just about everyone can relate to changing interest rates on their mortgage, car loan or credit cards. No one likes to pay more after the fact than they were expecting, especially if it's something that is out of their control. The owners would be wise to own up and lay out the areas where that occurred. "We didn't anticipate this" or "This wound up costing way more than projections" or "This competitior came in and influenced this revenue projection" or whatever.

Lay those out as mistakes or needs for correction. Then, and only then, provide the remedies and explain why those remedies protect the league from future risk. Belts have been tightened across the country. People have spent more conservatively on discretionary items. Connect your goals to that behavior and you've got a real chance to make some headway.

5. Paint A Pretty Picture 

As any GM worth his salts knows, you absolutely must sell hope. There needs to be a pot of gold over this rainbow. All the dreary talk about losing money gets people down. Nobody cares if you're losing money. Again, you've got to flip this for fans. What is in it for them? 

The owners must start painting the dream. How great will the NBA be in three years if you get your way? How many homes will be watching games then compared to now? How many teams that would have had to move will be safe in their current locations? How many teams won't have to be contracted? How many jobs will be saved and/or restored? How many hours of community service can be added? What cool new events can be added to All-Star Weekend? What preseason showcase tours will pop up on the schedule? What interactive TV or internet programming will now be possible?

Sell. Sell. Sell. You made millions selling products or services. Do not stop selling the future of your league in your vision. People want to hear it. Just make sure it sounds better than the status quo for someone besides yourselves.


When it's all over, offer the fans a blatant kickback. Discounted tickets or jerseys. Public autograph sessions. Free NBA League Pass for an extra few weeks. Whatever. Have a goodwill gesture on tap because, regardless of how long the lockout extends, you'll need it. 
Posted on: July 14, 2011 4:49 pm
Edited on: July 14, 2011 10:56 pm

So you want to win the people's support: NBPA

Posted by Matt Moore

Imagine you're the players of the NBA. You've known this was coming, you've hoped it could be avoided, you've even made a few compromises to try and avoid it. But here you are, locked out of the league you tried desperately for years to get into, staring at whatever the Istanbul version of Craigslist is. You know it's going to be a long fight, but it's one you're committed to winning (you even had T-Shirts made and everything!).

And while you understand that the people, the fans, the public have no real bearing on who ends up winning this thing, that neither side is going to look good in this lockout, every little bit helps. So how exactly are you going to get the public's support on your side of this ugly little spat with the powers that be?

Here's a five-step plan.

Step 1: Circle the wagons. And that means wrangling a few wild horses. You want the public to sympathize with you? Playing up the human interest angle isn't going to work here. You make zillions of dollars playing basketball while most people work in an office with a coffee machine that makes sludge and a terrible boss who likes baseball or something. But you don't need to engender sympathy, you just need to engender respect. And that means staying out of trouble.

It's the offseason. Guys aren't even under the leashes of their respective teams during workouts or events. But if the players want the public to take them seriously as a group of professionals fighting to protect their earning potential and wage-earning, they need to represent themselves as such. And respected professionals aren't arrested. When that happens respected professionals become disrespected (often former) professionals. DUI, assault, even things like speeding in extremely fast cars, all of these things contribute to an image the NBPA needs to keep at bay. This goes for every member of the union, regardless of age, race, or background. It's one thing when a player's irresponsible actions hurt himself, but now it can damage the collective efforts of the union.

Whether it's applying pressure to the right people, making personal pleas, or just downright babysitting, the player's union needs to make sure its athletes come across as suit-wearing professionals who are being prevented from going out and doing their job. That's harmed if it looks like they're having the time of their life, blowing the money they supposedly need to protect and getting in trouble.

Step 2: Spin the Euro bottle. Right now players escaping to Europe seems like a vacation. Fans feel like their favorite players (or Zaza Pachulia) are skipping out to go make money somewhere else while they're stuck without a team. The players need to first commit to who's going to go and who's not going to go. A decent combination of stars and role players should go, with players who have planned well enough to survive the lockout on their own staying home. Then the trick is to push this publicly as something they were forced to do. "Well, I need to play and I'm not allowed to here, so I went elsewhere." It should be made about staying in shape for their careers (for the NBA fans) and not about the money. In fact, players should pledge a certain amount of their income to charity, and a certain amount to a collective fund for the union.

The worst thing that can happen is this looking like a selfish avoidance of the problems here in the States. Every player is affected by the lockout, and every player should be working to bring it to an end. Pitching their European defection as an effort to do just that, to get the owners off their gulag-prison-guard-like stance, is the best way to go about it. Don't pretend your "family needs to eat" is the reason you're going. Make it about basketball.

Step 3: Level with the fans. A certain amount of PR in ugly situations like this involves saying things and taking stances you know make you sound like a moron. But those are often things to keep you out of trouble, a defensive position. What the players need to do is capitalize on the fact that they were the ones locked out, not put on strike, and level with the fans about how this looks.

When I asked Kevin Love about the lockout earlier this week, he said that fans "don't want to see billionaire owners and millionaire players bickering over money." This was a golden quote that could be dangerous if Love distanced himself from the rest of the union. But he didn't. He's firmly behind the union's efforts, but recognizing that people aren't going to feel sorry for the players, no matter how upset they are with the league's approach.

Being honest with the fans and acknowledging that there's a certain amount of ridiculousness to this process considering the amount of money involved doesn't hurt the players' case. They're not asking for change. They're just asking for things to stay the same. That should remain firmly in their wheelhouse of approach.

Step 4: Educate as much as possible. Your average person is going to be offended that players are doing anything but being grateful for the money they earn playing a game. Once again we return to the fact that so many people's jobs suck. It's offensive that someone who's life is awesome is saying his life isn't awesome enough.

So instead, focus on putting things in terms people can understand. "If your boss walked in one morning, even though your company has experienced record growth and critical success in the past year, and asked you to take a significant paycut, how would you react?" While spending time and resources on investing the public isn't going to win you anything with the players, it does remove something from the owners. The players aren't directly beholden to ticketholders and sponsors. The owners are. So the players need to spend some time to make the average season ticket holder understand that the players want to play, they aren't being allowed to.

No one needs to hear about BRI, or the difference in a hard cap. Just make it plain, that "billionaire owners made poor decisions and now say they want more money, and they want it from us, their workers, while they've fired their staffs until they get what they want." That's the reality of what's going on with the owners, and it paints them in about as bad a light as possible. If you really want to get in the trenches, release some information about how much some of these owners are actually worth, compared the amount of money they're squabbling with the players over.

But above all, follow Step 5.

Step 5. Be the better men.

This "negotiation" process quickly turned into one of prideful bickering and overdramatic gestures. The owners refuse to provide a counterproposal. The players release statements about how ridiculous the owners' proposal is. The owners bully up and take a hard line. The players show up in synchronized t-shirts. The owners let Stern do the talking. Kevin Garnett yells in a meeting.

This is not how business should be conducted.

This is not "Norma Rae." There's no moral high ground to be won. This is a business deal between two entities, both of which are doing exceptionally well in life. The players have every right to stand and fight for what they believe they deserve and protect the future earning potential of those in their profession. Anyone would do that, from plummers, to software designers, to middle management, to media members. No one wants to be sold up river or sell future people who will share their position up the river.

But behave with superior class. Don't get dragged into the mud. Peel back on the rhetoric. The public isn't sold that the players are greedy, they just haven't been sold on their requests being reasonable yet. By being the bigger men and taking the high road, they let the owners hang themselves by looking ridiculous and petulant, all the while the union is earning income through exhibition games and European contracts. The world's a smaller place, which means voices can carry more loudly. All the more reason to speak quietly, but firmly, and simply let the owners' red-faced bombastic approach peter out as the tide turns against them.

The union needs to be vigilant, reasonable, and clear. Do those things and their chances of putting the pressure back on the owners to crack will improve significantly.

Check back tomorrow for Part Two of our series and how the owners can crush the union's public support.
Posted on: July 7, 2011 5:08 pm
Edited on: July 7, 2011 6:05 pm

Report: Nets books show major losses

Posted by Royce Young

The NBA hasn't just been fighting the Players Association over a new Collective Bargaining Agreement. It has also been fighting a pretty major PR battle against the media and public over how truthful all these claimed losses are.

The league says 22 of 30 its 30 teams lost money last season. The league says in total, it lost about $370 millon, give or take. The league says owners are currently operating in a broken system that makes it extremely difficult to turn a profit, especially if you're not in a major market.

Some are having a hard time believing that. After a NY Times piece earlier in the week questioned how true some of the league's claims were, things only ratcheted up another notch. The league responded with a rebuttal, providing more facts and numbers in an attmept to quell some of the skepticism. The league claims $1.8 billion in losses over the past six years, but as many have noted, it's kind of hard to just take the league's word for it. We need to see stuff. Like open books.

Well, CNBC's Darren Rovell got ahold of the New Jersey Nets' books from last season and according to the report, the Nets suffered substantial losses over the past few years. (Click here to read the entire document.)
For the 2008-09 season, the documents reflect that the Nets lost $77,227,184. The team earned $78,783,677 in operating income, including $26 million in ticket sales and $32.5 million in total broadcast revenues. Operating expenses were $147 million, off mainly $66 million in salaries and $33.3 million in "amortization of intangible assets." When the team's $13.3 million interest expense is added, the Nets loss for the 08-09 season hits $77.2 million.

So there's that. According to the audited books, the Nets lost almost $80 million for the 2008-09 season. That's a lot of money. But there's still some skepticism over it all because sometimes bookkeepers are creative with their accounting. Rovell explains:

Now let's break it down for you. Assuming the operating income is accurate, there are three questionable line items within the operating expenses that are worth exploring. The most important is the $33.3 million amortization, since it's the largest number and often the number that the players union says is creative accounting.

So let's explain it first and then how it's reported. When a person buys a team, the price paid is distributed throughout various expense lines, the amortization line is one of those places. It's not voodoo accounting, it's actually part of generally accepted accounting practices. But the point is, that the NBA doesn't include that line item when it breaks out the losses to the union. So subtracting that number, the Nets loss that season, as the owners reported to the union, is probably closer to $44 million.

Rovell also notes that two other numbers could be disputed. That includes the $2 mllion in depreciation and the $13.4 million in interest. The union claims neither of those should be included in losses. But while the players dispute those being included, reality is, those are real losses. The value of the franchise is part of it all because it reflects the cost of expenses related to growing revenue. In terms of interest, that's actual money out of the owner's pocket so of course it should be included. It might not be a "real" loss in the same terms of expenses being more than revenue but as part of the whole pie, it counts.

One more note by Rovell to wrap it up though:

Finally, let's explore the bigger number. For the 2008-09 season, NBA owners told the players they lost a single-year record $370 million. Not only that, a record 24 teams lost that amount of money. Consider that amount of money an aggregate loss. Sources have told me that those 24 teams lost approximately $485 million, which leaves the six profiting teams with a net gain of $115 million.

So now take the Nets loss of $44 million that year. That means that the Nets share of the losses were nine percent of the total losses. If all teams used generally accepted accounting practices, is it possible that 23 other teams lost an average of $19.1 million that year? Of course it is.

What we have is another team where the financial picture is becoming clear. But that doesn't mean it's still not blurry. This is one of 30. There's a reason the league is locked out and it's because the players aren't buying everything the owners are selling. Like I've said before, the system has issues. No one would deny that. The players accept that as they've flexed on being willing to roll back their percentage of Basketball Related Income.

The matter is how deep the problem goes and how much give there has to be to fix it all. But the more information there is, the better things will get. Better PR for the league, better information for the public to digest, more pressure to make something happen.

Posted on: July 7, 2011 4:03 pm
Edited on: July 7, 2011 6:09 pm

What teams risk in a lockout: Southeast Division

Posted by Royce Young

Talk of losing an entire season is a bit ridiculous to me. There's just way too much at stake. Money, momentum, fan support, money, loyalty, money -- it's just hard to imagine losing any games much less a whole season.

But it's a possibility. And with all this hardline talk going on, it seems like neither the players nor the owners are wanting to budge. There's incentive for teams to get a deal done and not just for the money, but because a year without basketball and more importantly, basketball operations, could greatly affect each and every NBA franchise. Let's start with the Southeast Division.

The biggest question hovering over the Magic isn't about wins and losses or if Gilbert Arenas should stop tweeting. It's all about Dwight Howard's future and July 1, 2012. That's when Howard will become an unrestricted free agent. General manager Otis Smith has already said he won't trade Howard, but that could just be talk. Howard has said he wants to be in Orlando, but hasn't committed, turning down a three-year extension.

But if NBA offices are shut down and all transactions are halted, Howard might be forced to stay with the Magic all season -- except he won't play a game. Meaning Orlando could lose out on A) having a team good enough to convince Howard he wants to stay because he can win there; B) the Magic won't have an opportunity to trade Howard and get a Carmelo-like deal where they can restock the roster instead of letting him walk with nothing in return; or C) the Magic miss out on at least one more year with Howard meaning they miss out on a chance of having a good team that can compete. That's a lot to think about if this lockout starts stretching into 2012.

It's simple and very obvious for owner Micky Arison and the Heat: Lose the 2011-12 season and that's one less year you have of Chris Bosh, Dwyane Wade and LeBron James. That's one less year of the spotlight, the attention and all that money funneling right into South Beach. That's one less shot at a title. That's one less season of constant sellouts, through-the-roof merchandise sales and huge TV ratings.

Basically, it's one less season of $$$$$. And one big reason for Arison to be an owner willing to bargain.

The Hawks are in pretty solid shape right now. After the 2011-12 season, they only have six players under contract, including all their big names (Joe Johnson, Josh Smith, Al Horford and uh, Marvin Williams I guess).

But a prolonged lockout could simmer the momentum built from last season's deep playoff run. The roster still isn't quite there and a resolution on what to do with Smith has to be figured out. The earlier he's traded means the more he's worth. Losing that opportunity is bad news for the Hawks, even if they choose to keep Smith.

But on the bright side, it is one less season of overpaying Joe Johnson.

The Bobcats aren't really going anywhere this year, or even next year. The roster needs work. It needs more talent, more ability and better structure.

But the Bobcats used two lottery picks on Bismack Biyombo and Kemba Walker, meaning there's a little jolt of young talent on the roster, which is exactly the direction Rich Cho is looking to take them. Younger, faster and a path to building, not just hanging on with marginal veteran talent.

A year without basketball for the Bobcats means a year of stunted growth. These guys need to play together every second they can and I don't just mean on a blacktop in Greensboro. Even if they lose 60 games, that's progress. But they need to be on the court to even have the chance to learn through losing.

Michael Jordan was a player (if you didn't know). I don't know if that means he's on the players' side because I'm sure he also wants a system that helps his franchise competitively and one that helps him make money, but at the same time, I think he cares more about winning and playing than all the rest.

It's the same story for the Wizards too. John Wall, new pick Jan Vesely, Nick Young and JaVale McGee are all young guys that just get better every night they play.

The bright side though is that Rashard Lewis is owed $21.1 million next season and that could be money well not spent. Which is why Ted Leonsis, an NHL owner who has been through an extremely painful lockout, probably isn't all that worried about things like stunted growth when there's money to be saved and made. The Wizards aren't on the path to prosperity right now and are likely one of the teams hemorrhaging a little dough. The Wizards risk setting back their development, but I think that's a price Leonsis would be willing to pay.
Posted on: July 5, 2011 2:07 pm
Edited on: July 5, 2011 10:14 pm

Is the NBA trying to pull a financial fast one?

Posted by EOB Staff.

Update (9:46 p.m.): The NBA has released a statement in which it disputes the figures linked to below, claiming that it is "indisputably" losing money. The league also disputes conclusions drawn from those figures, originally published by Forbes, but has not yet released more accurate figures.

Original Post: The NBA is losing money. Lots and lots of it. Some $370 million. 

Or at least that's what the league says. We've all kind of been forced to accept this fact to some degree, even though facts like "22 of the 30 teams lost money last year" is a bit of a controversial "fact" that's lobbed around at every opportunity by Adam Silver and David Stern. 

The system has issues, otherwise there wouldn't be a lockout. I think that's obvious. But could there be a little financial trickery going on? Nate Silver of the New York Times did some sleuthing using public financial data and came up with this: The league may not actually be losing any money at all.
Instead, independent estimates of the NBA financial condition reflect a league that has grown at a somewhat tepid rate compared to other sports, and which has an uneven distribution of revenues between teams — but which is fundamentally a healthy and profitable business. In addition, it is not clear that growth in player salaries, which has been modest compared to other sports and which is strictly pegged to league revenue, is responsible for the league’s difficulties.


First, many of the purported losses — perhaps about $250 million — result from an unusual accounting treatment related to depreciation and amortization when a team is sold. While the accounting treatment is legal, these paper losses would have no impact on a team’s cash flow. Another potential (and usually within-the-law) trick: moving income from the basketball team’s balance sheet to that of a related business like a cable network, or losses in the opposite direction.
Silver lists three more good reasons why we should be skeptical: 

1) The Warriors sold for $450 million (some $90 million more than Forbes' estimated worth), the Pistons sold for $420 million (about $60 million more than the estimated worth) and the Wizards sold for $551 million last year which was about $230 million more than Forbes' valued the franchise. 

2) Silver says, "The NBA’s data has not been made public, although it has been shared with the players’ union. If the league expects their figures to be viewed credibly, they should open up their books to journalists, economists and fans." Point, Silver (Nate). 

3) His last reason is the one I like most. The league signed a new deal in 1999 -- one that owners wanted so badly that the league sacrificed 30 games for -- and renewed that same CBA with just a few tweaks in 2005. For the most part, that deal was considered very favorable to the owners, at least initially. Yes, costs have risen and the league had to endure a recession, so revenues decreased. But Silver says, "But to hear the NBA owners complain about the current deal now, when none of the fundamentals have changed, reminds one of the old Woody Allen joke about two women kvetching at a restaurant: 'Boy, the food at this place is really terrible,' one says. 'I know. And such small portions,' the other replies."

So digest all of that. Think about it. Should we all really sit here and not raise an eyebrow? Hard not to wonder what's really going on here. Hard not to listen to Billy Hunter and Derek Fisher and say, "Yeah, I guess I can see why you guys are a bit skeptical of this all."

But as Silver notes, that isn't to say the league's CBA doesn't need a restructuring. The system does have issues. Costs have undeniably risen and gate revenue hasn't contributed as much as the league needs it to. Some markets and franchises struggle to keep their head above water both financially and competitively. That's not right.

At the same time, if the league truly is fudging the numbers and massaging facts a bit just to try and make sure its owners score big, and games are lost at a time where the league's popularity is nearly at an all-time high, should we all be downright ticked?

Because think about it: The owners got the agreement they wanted in 1999 and stuck with it in 2005. Now the league is producing all-time revenues highs and projects to be incredibly successful over the next 10 years. And so they want a new deal that cuts into player salaries and "guarantees profitability." I don't know about you, but that smells funny to me. At least enough to make me say, "Hmm..."

Henry Abbott asks a very worthy question at TrueHoop today about this whole thing: If any other normally profitable business soured and started experiencing big losses, who would we blame? Upper management, right? Some blame deserves to go on the league office, but Abbott isn't willing to pin it all on The David's head.
Stern, et al, get off the hook, by and large, because their story is that 22 of 30 teams are losing money (more recently the league has said they have lost $300 million in 2010-2011). Stern works for those 30 owners. If 22 of them want to lavish more on their teams than they should have, he has little power to stop them. So, it's a story of bad management, perhaps. But it's not necessarily a story of Stern's bad management, to the extent the story is Mark Cuban deciding to spend deep into the red time and again to try to win a title.
Abbott's entirely right: You can't blame Stern. Owners run their teams, not the NBA -- well, except for the Hornets I guess (I always forget Stern's an owner). But for as great a commissioner David Stern has been -- and he has truly been an outstanding leader for the league -- this is the fourth lockout that's happened under his watch. One short one in 1994, another quickie in 1995, the big 1998 one and now the 2011 stalemate. For as much grief as Bud Selig gets, his league has been humming along for 17 years now without a work stoppage. Think about that one.

Whatever the case, the league and players are extremely far apart and when they get back to the bargaining table in a couple weeks, I'm sure Billy Hunter and Derek Fisher will mention a lot of the exact things Silver pointed out. In fact, I'm sure they've been saying them for two years now.  Both sides have a case, but always keep in mind: Both sides want what's best for them. Players don't care about owners' bank accounts and vice versa. But in the end, the people that feel it the most are the fans and extraneous team employees. So get this thing sorted out, will ya?
The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com