NEW YORK -- In a negotiating session described by both sides as "cordial and productive," the NBA and its players union began talks Tuesday on a new collective bargaining agreement to replace the one that expires after the 2010-11 season.
But no amount of politeness could sugarcoat league-wide losses -- and projected losses -- that were presented by ownership's negotiating committee in the closed-door session at a Midtown Manhattan hotel. One person familiar with the talks said the owners came prepared with "astronomical" figures detailing league-wide losses.
It's a good thing they're starting these talks early.
No formal proposals were exchanged, given that this was only a preliminary step in a two-year process aimed at ratifying a new agreement without enduring a damaging lockout like the one that hampered the NBA in 1998-99. The only official business came in the form of formal notice from the owners that, as widely expected, they will not exercise their option to extend the current CBA by another year.
"I think we knew that coming in," said the Lakers' Derek Fisher, president of the National Basketball Players Association. "I think it was a point that they just made sure was understood, that the deal won't be extended as it currently stands. There was no surprise there."
Nor should there be any surprise that owners presented a grim financial progress report that Fisher diplomatically described as "cautious." A person familiar with the owners' strategy said they claimed league-wide financial losses in every year of the current CBA, which went into effect at the start of the 2005-06 season.
The league and union agreed to begin the collective bargaining talks a year earlier than is customary, given the state of the economy and both sides' recognition that another costly work stoppage must be avoided.
The owners, accompanied by commissioner David Stern, deputy commissioner Adam Silver and president of league and basketball operations Joel Litvin, generally stuck to projections given to teams by the league office last month that league-wide revenue could decline between 2.5 percent and 5 percent during the 2009-10 season. As a result, the salary cap would decrease in 2010-11 -- the final year of the current deal -- to between $50.4 million and $53.6 million. The cap for 2009-10, based on last season's revenues, has been set at $57.7 million.
The issue isn't so much the declining cap, according to sources, but rather the overall share of revenue that players receive. Owners argued that the current system gives players an unfair split of revenues and struck the first blow in the negotiating process by advocating for a higher percentage of revenue going to the teams, a person familiar with the owners' position said.
Under the current CBA, players are guaranteed 57 percent of league revenues, with any overage getting refunded to the teams through the players' escrow fund. The owners are believed to be pushing for closer to a 50-50 split.
But players already are seeing payrolls shrink as a result of declining revenue related to the ongoing recession. The owners did not formally propose what share of revenue they are bargaining for, and union officials plan to review the league revenue figures given to them with their own accountants before agreeing to hold another bargaining session, which is expected to take place before the start of the regular season.
The players association -- and small-market owners -- also will push for an enhanced revenue sharing model that will funnel more revenue from the big-market teams to those in smaller cities struggling with ticket sales and local sponsorships. Although it is believed that the owners already have agreed on the framework for such a model, their negotiating committee did not formally propose it on Tuesday, sources said.
Owners leaving the meeting at the Omni Berkshire Place declined to comment on the proceedings. The key figures from both sides -- Stern, Silver and Litvin for the league and NBPA executive director Billy Hunter for the union -- did not comment beyond a joint statement released by the NBA.
"The NBA and NBPA held our first collective bargaining meeting earlier [Tuesday]," the statement said. "The 3½-hour meeting was both cordial and productive. There was a preliminary exchange of financial information but no proposals were made. We both look forward to another meeting before the start of the season."
Ownership was represented by the following members of its negotiating committee: Peter Holt (Spurs), James Dolan (Knicks), Larry Miller (Trail Blazers), Wyc Grousbeck (Celtics), Clay Bennett (Thunder), Robert Sarver (Suns), George Shinn (Hornets), Jeanie Buss (Lakers), Dan Gilbert (Cavaliers), and Glen Taylor (Timberwolves).
The players were represented by Fisher, Theo Ratliff (Spurs), Roger Mason Jr. (Spurs), Etan Thomas (Thunder), Keyon Dooling (Nets) and Maurice Evans (Hawks). Adonal Foyle (Magic), James Jones (Heat), and Chris Paul (Hornets) also are on the players' executive committee but were unable to attend.
Despite the owners' less-than-rosy portrayal of league finances, Fisher emerged from the bargaining session optimistic about the chances of hammering out a deal.
"What was very clear in the room was the sincerity, the honesty," Fisher said. "It was different from any negotiating process I've been a part of thus far in my career. There seemed to be an integrity in the room, and everybody is really trying to do the right thing here. So I hope that'll continue."