Players respond to Stern: Owners' financial losses oversold
NEW YORK -- David Stern's bombshell during All-Star weekend that NBA owners will lose $400 million this season was so stunning, it took the commissioner's normally talkative nemesis, Billy Hunter, a month to respond.
Consider this his response.
"Based upon our review and what we've done thus far, we dispute the $400 million figure," Hunter, the executive director of the National Basketball Players Association, told CBSSports.com Friday in his first public comments on Stern's doomsday prediction. "And we plan to present our rebuttal to David and the owners at an appropriate time. Our contention is that the number's overstated."
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| Hunter admits 'a lockout would be devastating, there's no question about it.' (Getty Images) |
"I would hope to submit a proposal to the owners any time between May 1 and July 1, with the idea that we would obviously be available to spend a lot of time negotiating during the summer, when the players are available," Hunter said Friday.
In the seven weeks since owners submitted their drastic initial proposal -- one that the union says would lower player salaries by $750 million in the first year alone, reduce the length and amount of guaranteed contracts and eliminate most if not all salary cap exceptions -- the union's attorneys and accountants have been reviewing a mountain of financial data turned over by the NBA. The league says these numbers prove how dire its financial position is.
The players don't buy it, and instead see a mixture of accounting tricks, team mismanagement and the nearly two-year recession as the real culprits in a revenue decline they say is not nearly as large as Stern stated in Dallas.
"The basis of our objection is just when it comes to general accounting principles," Hunter said. "We think that there's been an overstatement, that some of the things that they discount should not be discounted because they relate to non-operating expenses and related parties."
Hunter declined to get into specifics, saying he has employed a leading economist from the University of Chicago, Kevin Murphy, to analyze the financial statements turned over by the league. Asked if he had a more realistic figure for the league's losses this season, Hunter said, "No, I don't. But we will. We contend it's much less than the $400 million."
During his state of the league address in Dallas on Feb. 13, Stern said the $400 million loss came on the heels of annual losses averaging $200 million in the previous four years of the current CBA, which was ratified in 2005. The majority of the $200 million in additional losses this season could be the result of a massive decline in gate receipts, a drop the league projected could be as severe as 17 percent based on season-ticket sales as of July 2009, according to league ticket sales data obtained by CBSSports.com.
The question is whether that massive projected decline in ticket revenues actually occurred. The most recent public data showed a 7.4 percent decline in gate receipts as of Nov. 29, according to another league document obtained by CBSSports.com. The 7.4 percent decline was associated with a 3.7 decline in paid attendance, according to the document.
NBA spokesman Tim Frank declined to provide updated figures, but Stern said at his All-Star news conference that attendance would be "down a little under 2 percent" this season, which he described as "better than we were actually projecting it." Frank said league executives had no comment on Hunter's assertions Friday.
However you dissect the numbers, the distrust between the owners and players will be a key hurdle to overcome this summer as the NBA closes in on the final season before the current CBA expires on June 30, 2011. Even with 15 months to go, the battle lines have been shaped by the presence of numerous owners who were not in place for the league's most recent work stoppage in 1998-99.
"Ownership has changed completely," former Knicks president Dave Checketts said this week at the IMG World Congress of Sports in Los Angeles. "These guys sitting at the table were not there when we lost half a season. ... They don't understand how damaging a work stoppage is. Nobody wins, everyone loses."
Staunch supporters of Stern on the ownership side -- including the late Abe Pollin, Larry Miller, William Davidson and Mel Simon -- will be sorely missed during this round of negotiations. The old guard has been replaced by a younger, more vocal group led by the Celtics' Wyc Grousbeck, the Suns' Robert Sarver and the Cavaliers' Dan Gilbert -- moguls who've made their fortunes outside the NBA and are now "losing money in their day jobs and their night jobs," according to a team executive familiar with ownership dynamics.
Similarly, only about 10 percent of players who experienced the last lockout are still in the league.
"We feel like the CBA right now works because player salaries, for example, are the one thing that's grown the least throughout the deal," said Hawks guard Maurice Evans, a member of the players' executive committee. "If teams were managed properly -- signing the right guys -- maybe certain franchises wouldn't be in the situations they're in."
But another team executive familiar with ownership's strategy said the owners are convinced the players would cave quickly during a lockout. The executive pointed to recent wire stories reporting DUI arrests for Dorell Wright and Tarence Kinsey. Wright is a role player making $2.75 million for the Heat this season. Kinsey was last seen playing in Greece. Both were pulled over ... driving Bentleys. A person familiar with the players' strategy called the owners' assumption "a calculated risk."
"It was widely assumed in '99 that NBA players would never miss a paycheck," the person said. "That theory was proven wrong, and they risk making the same miscalculation again."
Though Hunter wouldn't divulge any specifics of the proposal he plans to formulate with the players this summer, he highlighted one issue that is a deal-breaker: revenue sharing. The owners did not include a revenue-sharing plan in their initial proposal in January, and Stern said during All-Star weekend that the owners would divulge changes on that front only after agreeing to a new CBA.
"Revenue sharing will be a material piece of our proposal," Hunter said.
After coming out swinging at All-Star weekend in the wake of what he called the owners' Jan. 29 "shock and awe" proposal, Hunter struck a conciliatory tone Friday. He said a work stoppage could hamper the league's own projections for growth in the coming years, particularly in international markets, and called "the mere discussion" of a lockout "almost foolish."
"A lockout would be devastating, there's no question about it," Hunter said. "And I'm not so sure, in the face of a lockout, how many teams would actually survive it. There's no question a great deal of economic injury and damage would be suffered by players, but there'd be a great deal of horrific injury suffered by the league. And I would think that in these difficult economic times, the last thing that either side would want would be a lockout that might bring about such devastation that we won't be able to recover from it.
"What we should be doing is trying to find points about which we can agree and try to bring about some kind of closure that way ...," he said. "We have to talk positively. We have to talk about trying to reach an agreement rather than talking in terms of the likelihood of a lockout."
