So Ted Leonsis says a hard cap is on its way to the NBA, which isn't exactly a stunning viewpoint. We know from details leaked about the NBA owners' initial bargaining proposal at the end of January that this is what the owners say they want.
That is what owners in every sport have always wanted.
I say, be careful what you wish for.
As owner of the Washington Capitals, Leonsis lived through the devastating NHL lockout that obliterated the entire 2004-05 season. So while he's new to the NBA owners' club, Leonsis should know better than anyone how determined the NBA is to adopt hockey's economic model.
He also should know the perils of that economic model. He also should know that it isn't everything it's cracked up to be, and that comparing the NBA to the NHL is, well, dumb.
But that isn't even the point right now. Not yet. The point is, if Leonsis is right and the NBA owners are going to the wall for a hard cap with no exceptions, then the NBA is going emulate more than the NHL's labor agreement. It's also going to lose significant games to an NHL-style lockout faster than David Stern could announce Leonsis' $100,000 fine for speaking out of turn the other day.
A hard cap, according to a person with knowledge of the NBA's recent labor negotiations, will be "a total deal-breaker" for the National Basketball Players Association.
|Did Stern drop the $100K hammer on Leonsis for speaking the truth? (Getty Images)|
So which is it? Did Leonsis get fined so swiftly by Stern for speaking the truth? Or did the Supreme Court of Stern act so quickly because the owners have softened their stance on a hard cap, making rhetoric like Leonsis' counterproductive?
We won't know for sure until the owners put another proposal in front of the players. But there are growing suspicions on the owners' side that their position isn't going to be hard-cap-or-bust. At the very least, whether the cap has exceptions or not isn't the issue the owners are primarily concerned with. They simply want to pay the players less; what system is used to pay the players is somewhat immaterial, at least at this stage of the negotiations.
Under the current deal, the players get 57 percent of basketball-related income (BRI). The two sides have a long way to go before they can agree on 1) how total revenue should be computed, and 2) how much of it the players should get.
"Trying to get the players to understand they have to take a lesser percentage, that's going to be the hard part," one person familiar with the bargaining dynamics said. "Once you get the percentage, then you figure out what the mechanism is to divide it."
Which brings us back to Leonsis and his hard-cap mechanism, which a majority of owners clearly favored back in January, when they proposed it to the players. A significant number of owners still believe a hard cap would help competitive balance, according to sources. But one person familiar with the owners' position said it would be "stunning" if they were fixated on a hard cap, and a hard cap alone as the solution to their problems. Eliminating or tweaking the bogus mid-level exception, reducing the number of guaranteed years, making it easier for teams to get out of bad contracts -– these are things the union would oppose, but at least it would be possible to have dialogue about them. Unlike a hard cap.
If you are still holding out hope that a work stoppage can be avoided, that's encouraging news. Because there is virtually no chance that the NBPA would agree to a new CBA that includes a hard cap before the current deal expires on June 30, 2011. It took a lost season for the NHL Players Association to finally agree to a hard cap, and the players had to swallow a 24 percent rollback on existing contracts, too. If the NBA went that route, the owners would also have to accept their thriving sport imploding before their eyes; imagine LeBron James and Dwyane Wade squaring off against Kobe Bryant on the Versus Network, all with 25 percent pay cuts.
Speaking of LeBron and Wade, that's another problem with a hard cap: How do you grandfather in existing salaries? After James, Wade and Chris Bosh signed contracts paying them $48 million combined next season, how would Miami field a team next season with, say, a $58 million hard cap? It's even worse for the Lakers, who owe Bryant, Pau Gasol and Andrew Bynum $58.8 million in 2011-12. With a $58 million cap, they wouldn't even be able to afford me.
The devastation wrought on the NHL by a locked-out season would seem like nothing compared to what's at stake for the NBA. Stern's league is coming off the highest-rated NBA Finals Game 7 of the post-Michael Jordan era, a free-agency class that generated daily headlines for months, and the best summer of season-ticket sales in league history. In a few weeks, the most anticipated season since Jordan retired will tip off with the Heat against the Celtics. A Heat-Celtics or Heat-Magic matchup in the Eastern Conference finals, followed by Heat-Lakers in the Finals, would send the league into a stratosphere of popularity and revenue growth unmatched in the history of pro basketball.
And then, darkness?
"Do you really think David Stern is going to shut down his league on July 1, a few days after the greatest season in NBA history?" said the person familiar with the NBA labor talks, who spoke on condition of anonymity because he was not authorized to discuss league issues.
Hard to imagine, but it depends on which owners are driving the negotiations. Will it be the hard-line, vocal new wave of owners such as Robert Sarver (Suns), Dan Gilbert (Cavaliers), Wyc Grousbeck (Celtics), and Leonsis, guys who weren't around for the 1998 lockout? Or the old guard, led by Timberwolves owner Glen Taylor and Spurs owner Peter Holt, the top-ranked owners on the labor committee? Taylor and Holt have been the loudest voices in the two most recent bargaining sessions, according to sources who described them as the "voices of reason" -– which explains the more amicable tone of the talks.
Leonsis, evidently, didn't get the memo. And if the hard-liners have their way and push the envelope for a hard cap, the NHL represents a "cautionary tale," according to Gabriel Feldman, director of the Sports Law Center at Tulane University.
"I don't think it's clear to be able to say that because the NHL has a hard cap, the NBA should get a hard cap because the NHL has competitive balance," Feldman said. "I don't think the hard cap is a cure-all. It has its own drawbacks."
The NHL has had a different Stanley Cup champion in each of the five seasons under the hard salary cap. But is that proof that the hard cap works? Major League Baseball, with no salary cap, has crowned five different World Series winners in the same span.
"It's hard to argue that without a hard cap, you can't have competitive balance," Feldman said.
And the hard cap is so restrictive that NBA champions likely would be forced to dismantle their roster a few weeks after the victory parade -– which is what happened to the Chicago Blackhawks after they won the 2010 Cup. On one hand, the NBA's unprecedented summer of player movement is a good argument that a hard cap is needed to restore competitive balance. But anybody can see that a hard cap actually would result in more player movement, making it harder for small-market teams to keep their stars.
"Having a team being able to keep its star players, that's why they came up with Larry Bird exception to begin with," Feldman said. "If you put a hard cap in space, that prevents teams from competing for players based on salary. You have to compete in other aspects. If you're a star player in Cleveland and you can get the same money from the Knicks as you can in Cleveland, where are you going to go? You're probably going to New York. The only way a player stays in Cleveland is if the smaller market is able to pay him more."
I'm no hockey expert, so I point you to some salient analysis from someone who is. Adrian Dater, who covers the Colorado Avalanche for the Denver Post, wrote here about how people on both sides of the NHL labor debate already are grumbling about the impact of the hard cap instituted in 2005. And he speculates that the NHL is headed for another –- you guessed it –- work stoppage in 2012 as a result. In one key passage, Dater quotes a pro-union source who says this:
"If you look at some of the stuff the PA proposed before the lockout -- a revenue-sharing, luxury-tax proposal -- and you get some forensic accountants and model it out based on NHL revenues since then with the same level of spending by each team currently, every single team would be doing better than they are right now. That's the dirty little secret that Gary Bettman doesn't want the media to ever pick up on."
So what was the point of losing an entire season and nearly destroying a sport if the resulting labor deal isn't worth the paper it's printed on? This is the real question that Leonsis, his fellow hard-line owners, and the NBA players should be asking themselves.
"Given the economic climate, given what happened in Miami, this might be the NBA's best chance to push something like this across," Feldman said. "But do you blow up what you've got in hoping that you can form it in better shape than you had it to begin with?"
The answer, of course, is no. It's just a matter of how much needless pain the NBA will have to endure to realize it.