|Mark Cuban and the NBA owners help the situation by backing off their 50/50 precondition. (AP)|
NEW YORK -- After a five-day cooling-off period, negotiators headed back to the bargaining table Wednesday in an effort to finally end the nearly four-month NBA lockout -- a stunning display of stubbornness that should've ended three weeks ago.
There's a laundry list of small-ticket items that have been agreed to in principle, but none of them matters as much as what I like to call the triple-threat of revenue sharing: the division of revenues between owners and players, the distribution of salaries among players and the division of payrolls among teams.
There are three battles to be waged, and there will be no deal until all the negotiators have rounded all three bases to the satisfaction of the various constituents. After a lengthy conversation among the staffs of both sides Monday and with high-level talks resuming Wednesday, the deal that has been there to make for weeks should -- and I stress the word should -- begin coming into focus. If not, God Shammgod help us all.
"We're inching closer to a deal," one person briefed on the talks told CBSSports.com on Wednesday.
With the owners dropping their precondition that the union agree to a 50-50 split of basketball-related income (BRI) before negotiations can proceed on system issues, the first item should be the easiest to solve. With the players seeking 52.5 percent of BRI and the owners dug in at 50 percent, the difference is only $100 million a year. Far more would be squandered by failing to get a deal and losing more games than already have been postponed or jeopardized.
Independent of my reporting several weeks ago that a 51.5-48.5 percent split in favor of the players -- down from the 57-43 arrangement under the previous CBA -- was where this negotiation was headed, a person in frequent contact with ownership told CBSSports.com this week that 51.5 percent is, in fact, the presumed landing spot for the players' share. According to the source, one owner recently confided to associates that the union's affinity for "odd numbers" and fact that 51.5 was a logical midpoint between the various "bands" each side has proposed signaled that such a split ultimately would get done.
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The owners then have to agree among themselves to a revamped revenue-sharing plan to help small-market and low-revenue teams. League executives, team officials and owners participated in a video conference call lasting several hours Tuesday to discuss the latest proposals on how to redistribute revenue. Although one person on the call said there was no consensus and that "a lot of ideas" remained on the table, one executive told CBSSports.com that observers will be "pleasantly surprised" by the commitment big-market owners are willing to make to revenue sharing.
Assuming that aspect of the negotiations soon will be finalized, the last base to be covered is perhaps the most difficult of all: changing the distribution of payrolls among teams to achieve what league officials consistently refer to as their goal of "competitive balance." It's an ideal that both deputy commissioner Adam Silver and labor relations committee chairman Peter Holt pointed to last week as something the NFL (hard cap) and NHL (flex cap) have achieved. Having been unable to get the NBPA to agree to either concept, league negotiators have spent the past several weeks trying to refine a more punitive luxury-tax system to achieve the same goals.
Sports economists differ on the viability of mechanisms that curtail team payrolls as a means to achieving parity or competitive balance. That's a debate for another day; since NBA executives and owners clearly are determined to flatten out the disparity in team payrolls, it's more productive to analyze how it can be done rather than wring our hands over whether it should be done.
One way or another, it's going to be done.
Despite Silver's insistence last week that the NBA's goals of lowering payrolls and flattening the payroll disparity are "completely unrelated," I pointed out in this column that the opposite is true. At some point, reducing the players' share from 57 percent to somewhere between 50 and 52.5 has to be linked up with new system rules that produce that result.
So what does the NBA mean, exactly, when it says it wants competitive balance? To figure that out, you have to do what I've already one -- analyze last season's team payrolls, determine what the league's precise goal is and figure out how to get there from here.
Goal No. 1 is to reduce league-wide player salaries by about 12 percent -- the difference between 57 percent and 50 percent, which is the league's ideal. To make the math simple, that basically means that last season's $2.02 billion in salaries would remain flat. (Remember: A pay freeze in 2011-12 is something the union already has proposed in one form or another.) The difference between that and the $2.25 billion the players would've received next season under a 57 percent system is $230 million -- a fair concession by the players by any standard, considering the owners say they lost $300 million last season and have blamed it on the system they are attempting to fix.
So, how do you reduce overall league payroll by more than $200 million and reduce the disparity between the top-spending teams and the bottom-feeders? You must first understand what the disparity is and what the league is trying to do to it.
According to league payroll figures obtained by CBSSports.com, the average payroll of the top eight teams was $79 million last season, compared to $55 million for the bottom eight. If you look at top five vs. bottom five, the disparity is even greater -- $84 million vs. $52 million. The middle 14 teams accounted for 47 percent of league payroll, hovering within a tight band between $65 million and $70 million. Those teams aren't the problem.
What the league primarily is attempting to do, sources say, is rein in the top-spending teams so the vast majority of teams settle within a band ranging from the salary cap and luxury tax level ($58 million and $70 million last season). League sources argue that in a typical year, most teams are in this range anyway. There were more outliers at the bottom last season for several reasons: Some cleared cap space to chase free agents (Nets), others lost a franchise free agent (Cavaliers), others tore down to atone for mistakes (Wizards), others were saving room to re-sign their own free agents (Bulls, Thunder), and others went with bare-bones payrolls partly in anticipation of a lockout and a vastly new system (Kings, Timberwolves).
With 303 players (including draft picks) under contract for next season at $1.65 billion, it will be difficult for the teams at the top to fall as far as the league wants them to in one year -- particularly the top three (Lakers, Magic and Mavericks) whose payrolls average $20 million over the previous $70 million tax level. The fact that most teams recognize this free-agent class as a weak one helps a little, but there remains a square peg-round hole element to what the league is trying to do.
So league sources with knowledge of the negotiations concede there will have to be a phasing in of the more punitive tax system aimed at gradually bringing the outliers at the top into a more competitive range with the rest of the league. This, my friends, is progress -- a rare acknowledgement by the owners' side that they can't have everything they want all at once.
What's troubling to me is that the league's plan is focused more on bringing down the outliers at the top than bringing up the outliers at the bottom. True competitive balance has to assure that the bottom eight teams will receive substantial revenue-sharing enhancement from the wealthy teams -- and that they actually will spend this money on players. This is why union chief Billy Hunter has publicly expressed suspicion that the owners' desire for "competitive balance" actually is just a euphemism for "putting money in their pockets." But Hunter has not expressed these concerns in such strong terms in the bargaining sessions, according to sources -- only publicly.
While league sources believe shorter contracts and limits on big-spending teams will open up an active market for players among the middle- and lower-tier teams, they also understand you can't lower the payroll ceiling without raising the floor. So league negotiators have proposed something I've previously suggested -- raising the minimum team salary from its current level of 75 percent of the salary cap. The NFL's minimum is 89 percent, so it would be logical to expect that the NBA's new minimum would fall somewhere between those two numbers.
The bottom line is that this isn't easy, but it's doable if the league is willing to phase in its vision for competitive balance -- and if the union is willing to trade some system restrictions for a more favorable BRI split than the 50-50 offer they've thus far been unable to accept. With further cancellations threatening to wipe out $1 billion or more when the fight is about pocket change by comparison, we have reached the fourth quarter of these negotiations. We have arrived at the time for big-time horse trading and compromise, the point where logic and reason must rise to the top.
If not, everybody sinks in poorly constructed boats that won't hold up under the storm of a wiped-out season. Time to jump in the life rafts and paddle ashore, fellas. How u.