Adam Silver: 'My preference would be to have a harder cap'
NEW YORK -- As NBA owners rejected draft lottery reform, NBA commissioner Adam Silver said Wednesday that one-third of the league's teams still aren't profitable and reiterated his preference to have a hard salary cap.
NEW YORK -- The term of the day was "unintended consequences" at the NBA Board of Governor's meeting, where owners rejected a proposal to reform the current draft lottery system and discourage tanking.
The proposal received 17 votes in favor and 13 against, well short of the three-fourths majority needed to pass it. Commissioner Adam Silver said owners were "unanimous" that the issue should be kicked back to the competition committee for further study.
"From a personal standpoint, what I'm most concerned about is the perception out there right now," Silver said. "Frankly, the pressure [is] on a lot of our teams, even from their very fans, to somehow underperform because it's in some people's view the most efficient and quickest way to get better. So I think that's a corrosive perception out there."
Also under the microscope with two seasons left before another potential work stoppage is the NBA's financial picture. With high-profile players already barking that the league's massive TV deal won't allow owners to cry poverty when the current collective bargaining agreement can be terminated in 2017, Silver managed to slip an interesting line into his news conference: one-third of the league's 30 teams still are not making a profit.
Given that the owners ran the table in the 2011 labor talks, winning a 12 percent reduction in the players' share of revenues, it was a significant revelation.
The league's new $24 billion broadcast and digital rights agreements taking effect in 2016 obviously are not yet baked into the NBA's profit-loss statements. Still, it's ominous that so many teams still rely on revenue sharing to balance their books.
Lest you think that Silver is moving the goalposts as far as the league's goals from the 2011 lockout are concerned, I asked him the following question after his news conference: If all 30 teams aren't making a profit on July 1, 2017, is that reason enough for another lockout?
"No," he said. "No, because the caveat has always been, if well managed. And I would also say, if you don't have a hard-cap system, for example, one of the teams that isn't profitable are the Brooklyn Nets. That's an election they're free to make under our compensation system. They've elected to be unprofitable. My preference would be to have a harder cap, where teams couldn't elect to spend so much more than other teams.
"We've always said to the players' association ... you can make revenue sharing our issue, not yours," Silver said. "We've never come in and said because a particular team is unprofitable that that somehow becomes your problem. We recognize it's our obligation to run a well-managed league."
So if profitability isn't the issue, I asked Silver if achieving a hard cap -- which the owners pushed for and didn't get in the last round of bargaining -- will be a take-it-or-leave-it issue in 2017.
"No, not at all," Silver said. "There's gradations of hardness in terms of the cap as well. I wish our current cap system was harder. It's what we proposed last time around, but we compromised."
The other key negotiation in front of Silver is working with the players' association on "smoothing" the influx of TV cash into the player compensation system. The issue potentially cuts two ways.
First, if all the money hits the system in the first season of the new TV deal in 2016-17, players who are free agents that summer would benefit disproportionately. (The new revenues would be added to the cap all at once, and would be distributed unfairly -- and potentially unwisely -- among players whose contracts are up.)
Second, league sources say some small- and mid-market teams are fearful that a massive, one-time increase in the cap would give big-spending teams a get-out-of-jail free card with respect to luxury and repeater taxes.
So the league has begun negotiations with the union on "smoothing in" the TV revenues -- a plan that would raise the cap artificially less than revenues would normally dictate in 2016-17. The players would still get their collectively bargained 51 percent, but the difference would be distributed equally among all the players after the season.
"The players would receive every nickel of their 51 percent that year, but we would artificially lower the cap and then make a shortfall payment directly to the union," Silver said.
As for the lottery proposal, it would've dramatically flattened the odds of the worst team getting the No. 1 pick -- something that has happened only three times in 24 years under the current system. Objections came on several front, including from small- and mid-market teams that viewed the changes as potentially crippling if, for example, they had the worst record and ended up with the seventh pick.
Timing was another issue, as teams have already made roster and payroll decisions for the coming season based on expectations that the current lottery system would be in place. Interestingly, it wasn't only small-market teams that voted down the proposal; Chicago and Washington were among the teams rejecting the idea.
According to a person involved in the discussions, some teams simply felt that a drastic change would be an overreaction to the Sixers' abject strategy of tanking for better draft picks, and that Philly turning tanking into a way of life instead of a temporary fix is an aberration.
So whether it's lottery reform or future collective bargaining or how to manage the league's TV windfall, Silver has a lot of smoothing to do.
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