So much progress was made between NBA owners and players union officials during marathon negotiations this week that there is renewed optimism a full 82-game season can be salvaged.
A great chorus of hurrays is erupting among vested parties everywhere—not the least of which is ESPN.
However, one small detail is being overlooked. The two sides have made no progress on the biggest issue—the revenue split between players and owners.
In the old deal—the one that was bankrupting about two-thirds of the teams—players got 57 percent of basketball revenue. In the new deal, the owners are demanding a 50-50 split. That’s a deal I’d like to broker with the owner of the company I work for.
NBA players are dug in with their demand for 52.5 percent of all basketball revenue. Each percentage point in the split equates to $40 million annually, so this is no small matter. The 2.5 percentage points at stake would mean $100 million annually that could be spread around among the 30 NBA teams.
With the Indiana Pacers losing anywhere from $15 million to $30 million annually, local fans who would like to see the blue and gold remain anywhere near financially viable for the long-term must be rooting for an agreement with a hard cap—at least much stiffer than it is now—and a 50-50 split.
And while the N.Y. Knicks are coming off one of their best financial years ever and the Chicago Bulls made somewhere in the neighborhood of $55 million last year, teams like the Pacers must be wondering how much longer they can stand to hemorrhage without considering major changes.
Already, the city’s Capital Improvement Board has approved a three-year $33.5 million forgivable loan (subsidy in more common parlance) and local officials have warned that writing checks from the city coffer can’t be a long-term solution.
Yes, the owners are working hard to increase revenue sharing, with hopes of more than tripling the current pot to about $155 million.
But that won’t be nearly enough to erase the red ink on the Pacers ledger, and if NBA Commissioner David Stern and team owners don’t hold fast during the 11th hour of these negotiations, teams like the Pacers and the city officials who back them will have some very difficult decisions ahead of them.
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There is no excuse for bad journalism. Simply put, if (big if) the NBA is losing money, it is largely because of terrible contracts the owners voluntarily offer to players. That a team could be losing money when there is already a max salary and rookie scale depressing wages should be embarrassing to GMs. You don't think Kobe's worth $50M to the Lakers? Durant and Derrick Rose are still making rookie money.
This lockout is really about big market owners and small market owners not having an equitable revenue sharing system, and so the small market owners are looking for guaranteed profits by sticking it entirely to the players. Nowhere in capitalism is there a concept of "guaranteed profit in the face of shoddy management."
Nowhere in this article do you mention that a) the players are why there is any BRI to begin with, and b) BRI is the money remaining AFTER most costs are deducted, so a 50-50 split is not a true 50-50 split. Sorry to say but this article reads as no more than a biased pro-management, anti-labor piece. I can't speculate on the reason for your bias, so I won't ascribe any motives to you, although I do have a suspicion. If you can't do better, your editor at least should.
"small market owners are looking for guaranteed profits by sticking it entirely to the players."
This guy must have gotten the idea for this article when he was at dinner w/Herb at St. Elmo's last night.
I do think management is merely crying poor because they refuse to open their books to the NBA, and both sides disagree on the way they come up with their numbers. What about ancillary business interests that spring from owning an NBA team? What about TV rights, etc? What about favorable tax treatment on loss vs. capital gains? There are so many ways to hide losses. Fundamentally, NY, LA, Miami are always going to be more attractive destinations than Indiana, Charlotte and Utah. There's already a rookie wage scale and a max salary. The only decent way to address the disparity is better revenue sharing. But the owners would rather band together to screw the players than fight amongst themselves. It's not rocket science.
But look, even if you are right, even if everything you say is true, consider this fact. Out of the box, the players offered to take what amounts to a $1Billion paycut. And the owners refused. It's a shame the players don't have better PR. The owners don't want to bear ANY of the losses that they themselves mostly caused. But I guess that's now the corporate culture in America.