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Art Garcia

David Stern has stated owners are in agreement that increased revenue sharing must take place.
David Stern has stated owners are in agreement that increased revenue sharing must take place.

Commish Stern talks financial outlook, new rules and more


Posted Oct 21 2010 8:09PM

NBA commissioner David Stern said a reduction in player salaries of at least $750 million is needed to achieve financial stability in the new collective bargaining agreement. Stern added that projected losses this season will be in the range of $350 million.

Those are meaty numbers that won't be impacted, much less lessened, by what Stern's recently promised would be "special" season.

"This is a sport that's going to have a good year," Stern said, "but it doesn't affect the underlying financial dynamics."

An unprecedented summer of player movement, the hype surrounding the Heat alliance of LeBron James-Dwyane Wade-Chris Bosh and the Lakers' quest for a three-peat are the among the factors leading to one of most anticipated campaigns in league history. Ticket sales around the league are at levels not seen in years and Stern anticipates a top-five all-time season in terms of attendance.

But the current financial system doesn't leave much room for celebration. Stern and deputy commissioner Adam Silver addressed the league's financial picture and the ongoing CBA negotiations with the Players Association on Thursday after two days of meetings by the league's Board of Governors.

Stern added that little significant progress has taken place in talks with the union this offseason, despite meetings that both sides previously characterized as cordial and productive. The league continues to push for a complete overhaul of the current economic structure.

"Even though we reported we have record season ticket sales over the summer and otherwise very robust revenue generation because of the built in cost of the system, it's virtually impossible for us to move the needle in terms of our losses," Silver said.

Players receive 57 percent of basketball-related revenues under the existing agreement, which expires June 30. Silver said league teams are spending approximately $2.1 billion annually in player salaries and benefits. Stern said that amount must come down somewhere in the neighborhood of $750-800 million. The commissioner left open the possibility of such cuts taking place over several years.

The league reported losses of $380 million last season, a figure the union disputes. NBPA executive director Billy Hunter wasn't immediately available to comment Thursday's developments. The league and union had negotiating sessions in both August and September.

Stern said owners are in agreement that increased revenue sharing must take place among teams. Currently, about $54 million is divvied up in the current revenue sharing pot. The new system being proposed by the ownership group would ensure the profitability of all teams, Stern said.

"One model is designed to assure that a team, all teams, will have the opportunity to be profitable with some modest performance standards," he said. "That is to say, you've got to get up to a certain level of performance in every market."

A revamped revenue-sharing system among teams goes hand-in-hand with labor negotiations, Stern said. The threat of a lockout after the season could impact the NBA's ability to do business with sponsors and other league partners going forward.

"We're getting very close to that point, unfortunately," Silver said. "Teams' season ticket renewals begin early first quarter of next year, pre-All Star [in] January. It's going to start having an impact on us then.

"I think we've been relatively under the radar compared at least to the NFL, but I think also the NFL's labor situation will have a direct impact on ours. Clearly if they're out, that's going to focus more on the potential for us to be out in the spring."

Hunter had previously said by the February All-Star break would be a suitable target date to determine whether or not a new agreement is likely before a potential work stoppage. Stern said that while an "internal deadline" has been set with the union, both sides should be able to gauge progress by the break.

"We'll have a pretty good idea how good or not good things are by the end of February," Stern said.

Among the other topics discussed:

• Stern welcomed any discussion/possible legal challenge from the union regarding to the "Respect of the Game" initiative, which has led to a number of technical fouls and player complaints during the preseason.

"They know exactly how to adjust," he said of the players. "They will adjust here and the referees will call fair games, and our fans will have a better appreciation for how good our players really are."

• The league expects to close the Golden State Warriors sale near the start of the season next week. Prospective new owners Joe Lacob and Peter Guber attended the BOG meetings.

• The league hopes to settle on a new owner for the Detroit Pistons by the end of November.

• Stern said the league received a "disappointing update" on the prospect of a new arena in Sacramento. The potential sale of the New Orleans was also discussed.

• The league also announced changes to the instant-replay rules. Owners were also briefed on the use of international rule regarding goaltending in the D-League.

Art Garcia has covered the NBA since 1999. You can e-mail him here and follow him on twitter.

The views on this page do not necessarily reflect the views of the NBA, its clubs or Turner Broadcasting.

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