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In the expiring CBA, players received 57 percent of the revenues. Ownership is seeking a 50-50 split.
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NBA heads into lockout after sides can't get deal done

By Steve Aschburner, NBA.com
Posted Jun 30 2011 7:52PM - Updated Jul 1 2011 1:56PM

NEW YORK -- Parting amicably but most definitely parting, NBA owners and players exited a final three-hour bargaining session Thursday, walked through a hotel lobby and headed directly into the uncertainty of the league's first labor lockout in 13 years.

Do not pass "Go?" Do not collect another $2.17 billion in player compensation and $4.2 billion in total league revenues if the 2011-12 NBA season is jeopardized?

That's the question the two sides ultimately will answer, based on how soon -- or not soon -- they reach an agreement to play basketball and conduct business again once the lockout triggered at 12:01 a.m. ET Friday.

Hammer out a deal in the next two or even three months? Lockout jail might feel like an ankle-bracelet stay at one of those tennis-and-shuffleboard Club Feds. Spend five, six or (uh oh) seven months mostly staring across the great divide in their positions? Everyone involved -- players, owners, folks who make more modest livings from the sport, fans -- could be looking at hard time. For a long time.

After all, this dispute -- the pursuit of a new collective bargaining agreement -- has gone on for 18 months, across nearly a dozen proposal and counter-proposals, with numerous face-to-face meetings in Miami, Dallas and New York accelerating since the start of The Finals May 31.

"It worries me that we're not closer and we spent all this time trying to get closer," a dour NBA commissioner David Stern told a roomful of reporters. "We have a huge philosophical divide."

Billy Hunter, executive director of the National Basketball Players Association, called the difference "mammoth." "The gap is too great," Hunter said. "It's like taking a baby step [instead of] a giant step."

The meeting Thursday was a relatively intimate gathering compared to the session last week attended by more owners and more than 30 rank-and-file players. This time, Stern and deputy commissioner Adam Silver were joined only by San Antonio's Peter Holt and New York's James Dolan of the 11-person labor relations committee. Hunter, union president Derek Fisher and executive committee members Matt Bonner of the Spurs and Maurice Evans of the Wizards represented the players, along with attorneys, economists and staff on both sides.

Given the incremental progress to that point, the prospect of getting a deal Thursday -- or even making sufficient strides to extend the midnight deadline and postpone a lockout -- was slim. But Stern and Silver said even that chance fizzled when the players came in with a tweaked proposal that did nothing to further address the owners' goals of greater competitive balance and profitability. Instead, Stern said, it featured a boost in player compensation from the current average of about $5 million to nearly $7 million in the sixth year of a proposed agreement.

"A lockout has a very large impact on a lot of people, most of whom are not associated with either side," Stern said. "They're the other employees of the teams, they're the people who work at the arenas. They're a whole raft of people who make their living from our industry.

"Given the fact that the teams were basically not to be profitable -- very close to break-even under the players' last proposal -- while the players would increase their compensation from the current range of $5 million to approximately $7 million, we didn't see any other option."

Hunter and Fisher did not share details of the union's latest proposal when they exited. It appeared to focus on the NBA's growth projections, with the players' share rising as overall revenues rise.

In management's last known offer, the players would be guaranteed at least $2 billion annually for 10 years -- compared to their 2010-11 compensation of $2.17 billion -- with increases possible (but at a slower rate than the players suggest).

In the expiring CBA, players received a 57 percent share of "basketball-related revenues" and last week presented an offer to adjust that down to 54.3 percent. They said that would result in $500 million in givebacks across five years. Ownership is seeking a 50-50 split, with more cost exclusions from the calculation of BRI.

Then there is the disagreement over systemic changes, such as the owners' desire for a hard or "flex" salary cap that would prevent some team from spending in excess of $100 million on payroll (and luxury-tax penalities) while others spend less than $50 million.

The players see that as poor team management that they shouldn't be squeezed to fix, suggesting that a better revenue-sharing system among the 30 franchises would solve that. Stern and Silver, citing losses by 22 teams, maintain that the NBA's collective $300 million loss means there aren't enough profits to salve all the shortfalls.

And so it goes.

"I'm not scared," Stern said. "I'm resigned to the potential damage that it can cause to our league. ... As we get deeper into it, these things have the capacity to take on a life of their own. You never can predict what will happen."

Fisher, on his way out of the midtown Manhattan hotel that served as meeting site, said: "I know there are a lot of our fans and people that follow our game that, although we're not going to miss any games at this point, still just don't like the prospect of a lockout. We don't like it either. It's something that our owners feel like is the best way, I guess, to maybe get what they want. We don't agree."

That is, well, something. The two sides did agree to meet in about two weeks for another stab at it. When the NBA plunged into a lockout that shortened the 1998-99 season to just 50 games, there were no talks from June 22 until August 6 -- and that one in August lasted just 90 minutes.

Both sides also indicated that their most recent proposals, disparate as they are, would remain in play. That's a departure from the ominous words leading up to the deadline that offers would get worse once a lockout began.

However, there is a chance the sides will begin with a clean slate sometime in the week of July 11. Fisher and Hunter said the gulch over economics is so large, they all might be better off focusing on the system changes.

Said Stern: "The players on their way out suggested to us that, when we re-convene, maybe we should start from scratch. And if there are things we should think about that we haven't thought about before. So I don't mean to suggest that [the latest owners' proposal is] 'off the table' in any threatening way. It just hasn't done the job. The question is, what does it take on both sides to get the job done?"

That's one question anyway. Another one is, how long can these negotiations drag on without doing serious harm to 2011-12? In terms of financial pain, the players won't start feeling the effect of a lockout until November, when their first paychecks for next season don't arrive. Owners face a more complicated financial picture, given sponsorships, partnerships and advance ticket sales.

But for the teams that have been operating at a loss, not staging games -- while not paying players -- might leave them better off rather than worse.

If the 1995 and 1998 lockouts can serve as primers, a full season could be played if a deal were achieved in September (as in '95). The 50-game version that began in February 1999 after a 204-day lockout had a drop-dead date for settlement of Jan. 7.

Go much beyond that and all of 2011-12 could be scuttled, taking with it the momentum of huge ratings and popularity gains of the recently completed season. That's when a seven-month lockout could become 15, much like the NHL's lost year of 2004-05.

By the way, Stern was asked about the pain associated with slamming the brakes on what was widely considered the highest-profile season for the NBA since Michael Jordan's run in Chicago ended in 1998.

"We had a great year in terms of the appreciation of the fans for our game," he said. "It just wasn't a profitable one for our owners. And it wasn't one that many of the small-market teams particularly enjoyed. Or felt included."

For what it's worth, the rhetoric between the union and the owners hasn't been amped up to 1998 levels yet -- there was more disappointment and resignation than acrimony in everyone's tone Thursday. But it is early.

"Obviously the clock is now running," Hunter said. "I've been anticipating this lockout for the last two to three years, and so it's here. ... I feel, OK, we were waiting for the lockout. Now there's a lockout. Now let's get down to business."

Said Stern: "We understand it's nothing personal. We could swap sides for advocacy. But the lack of animosity doesn't get us any closer with respect to the underlying philosophical divide."

It doesn't get anyone -- players, owners, fans, team and league employees -- any closer to basketball.

NBA.com's John Schuhmann contributed to this report.

Steve Aschburner has written about the NBA for 25 years. You can e-mail him here and follow him on twitter.

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