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Steve Aschburner

Digging in at this late point makes dubious financial sense

Posted Oct 7 2011 11:24AM

David Stern walked out of the last of the series of hotel conference rooms in which he worked Tuesday and, to no one in particular, said, "I'm tired." It wasn't the first time a long day of negotiations and, more so, the pressure inherent in safeguarding and allocating a $4 billion industry had taken their toll on the NBA commissioner. It likely won't be the last, given the work that remains for Stern, the league's owners and its 450 or so players.

The NBA lockout will hit its 100th day Saturday and, like Stern, a whole bunch of people are tired.

Not tired as in fatigued, necessarily, the way the 69-year-old Stern meant it. Tired as in fed up, worn down and played out. Tired as in weary of the fruitless meetings followed by fruitless meetings. Tired as in impatient with the incremental movements in each side's bargaining position, dwarfed by the calendar's giant leaps every 24 and 168 hours.

Tired as in embarrassed for and, in the case of some NBA fans, done with the squabble between millionaires and billionaires against a backdrop of real-world economic pain. People seem tired of bad news and tired of getting more of it from the very places they seek refuge -- their entertainment, their games, their distractions.

The needle on any meter of public burnout from the NBA labor talks hit a new high when the owners' and players' arrows found a new middle: 50-50. After two years of wrangling and hand-wringing, after five months of dramatic posturing and digging in, the two sides got to a point -- one potenially offering a 50-50 split, the other considering and rejecting -- that screamed settlement. Heck, 50-50 isn't just an even split mathematically. It is a synonym for "fair" and "equal" and "partners."

It came and went, that 50-50 "concept" floated by Stern and deputy commissioner Adam Silver late in the day Tuesday, and so too did a timely end to the lockout (or what could pass for that). Now there is a hard deadline -- Monday afternoon as set by the league -- to avoid the cancellation (or postponement) of regular-season games. After that, it's just a rolling horizon of darkness for NBA arenas.

What makes all this worse, though, is the sense that principle, rather than business, is grinding the negotiations to a halt.

At a point when even the Corleones would separate what's personal from what's best for the bottom line, the players drew some lines in the sand over the way things should be, the surest sign of bargaining de-coupled from business.

The players should get a bigger share of the NBA's basketball-related income because they are "the talent and the skill that drive the business," union president Derek Fisher said. They should only have to cover a certain portion of what the owners contend was a $300 million loss in 2010-11. And they feel an obligation not just to today's players but to future generations. (Never mind that none of them actually is paying union dues yet. Or that the current stars' duty has been done in how they've already grown the game for the newbies.)

Overlooked is the reality that the time for shoulds and feelings ends the moment real games get canceled and bankable paychecks get lost.

Billy Hunter, executive director of the National Basketball Players Association, estimated that each month of the NBA season represents about $350 million in player compensation. Basically, it's the $2.17 billion players' share of BRI divided by the six months (November through April) during which they earn it. Whack half a month -- the NBA is expected to cancel the season's first two weeks Monday, if no agreement is in place -- and that's $175 million.

(Noted NBA salary-capologist Larry Coon crunched some more specific numbers, factoring in projected growth, the actual numbers on existing players contracts and estimates for what deals not yet signed and landed on $82.4 million as the players' weekly stake. That's $164.8 million for two weeks, in the same fiscal ballpark as Hunter's $175 million approximation.)

The players have dug in, publicly anyway, at 53 percent. If 1 percent of $4 billion is $40 million, that means they are holding out for $120 more annually than the owners, at 50-50, might be offering.

The players would lose that much or more if three weeks of the 2011-12 season were lost to this lockout.

(Coon took the numbers out further to see how the dollars would be impacted over a full six-year collective bargaining agreement. The players would be giving up not only $120 million this season, if they accepted a 50-50 split, but that amount compounded by a projected four percent annual growth. Over six seasons, that would be $796 million left on the bargaining table.)

But losing games this season -- losing paydays -- could get the players to that number even faster. At $350 million a month, the math is easy. Even in the best case among worst-case scenarios -- another 50-game season cobbled together from February to May, as in 1998-99 -- the players (if they still managed to get 53 percent) would lose $685 million from those 32 games sacrificed off the schedule.

Granted, $685 million is less of a hit than $796 million. But only those players whose careers lasted for the entire six-year CBA would, in theory, be better off. Most players' careers are shorter.

Also, Stern and Silver have talked frequently about positions hardening once games are lost, based on each side's need to recoup real losses out of any eventual deal. So if the players budge even a little from 53 percent, their ability to make up what they'll have lost will take a hit. Besides, the owners might not budge from 50-50 or might even drop their offer below that split.

Does this all start to become reality by Monday afternoon, if no deal has been reached and a cancellation announcement is made? Not necessarily. If the NBA had to sprinkle a week or two worth of postponed games into the remaing schedule -- like baseball rainouts -- it probably could find a way. Maybe an 82-game season still could happen, saving 82 games worth of paydays for the players.

Beyond two weeks, though, arena conflicts and a calendar with an unyielding back end (the 2012 Olympics in London in July, for one) make that improbable. Then money, real money, would get lost, while one side (or the other) stands on principle.

Here's a number for all involved to consider: $4.24 billion. That's what the league's BRI would need to be for a 50 percent share ($2.12 billion) to equal the players' demanded 53 percent of $4 billion. Isn't it just slightly possible -- and certainly a more admirable "partnership" type of goal -- for the two sides to settle now, work together and grow the game enough so both reap more?

They're squabbling over the size of their slices in an existing pie, when instead, they could be cooperating in ways never seen before in the NBA, in pro sports, to bake a bigger pie.

But no, time is wasting. Lines in the sand might soon be lines in the concrete. And black ink is about to turn red.

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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