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Steve Aschburner

As sides plan Sunday night talks, financial picture muddles

Posted Oct 9 2011 3:54PM - Updated Oct 9 2011 6:13PM

As the damage grows, the pie shrinks. It's an inverse relationship that deepens with each fruitless round of negotiations in the NBA labor dispute.

The longer it drags on, the more harm gets inflicted on the events -- preseason, regular season, sponsorships, broadcasts -- that generate the $4 billion over which the league's owners and players are squabbling. And the more harm that gets inflicted, the more money is lost, intensifying each side's fight to grab what it considers to be its "fair" share.

Both sides reportedly were ready to make one last grab Sunday night at the pie as is, agreeing to meet in New York to find a compromise that would preserve the NBA's 82-game 2011-12 schedule.

The session, based on information given anonymously to The New York Times, was to involve the key negotiators from each side: NBA commissioner David Stern and deputy commissioner Adam Silver for the owners, with union president Derek Fisher and executive director Billy Hunter representing the players. San Antonio owner Peter Holt, head of the league's labor relations committee, also was reported to be headed to New York.

After the most recent bargaining session ended last Tuesday, Stern said he would cancel the first two weeks of the regular season if an agreement wasn't reached by Monday. (He specifically used the word "cancel" too, rather than "postpone," citing arena conflicts and calendar constraints that would make it difficult for all 30 teams to reschedule lost games.)

What Stern didn't specify was the time Monday by which the games would get whacked. With Hunter expected to fly Monday morning to a regional players' meeting in Los Angeles, the prospect of any Sunday meeting spilling into Monday initially seemed slim. But a report on said Hunter's plane ticket had been canceled, adding one more opportunity to meet what has been a succession of "D-Day" deadlines.

More than a week ago, the owners, players and fans faced "enormous consequences" if the collective-bargaining talks on Sept. 30 and Oct. 1 failed to produce an agreement. After sessions on Monday and Tuesday, there was chatter that the sides might not meet again for a week, a month or longer. So far, the cries of "Wolf!" and the Chicken Little hysterics seem less credible than a Yogi Berra outlook (as in, the CBA talks will be over when they're over).

Some D-Days are more equal than others, though. Even if the commissioner's deadline comes a stroke before midnight Monday, the cancellation of games will cost the NBA real money. How much? Stern and Silver alluded last week to "hundred of millions of dollars" lost from the first two weeks. Hunter estimated a $350 million hit to players' salaries for every month of missed games.

To keep the math simple, let's divide the annual $4 billion haul by six, since that's the length of the NBA regular season (yes, we know the playoffs are lucrative for the owners) and the round numbers jibe somewhat with the estimates tossed out by both sides. If each month represents $666 million of basketball-related revenues, two weeks would be about half that ($333 million). Which would be about 8.3 percent of the total.

So by digging in at their bottom-line share of 53 percent -- and contributing to the loss of two weeks of the season -- the players would have to up their demand to 57.8 percent of a smaller BRI to get the same $2.12 billion they want now. Heck, they'd have to get 54.5 percent just to reap the $2 billion that the owners are -- or at least Stern is -- offering in a 50-50 split.

The same goes for the owners. If they require a minimum of $2 billion, as suggested by Stern's 50-50 "concept," they would need the players to accept 45.5 percent going forward just to recoup their losses from the first two weeks of games. Anything short of that split -- 54.5 to 45.5 -- would mean that someone lost dearly. Maybe two someones.

Remember, the assumption from the start of the lockout on July 1 was that one side or the other would get the better deal. Most observers assumed the owners would hold out past the time (middle of November) when the players start missing paychecks and use that leverage against them. More recently, some have suggested the players are more committed and prepared than anticipated and might outlast a splintering group of owners.

What the above back-of-the-page calculations show, though, is the toxic cost to both sides of failing to preserve the entire 2011-12 season. Once actual financial pain is inflicted, both sides -- in most negotiations of this sort, historically -- try to recoup some of their losses from the other side by digging in for a better deal.

As Stern said last week: "There is an extraordinary hit coming to the owners and to the players. So I don't want to speculate about what our future bargaining position would be."

What might work best at 50-50, in this instance, becomes less attractive even at 52-48 in one side's favor if the overall $4 billion pie shrinks. And the speculated losses in just two weeks of games doesn't even account for what might end up as a dropoff in fan enthusiasm overall. After all, gate receipts and broadcast ratings slumped for several seasons after the 1998-99 lockout resulted in a 50-game season.

Nor do the numbers above factor in a league whose success instead builds on the momentum of 2010-11 and with owners and players committed not just to a new CBA but to a more legitimate, revenue-sharing partnership.

So which will it be: Half of a big pie? Or more than half of a smaller pie? Children seated at the kitchen table could answer that one quickly enough.

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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