Looming labor talks, 'Hack-A' rules and more must be addressed
POSTED: Feb 12, 2016 6:18 PM ET
Inside The NBA: Commissioner Silver
NBA Commissioner Adam Silver joins the Inside The NBA set to talk about various topics surrounding the Association.
TORONTO — These are fat times for the NBA. More money is pulsing through the system and into players' and teams' pockets than ever before. The league never has been more avidly and widely followed, domestically and globally, using whatever metric you prefer.
Which means this is precisely the right time for commissioner Adam Silver, the owners and executives of the 30 franchises, NBA players union chief Michele Roberts and the league's approximately 450 players to be on high alert against that grave and all-too-familiar threat to any successful enterprise: Complacency.
It was inventor Thomas Edison, after all, who kept prodding himself and said, "We shall have no better conditions in the future if we are satisfied with all those which we have at the present." Or as former GE chairman Jack Welch said more succinctly, "Change before you have to."
It really isn't necessary to quote chapter and verse on the NBA's popular and fiscal well-being. But here are some of the essentials: A bonanza of a TV rights deal with ESPN and Turner Sports -- a reported $24 billion gusher over nine years, nearly tripling the current annual take -- kicks in for next season and runs through 2024-25. Average player salaries, after hovering for several seasons near $5 million, will break $6 million, then $7 million and $8 million, all in over a few years.
Franchise valuations are at nosebleed levels, with Forbes calculating an average of $1.25 billion, triple what they were just four years ago. Thirteen teams are said to be worth at least $1 billion. Five have soared to or beyond $2 billion. And 29 of the 30 teams, per Forbes, currently are running in the black, with Brooklyn paying now for recent largesse.
Inside The NBA: SIlver On Social Media
Commissioner Silver talks about the evolution of the NBA, Golden State's success and online betting.
"There's never been a better time to be an owner of an NBA franchise — or, frankly, any professional sports team," Washington Wizards owner Ted Leonsis, chairman of the league's media committee, said after the new TV deal was announced.
Expansion isn't in the offing, as commissioner Adam Silver likely will mention again in his annual state-of-the-NBA news conference to tip off the evening events of All-Star Saturday. But if it were, the expansion fee asked of a new entrant in Seattle, Las Vegas or wherever would be, what, $1 billion? Maybe $1.5 billion? More? Consider: The last time the NBA expanded, Charlotte bought back in as the league's 30th team in 2004 for $300 million. Per Forbes, that franchise is estimated to be worth $750 million today.
Facilities around the league range from venerably refurbished (Madison Square Garden) to brand spanking new, at least when construction of new arenas is complete in Sacramento, San Francisco (Golden State) and Milwaukee. Sponsorships are up, both plentiful and bountiful, and the league has been exploring new revenue streams such as daily fantasy and uniform advertisements.
Silver on Media Deals
NBA Commissioner Adam Silver discusses what the new NBA media deals mean for the longterm health of the league.
The NBA is said to lead the four major North American team sports in its profile on social media, players and fans interacting in ways that didn't exist a few years ago. As for the game itself, the Golden State Warriors are as breezy, likeable and fresh a champion as many people can remember, a roster built in traditional fashion playing a non-traditional style of basketball. In pace, in lineup configurations and in their deployment of the 3-point shot, the Warriors at least temporarily have transformed not just the league but the sport.
The international appeal continues unabated. More than 100 players from 37 nations held roster spots when the 2015-16 season opened. This All-Star Weekend will be broadcast to 215 countries in 49 languages, with 336 credentialed media outlets from around the planet. Even a dreaded taxi strike in Toronto set for this weekend was called off in time to serve the NBA's agenda.
So what could go wrong? Could there really be dark clouds gathering in the short-, mid- or long-term forecasts?
The answer, of course, is yes.
Devotees of the Hack-A-______ strategy probably should enjoy it while they can. Silver told USA Today last week that he is "increasingly of the view that we will be looking to make some sort of change in that rule this summer."
The tactic in which a notoriously poor free-throw shooter -- most often the Los Angeles Clippers' DeAndre Jordan, Detroit Pistons' Andre Drummond or Houston Rockets' Dwight Howard, with the Golden State Warriors' Andre Iguodala and Memphis Grizzlies' Tony Allen mixed in as non-centers -- is intentionally fouled away from the play is the NBA's topic du jour. Traditionalists feel, rather than legislating a rule change, that the burden ought to be on those guys to thwart the maneuver. As longtime big man Nazr Mohammed posted Wednesday on his blog: "To let poor free-throw shooters like myself off the hook is not the message we should be sending."
But others are more pragmatic, and when that includes the commissioner, it seems likely the league's competition committee will be charged with finding a fix.
The Starters: Hack-A-Rules
Adam Silver said the NBA will look at the current 'Hack-A-Shaq' rule — should it be changed?
"As I travel around the league, there's that one school of thought 'Guys have got to make their free throws,' " Silver said. "But then at the end of the day, we are an entertainment property. And it's clear that when you're in the arena, that fans are looking at me, shrugging their shoulders with that look saying, 'Aren't you going to do something about this?' "
Said TNT's Chris Webber: "That's going to be a real discussion. Do you change the rules for eight guys, 10 guys, none of whom are really the stars of this league, because they can't shoot free throws? When I can show you kids in the seventh grade who can make 80 percent of their free throws? So I think we're gonna have to talk about how those decisions are going to affect the overall game. Do we want to bore fans to death? Do we want players to get better? I really want to see where we go with that. Hopefully not with major rule changes but something's going to have to be done."
The NBA, in what now is two full years of Silver's appointment, has been quick to respond in matters of player, referee and fan safety -- thinning and moving the crowd of cameras along the baselines, for instance -- so there's no reason to think it won't move swiftly to address the exploitation of a rule.
As Chris Paul, president of the National Basketball Players Association, told NBA.com shortly after his arrival to All-Star Weekend Thursday: "There's always the game. But even me, I had to realize, it also is entertainment. Our fans, we're always trying to get feedback from them."
Do we want to bore fans to death? Do we want players to get better? I really want to see where we go with that. Hopefully not with major rule changes but something's going to have to be done.
– TNT analyst Chris Webber
There are other basketball-related topics in play, from the proposed 1-through-16 seeding of playoff teams without regard for conference to tweaks to the Draft lottery. A pet one here is the over-utilization of the 3-point shot and the sameness it has produced in teams' attacks. Style and math are dictating personnel more than the other way around. Even coaches whose rosters have competent, potentially superior big men are cowed into trying to keep up by scoring by threes.
How about widening the floor to make the 3-point line a true arc and lose the convenient corner locations? Maybe extend the line a bit to increase the difficult -- well, for most guys not named Stephen Curry? Some of the game's greatest athletic artistry came in that "long two" area now pooh-poohed by the analytics set. Making the 3-pointer less an Everyman's shot might bring some of that back.
Mark Cuban, owner of the Dallas Mavericks and out-of-the-box thinker, had a swift response when asked about a big challenge facing the NBA. "Simple," Cuban wrote in an email. "Growing our TV audience."
Contractually, that might not seem like a pressing matter, with the new ESPN/TNT deal -- taking annual payments of about $930 million to an average of $2.66 billion -- locked and loaded. Then again, the deal has to be a good one for the TV partners too or the next time around, the numbers might head down.
So many other opportunities available to the NBA only get enhanced if the TV audience gets bigger. And both the technology and the audience is changing, with more consumers "cutting the cord" in pursuit of more personalized, a la carte TV programming options.
Any discussion of the NBA's future is packed with pachyderms -- that is, the elephant in every room, represented by the prospect that either the owners or the players will opt out of the current collective bargaining agreement before its full term. Invoking that option by Dec. 15, 2016 will end the CBA as of July 1, 2017, which means another series of contract talks is just around the corner. Another lockout could hit in less than 17 months and, reminiscent of the ones in 1998 and 2011, real games and real money could be lost to start the 2017-18 season.
Keep in mind, the salary cap already has been projected to hit $108 million per team by then, up from its current $70 million and another big leap from the $89 million penciled in for next season.
For a sense of just how much money will be in play, it's worth recalling the rancor players felt four years ago after their 57 percent share of basketball-related revenue (BRI) had been negotiated down to 49-to-51 percent, a huge concession to the owners' claims that most teams were losing money. The subsequent cap in 2011-12 (in 2015 dollars) was $61 million.
The whole thing that went on with the last negotiation process was the owners were telling us they were losing money. There's no way they can sit in front of us and tell us that right now.
– Cleveland Cavaliers star LeBron James
Well, the $70 million salary cap already in use this season is the equivalent of 57.4 percent of BRI in 2011-12 -- which means the players already are ahead, in sheer dollars, of where they were before the last lockout. At an $89 million cap, that's like getting 73 percent of BRI from just five seasons back. And a $108 million cap figure represents an 88 percent share of the previous total pot.
The players understand how robust the business is these days, with many determined to win back BRI share almost as a statement or source of pride distinct from absolute dollars. They know the Clippers sold to Steve Ballmer for $2 million, that the Knicks are estimated to be worth $3 billion and that almost every owner is turning a profit. The union reportedly is considering taking back the group licensing/marketing rights it traditionally has sold off to the league for about $40 million, believing it can do better while exercising control.
As Cleveland's LeBron James, an NBPA first vice-president, said: "The whole thing that went on with the last negotiation process was the owners were telling us they were losing money. There's no way they can sit in front of us and tell us that right now."
Ownership will contend that the financial stability generated by the current CBA is a big reason why the league is attractive to investors and sponsors.
Here's another money-related challenge that could impact the next round of CBA talks and even the league's general sense of well-being, as suggested by TNT's Reggie Miller. The flood of TV money over the next two years, bloating cap space for a limited supply of players (teams are obliged to spend 90 percent of the cap amount each season), will lead to some contract mistakes.
So while Miller doesn't predict another lockout, he does anticipate some discord.
"My only problem would be what I call the "Jon Koncak Rule." When guys with [ordinary] numbers get rewarded with huge contracts," the former Indiana Pacers shooting guard said.
Koncak was the Atlanta Hawks center who, because he hit free agency at just the right time in 1989, landed a (gasp!) six-year, $13.1 million deal that rankled some NBA rivals. A 7-footer from SMU, Koncak had averaged 4.7 points, 6.1 rebounds and 20.7 minutes prior to signing what then was a massive contract.
"That could be a problem, because I see guys who have OK numbers that are in line to get $18 million or $22 million," Miller said, updating to current price tags. "I see that being a problem because some superstar is going to be like, 'Wait a minute! Are you kidding me? If he's getting $18 [million], then I'm worth $35 [million].' "
One team's decision to overpay a player can warp the market for every other player who thinks he is better and for every other team, regardless if it wants to pursue fiscal responsibility. The likelihood of it happening increased, allegedly, when the NBPA declined the NBA's suggestion of "smoothing" in the new TV money over several years, rather than dumping it into the system immediately.
The league still would have paid out 51 percent of BRI but less initially would have gone into the salary cap, with more paid in a lump sum to be distributed by the union (typically on a pro-rated basis). But rather than structure the ESPN/TNT payments to do more of the "smoothing" for them, the owners wanted more of the money sooner. Kind of like the players.
All of this will get hashed out in the CBA talks. Some preliminary discussions already have taken place, with Silver and Roberts meeting quietly to find common ground and, perhaps, get out front of grittier, more heavily covered formal negotiations.
Some wonder if Roberts, in handling her first contract talks as the union's executive director in place of deposed Billy Hunter, might want to demonstrate toughness, which could make a compromise difficult. Others, though, believe she will show her competency by being smart, if a good deal can avoid lost games.
Silver, at a time when so much is going so well, surely isn't eager to gash open the start of the 2017-18 season either. Ultimately that particular challenge will come down to two parties that previously shared a large pizza figuring out how to divvy up an XXL pizza. With so much more on the table, do they really want to fight over the last piece?
The answer will have to wait. But when an enterprise's biggest challenge comes from having so much, as opposed to too little, business generally is good. Awfully good.
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