Friday, September 16, 2011

NBA Lockout Thoughts

After months of NFL lockout coverage, luckily owners and players came to an agreement just in time to have a full season this year. Now, even as the NFL gets under way, we're stuck hearing about the NBA lockout, and there is very little optimism that a deal will get done before the season starts. Who's to blame?

I've seen several "fans" tweeting things at NBA players, calling them greedy because they can't come to an agreement with the owners on a fair CBA that will pay the players their fair share. That is ridiculous. However, the lockout mess is getting frustrating, so I understand why some people feel the need to vent their frustrations. Just please don't do it without a sense of logic; you give the rest of us fans a bad reputation.

As it is now (as it was, I suppose), the NBA players are getting 57% of the pie while owners are only getting 43%. That seems unfair, in favor of the players, and it is. Sure, the players make the league what it is, and nobody would argue that. However, the players are still employees. They aren't spending millions of dollars hoping to turn a profit; they are paid their salaries whether the team wins 17 games or 65 games. Owners need to build a winning organization to see consistent profits, and even though 16 teams make the playoffs every year, that means 14 teams will always miss the playoffs. It's not possible for every single team to consistently win, so from the owners point of view it's important that they get as much of the pie as possible because they realize the odds are not in their favor to consistently win games.

What would be fair? As much as a 50/50 split would seem to make sense, that's probably not fair either. Again, the risk involved for these owners is much higher than the risk involved for the players from a strictly economical standpoint. I think a 52/48 spread, with the owners getting the bigger chunk, would be more than fair. Has this been offered? I'm not sure. It's been reported the owners are trying to completely swing the spread in their direction, meaning from 57/43 in favor of the players to 57/43 in favor of the owners. It's also been reported that the players were willing to split it 50/50, which to me suggests a 52/48 spread wouldn't be out of reach for the owners. The players have seemed to concede that they don't deserve to take more of the pie than the owners, however the difference between 57% and 50% is huge when we're talking about billions and billions of dollars.

The owners, of course, will be fine if the lockout continues into the season. Financially, they are just fine, while a lot of players foolishly live paycheck to paycheck. This factor undoubtedly is why the owners don't feel any pressure; they're sure that the players will continue to cave as they realize their paychecks aren't coming. 

Sadly, this is the financial aspect of the league. Some owners are more worried about making a few more million dollars than they already will (and at a 50/50 split even, I can't imagine teams losing money) rather than ensuring the interest in their league continues on an upward trend.

There are other issues besides the revenue splits that are slowing things down as well, most notably an attempt by the owners to implement a "hard cap" instead of the current "soft cap." A hard cap would require teams to always remain at the cap or under it, as opposed to the current soft cap that allows teams to go over the cap in several instances. Common occurrences are re-signing players or offering a "mid-level exception" to free agents while already over the cap, among other things. Obviously, a hard cap would mean less money in the pockets of the players. Several teams were $20MM or more over the cap last year, and the World Champion Mavericks spent about $90MM despite a cap that was just under $60MM.

So even though I understand that this is a business for several owners and as a fan I will never completely understand that aspect of professional sports, I'm going to blame the owners. They are the ones being greedy, asking for even more than they would need, simply because they can. A soft cap has worked just fine, and if an organization performs well enough to have several young, talented players, it seems ridiculously unfair that a team like Oklahoma City might have to let Russel Westbrook sign elsewhere because giving Durant and Westbrook a max contract each would leave the team only about $20MM to sign the rest of the roster. Would the "hard cap" increase to a number closer to $90MM than the current $60MM? Again, I'm not sure. I've seen suggestions from people far more knowledgeable than me in both directions, so we'd have to see. My assumption is the "hard cap" would be much closer to $60MM than $90MM.

Asking for a 14% switch in revenue sharing with the players while also asking the players to agree to less spending from the owners is NEVER GOING TO HAPPEN. The owners ultimately are angling for something closer to 55/45, and the players might in fact cave if the league remains locked out into November and December. But that doesn't mean it's the right thing to do. Everyone involved will be making money if they can just agree to a fair CBA, and more importantly the NBA may continue to see it's ratings increase. Increased ratings will lead to more money over the next decade than batting over 1 or 2% of the pie. Considering the owners are the ones who benefit the most from expensive TV deals, it's clear how greedy they are being.

So, blame the greedy owners for the lockout, not the employees (players). Imagine for a minute that you work at a company that literally makes money because of you and you can't be replaced. If your boss came up to you and said "Well, we're going to make you take a 14% paycut when this contract runs out, because we know you need the money to live and you have no leverage." What would you do? Would you just take it in stride and continue going to work? No. And if you would, you're an idiot. The players aren't greedy for asking for a fair share; hell, they've ALREADY offered to take a 7% paycut. Now, paycut isn't the right word, because they will be making more money probably, if the league continues to receive more and more money from television deals and other things. But the players are willing to give back some of the pie to ensure there is a season this year. If the owners would budge, something might actually get done. But don't count on it.