NBA Lockout: Where the settlement lies, dollar-wise

By Chris Sheridan

NEW YORK — From what I can gather, it is looking more and more like a deal is going to be cut in the 51/49 or 50/50 range when it comes to the split of basketball related income.

It’ll probably take the sides a couple of days to get to that point when negotiations resume Friday, with the owners currently offering only 46-48 percent (down from 57 percent in the last deal) and the players at 54 (but having shown a willlingness to drop to the 52 range).

The owners also have moved only slightly off their late June flatlined offer of $2 billion per season with no increases over the following six seasons. But move they will, and if they come to the table with an offer that keeps salaries and benefits close to where they were in 2010-11 — $2.19 billion, that’ll be the clincher in getting players to ratify the deal.

I have been telling you since this site opened for business early this month that the two main words to keep in mind throughout this process were “aggregate dollars” — especially the number of dollars that are separating the sides in Years 1-6. That remains the key point, with the settlement number coming in somewhere between $12 and $15 billion over the first six years, as I wrote in my debut column for this site.

Here is what I believe the deal will look like, dollar-wise in terms of player salaries, when this thing gets settled within the next week: (And in the meantime, the doomsday rhetoric meter is likely to hit 11 at some point, and the words “best and final offer” are guaranteed to be uttered).

2011-12: $2.19 billion. (No reduction)

2012-13: $2.2 billion.

2013-14: $2.25 billion

2014-15: $2.3 billion

2015-16: $2.4 billion

2016-17: $2.5 billion — with a mechanism for bumping that number upward if the NBA’s new TV deal provides a windfall, and/or an opt-out for the players that would allow them to keep the deal from running longer than six years.

That would give the players $13.84 billion in salaries and benefits over six years, an average of $2.307 billion per season. It is a far cry from what the players were getting percentage-wise under the old deal, but it is palatable enough — no matter how it is categorized percentage-wise — to ensure a high probability that it will pass a ratification vote.

And again, once they agree to terms on the money, the remaining aspects of the deal (including an amnesty clause that would likely remove at least $100 million from payrolls for the upcoming season, thereby allowing players to avoid salary shrinkage through the escrow tax, the phasing in of a more punitive luxury tax, adjustments to the mid-level exception, etc.) could be worked out quickly. Then they take two weeks to put the thing on paper, and camps can open in mid-October with enough time to save the scheduled Nov. 1 start of the regular season.

So that is my prediction.

Now, let’s have a look around the Web to see what other writers who are well-versed in labor lingo are writing today:

Ken Berger of CBSSports.com:  “In addition to what they presented as hard cap alternatives — which also included a reduction in the Bird and mid-level exceptions — league negotiators also have presented a concept that could drive a wedge in the players’ association. In exchange for keeping certain spending exceptions in place — albeit in a reduced form — one idea floated by the owners was a gradual reduction in existing contracts — the “R” word, as in rollbacks – that would minimize the financial hit for players who will be signing deals under the new system. Such a proposal would alleviate the problem of players such as James, Wade, Stoudemire, Anthony, Chris Bosh and Joe Johnson having outsized contracts compared to stars who’d be faced with signing lesser deals under a new system. In essence, the players who already are under contract would take a percentage cut in the early years of a new CBA – 5 percent the first year, 7.5 the second and 10 percent in the third year, sources said — so that players like Derrick Rose, Dwight Howard, Chris Paul and Deron Williams wouldn’t bear a disproportionate share of the burden when they sign their max deals under the reduced salary structure the owners are seeking. The provisions are not geared strictly for the star class of players; in fact, the proposed rollbacks would be across the board, “for everyone,” a person with knowledge of the idea said. And while this concept may alleviate the problem of having future stars bear more of a burden, it would create other problems — not the least of which is the players’ unwillingness to accept a percentage of BRI in the mid 40s that would make such rollbacks necessary. It is for this, and other reasons — such as restrictions the owners would want even in a soft-cap system — that a person familiar with the owners’ ideas told CBSSports.com Tuesday night that what they were proposing was deemed “alarming” by union officials. And it is why Stern said Wednesday, “We are not near a deal.”

Sam Amick of SI.com: “The National Basketball Players’ Association has asked stars like Kobe Bryant, LeBron James and Kevin Durant to join the efforts on the public front by meeting in New York on Friday. The rank-and-file players are expected to be represented as well, with one source saying that NBPA executive director Billy Hunter wants “as many guys there as possible.” The negotiations are also expected to continue on Friday, with as many as 15 owners reportedly planning to attend the next session. Unless major concessions are made by the owners by then, the sources said players are prepared to show a united front and express their willingness to sit out the entire season — if not more. There is a growing sentiment that missing the start of the regular season could mean missing the entire season, one that was recently reflected in the comments of agent David Falk. There has even been renewed talk of players starting a league of their own, which may or may not be realistic but is certainly indicative of their level of frustration and the types of strategies being considered.”

Henry Abbott of ESPN.com’s TrueHoop: “Stern has assessed it’s deal time. In other words, he likes his negotiating position now, and is genuinely happy to have everything come to a head immediately. People who do lots of deals talk a lot about the importance of recognizing deal time when it comes around. What better card to play to sharpen everyone’s focus this weekend? Stern wants to eliminate the possibility of talks dragging on through the autumn. It’s interesting to speculate as to why. Maybe he doesn’t want fans and the media to demonize the players he’s counting on to carry his league. Maybe he’s scared of what could happen to the talks — he has intimated in the past that if it gets ugly, it could get really ugly, which could mean the decertification of the union, litigation galore, and who knows what else. An on-time start to the season does carry significant benefits to many owners and the league, and not to mention fans. For moneymaking teams, the benefits are obvious. Some other teams have short championship windows. And then there are all those corporate sponsorship and advertising revenues that might find new homes in a lockout.

Adrian Wojnarowski of Yahoo Sports: “When Stern decides to give Hunter an escape valve, this is over. When Stern can convince his owners to back off, this is over. Stern needs to give Hunter something to take back to the union, and say, “We won.” Maybe it’s the illusion of a soft salary cap, the preservation of the midlevel exception, a 50-50 revenue percentage split. Whatever. This isn’t about a fair deal, it’s about a deal the union can rationalize to the players for ratification. Hunter has no leverage, and no way out. This isn’t about getting the players a great deal, it’s about getting out of this without the agents overthrowing him. The union keeps insisting its players will go the distance, sit out the season, and that’s not happening. It sounds noble and strong, and there are players with the stomach to do it. Yet, there aren’t enough of them. What’s more, there’s the sobering understanding that the bad deal being offered now becomes worse in December.”

 

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  1. Drew H says

    Chris, with the amnesty clause, will a team be able to resign the player they released after a certain amount of period like 60 days?

    • Mike says

      I really doubt it. I think there is a rule that states you cannot reacquire a player you have released/traded for like 12 months. Something along those lines. I doubt the new CBA would change that.

      • Bill says

        I’m not sure about that. Two years ago the Cavs traded Zydrunas Ilgauskas to the Wizards who then bought him out or waived him. After a period of like two weeks or something, the Cavs resigned him for the minimum and he returned to Cleveland to finish the season

        • Guest says

          You cannot re-trade for someone, but you can re-sign them if they were traded and then waived.

          Last time, teams were prohibited from re-signing players that they waived under the Houston/Finley exception, and you would have to assume it would be the same this time.

  2. says

    Players and owners alike should look at this as a chance to get things on the level, then build from there. I’ve said all along that a 50/50 share makes perfect sense and then you start working on other aspects. This weekend will be the most telling of all.

    • Joshua says

      50/50 would be equitable if all basketball-related revenue including all stadium revenue and equity in Sports Channels were in the pot. But since they’re not, splitting it 50/50 is disproportionately in favor of the owners.

      In the other sports, the BRI that goes to the players is similar to what the NBA players currently get. They’re not getting a greedy share of revenue. What was so lopsided about the NHL lockout was that the player’s percentage of BRI was 66 percent. It’s since dropped to around 56 percent. The NBA, which seems to reference the NHL lockout a lot, is locking out for different reasons and differing terms.

      If MLB didn’t have massive revenue sharing, with teams like the Marlins and Pirates getting hundreds of millions of dollars in revenue sharing the past five years, the small market or struggling teams would be crying like the small-market NBA teams are right now. With revenue sharing, there has been labor peace in baseball for going on nearly two decades. The NHL, which enacted very little revenue sharing in their latest agreement, might be right back in the lockout game and the owners supposedly handily won that round.

      • Joshua says

        Also, I don’t necessarily buy the idea that the players have nothing to gain and a lot to lose by not caving into the owners and missing games. The lockout endgame does not always go in favor of the owners the longer it goes. The baseball players did alright after striking for a long time. The NFL players a long time ago wrung free agency out of their protracted labor struggle. Yes, the NHL players didn’t fare as well but things were out of balance in the league to begin with and there were other issues, like it being the fourth most popular major sport with less revenue and the NHL had lost its TV deal with ESPN because of the lockout. The players had to concede that their sport was facing a very ominous future. The history of their lockout really doesn’t apply with the NBA’s.

        • Guest says

          Agreed. You would also think that the NBA owners would start to split if the prospect of losing an entire year was really on the table. Several NBA teams make a good amount of money no matter how you slice it. And if you were being true about BRI, more teams make money. It’s not as if costs go away during a lockout. Obviously, most owners are better equipped than the players to lose money, but losing money is losing money, no matter how much of it you have.

          There are also long term costs. If the owners think they are hurting for season ticket holders now, wait until next October after there was no season.

          The players don’t have the testiticular fortitude to hold out, but a small part of me would like to see them call Stern’s possible bluff on cancelling the season.

  3. Frank Marsala says

    Chris, I see it the way you do. I think there is a deal to be had. It all depends on the players mindset. I think it would be a mistake for them to believe they can sit out half the season and get a better deal at that time. The time for a deal is now. If they can get 51% and retain soft cap, MLE, Bird rights (even if limited) I think they should do it. If they don’t do it now they will end up with the same deal in January.

  4. Let the season start says

    Great read, Its really hard to figure out where the negotiations are based on the soundbites from Fisher and Stern. Im guessing that during a negotiation… neither side wants to come out and say they are close, but with the calander where it is… this is getting kind of scary.

  5. Ramneet says

    Chris,

    I love reading your take on the lockout! I really hope you are right, and we can start reading about more important stuff like the Knicks-Heat on Nov. 2nd!

  6. FrankVogelisGOD says

    You are really putting yourself out there. I enjoy this site and I really hope your right, but if you are wrong and we miss this season you will have absolutely no credibility. I’m sure I’m not the only one who will stop frequenting this site if that happens. I really hope your right, I want basketball.

    • says

      Fair enough, Frank. I have a strong opinion on this, and I have been covering the NBA for a long, long time. Too much to be lost by canceling regular-season games. At a certain point, common sense MUST prevail.

      • says

        Chris, I enjoy your site and I’ve even shared one of your articles on our website (www.tradestreetpost.com)
        I will agree that a deal has to be made. It took too long to get fans back from the last lockout and shortened season. I don’t think the NBA wants to weather another storm where popularity falters yet again.

    • Vincent says

      I think you’re going a little overboard by claiming that one bad (wrong) prediction can result in Chris Sheridan, a guy who’s been writing for many years, having “absolutely no credibility”.

    • DR says

      I love the site Chris, seems like everywhere else you look is just over-blown doom and gloom which feels like it is trying to generate web traffic.

      so.. when Chris is right does that mean every other outlet is left with “absolutely no credibility”?

      • skelman says

        Not quite fair, Frank. I’ll still read, because all of these posts have been insightful and just plain good NBA talk for those of us after details. I sure do hope you’re right about all of this Chris. Lets get this deal hammered out NBA!

        • FrankVogelisGOD says

          No credibility is an overstatement. I take that back and there is a chance I might continue to read if he is wrong, but he does have a lot riding on this. His optimistic view of the lockout is definitely what sets this site apart and is definitely a tool to drive people here. He has certainly put his reputation on the line on this and I really don’t think I will be able to take his comments seriously about the lockout if he’s wrong although I do respect his passion. Since the main reason I come to this site is lockout news, I’m not sure that I would come back for that if he is proven wrong. I really really hope he is right though and I do think he has done a good job with the website so far. Yes, it will greatly damage all the doomsayer’s credibility if Chris is right. I don’t think credible journalists would be constantly saying that there is a 0% chance of games before January if they are as close as Chris says.

    • kantankruz says

      I’ll be still reading this site whether Chris is right or not. It’s just his opinion on the lockout (and it makes a hell of alot of sense). This has nothing to do with whether he is a great basketball journo or not, which he is. Keep up the great work Chris. Good read.

  7. John Dasdelen says

    I still believe the players do not trust the owners and there will be a lookout. The NBA might be trying to gimmick the NFL by trying to gather interest to it’s sport by dragging on with the lockout, but NBA is no by no means the NFL, and as I read lockout articles I think to myself the NBA has financial problems and as long as they have bad teams in indiana charlotte sacramento and with no system in place to give them a chance to compete NBA will always be a 3-4 team league. Bills and lions are 3-0, NBA can never provide that kind of balance and hope to smaller markets without some radical changes. I love the NBA I love the star power but small markets will continue to struggle and every time a CBA expires there will be lockouts because their not fixing the real problems in hand. NBA should admit it’s mistake of over expanding and buy out X number of teams and make this a more balanced competitive league.

    • Guest says

      The NBA is far from a 3-4 team. Just last year, 6-7 teams had a legitimate shot to go to the Finals and that’s not including Dallas, who, wait for it, many people predicted would lose in the 1st round.

      Meanwhile, what parity is there in the NFL? Over the last 8 years, three teams have represented the AFC in the Superbowl. And in most years by Week 13-14, it is very clear who the few teams are with a chance to win it all. But if by parity you mean, lots of teams can go 9-7 and make the playoffs, then sure, the NFL has parity. But in terms of championship contenders, it’s no different than the NBA.

      The NFL comparison is also tough to make given that you take local TV revenue out of the equation.

    • Guest says

      I do agree that we need contraction, but the players would never go for that. For all the talk about “small market” teams hurting, there are really only a handful of truly small market teams. Conversely, there are only a handful of “big” market teams. The vast majority fall somewhere in the middle–the problem for those teams is that they are poorly run. PHI, WAS, and GS should have no problem making money. How Ernie Grunfeld still has a job in DC is beyond me. I bet he has that long term offer to Nick Young ready to go.

      I’d love to see SAC, NO, MEM, and CHA get the axe. It may also be time to consider a 2nd team in Chicago. Reinsdorf would throw a fit, but if NY and LA can support two teams, CHI should be able to as well.

  8. says

    Interesting. By my calculations, it would take a 5% yearly increase in BRI for those numbers to equal between 50% and 51% of BRI for the players. Most other reports seem to be making projections based on a predicted 4% annual increase in BRI (in which case your predicted numbers would give players 52.5% of BRI). Is 5% the number you are hearing is being projected by the NBA and/or the NBPA? Or is it just your personal projection?

    • Tim McShane says

      Good question Jeff. I was already thinking that the negitive PR of this lockout could already reduce the the BRI increase of the 2011-12 season to something in the 2.5-3.5% range. But the 12-13 season could then reach the 5% increase once investing faith had been restored.

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