Hubbard column: Did players really lose? You mean like they did in 1999?

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Less than two decades after James Naismith invented basketball, he attended a game between Kansas and Missouri and was appalled when he saw Rule No. 5 of his Thirteen Original Rules of Basketball being violated.

That rule calls for, “No shouldering, holding, pushing, tripping or striking,” because the premise of basketball was that it would be a non-contact sport. Even by 1910, however, players were doing what comes natural, gleefully banging into each other like a bunch of early-day Charles Oakleys and it was ugly. Naismith was not amused.

“Oh, my gracious,” the good doctor said, “they are murdering my game.”

For 149 days in 2011, NBA fans could relate. The game of basketball was healthy – in colleges, Europe, Asia and other outposts. But NBA owners and players were shouldering, tripping and striking each other as they fought over $4.2 billion in revenue and threatened to murder a season.

The celebration of the settlement has been universal but, as always, there’s more to it because negotiations are simply another part of competition. While lawyers for both sides work on the language of the new agreement so that training camps can begin Dec. 9, everyone else is focused on who won and who lost. And in sports, that is important. It’s not enough to have labor peace, we absolutely must know who got the better of whom.

Opinions have been consistent with most analysts – well, make that all I have read – awarding a technical knockout to the owners. The players are getting a lower percentage of the revenue than before, contracts are shorter and controls are tighter.

It is not my nature to be cynical – I do, for instance, believe in Santa Claus, the Tooth Fairy, the Easter Bunny and the virtues of non-alcoholic beer – but the judgments sound very much like those from 1999 and 2005 when owners were declared the victors immediately upon the completion of negotiations. One agent quoted anonymously in 1999 said union boss Billy Hunter “got killed” by NBA commissioner David Stern.

Yet it is that 1999 agreement, which included an individual maximum salary and a rookie wage scale, that led the owners to claiming monstrous losses in recent years.

So now, for the third consecutive collective bargaining agreement, the owners are winners. At least that’s what is speculated.

But did the players really lose? Yes, their percentage of BRI decreased from 57 to 51 percent but from a fairness standpoint, isn’t that what it should have been anyway? Isn’t that a good deal?

This time, the players were victims of the owners’ previous ineptitude. The truth is players hammered owners in negotiations the last two times, and the cost had become so substantial that the owners had to do something about restoring at least a measure of financial sanity. At least that’s what they told us.

But the players still have it very good. They have perhaps the finest playing and traveling conditions of any set of workers in the world. They play in the best arenas, travel in private chartered jets, stay mostly at five-star hotels and despite salaries that average in seven figures, they get $110 a day meal money to help out when they are on the road.

In describing the deal to players, Hunter obviously put the most positive spin on it.

“Even though players took a reduced percentage of BRI,” Hunter wrote in the letter first obtained by Sam Amick of SI.com., “no player contract will be rolled back, the minimum salary and rookie wage scales will not decrease, and the 2011-12 salary cap and luxury tax threshold will be no lower than it was last season. To give some perspective, by year 7 of the agreement, the luxury tax threshold is projected to reach approximately $90 million.”

Hunter also projected the averaged NBA salary will be $8 million per player by the end of the agreement. As former Atlanta Hawks executive Stan Kasten told Bloomberg.com, NBA players “still are going to have the highest average salary of any group of workers ever in history, including all of sports. It’s not going to go down.”

When figures in the billions are being tossed around, however, we start to get casual about it. Consider one aspect of the new agreement – teams that exceed the luxury tax threshold cannot use the mid-level exception. In the last agreement, players could get a five-year contract worth a max of $37 million from any team over the cap, irrespective of where they stood in relation to the luxury tax.

Under new rules, they can get no more than a three-year deal worth about $10 million from any team that trespasses into luxury tax land.

Is it less than before? Obviously. Lest we forget, however, if you take $10 million and divide it by 50 years, that’s $200,000 a year. And that’s not including investing it and getting simple interest.

In real life, life in the NBA is good.

But count on labor peace lasting six years. Despite increased revenue sharing, the big market teams will still have the most money. Take the Lakers. As Mark Heisler pointed out yesterday, the Lakers will continue to be active as their annual profit soars to $150-170 million. Even as the luxury tax increases, the Lakers will not be reluctant to pay it because they have a 20-year, $3 billion TV contract.

So the tax to win a title is $60 million instead of $30 million? No problem. Let’s go to the TV bank account.

Ultimately, I believe, something as unforeseen as 2010-11 was in 1999 will happen. I have no idea what it will be, but the disparity in revenue in a sport so dependent on one or two great players will continue to exist. Baseball can operate without a salary cap because – as the Yankees can attest – one pitcher or one hitter or even several of each do not guarantee a title.

A quarterback in football can obviously make a big difference, yet Trent Dilfer and Brad Johnson have been Super Bowl-winning quarterbacks. Enough said.

When a player like LeBron James leaves and Cleveland goes from 61 to 19 victories, the importance of a small market being able to retain or attract a premier free agent is significantl. And it seems doubtful that will change in this agreement.

Regardless, we should enjoy the NBA and the next six years, even though we know labor peace is not permanent.  At the end of it, at least one of the parties will opt out. And my bet is that it will be the owners. As we found out in these negotiations, when it comes to financial shouldering, holding pushing, tripping or hitting, no one does it like they do.

Jan Hubbard has written about basketball since 1976 and worked in the NBA league office for eight years in between media stints. His columns appear every Tuesday on SheridanHoops.com. Follow him on Twitter at @whyhub.

 

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  1. I stopped reading when the author mentioned that from a “fairness” standpoint players should receive 51 percent of the BRI.
    Do the math people.
    Under the previous deal, with the players receiving 57 percent of the BRI, the players and owners actually split TOTAL revenues 50/50. The players received $2.16 billion and the owners received $2.14 billion.
    That’s because total revenue was $4.3 billion while BRI revenue was $3.8 billion. That means that before the owners and players made their split, the owners received $500 million dollars.
    If you apply the new BRI split numbers to the old revenue numbers, you come up with the fact that the owners could receive as much as $500 million more than players each year moving forward. Why is that fair?
    What makes it fair that owners, many of whom purchased their teams for one tenth of their current value, continue to take home a significantly larger share of revenues than the employees who actually grew the League and continue to make it widely popular? Where does “fairness” come in when you consider that more than half of the League owners have owned their teams for more than a decade, and reaped the rewards from revenue and increased team values, while the average player career is six years. Hell, seven owners have owned their teams for an AVERAGE of 26 years?
    Why is it fair that the people who do the most work and have the shortest time to earn money should take less money, when they were already splitting the pot 50/50?
    That’s not fair. Under the last deal, the owners got a chance to cap their highest earners and insure that a significant portion of the League will NOT earn their market value. That includes high performing players on rookie contracts and superstars whose value far exceeds their max salaries. And they still got 50 percent of total profits.
    That sounds like a victory to me. The only way it wouldn’t be a victory is if you didn’t actually bother to pay attention to the details.

  2. paulpressey25 says:

    The owners made one massive mistake in this whole thing. They didn’t look to bargain in a franchise player tag.

    But to be honest, I’m guessing that about ten markets wouldn’t have supported it because those ten markets draw the talent for a variety of reasons. Let’s face it, the Lakers are a run of the mill team if they aren’t driving the boat with the built-in advantages of Hollywood, endorsements and for many years the most cash.

    Wilt, Kareem, Shaq. The greatest centers of each decade all forced their way to LA, many times with the league’s tacit blessing. LA Fans started on third base and claim they hit a home run. And with that is the reason the Lakers are the Lakers and the Rams were, well, the Rams. It is easy to get fans to flock to your team when you are one of the top two in the league every season for forty years. In the NBA, the market advantages of LA are allowed to feed upon each other an exponentially grow. Not so in the NFL where you have to prove your management mettle every single year.

    The small and mid market 20-owners will rue these negotiations for not getting the tag done. A tag solves a lot of problems. That will be the biggest foreseen consequence.

  3. it’s going to be hard to control the proliferation of mid-level contracts and that’s going to be almost ENTIRELY because top players are so very, very underpaid.

    all that extra money needs to go somewhere and the top players aren’t getting any less good at growing the game and bringing in tons of money. so guys that aren’t very good are going to get paid way too much just because individual teams need to redistribute that leftover money to the other players.

    but now that high spending teams are working with a smaller mid level exception, that just means that teams under the salary cap are going to be the only ones waaaaaaay overpaying mediocre players.

    now miami only has to offer sam dalembert 5m over 4 years instead of 6m over 5 years. if he wants to win (having banked a whole lot for his mediocre play already), where is he going to go? to a team that’s under the cap and probably won’t win with him, or to a team that actually NEEDS a guy like him and can still pay him an acceptable amount of money?

    seems like miami should at least have to pay him more money, right?

    ——-

    as long as the max salary and rookie scale exist, there will be a glaring contract efficiency disparity of the owners’ own making.

    • Seems like the owners are ok with letting ‘super teams’ fill their rosters with ring chasing veterans more so than role players in their prime. Where as before you could possibly get a younger player with a ML contract. They were valued at what over 30 Million for the life of the contract, now it is what 9 million over 3 years?

      • You are right about one thing, if the superstars are underpaid (rookie or otherwise) and then you have Luxury teams filling out rosters with a lower mid-level, and others signing at slightly below their ‘value’. Who get’s overpaid? Most likely the starters on mediocre teams.

  4. I think the latent point made in your column is that the owners will ceaselessly push against labor interests. Their default position will continue to be to opt out of each CBA at the earliest juncture, demanding more protections from themselves, securing an ever larger percentage of the money flowing to their entities, and restricting movement and opportunity for labor whenever possible. The narrative this column paints, to me, is of the owners as a demanding tide that beats endlessly against the blockades set up by the players union, and in each chapter of this ongoing bargaining session, the players can do nothing more than minimize the damage to the best of their abilities. Each new CBA will inevitably mean a loss of freedom and a lower share of revenues. Therefore, in the terms used by the press and chattering classes, the union is doomed to “lose” each negotiating installment, at least in absolute terms. There will never be a CBA where the players emerge with a greater share of revenue, more freedom to play where they’d like or stronger guarantees on their contract terms. The question then becomes: how well did the union, in each chapter of its ongoing negotiating battle, manage to limit the encroachment of the owners into their pockets? I don’t know what the answer is in regards to this lockout, but that’s probably a better way to view paradigm, rather than in absolute terms of what was immediately lost and what was immediately gained.

    Hubbard’s right: $10 million is still a damn good way to make a living, and to that extent, yeah, the players should be happy to have maintained a virtually unparalleled standard of living. But the broader point that I think his column suggests without explicitly stating is that the “fair compromise” point in each stage of negotiations moves incessantly in the direction favored by the owners, and the players association undoubtedly knows as much. Their goal now is mainly to obstruct and minimize losses. They have no other choice.

    • Well, that is interesting, but doesn’t fit with the last couple decades of collective bargaining. Until this latest negotiation, the players had never agreed to a decrease in the percentage of revenue they were owed. They got increases in the 1995, 1999, and 2005 bargaining sessions, to look at the most recent and relevant cases. There were trade-offs on the system, but the players more than held their own in those negotiations. It is all about the leverage, and this year was the first year in a while the owners had the leverage.

      • Is that accurate? And in that case, what was it about these negotiations that suddenly transferred the leverage so dramatically?

        • The owners lost money.

          • Well, that contention has been thoroughly debunked on too many levels to list here, but clearly you already know that no one was losing money over the course of the last CBA.

          • Debunked? The players association themselves said the owners lost over 150 million last year. The owners losing money wasn’t disputed – how much was the question. It doesn’t change the fact that those losses, whatever value you may assign them, we’re the leverage the owners had this time around.

  5. This is a dumb statement- “But did the players really lose? Yes, their percentage of BRI decreased from 57 to 51 percent but from a fairness standpoint, isn’t that what it should have been anyway? Isn’t that a good deal?”

    The previous agreement was a 50/50 split of revenues when you consider that the owners take OVER $500 MILLION OFF THE TOP before you get to what they deem to be BRI. So if you think 50/50 is a fair split, there is no way you should be in favor of the current deal which is closer to 45/55 – 44/56 split.

    The players did lose. For some reason, the financial problems of the league were blamed on them, and they took the hit. The NBA wanted everyone to believe that player salaries were too high and out of control. The dirty little secret is that player salaries have been stagnant as a percentage of BRI for the last 13 years. It’s the most controlled cost the NBA has. It’s virtually a fixed expense. If your losses are increasing (which is what happened to the NBA from 1998 to 2011) there is no way you could possibly solve that problem by cutting, lowering or capping salaries, because salaries aren’t the problem with the NBA’s increasing expenses. Salaries have nothing to do with the millions the NBA has spent on building vacant NBA sized arenas in China. Salaries have nothing to do with owners overpaying for their franchises. And salaries have nothing to do with the hundreds of millions of dollars in interest/depreciation expense the league claims to have.

    Yeah, they are the highest paid athletes and what not. But they should be. Afterall, it’s a $4 billion industry and there is only about 450 or so NBA players. But that doesn’t negate the fact they got royally screwed in this CBA and will probably never be able to do anything about it. Because when it comes to asking for more money, the public is totally cool when an owner wants more, but god forbid the players ask for more money.

    I fully expect the NBA to be losing loads of cash in no time. I have no idea how they expect to break even this year, let alone the ensuing years of this CBA using their calculations and claimed losses. If I was a player, I would have tried to lock in this CBA for 50 years, cause it’s only getting worse from here on out.

    • All a matter of perspective, they got mugged compared to what they had going but still are sitting pretty compared to the NHL, MLS or on average to the NFL.

    • Michael: good points. I noticed that the agreed upon deal specifically stated that the players annuity fund was part of the 50-50 split. The prior proposal did not contain such language and a plain reading of the agreement separated the annuity fund from the 50-50 agreement. So the deal is not as good as I thought.

      You do, however, continue to ignore one basic point. The players have no other options that will provide them with anywhere near the deal they get in the NBA. Hunter, Stoudamire and Anthony talked about forming a new league but that would take years to develop and it may never be successful. Overseas options are not nearly as lucrative nor are any other opportunities in this country.

      The NBA provides a good guaranteed salary and an opportunity for the players to obtain endorsement deals via the marketing of the league. Further, the players get luxury hotel stays, per diem deals and chartered travel.

      At the end of the day, the players jumped at this opportunity. And they were right in doing so.

    • “The previous agreement was a 50/50 split of revenues when you consider that the owners take OVER $500 MILLION OFF THE TOP before you get to what they deem to be BRI. So if you think 50/50 is a fair split, there is no way you should be in favor of the current deal which is closer to 45/55 – 44/56 split.”

      The reason that money is taken off the top is because things like the naming rights of the arenas, the in-arena advertising, luxury suites, etc are sold as an annual commodity, and as such the sales of these things are shared with any other teams (eg hockey) that use the arena as well as the arena itself for things like concerts and other bookings. So although these revenues often go to the same owners, they are not entirely to do with the NBA team. It is entirely valid to only include parts of these revenues.

      • Certainly the NBAPA would have taken issue with the definition of BRI if they disagreed with you. From the perspective of collective bargaining, there’s absolutely a necessity to separate the earnings owed entirely to the NBA and those that come from various other sources.

        But from the perspective of “what’s fair,” as negotiations are often depicted in the press, and in terms of owners being those who own capital and therefore are alone exposed to the risks associated with their businesses, it’d seem reasonable to include the sources of income that they’ve been able to generate thanks in large part to the existence of a basketball league that requires top tier players to remain profitable. Sure, Ted Leonsis collects a great deal of money from the Verizon Center, thanks in part to the existence of the Washington Capitals, the Washington Mystics and a year’s supply of Beyonce and Spice Girls concerts, in addition to the existence of the Wizards. But when the owners’ public negotiating stance is that they’re being backed into poverty by a salary structure that makes their basketball teams unprofitable, is the reasonable reaction of the public to simply ignore those revenue streams that aren’t entirely owed to the players’ whose salary the owners would like to cut, simply because those revenue streams owe themselves only in part to those players? What can’t be separated and quantified for the purposes of collective bargaining most certainly can and should be for the purposes of public understanding of what’s at stake.

      • You’re going to have to provide evidence of this because I don’t believe you considering how many things you have lied about in the past. NFL owners take a $1 billion off the top, and nobody uses their stadium besides the teams.

        And even if what you said was true, which I highly doubt, it’s still a poor reason because the NBA is the main reason the vast majority of these arenas exist in the first place. For example, American Airlines Arena, Quicken Loans, Bradley Center, Fedex Forum, Chesepeake Energy Arena, etc. And don’t kid yourself that there are many other events going on at these places outside of the NBA. Here at the Verizon Center in DC, we’ve had a grand total of 4 concerts in the last 3 months. These arenas would be vacant if not for the NBA. Much like the ones the league has helped build in China

        • What’s with this latest repeated rant about arenas in China? Have you done some analysis that says these are bad investments, and/or serve no purpose in growing the game?

          • Please explain how a vacant NBA arena in China grows the game.

            What analysis do you need? Seriously, think for yourself just once in your life.

          • Sorry, I mistook you for someone capable of abstract thought, even though there’s plenty of evidence to the contrary. Since you hang all your arguments on bare “facts”, do you have any empirical evidence of these built arenas being empty?

          • My God!

            How fucking difficult is it for you to use Google and figure these things out for yourself?

            Google the schedule of the arena you’re looking for. Here I’ll do it for you as an example. And here is one of the first links.

            http://www.culture.sh.cn/english/venue.asp?venueid=203

            Yeah, lot going on here. Look at all the basketball events coming up :rollseyes:

          • Pathetic. I have no time to Google anything to validate your whining about the NBA investing in China. That’s on you, and you fail. I did a little investigation myself, beyond linking to a current schedule. It’s a super state of the art multi use cultural and entertainment center that has revenue coming in 365 days a year. The Arena operation itself had 115 events in it’s first year of operation. That equals a full NBA season, a full NHL season, and 3 other events per month. It’s only it’s first year, but that “empty” schedule compares favorably with most North American arenas.

            Aside from no evidence that it’s a failure at all, the NBA is seeing China as a huge investment opportunity, like the rest of the world, and you don’t get a foot in China without investing there. Instead of pointing to an internet schedule (that always tells you everything), give us something that says this was a bad idea and investment by the NBA.

          • And of those 115 events, how many of them had anything to do with basketball, let alone the NBA? Hmm… answer me that smart guy. And of those 115, how many actually took place in the main arena? C’mon genius, you should be able to figure this out.

            As for the events themselves, either you’re completely full of shit or nobody uses the arena anymore. The obvious answer being a combination of both because they have 4 fucking events scheduled for this month and next. 4! According to the arena’s own website. And none of them have anything to with basketball.

            Heck, even Shanghai’s pro team doesn’t even use the arena.

            So yes, there is plenty of evidence this is a waste of money. Even if you read local Shanghai articles, they think it’s a waste of money to and can’t figure what it’s purpose is. Yet, you’re either just too stupid to understand that or too stubborn to admit it.

            Seriously, dude stop slobbering over David Stern’s cock for just one second and actually think for yourself just one time. I dare you…

          • Look you mouthy little asshole, you brought up this NBA investment as an example of the NBA throwing away money, and all you’ve got is the arena’s current schedule of events to support this. As I pointed out, you don’t do business in China without investing there. The only way you can equate their participation (do you know how much is their investment?) in this venture as wasted expense, is if you look at the total picture (is that abstract concept beyond you?) of expenses and revenues in China. When you can do that, maybe you’ll have a point about it being a bad investment. Until then you’re just a loud mouth talking out of your ass.

          • “you brought up this NBA investment as an example of the NBA throwing away money, and all you’ve got is the arena’s current schedule of events to support this.”

            WHAT MORE EVIDENCE DO I NEED SHIT FOR BRAINS? If an arena schedule that says ZERO BASKETBALL EVENTS ARE BEING PLAYED HERE isn’t good enough for you, what will be?

            You want some financial analysis? Ok, zero NBA events have occurred in this arena in 2011. By my calculations, that means the NBA has received zero benefits from investing in this arena this year. But of course, knowing how fucking stupid you are, you will disagree for some piss poor reason.

            I ask you again, think for yourself just one time. Please one time. I beg of you to just pull your head out from your ass just far enough to realize that investing in an NBA sized arena in China makes absolutely zero fucking sense for the NBA. Especially in a place like Shanghai, where there are already plenty of arenas where basketball can be played (Qizhong Forest Sports City Arena, Yuanshen Sports Stadium, Shanghai Indoor Stadium, etc). And this as I said before, is just one example.

          • Still can’t get your mind past one factor at a time, hey. I understand. No worries, you’ll grow up and expand the mind a little one day. May I suggest you start by reading as much Aesop as you can find. In the meantime, you’re right. The NBA is dumb, and they must be losing money on the TV and merchandise revenues over there too. Dumb fucks need to listen to you.

        • Basketball Related Income (BRI) essentially includes any income received by the NBA, NBA Properties or NBA Media Ventures. This includes:

          * Regular season gate receipts
          * Broadcast rights
          * Exhibition game proceeds
          * Playoff gate receipts
          * Novelty, program and concession sales (at the arena and in team-identified stores within proximity of an NBA arena)
          * Parking
          * Proceeds from team sponsorships
          * Proceeds from team promotions
          * Arena club revenues
          * Proceeds from summer camps
          * Proceeds from non-NBA basketball tournaments
          * Proceeds from mascot and dance team appearances
          * Proceeds from beverage sale rights
          * 40% of proceeds from arena signage
          * 40% of proceeds from luxury suites
          * 45% – 50% of proceeds from arena naming rights
          * Proceeds from other premium seat licenses
          * Proceeds received by NBA Properties, including international television, sponsorships, revenues from NBA Entertainment, the All-Star Game, the McDonald’s Championship and other NBA special events.

          That from Larry Coon’s FAQ. Which I’ll say again, you should really read so you don’t consistently make these unfounded claims.

          • LOL I need to read Larry Coon’s FAQ. Says the guy who has no clue what player BRI has been the last 13 years.

            That still doesn’t address the second part of what I said.

        • And as for the arenas shared with NHL teams:

          Staples Center – LA Lakers, LA Clippers and LA Kings
          American Airlines Center – Dallas Mavericks and Dallas Stars
          Wachovia Center – Philadelphia 76ers and Philadelpiha Flyers
          Madison Square Garden – NY Knicks and NY Rangers
          Verizon Center – Washington Wizards and Washington Capitals
          Philips Arena – Atlanta Hawks and Atlanta Thrashers
          Pepsi Center – Denver Nuggets and Colorado Avalanche
          TD Banknorth Garden – Boston Celtics and Boston Bruins
          United Center – Chicago Bulls and Chicago Blackhawks
          Air Canada Center – Toronto Raptors and Toronto Maple Leafs

          And even though there’s nothing going on in Washington, that doesn’t mean many other stadiums don’t bring in many concerts and performances throughout the year.

          • So that list makes up a 1/3 of the arenas in the league. Way to support your argument with piss poor evidence.

            And no, there isn’t much going on in arenas anywhere across the US outside of sports. Numerous reports have been done on how they are basically a waste of money. There are only so many Lady Gaga, Chris Brown/Rihanna, etc type concerts that can actually fill these huge venues. And it isn’t like there are a lot of other events that take place during the calendar year at these arenas.

            Anyways, the point is the evidence you used to back up your argument is extremely weak. You’ve basically strengthened my case that without the NBA, these arenas wouldn’t exist. Hence why the non-BRI money really is BRI.

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