Official CBA/Labour Talks Discussion Thread II

[dacrusha]

Woj of Yahoo Sports is reporting that the NBAPA will accept a 51/49 BRI or a 50/50 BRI, if the system is flexible.

Woj and Chris Broussard are both saying the stumbling block is the small market hardliners who don't want to even move to 50/50. They want 47/53 BRI.

So revenue sharing with some preconditions gets us basketball this season. Good thing the NBA won't consider that until after the CBA is settled.

It's a shame that the small-time owners representing markets that don't even deserve to have teams are holding the whole agreement process hostage.

[C Court]

Gabriel Feldman, legal expert for the Huffington Post explains a potential anti-trust lawsuit. If the players prevail then the NBA would restart the league and the NBA would pay treble damages to the players.

What can the players gain by bringing an antitrust suit?

The players would ask for two things in any antitrust suit against the NBA owners. First, they would seek an injunction from a court that would block the lockout and force the owners to re-open the league. Second, if they were unable to get an injunction, the players would seek money damages to compensate them for lost salaries and other financial injuries caused by the lockout. Antitrust law is a particularly powerful weapon because it gives private plaintiffs treble damages--i.e., three-times actual damages--for successful claims.

Of course, the threat of the injunction and the treble-damages may also give the players a more immediate benefit that does not require a court ruling--the risk of the antitrust litigation may give them leverage at the bargaining table and push the owners to make a deal

[BorisDK1]

They take out debt to finance their operations and capital expenditures (I believe the hornets had to take out loans to cover payroll). I don't recall where I said they only took out loans for operations and did not take out loans to cover capital expenditures.

Sure, that one team took out a loan in the year that it returned to a city which was still recovering from having been squashed by a hurricane. In the most part, though, the vast bulk of borrowing league-wide has not been taken out to cover operations: you yourself admit that. The borrowing has taken place to acquire teams and/or buildings.

So they're not being asked to pay a dollar, they're being asked to give up a dollar... In the end, the outcome is the same.

...except there's no risk involved in the latter situation, which does make it a big difference.

No, I'm not. I'm simply stating that if players show a willingness to cover the interest expenses in CBA negotiations then NBA owners will be more likely to take on additional debt. It's human nature. If you present an incentive, people will take it.

You do realize that nobody's suggesting that credits be issued against BRI for interest expenses, right? And do you really think any owner - who presumably has plenty of business experience - is going to take out loans and ruin his company's financials just to break even on the salary side? Please. Even if they did what you're suggesting, they wouldn't be any further ahead for it: they'd still have to pay that interest. And the amount of debt they'd have to assume just to make a significant dent in BRI would be in the multiple hundreds of millions of dollars: who's going to float paper like that without any tangible plan for using it?

I'm aware of what BRI entails. I think we're having a failure to communicate. What purpose would a credit for interest charges serve? I certainly did not bring that up.

But that's what you're arguing against, no? You think that somehow the owners want BRI reduced by however much they pay in interest - which would be a BRI credit. That's not the case currently.

[BorisDK1]

Player costs are directly linked with BRI, so if those costs rise, then, obviously, BRI has also risen, meaning, then, owners revenues also increased.

No kidding. That's why they want to reduce that amount, so they won't lose money. Hence, player salaries is the only thing owners can control to any meaningful degree in terms of their costs. They can't control interest rates, they can't control stadium rents/maintenance, or travel costs (to any meaningful degree) but in these CBA negotiations, they have to get control of payroll costs.

In fact, the owners underpaid players last year, necessitating escrow payments to the players to make up for the shortfall.

Um, not quite: the escrow is taken so as to provide a cushion for the league when payroll payments exceed 57% of BRI. The players weren't underpaid, they just had the funds held in escrow returned to them.

Again, where do those $300 million LOSSES come from?

The majority of the costs of an NBA franchise are in payroll - period. End of.

[dhackett1565]

In fact, the owners underpaid players last year, necessitating escrow payments to the players to make up for the shortfall.

Um, not quite: the escrow is taken so as to provide a cushion for the league when payroll payments exceed 57% of BRI. The players weren't underpaid, they just had the funds held in escrow returned to them.

Umm, not quite. The year before, the owners spent 170 million in overage, which was covered by the 192 million held in escrow. So they gave back 22 million in 2009-10.

In 2010-11, the owners spent 2.150 billion in salaries, which was 26 million below the promised 2.176 billion (57%). As such, the entirety of the escrow was given back to the players (about 162 million) and an additional payment was made to the union in the amount of 26 million to bring the percentage up to 57%.

In general I agree with your take in these negotiations Boris, but there is no arguing the owners underspent last year. Not that that has any bearing on the matters at hand.

[dacrusha]

Player costs are directly linked with BRI, so if those costs rise, then, obviously, BRI has also risen, meaning, then, owners revenues also increased.

No kidding. That's why they want to reduce that amount, so they won't lose money. Hence, player salaries is the only thing owners can control to any meaningful degree in terms of their costs. They can't control interest rates, they can't control stadium rents/maintenance, or travel costs (to any meaningful degree) but in these CBA negotiations, they have to get control of payroll costs.

In fact, the owners underpaid players last year, necessitating escrow payments to the players to make up for the shortfall.

Um, not quite: the escrow is taken so as to provide a cushion for the league when payroll payments exceed 57% of BRI. The players weren't underpaid, they just had the funds held in escrow returned to them.

Again, where do those $300 million LOSSES come from?

The majority of the costs of an NBA franchise are in payroll - period. End of.

BRI revenues cover payroll costs 100%. Period.

Quit avoiding the question.

[I_Like_Dirt]

The majority of the costs of an NBA franchise are in payroll - period. End of.

The owners are actually claiming differently. Based on their statements, the league can't make money unless the players take less than 50% of BRI. That means that non-player-salary expenses are actually starting to outstrip player salaries, or at least, they want them to. And we're talking BRI here, there are other revenue streams that don't get counted towards BRI including a significant portion of luxury suites along with several other things (like the non-controlling dividend-paying stake that the Celtics assumed in their recent TV deal which also represents millions).

I've brought this point up before and haven't seen you respond, but the NHL currently is paying player 57% of HRI and that league isn't acting broke. Some teams are struggling, but on the whole, the league is claiming it is making money. The NBA has much greater revenues meaning they have greater overall profits at their disposal than the NHL on average. Granted, I don't know exactly how HRI is calculated, but the difference between the two, if they're similar, winds up being in the order of $500 million give or take a few hundred million. Even if you assume the NHL is exaggerating and only breaking even on the whole, that means the NBA has something between $500 million to $1 billion more in non-salary expenses than the NHL. What could possibly result in that kind of expense that would be justifiable? I'm sure the WNBA is a few million. Jerry Buss pays tens of millions a year to his son, his daughter and he used to to his son-in-law. I know the NBA is marketing itself in China, but to get to that $500 million mark is tough going. If it's just the normal cost of doing business then I'd like to understand how the NHL manages to do it for so much less.

[BorisDK1]

BRI revenues cover payroll costs 100%. Period.

Quit avoiding the question.

What are you talking about? BRI refers to (a portion of) income, not costs. Payroll is the single biggest item of team costs, across the board - and it's really the only thing that is a variable cost to any meaningful degree. The travel, rents, etc. are all fixed costs. So if costs are the issue - and they are, as opposed to revenues - then guess what's the obvious area to address?

[BorisDK1]

Umm, not quite. The year before, the owners spent 170 million in overage, which was covered by the 192 million held in escrow. So they gave back 22 million in 2009-10.

In 2010-11, the owners spent 2.150 billion in salaries, which was 26 million below the promised 2.176 billion (57%). As such, the entirety of the escrow was given back to the players (about 162 million) and an additional payment was made to the union in the amount of 26 million to bring the percentage up to 57%.

In general I agree with your take in these negotiations Boris, but there is no arguing the owners underspent last year. Not that that has any bearing on the matters at hand.

Okay, my understanding was that the entirety of the escrow was enough to cover the gap, I had forgotten (or was ignorant of, I can't remember which) that an additional payment had to be made. It isn't overly material, I suppose, in that the 57% did get covered largely out of the escrow fund.

[lucky777s]

Again, where do those $300 million LOSSES come from?

Without researching this at all I think we can pretty easily come up with a great deal of costs for the teams. Remember, if team payroll is 57% of BRI and an average team has say 55 mill in salary than these costs quickly eat up the remaining 41 million dollars or so.:

1. Travel - this must be a huge expense to charter the team all across the country and put them up in 5 star hotels. Some teams, like DAL pay a lot more to really pamper their players and this is another competitive advantage they have in attracting players. I won't even venture a guess at this figure.

2. Other salaries - GM's, VP's, Coaches, Asst. Coaches, Trainers, Scouts, etc. Sometimes these expenses are doubled for paying former employees off on their contracts. They also have doctors, lawyers, accountants, sales people and don't forget about all the equipment they have to purchase and maintain from the actual court, uniforms, towels balls to computers, monitors, telecom,

3. Other expenses - like rental of office space, telecom service, marketing and promo, and carrying what has been a money loser in Raps TV for some franchises. And lets not forget another big one that kept most players from going overseas this summer - Insurance. Insurance on players and also insurance on all the employees and assets of the business. That must be a huge number.

That is all I can do off the top of my head but I should also point out that each team is operating under a very different economic reality. The 57% is an average for the league of total revenue but we know that the top 10 teams bring in most of the revenue outside of the national tv contracts. So the income side is far less for most owners than that average figure I posted above of around 96 mill. But the salary expense is much closer to the top earning owners and all the other costs like travel and insurance and executive salaries will take a much harder toll on the small market teams.

I believe a lot of the teams lose a great deal of money each year.

[Reignman]

Player costs are directly linked with BRI, so if those costs rise, then, obviously, BRI has also risen, meaning, then, owners revenues also increased.

No kidding. That's why they want to reduce that amount, so they won't lose money. Hence, player salaries is the only thing owners can control to any meaningful degree in terms of their costs. They can't control interest rates, they can't control stadium rents/maintenance, or travel costs (to any meaningful degree) but in these CBA negotiations, they have to get control of payroll costs.

In fact, the owners underpaid players last year, necessitating escrow payments to the players to make up for the shortfall.

Um, not quite: the escrow is taken so as to provide a cushion for the league when payroll payments exceed 57% of BRI. The players weren't underpaid, they just had the funds held in escrow returned to them.

Again, where do those $300 million LOSSES come from?

The majority of the costs of an NBA franchise are in payroll - period. End of.

BRI revenues cover payroll costs 100%. Period.

Quit avoiding the question.

How do you know it covers payroll costs for each individual team? It might for some but it might not for others, that's why we're here right?

[LittleOzzy]

Are they meeting today or tomorrow?

[S.W.A.N]

Are they meeting today or tomorrow?

Players reps are meeting right now, rumour has it that some time today Hunter and Stern may get togeather and Stern may 'tweak' deal to get things done.

As of now it has not been confirmed that they will meet before deadline

[ATLTimekeeper]

Woj of Yahoo Sports is reporting that the NBAPA will accept a 51/49 BRI or a 50/50 BRI, if the system is flexible.

Woj and Chris Broussard are both saying the stumbling block is the small market hardliners who don't want to even move to 50/50. They want 47/53 BRI.

So revenue sharing with some preconditions gets us basketball this season. Good thing the NBA won't consider that until after the CBA is settled.

It's a shame that the small-time owners representing markets that don't even deserve to have teams are holding the whole agreement process hostage.

I'd say it's more of a shame that there's not enough billionaires that treat their teams like works of art. But, I'm skeptical of anything coming out of those two scribes mouths during the negotiations. If the NBA walks away from a 50/50 agreement I'll eat my hat. I'll eat my socks if the players decertify.

[T.O.G.M]

Found this via Henry Abbott's twitter account: http://toronto.en.craigslist.ca/tor/m4w/2690173365.html


LoL!

[tecumseh18]

Woj of Yahoo Sports is reporting that the NBAPA will accept a 51/49 BRI or a 50/50 BRI, if the system is flexible.

Woj and Chris Broussard are both saying the stumbling block is the small market hardliners who don't want to even move to 50/50. They want 47/53 BRI.

So revenue sharing with some preconditions gets us basketball this season. Good thing the NBA won't consider that until after the CBA is settled.

Hmm. Any chance that the real game of chicken is being played between the hardline owners and the rich teams?

[BorisDK1]

The owners are actually claiming differently. Based on their statements, the league can't make money unless the players take less than 50% of BRI. That means that non-player-salary expenses are actually starting to outstrip player salaries, or at least, they want them to. And we're talking BRI here, there are other revenue streams that don't get counted towards BRI including a significant portion of luxury suites along with several other things (like the non-controlling dividend-paying stake that the Celtics assumed in their recent TV deal which also represents millions).

Sure, their fixed costs have increased significantly: it costs more to travel and rent stadiums, etc. than it ever did and those increases have well outstripped the Consumer Price Index (prior to this year). But those are fixed costs: they really can't do much to fix those, can they? I mean, if you think this labour stoppage has been brutal, wait until you see what happens when you tell NBA players they can't stay in a 5-star hotel in downtown Manhattan any more, but instead have to stay in a Microtel in Newark, NJ - and fly coach everywhere (bye-bye team-chartered airplanes).

I've brought this point up before and haven't seen you respond, but the NHL currently is paying player 57% of HRI and that league isn't acting broke. Some teams are struggling, but on the whole, the league is claiming it is making money. The NBA has much greater revenues meaning they have greater overall profits at their disposal than the NHL on average. Granted, I don't know exactly how HRI is calculated, but the difference between the two, if they're similar, winds up being in the order of $500 million give or take a few hundred million. Even if you assume the NHL is exaggerating and only breaking even on the whole, that means the NBA has something between $500 million to $1 billion more in non-salary expenses than the NHL. What could possibly result in that kind of expense that would be justifiable? I'm sure the WNBA is a few million. Jerry Buss pays tens of millions a year to his son, his daughter and he used to to his son-in-lawitI know the NBA is marketing itself in China, but to get to that $500 million mark is tough going. If it's just the normal cost of doing business then I'd like to understand how the NHL manages to do it for so much less.

You cannot predict profits strictly by revenues: you have to look at costs. I don't know what other costs the NHL has or does not have over against the NBA, so I won't comment on it.

[I_Like_Dirt]

How do you know it covers payroll costs for each individual team? It might for some but it might not for others, that's why we're here right?

We have no way of knowing whether it does or it doesn't (that includes you). To help with that end, other leagues have instituted signficant revenue-sharing plans in order to help teams in small markets compete. Even the NHL with way smaller revenues than the NBA has way more revenue-sharing than the NBA has. Why is it that for the league to be viable MLSE and Jerry Buss need to make even more money than they already do? Cutting player salaries means that the bulk of the savings are going to be had by the big spenders since they won't be able to go into the tax so easily or readily. Small market teams will see a little savings, but not a lot, while the Lakers and Knicks will suddenly be in line to make even more money than they already do.

It's the revenue disparity that hurts the league in the end because no matter the rules, if one team is making way more than the other and the players are paid a percentage of the two combined, then one team is at a major disadvantage no matter how low revenues are driven. Revenue-sharing solves that problem. Lowering player salaries only keeps the problem under control until the next round of negotiations when wealthy owners have seen their profits increased to the point where small market teams are struggling yet again.

[Reignman]

How do you know it covers payroll costs for each individual team? It might for some but it might not for others, that's why we're here right?

We have no way of knowing whether it does or it doesn't (that includes you). To help with that end, other leagues have instituted signficant revenue-sharing plans in order to help teams in small markets compete. Even the NHL with way smaller revenues than the NBA has way more revenue-sharing than the NBA has. Why is it that for the league to be viable MLSE and Jerry Buss need to make even more money than they already do? Cutting player salaries means that the bulk of the savings are going to be had by the big spenders since they won't be able to go into the tax so easily or readily. Small market teams will see a little savings, but not a lot, while the Lakers and Knicks will suddenly be in line to make even more money than they already do.

It's the revenue disparity that hurts the league in the end because no matter the rules, if one team is making way more than the other and the players are paid a percentage of the two combined, then one team is at a major disadvantage no matter how low revenues are driven. Revenue-sharing solves that problem. Lowering player salaries only keeps the problem under control until the next round of negotiations when wealthy owners have seen their profits increased to the point where small market teams are struggling yet again.

I've said it many times but I'm ok with revenue sharing, I just don't think revenue sharing should be the back bone of a business.

If only 2 teams were losing money (like the NFL / combined $10 mil) then I'd agree that revenue sharing can fill the gap; however, that's not the case here, the books show 22 teams losing money. That's the sign of a broken business model.

There's 3 parts to this negotiation, lower costs (BRI), increase revenue sharing and fix the system. Once there is a CBA that at least allows the majority of teams to stand on their own two feet the other things won't improve the overall business.

Revenue sharing is a band aid solution to propping up the business. That's not a viable long term solution.

[floppymoose]

I didn't think I could hate Kobe any more, but surprise surprise... he made it happen.