Official CBA/Labour Talks Discussion Thread II

[Indeed]

That's a good point. But isn't it reasonable to believe that certain teams deserved to lose money? Revenue sharing can correct the imbalance slightly, while ultimately rooting out the owners that continue to make mistakes or try to function in markets that flat out aren't viable. Once other owners have to foot the bill for their "colleagues'" mistakes they might sing a different tune. I just don't believe that placing the blame solely on the players for the league's overall losses is fair.

Sure, some teams deserved to. And some teams still will under the new agreement, quite possibly even with revenue sharing. But the league as a whole must be financially viable, and the article presented revenue sharing as a way to make that happen, which it clearly is not.

The blame isn't being assigned to the players. The blame for any losses that (may or may not) exist should be placed on the structure of the league (too many teams), the cost of travel and accommodations, and of course the rising costs of player salaries over the past 2 decades, along with the current economic crisis, wherein owners presumably have to spend more in advertising to maintain the revenue growth we've seen recently.

Unfortunately, the only thing there that the owners can control is player costs. The league could reduce the number of teams, but then there would be unhappy owners ousted, and unhappy players because there would be 15 less jobs per team lost. The players could agree to fly coach and stay in motels, but that's not going to happen. The owners could stop spending on advertising and branding, letting the revenue levels fall or level off, but that would only hurt the players and owners alike.

So the player revenue share has to decrease. Sure, there are incidents of bad spending in the various teams, like overpaying executives and some shady family member employees, but that wouldn't cause the losses the league is seeing by itself. Plus, good luck on cutting down on corruption in the business world. So the players are the only cost the owners can/will cut down on.

I am not sure if the owners can only control the player costs.
Those costs you mentioned does not make sense. How would NHL having more travelling cost (more players) can survive better? How can a fixed BRI in player salaries be a rising cost excuse (they rise only when they make more for the owner)? How come they cannot stop spending on advertising and branding, while NHL and other leagues can maintain that? How come they are making more money (increase in revenue) would end up being paid less?

The player salary is parallel to the revenue. Unless you are the league not making money fast enough to level with inflation, otherwise, there is something wrong with the owners side alone.

[floppymoose]

Ok, run with me here. How would you expect that to affect the league. Lower revenues?

Increase in marketing costs to get people to keep coming out to games and for corporations to continue with their sponsoships. Increase in fuel, accomodations and the fact that no pro-sports team is going to get a publically funded arena in at least the next decade.

Remember, in a good economic climate people have more money to spend on entertainment and corporations dump more money into marketing / sponsorships.

League revenues: all time high

Inflation:



The owners have learned that you can fool some of the people all of the time.

[Reignman]

Is there anything we agree on, factually? Do you at least acknowledge the league made good money for years and years until recently? And if you do agree with that, what is it that changed recently?

The downward spiral of the global economy and inflation.

And I'll add one more thing here, owners should forget about public funding for arenas in 90% of the NBA cities once their current arenas have met their shelf life. Where is the half a bil going to come from to build these things in the future?

Trust me, there isn't a politician stupid enough to propose a public funding for a new arena in most cities for the next decade or more. Just watch what happens with KJ proposing this new publicly funded arena in SAC. It ain't happening, so where will that money come from?

There wouldn't be a problem in Sacramento if the Malloofs had invested their massive profits from the early 00s into a new arena rather than squandering it on casinos and hotels.

Yet another example of poor management decisions made by the bottom 10 franchises during the past decade of riches.

Bullet points:

- In the early 2000's publicly funded arenas were a reality, I'd expect any business to go for that option over putting out the capital themselves - Smart decision
- Maloofs dumped nearly a billion dollars into the Palms because the ROI on a casino in Vegas is FAR FAR better than the ROI on an NBA team - Smart decision
- SAC had a great team with huge attendance numbers - Maloofs knew the city would cough up some or all of the dough
- 2007 financial crisis happens
- SAC has a **** team
- The Maloofs / Palms are hit big time and they are forced to sell part (all?) of the Palms to stay afloat
- New ecomic climate dictates that public funding for a new arena is a long shot

I don't see any mismangmeent here, they were victims of cirucmstance just like many people who lost a tonne since 2007.

If you think they should've been able to predict the future that's a different story but I don't see any mismanagment that led them here.

[Reignman]

Ok, run with me here. How would you expect that to affect the league. Lower revenues?

Increase in marketing costs to get people to keep coming out to games and for corporations to continue with their sponsoships. Increase in fuel, accomodations and the fact that no pro-sports team is going to get a publically funded arena in at least the next decade.

Remember, in a good economic climate people have more money to spend on entertainment and corporations dump more money into marketing / sponsorships.

League revenues: all time high

Inflation:



The owners have learned that you can fool some of the people all of the time.

How does that debunk anything I said, and again, revenue =/= profit. Big difference. You do realize that you can have all-time high revenue and still lose money right?

[Ponchos]

Orlando got an arena that was largely publicly financed that began construction after the financial crisis hit in 2007.

[Indeed]

The downward spiral of the global economy and inflation.

And I'll add one more thing here, owners should forget about public funding for arenas in 90% of the NBA cities once their current arenas have met their shelf life. Where is the half a bil going to come from to build these things in the future?

Trust me, there isn't a politician stupid enough to propose a public funding for a new arena in most cities for the next decade or more. Just watch what happens with KJ proposing this new publicly funded arena in SAC. It ain't happening, so where will that money come from?

There wouldn't be a problem in Sacramento if the Malloofs had invested their massive profits from the early 00s into a new arena rather than squandering it on casinos and hotels.

Yet another example of poor management decisions made by the bottom 10 franchises during the past decade of riches.

Bullet points:

- In the early 2000's publicly funded arenas were a reality, I'd expect any business to go for that option over putting out the capital themselves - Smart decision
- Maloofs dumped nearly a billion dollars into the Palms because the ROI on a casino in Vegas is FAR FAR better than the ROI on an NBA team - Smart decision
- SAC had a great team with huge attendance numbers - Maloofs knew the city would cough up some or all of the dough
- 2007 financial crisis happens
- SAC has a **** team
- The Maloofs / Palms are hit big time and they are forced to sell part (all?) of the Palms to stay afloat
- New ecomic climate dictates that public funding for a new arena is a long shot

I don't see any mismangmeent here, they were victims of cirucmstance just like many people who lost a tonne since 2007.

If you think they should've been able to predict the future that's a different story but I don't see any mismanagment that led them here.

There are more reasons why SAC team is being sold.
Because there are more buyers! It is easy to sell without losing money (or perhaps make a fortune even in the worst economy).

Meanwhile, why MLSE wants to sell it off? Because a stable business like Raptors, Leafs or TV channel has its value at the peak with little room to improve. If they can sell them off and invest on other things (where they are at the bottom), they can make a much bigger margin of it.

[Ponchos]

Meanwhile, why MLSE wants to sell it off? Because a stable business like Raptors, Leafs or TV channel has its value at the peak with little room to improve. If they can sell them off and invest on other things (where they are at the bottom), they can make a much bigger margin of it.

Actually my guess is the OTPP needs the liquidity from the sale of MLSE due to other assets underperforming in recent years.

[Indeed]

Increase in marketing costs to get people to keep coming out to games and for corporations to continue with their sponsoships. Increase in fuel, accomodations and the fact that no pro-sports team is going to get a publically funded arena in at least the next decade.

Remember, in a good economic climate people have more money to spend on entertainment and corporations dump more money into marketing / sponsorships.

League revenues: all time high

Inflation:



The owners have learned that you can fool some of the people all of the time.

How does that debunk anything I said, and again, revenue =/= profit. Big difference. You do realize that you can have all-time high revenue and still lose money right?

You do realize there is some logic question here?
You think a company has less expenses/lower cost when everything is more expensive, while it has more expenses/higher cost when everything is cheap?

Again, the owners claim their "other expenses" are 5 times the inflation. Not only it is non player salary, also this is only on NBA, not NHL.

[Indeed]

Meanwhile, why MLSE wants to sell it off? Because a stable business like Raptors, Leafs or TV channel has its value at the peak with little room to improve. If they can sell them off and invest on other things (where they are at the bottom), they can make a much bigger margin of it.

Actually my guess is the OTPP needs the liquidity from the sale of MLSE due to other assets underperforming in recent years.

Perhaps you are right.
But I would also sell off something at the peak right now, and invest something else that is at the bottom to make the huge difference in a few years.

[dhackett1565]

I am not sure if the owners can only control the player costs.
Those costs you mentioned does not make sense. How would NHL having more travelling cost (more players) can survive better? How can a fixed BRI in player salaries be a rising cost excuse (they rise only when they make more for the owner)? How come they cannot stop spending on advertising and branding, while NHL and other leagues can maintain that? How come they are making more money (increase in revenue) would end up being paid less?

The player salary is parallel to the revenue. Unless you are the league not making money fast enough to level with inflation, otherwise, there is something wrong with the owners side alone.

The player salary is not parallel to the revenue. It has gone up from below 50% prior to the '95 CBA, to 53% in that CBA (with unrecoverable growth to 58% in '98), to 55% in '99 (with unrecoverable growth to above 60% in some years), to 57% in 2005. In each CBA it remains parallel (ideally, but not really), but certainly not over time.

I agree that the NHL would have similar costs to the NBA in terms of travel, but I don't know that you can compare the two in terms of advertising costs - they are very different leagues in terms of how their image works and what type of advertising they do. You bring up a good point though - perhaps the costs differ for other reasons. However, you can still see how the most easily modified cost is the players' wages.

I don't particularly side with the owners in this (both sides are greedy buggers in my opinion) but it is not hard to see why they want to bring the players' salaries back to where they were a decade or 2 ago.

[floppymoose]

Reignman, the question is HOW are the teams losing money. We have to answer that in order to know how to fix the problem.

We know it's not from revenue going down. Its not the economy taking down ticket sales or tv revenue, etc.

We know it's not from player salaries eating it up, because player salaries stayed at the same portion of the revenue.

We know it's not inflation on the other costs because the year they say they lost the most money was a year with some of the lowest inflation ever.

[RapTelligence]

Reignman, the question is HOW are the teams losing money. We have to answer that in order to know how to fix the problem.

We know it's not from revenue going down. Its not the economy taking down ticket sales or tv revenue, etc.

We know it's not from player salaries eating it up, because player salaries stayed at the same portion of the revenue.

We know it's not inflation on the other costs because the year they say they lost the most money was a year with some of the lowest inflation ever.

But player salaries are cost and in the new economic environment the cost have to go down. Reignman pointed out the league onwers were able to subsidise statdium cost via taxpayer hand outs. In this economy one is not going find such freebies. Do the owners have to reduce their costs. And one of the costs are salaries. and in the new economic reality 50% seems like what they are ready to pay.

[Indeed]

I am not sure if the owners can only control the player costs.
Those costs you mentioned does not make sense. How would NHL having more travelling cost (more players) can survive better? How can a fixed BRI in player salaries be a rising cost excuse (they rise only when they make more for the owner)? How come they cannot stop spending on advertising and branding, while NHL and other leagues can maintain that? How come they are making more money (increase in revenue) would end up being paid less?

The player salary is parallel to the revenue. Unless you are the league not making money fast enough to level with inflation, otherwise, there is something wrong with the owners side alone.

The player salary is not parallel to the revenue. It has gone up from below 50% prior to the '95 CBA, to 53% in that CBA (with unrecoverable growth to 58% in '98), to 55% in '99 (with unrecoverable growth to above 60% in some years), to 57% in 2005. In each CBA it remains parallel (ideally, but not really), but certainly not over time.

I agree that the NHL would have similar costs to the NBA in terms of travel, but I don't know that you can compare the two in terms of advertising costs - they are very different leagues in terms of how their image works and what type of advertising they do. You bring up a good point though - perhaps the costs differ for other reasons. However, you can still see how the most easily modified cost is the players' wages.

I don't particularly side with the owners in this (both sides are greedy buggers in my opinion) but it is not hard to see why they want to bring the players' salaries back to where they were a decade or 2 ago.

Same, I am not supporting to neither side, but just want to find out the true and the middle ground.

I assume it has gone up to 57% from either 50% or 53%, but why they cannot agree to a 53% with some kind of revenue sharing between owners, and start the season with reducing some contract length for competitive parity.

Anyway, its good to know how other agree to things, and what has been discovered in terms of information.

[Indeed]

Reignman, the question is HOW are the teams losing money. We have to answer that in order to know how to fix the problem.

We know it's not from revenue going down. Its not the economy taking down ticket sales or tv revenue, etc.

We know it's not from player salaries eating it up, because player salaries stayed at the same portion of the revenue.

We know it's not inflation on the other costs because the year they say they lost the most money was a year with some of the lowest inflation ever.

But player salaries are cost and in the new economic environment the cost have to go down. Reignman pointed out the league onwers were able to subsidise statdium cost via taxpayer hand outs. In this economy one is not going find such freebies. Do the owners have to reduce their costs. And one of the costs are salaries. and in the new economic reality 50% seems like what they are ready to pay.

I don't see this argument.
You are making $100, you gave $57 to players and making a profit.
Now you are making $150, you gave $85.5 to players and you are losing money?

You have a revenue from $43 and increased to $64.5 which is on par with inflation, so why is player salary causing this to happen? Why this is related to the players?

[S.W.A.N]

Reignman, the question is HOW are the teams losing money. We have to answer that in order to know how to fix the problem.

We know it's not from revenue going down. Its not the economy taking down ticket sales or tv revenue, etc.

We know it's not from player salaries eating it up, because player salaries stayed at the same portion of the revenue.

We know it's not inflation on the other costs because the year they say they lost the most money was a year with some of the lowest inflation ever.

I would say that Fixed costs have gone up higher for sure.

The normal costs associated with travel have gone up much higher than inflation rate in last 10 years, marketing costs, financial commitment to wnba, development league, foreign marketing etc. Have all been increased.

Management costs have increased, Coaches, GM's etc have all had wage increase that go beyond inflation.



Overall I think its deceiving to talk about players salary compared to BRI. BRI is always going up.
Players salaries compared to net revenues would be more realistic (ya I know that will never happen)

[YogiStewart]

Let me know what is the risk of the owners, and why they deserve more than 50% of the BRI alone without including non-BRI (renting out arena and etc.).

i wish that both you and i had the capital to buy into this low-risk business. Ask the owner of the Dallas Stars how well sports franchises worked out for him. Phoenix Coyotes? The same.

The Sonics' owner moved his team because of arena issues (yes, the reasons are arguable). there's no risk in raising the capital to build an arena?
no risk in having employees making $15 mil/year? especially when television contracts expire before their contracts expire?
seriously? there's huge risk (and possibly huge reward) to owning any sports franchise. if it was so risk free, why aren't we able to round up a gang of people to invest in the Kings or Pacers, who may both relocated due to the risks.

[Indeed]

Reignman, the question is HOW are the teams losing money. We have to answer that in order to know how to fix the problem.

We know it's not from revenue going down. Its not the economy taking down ticket sales or tv revenue, etc.

We know it's not from player salaries eating it up, because player salaries stayed at the same portion of the revenue.

We know it's not inflation on the other costs because the year they say they lost the most money was a year with some of the lowest inflation ever.

I would say that Fixed costs have gone up higher for sure.

The normal costs associated with travel have gone up much higher than inflation rate in last 10 years, marketing costs, financial commitment to wnba, development league, foreign marketing etc. Have all been increased.

Management costs have increased, Coaches, GM's etc have all had wage increase that go beyond inflation.



Overall I think its deceiving to talk about players salary compared to BRI. BRI is always going up.
Players salaries compared to net revenues would be more realistic (ya I know that will never happen)

Still doesn't make sense to me as NHL has travelling cost as well, why NBA needs more to compensate with it.

As for management salary, coach salaries and etc, it is owner's responsibility to maintain those costs, no one ask them to give them Rashard Lewis contract, no?


However, as you pointed out, this is a result of revenue gaps between big market teams and small market teams. At the end, it seems a revenue sharing is needed to ensure those costs are being treated fairly, otherwise, we can hardly see competitive parity for teams with HOF coaches, while the others can only afford rookie coaches.

As for your idea. If players can vote on the expenses for the owners, maybe they would accept BRI in terms of net profit. Right now there is no control to the expense of the owners, how would players willing to do a sharing with them? Would you like to share your income with big spender in government (paying for eHealth contractors with $100,000 a month)? Probably no, right?

[floppymoose]

There are definitely franchises that have struggled. The NBA in particular could benefit from better revenue sharing, and possibly contracting or relocating some teams.

[ranger001]

Even Billy Hunter acknowledged that the league was losing around 160 million.

Why aren't you quoting the huge amount of money the league made in twelve years at that rev split? What's wrong with that number? Why isn't more relevant than the worst year of the deal? (A year that was likely cherry picked to hold whatever losses could be pushed into it.)

Neither you nor I have the profit number that the league made. Forbes has been proven to be a guess. We do know that both the owners and the players acknowledge that the league lost at least 160 million last year. That is a fact.

The bobcats sold for a loss. That is also a fact. You can try to spin a loss into a profit but when franchise values go down you know there is a problem. Or should.

[Ponchos]

When 1 owner sells for a loss in 30 years it may be indicative of a problem, however, the sky isn't falling.