Lockout

[turk3d]

Union considers Decertification and Antitrust lawsuit. Do not know if this is just an idle threat or a real possibility but if so, things could get really ugly.

http://www.nytimes.com/2011/07/10/sport ... .html?_r=1

But the path the N.F.L. Players Association chose — decertification, coupled with an antitrust lawsuit — remains a weapon in the basketball players’ arsenal should negotiations fail.

[floppymoose]

Eventually, they will. I have no doubt that the owners will get most of what they want from this lockout. And as a fan, I dread that reality. When the players break, it is going to hurt the fans in the long run.

I'm still hopeful. Perhaps naively so. I think the owners have more skin in this season than they are letting on. If the players make it through the whole season without breaking then I think we'll start to see massive infighting among the owners. The players should insist that revenue sharing be part of the new CBA and not budge on that, to keep the owners at each other's throats early and often.

[billinder33]

Interestingly, it's classic case of social wealth distribution vs winner-take-all capitalism.

On what humanistic grounds are the owners entitled to a "social distribution of wealth?" This is not healthcare. It's not education. Human civilization does not descend into Hobbsian carnage if a few NBA teams are shutterred for failure. The only wealth distribution being considered is to redistribute players wealth among already preposterously wealthy owners, who also dip into the non-voluntary fan pocket through tax breaks and public financing of stadium schemes . . . none of which do the players get to participate in.

I didn't argue for ether side, just commenting that this is the battle that's going on here. And it's happening on 3 levels - among the owners, among the players, and between the players and the league:

Among the owners, the NFL figured it out years ago that a healthy, competitive league directly benefits all owners, even though you will never get the Jerry Jones' of the world will never buy into this. These types of owners, many of whom inherited their franchises or the wealth that allowed them to become owners, don't want the revenue sharing not because it would be an affront to the inherent advantages they have in both revenue and on-court competition. They fail to see what benefits the league, benefits them.

Among the players, it's the stars, the high draftees, and the entrenched high-dollar medium-to-low output player vs any player who's fighting the salary constraints that are imposed on his team because of high-dollar players how aren't producing relative to salary.

And between the players and the league, with the league using every tool in the book to drive labor as low as possible in order to maximize profit.



My interest don't lie with any of the above parties, my interest lie as a fan. I don't care whether owners are making runaway profits or if the are going broke. I don't care if the players get 30% of Gross or 70%. I only care about the quality of the product on the court, which IMO is nowhere close to being as good as it could be if guaranteed contracts were reigned in, and if there wasn't such a huge disparity in team salaries - and these are issues that require sacrifice from both the players AND the owners.

[Sleepy51]

NBA players getting close to 60% of the gross revenue in a business that has huge operational expenses seems high to me. In the restaurant business (granted not a exactly an apples to apples comparison), about 33% is typically labor, 33% COGS, and the remaining third split between fixed costs and owner profit. While NBA franchises don't have much if any in the way of COGS, operational expense is through the roof - arena leases, travel expense, marketing, etc, and that doesn't even factor in the labor that is NOT associated with player salaries like coaching, scouting, and training, marketing personnel, backoffice staff, etc.

Player salaries would be more accurately considered COGS (especially when they are being depreciated as property.) The core NBA product is PLAYERS PLAYING basketball. Not jerseys or nachos. 58% of revenues are spent procuring the raw commodity that the NBA sells.

Obviously there are differences, but looking at another company who's product is a commodity (XOM Exxon Mobile)
http://investing.businessweek.com/resea ... ker=XOM:US

They had sales of $342BB and cost of sales of $231BB. That's a 60% cost of goods sold.
Different businesses have very different investment and operating profiles. I would venture that the restaurant business has very little in common with a $400MM sports/entertainment complex.

I'm not sure that's a fair comp either. Oil companies are typically low margin on mass volume industries. Plus, what comprises that COGS line item? 3rd party consulting contracts to companies like Halaburton? Drilling platforms? - one would think that would be operational, but when you look at their income statement, non-S&M non-Depreciation operating expenses are 12% of revenues, which I find difficult to buy into.
.

The thing is, I look at those two examples and I would see the NBA player workforce as MUCH more like Drillers, consultants and subcontractor relationship than I would see it like dishwashers.

But either way, if we accept that the NBA's player workforce is labor and not COGS (which I don't, based on the tax treatment and nature of the relationship) then the miniscule COGS line item goes a long way towards offsetting the massive labor expense.

There is a value judgement that I really really am not comfortable with in dismissing the character of professional athletic "labor" to liken it to dishwashing or bartending (both jobs I have done in my own life.) I wonder why as a society so many of us are willing to financially reward and spectate and take from this one particular branch of highly specialized labor while simultaneously holding highly paternalistic and contemptuous opinions of it.

[billinder33]

The thing is, I look at those two examples and I would see the NBA player workforce as MUCH more like Drillers, consultants and subcontractor relationship than I would see it like dishwashers.

But either way, if we accept that the NBA's player workforce is labor and not COGS (which I don't, based on the tax treatment and nature of the relationship) then the miniscule COGS line item goes a long way towards offsetting the massive labor expense.

There is a value judgement that I really really am not comfortable with in dismissing the character of professional athletic "labor" to liken it to dishwashing or bartending (both jobs I have done in my own life.) I wonder why as a society so many of us are willing to financially reward and spectate and take from this one particular branch of highly specialized labor while simultaneously holding highly paternalistic and contemptuous opinions of it.

I'm not sure who is holding highly paternalistic and contemptuous opinions of NBA players... I am certainly not. I am probably one of the more pro-labor people you will ever meet. And while I do high-tech sales in a very specialized field for a living, I do not delude myself away from the reality that I am anything other than disposable labor to corporate America.

But insofar as the inner workings of a company's financials is concerned, labor is labor is labor. There are a lot of people in the top 1% of 1% of 1% of 1% of workforce specialization who don't make anywhere near the lifetime money that NBA players do.... microbiologists, astronomers, physicists, computer scientists, academicians, etc, partly because these people are not unionized and largely because the organizations that employ these people have a balance sheet to maintain. Even if NBA players have to give in on the things I would like to see - a hard cap and reduction of guaranteed contracts - NBA basketball will continue to be a very lucrative career, even when the earnings are amortized over the lifetime of the player.

[billinder33]

One more comment on COGS. If we put things like contractors and drillers into COGS, then we should do the same on the NBA side and put coaching, staff, scouting, D-League operations, and other nebulous aspects of the product as part of the discussion of player salary percentages as well.


That's the slippery-slope of using COGS as a percent. If you throw the kitchen sink into COGS on the corporate side, you have to do the same on the NBA side to get comparable numbers, and then find a way to deduce player salaries from that amalgamation. To me, splitting out direct labor is a much easier way to look at the number.

[floppymoose]

I don't really care about what the %'s are in other businesses. To me it's much simpler than that. The players are the product. If the player slice of the pie is small enough that the owners are guaranteed to make money no matter how stupid they are, that to me is the definition of the player's pie being too small. That some teams are losing money while others are making money sounds like the correct state of affairs as far as the player/owner split goes. There is nothing stopping most teams from making money right now aside from their own poor decision making. The remaining teams can be either revenue shared into profitability, moved, or bought out by the league and contracted.

[Sleepy51]

One more comment on COGS. If we put things like contractors and drillers into COGS, then we should do the same on the NBA side and put coaching, staff, scouting, D-League operations, and other nebulous aspects of the product as part of the discussion of player salary percentages as well.


That's the slippery-slope of using COGS as a percent. If you throw the kitchen sink into COGS on the corporate side, you have to do the same on the NBA side to get comparable numbers, and then find a way to deduce player salaries from that amalgamation. To me, splitting out direct labor is a much easier way to look at the number.

I understand that was your objective in bringing up the restaurant business, but my response was about the fact that the NBA has minimal costs other than player salaries. Where your restaurant example had 33% in labor and 33% in COGS, the NBA does not have 58% in labor and another 33% in COGS (unless that fancy paper they print tickets on is REALLY expensive.) The higher player salaries are offset to some degree by much lower COGS. The TOTAL of all expenses is not a far off as the way your original example insinuated.

Back to the basketball stuff, we aren't that far apart. I want a hard cap. I just also want contraction. I would also be perfectly willing to see the players go without a minimum salary. Seriously, I would be absolutely fine with the 15th man needing a summer job. I think he should need one. Because he's not likely to stay on a roster for long anyway and needs something to fall back on.

I think within that really basic framework, a lot of the other problems take care of themselves. What I do not want is for players who ARE driving revenue, who ARE increasing franchise values that they do not participate in to be limited in what compensation they can seek in exchange for their exceptionally valuable services. Lebron James does not owe Rob Kurz financial security anymore than the taxpayers of Lousisiana owe the next Hornets owner guaranteed ticket sales.

[Sleepy51]

I don't really care about what the %'s are in other businesses. To me it's much simpler than that. The players are the product. If the player slice of the pie is small enough that the owners are guaranteed to make money no matter how stupid they are, that to me is the definition of the player's pie being too small. That some teams are losing money while others are making money sounds like the correct state of affairs as far as the player/owner split goes. There is nothing stopping most teams from making money right now aside from their own poor decision making. The remaining teams can be either revenue shared into profitability, moved, or bought out by the league and contracted.

+250,000,000

[Sleepy51]

Oh, and David Stern makes reportedly somewhere between $9MM and $23MM per year, so if the owners have really been losing money there's a place to start.

[turk3d]

Not to mention the salaries which owners are paying themselves, loved ones, friends and high priced executives which are all written off as expenses and which probably greatly contribute to their "losses" each year. We're talking multiple millions here in addition to corporate bonuses and possible profit sharing (which is deductible as well). For those who know how they play the game, this stuff is pretty obvious.

[billinder33]

I understand that was your objective in bringing up the restaurant business, but my response was about the fact that the NBA has minimal costs other than player salaries. Where your restaurant example had 33% in labor and 33% in COGS, the NBA does not have 58% in labor and another 33% in COGS (unless that fancy paper they print tickets on is REALLY expensive.) The higher player salaries are offset to some degree by much lower COGS. The TOTAL of all expenses is not a far off as the way your original example insinuated.

Back to the basketball stuff, we aren't that far apart. I want a hard cap. I just also want contraction. I would also be perfectly willing to see the players go without a minimum salary. Seriously, I would be absolutely fine with the 15th man needing a summer job. I think he should need one. Because he's not likely to stay on a roster for long anyway and needs something to fall back on.

I think within that really basic framework, a lot of the other problems take care of themselves. What I do not want is for players who ARE driving revenue, who ARE increasing franchise values that they do not participate in to be limited in what compensation they can seek in exchange for their exceptionally valuable services. Lebron James does not owe Rob Kurz financial security anymore than the taxpayers of Lousisiana owe the next Hornets owner guaranteed ticket sales.

Kurtz has made what over his NBA career? 150k? 300k? 500k? I'd hardly call that financial security. I think there is some value to being good enough to put on an NBA uniform and provide a quality practice body for LaBron. The guys who James really subsidizes are guys like Dampier, Andris, and Maggot... guys on big money, long-term contracts who are not performing.

[billinder33]

I don't really care about what the %'s are in other businesses. To me it's much simpler than that. The players are the product. If the player slice of the pie is small enough that the owners are guaranteed to make money no matter how stupid they are, that to me is the definition of the player's pie being too small. That some teams are losing money while others are making money sounds like the correct state of affairs as far as the player/owner split goes. There is nothing stopping most teams from making money right now aside from their own poor decision making. The remaining teams can be either revenue shared into profitability, moved, or bought out by the league and contracted

Reportedly, the Thunder are hemorrhaging money while Cohan made money every year. Clearly there is a huge disconnect between making decisions and making money. You seem to think that there is a correlation between profit and decision, where the evidence would say otherwise.


And you know who's to blame for that? YOU ARE.... because you are someone who paid a lot of money to support Cohan's crap decision making over the years by going to home games. If you really wanted to punish owners for bad decision making, then you should have stayed home all these years and watched the games on Fox Sports Bay Area Network instead.

[Sleepy51]

Oh boy...

Rob Kurz and minimum salary really arent essential to my argument that was kind of tongue in cheeck. The point was that I do not mind if player salaries come down, includimg Damp's salary. I just do not support any measures to reduce those salaries that restict player's opportunity. The salaries should be reduced by responsible spending decisions by owners. Makin good decisions and living with the results does not require rules limiting contracts. The owners are not required to offer anyone any specific amount of money for any specific number of years except in the case of rookie scale. Restraint and good decisionmaking can accomplish all of that, but we wont get restraint ir good decisionmaking as long as the owners continue to structure idiotproof financial systems to protect the weakest and stupidest among them.

[billinder33]

Oh boy...

Rob Kurz and minimum salary really arent essential to my argument that was kind of tongue in cheeck. The point was that I do not mind if player salaries come down, includimg Damp's salary. I just do not support any measures to reduce those salaries that restict player's opportunity. The salaries should be reduced by responsible spending decisions by owners. Makin good decisions and living with the results does not require rules limiting contracts. The owners are not required to offer anyone any specific amount of money for any specific number of years except in the case of rookie scale. Restraint and good decisionmaking can accomplish all of that, but we wont get restraint ir good decisionmaking as long as the owners continue to structure idiotproof financial systems to protect the weakest and stupidest among them.

So you are against a maximum contract value? Or just the reduction of the existing maximum?

[Sleepy51]

Oh boy...

Rob Kurz and minimum salary really arent essential to my argument that was kind of tongue in cheeck. The point was that I do not mind if player salaries come down, includimg Damp's salary. I just do not support any measures to reduce those salaries that restict player's opportunity. The salaries should be reduced by responsible spending decisions by owners. Makin good decisions and living with the results does not require rules limiting contracts. The owners are not required to offer anyone any specific amount of money for any specific number of years except in the case of rookie scale. Restraint and good decisionmaking can accomplish all of that, but we wont get restraint ir good decisionmaking as long as the owners continue to structure idiotproof financial systems to protect the weakest and stupidest among them.

So you are against a maximum contract value? Or just the reduction of the existing maximum?

I am for a hard cap that lends itself towards parity but is not low enough to guarantee profits.
I am against pretty much any limitations on individual contracts. Minimum or maximum.

And that includes mandatory multi-year guarantees to rookies.

[floppymoose]

Reportedly, the Thunder are hemorrhaging money while Cohan made money every year. Clearly there is a huge disconnect between making decisions and making money. You seem to think that there is a correlation between profit and decision, where the evidence would say otherwise.

What evidence? The only evidence I can find suggests they made good money. Their attendance is strong, their payroll is under control, and they make playoff dollars and will continue to do so. I'm not convinced they are in a bad way at all.

http://www.forbes.com/lists/2010/32/bas ... 29710.html

And you know who's to blame for that? YOU ARE.... because you are someone who paid a lot of money to support Cohan's crap decision making over the years by going to home games. If you really wanted to punish owners for bad decision making, then you should have stayed home all these years and watched the games on Fox Sports Bay Area Network instead.

I don't see a lot of games in person, but that doesn't matter. The strength of the season ticket holder money is just one more thing the owners have to evaluate. It's one of the things that makes GS a valuable team. Where GS has suffered for their poor decisions has been in maximizing their profit. They would be able to charge (even) more for seats, get playoff revenues, get more tv money, and get players for less money if they had made better decisions over the years.

[Sleepy51]

Reportedly, the Thunder are hemorrhaging money while Cohan made money every year. Clearly there is a huge disconnect between making decisions and making money. You seem to think that there is a correlation between profit and decision, where the evidence would say otherwise.

What evidence? The only evidence I can find suggests they made good money. Their attendance is strong, their payroll is under control, and they make playoff dollars and will continue to do so. I'm not convinced they are in a bad way at all.

http://www.forbes.com/lists/2010/32/bas ... 29710.html

I saw that too, but didn't feel like going around that circle again. The Forbes numbers are supposedly EBIDTA which does not reflect the paper loss for depreciation or the actual payable for interest expense. The audited financial statements are based on GAAP and do show interest and depreciation expenses above net income. The financial statements would show less profit than EBIDTA numbers.

From the various articles and rebuttals the NBA seems to on one hand have claimed that the Forbes numbers are incomplete for unspecified reasons and overstate profitability, yet out of the other side of their neck they deny that they are including the depreciation expense in their loss claims, but then in another turn, they do show the depreciation expense on their audited financial statements. None of us have yet seen exactly and in what format the numbers are being disclosed to the players, but I have very little confidence that the league's public statements are consistent, truthful or devoid of spin on this issue. The most solid thing we have to discuss are the Forbes numbers which Forbes claims are EBIDTA and do not show OKC losing money. I trust Forbes a lot more than I trust partisan spokespeople.

There have been articles about the huge expense for the OKC arena and practice facility that could not possibly be funded out of operations at this point, but I beleive I also read those are being publicly financed on sales taxes, so they are not expenses to the franchise.

And you know who's to blame for that? YOU ARE.... because you are someone who paid a lot of money to support Cohan's crap decision making over the years by going to home games. If you really wanted to punish owners for bad decision making, then you should have stayed home all these years and watched the games on Fox Sports Bay Area Network instead.

I don't see a lot of games in person, but that doesn't matter. The strength of the season ticket holder money is just one more thing the owners have to evaluate. It's one of the things that makes GS a valuable team. Where GS has suffered for their poor decisions has been in maximizing their profit. They would be able to charge (even) more for seats, get playoff revenues, get more tv money, and get players for less money if they had made better decisions over the years.

Also worth noting that the GSW ticket prices have been amongst the bottom 3rd of the league in a top 5 population market for the better part of the Cohan regime. The attendance figures of the Cohan regime were largely based on blue light special ticket prices for a grab table quality product for 15 of 17 years. I think the commitment and value of the GSW fanbase is frequently overestimated by fans and analysts in overlooking the ticket price issues. Our famous passion and loyalty has yet to be truly tested by a market appropriate ticket price.

Rather than the most passionate fans in the NBA, we may just have those with the appropriately lowest expectations.

[Twinkie defense]

The owners are not required to offer anyone any specific amount of money for any specific number of years except in the case of rookie scale. Restraint and good decisionmaking can accomplish all of that, but we wont get restraint ir good decisionmaking as long as the owners continue to structure idiotproof financial systems to protect the weakest and stupidest among them.

The League is required to spend 57% of revenue on players' salaries. Given this, it's hard for me to understand how teams could make only dollar for value signings, or choose to employ only relatively low-paid players and still meet this threshold.

Further, teams can't collude on what player salaries to offer. And you are ignoring market variables which have the effect of driving up player salaries - there's a very limited pool of free agents, and all it takes is for one team to drive up the price of signing one.

Overpaying is built into the system right now - both smart and dumb teams do it, although being dumb or smart doesn't seem to make a huge difference when it comes to profitability, which is more about what market you're in. I think everyone can agree that the Knicks, Clippers, and Warriors haven't had the smartest of front offices over the last CBA, and yet these three are amongst the few teams that everyone can agree have been profitable.

If your social engineering goal is to reward smart franchises and punish stupid ones, I think what we need is contraction. Again though, the players won't sign off on contraction because that means fewer players getting paid.

[billinder33]

What evidence? The only evidence I can find suggests they made good money. Their attendance is strong, their payroll is under control, and they make playoff dollars and will continue to do so. I'm not convinced they are in a bad way at all.

http://www.forbes.com/lists/2010/32/bas ... 29710.html

I did read somewhere that OKC isn't doing so well, even though the Forbes article seems to dispute that. But I suggest you click through the rest of the teams in the link you provided and you will find a lot of red ink. Granted, Depreciation is included in these numbers, but they would indicate that it's not all peaches and creme like you suggest.

I don't see a lot of games in person, but that doesn't matter. The strength of the season ticket holder money is just one more thing the owners have to evaluate. It's one of the things that makes GS a valuable team. Where GS has suffered for their poor decisions has been in maximizing their profit. They would be able to charge (even) more for seats, get playoff revenues, get more tv money, and get players for less money if they had made better decisions over the years.

Absolutely it does matter. You and the rest of the posters here and elsewhere, who p1zzed and moaned about Cohan's reign sure had no problem forking over a few hundred or thousand or more every year, to make sure that he kept making big money. This is not a direct attack on you. I've been posting on the ESPN message board for years about the hypocrisy of people who screamed about how they hated Cohan but kept giving him their hard earned money so he could keep on doing what he was doing. Cohan is a filthy human being and a despicable tax cheat, and the thought of giving this guy a nickel is deplorable.

Again, this is not a personal attack on you, but for someone who talks about bad basketball decisions having business consequences, look in the mirror and you will see exactly why they don't. Your patronage during the Cohan era is a perfect example of this disconnect.