Official CBA/Labour Talks Discussion Thread II

[Laowai]

Profit sharing for local TV rights and attendance is between owners not with players to clarify.

[BorisDK1]

So he was just wasting my time? You could have warned me.

You know what I notice? Nothing of the substance with which I've replied - namely, looking at net cash losses from the Cash Flow Statement, which seems to be what the NBA itself is pointing to. That also seems to make the most analytical sense: even EBITDA might not truly reflect the operating position of a company particularly well, whereas I think we'd all agree that net cash position shows that far more reliably.

And what I had discussed with Fairview previously was to handle a whole bunch of ridiculous assertions from him, including that the Nets had actually made money in 2005 and 2006. The reality was, without considering the depreciation and amortization in the SOO, New Jersey had an operating loss of a combined $40 million in FY 2005 and FY 2006. Fairview didn't really have much of a response then, either.

[Fairview4Life]

And what I had discussed with Fairview previously was to handle a whole bunch of ridiculous assertions from him, including that the Nets had actually made money in 2005 and 2006. The reality was, without considering the depreciation and amortization in the SOO, New Jersey had an operating loss of a combined $40 million in FY 2005 and FY 2006. Fairview didn't really have much of a response then, either.

...yeah, I would like to see a quote on that, because I don't think I actually said the Nets made money in 05/06, just that the vast majority of their losses in 05/06 were paper amortization and depreciation losses, which is true. What I did say was that Ratner and Prokharov (bought into the deal) are going to make hundreds of millions of dollars due to the fact the Nets moving to Brooklyn is facilitating a billion dollar real estate deal. They both loudly proclaimed they were going to make a ton of money off of the Atlantic Yards project which is why Ratner bought the Nets in the first place.

Our "one-sided" debate started around here, if you want to take a look:
viewtopic.php?f=32&t=1121231&start=1200

The page where we started talking about the Nets books specifically (and on subsequent pages):
viewtopic.php?f=32&t=1121231&start=1245

Here's a pertinent quote from me:

I never said the Nets losses weren't real or more than likely extensive. Just that the numbers were overblown. I also did not say that Nets losses were solely the responsibility of poor management salary structure, depreciation, amortization, and everything else I listed previously. I said the 22-24 teams losing over 350 million number the league uses is overblown due to those factors. Not the Nets specifically.

Bruce Ratner bought the Nets and ran them into the ground. He purchased them with the express intent of moving them to Brooklyn, and only worked towards that move. He needed the team to get his billion dollar real estate deal off the ground. Once his eminent domain case was won, he quickly sold to Prokharov to improve the financing of his real estate development. The Nets losing a bunch of money during his run as owner does not indicate a systemic problem with the NBA's CBA. It indicates a systemic problem with letting someone like him own an NBA team. Unless you don't care about keeping franchises in their current markets. Personally, I think the move is a good thing. I think the Hornets should also move, and the Thunder are probably going to have to move somewhere with more people and money as well, along with a few other teams. But I don't think the players should have to pay for the Nets losing money while tanking their franchise in a poor market as they waited out a court case. Their losses are also indicative of the fact that yearly operational losses were not a big deal for Bruce Ratner. He will now be bringing in about $30 million a year, and Prokharov will be doing extremely well thanks to his 20% option in the real estate side of things, and 45% stake in the new arena. This is the team with the largest losses in NBA history, and both the old and new owner have been crowing about how much money they will be making. There is an obvious disconnect here between how hard the NBA says it is to be an NBA owner, and the reality of how much money these men are going to be making.

That seemed pretty clear to me. And all of this is coming after you questioned my integrity, no less. As I suggested earlier, maybe you should tone it down.

[BorisDK1]

...yeah, I would like to see a quote on that, because I don't think I actually said the Nets made money in 05/06, just that the vast majority of their losses in 05/06 were paper amortization and depreciation losses, which is true. What I did say was that Ratner and Prokharov (bought into the deal) are going to make hundreds of millions of dollars due to the fact the Nets moving to Brooklyn is facilitating a billion dollar real estate deal. They both loudly proclaimed they were going to make a ton of money off of the Atlantic Yards project which is why Ratner bought the Nets in the first place.

"Vast majority"? They posted a $40 million operating loss not including depreciation in those two years, and a $67 million net cash loss. In two years! Try again.

That seemed pretty clear to me. And all of this is coming after you questioned my integrity, no less. As I suggested earlier, maybe you should tone it down.

Congratulations on re-posting your previous post, without any of the responses that followed. Is that supposed to be convincing?

[Indeed]

If the RBI is 50/50, I doubt the hard cap is at 73m, but perhaps 60m.
As for the TV profit sharing, if they got 50/50, most likely the share would be 10% of local TV rights and 0% of ticket revenue. They can argue that given a hard cap, teams should be competitive enough to make their own revenue through ticket sales and TV rights, therefore, it is the franchise's responsibilities to earn their own money.

A hard cap could be at 73 million easily since many teams will pay below like the Raptors in there current state.
Sharing is required LAL make 150 million in local rights whether gate revenue is included is likely debatable.

Currently 71m = 57% sharing
(71m / 57%) * 50% = 62.3m (how can it changes to 73m easily?)

[Fairview4Life]

...yeah, I would like to see a quote on that, because I don't think I actually said the Nets made money in 05/06, just that the vast majority of their losses in 05/06 were paper amortization and depreciation losses, which is true. What I did say was that Ratner and Prokharov (bought into the deal) are going to make hundreds of millions of dollars due to the fact the Nets moving to Brooklyn is facilitating a billion dollar real estate deal. They both loudly proclaimed they were going to make a ton of money off of the Atlantic Yards project which is why Ratner bought the Nets in the first place.

"Vast majority"? They posted a $40 million operating loss not including depreciation in those two years, and a $67 million net cash loss. In two years! Try again.

That seemed pretty clear to me. And all of this is coming after you questioned my integrity, no less. As I suggested earlier, maybe you should tone it down.

Congratulations on re-posting your previous post, without any of the responses that followed. Is that supposed to be convincing?

What is going on here? You said I claimed the Nets made money in 05 and 06. I gave you the links and quoted a post that shows I did not say that. What the hell is your problem?

Over 83 million dollars is amortization and depreciation. That is 2/3's of their claimed ~120 million loss. That 120 million loss also includes 20 million in interest expenses that we could point to not being the players problem either, but Sleepy is arguing that point better than I could. Do you have a problem with the word "vast"? Do you just want to argue semantics now? Christ.

[dacrusha]

Profit sharing for local TV rights and attendance is between owners not with players to clarify.

If players are being asked to cover owner losses not related to the product on the court, but related to stadium costs and other infrastructure/operational expenses, then they have every right to expect and demand profit sharing between the owners.

[Indeed]

Something like this is okay. Not completely satisfying but a deal both sides can live with.

And that's why I don't understand why both sides are claiming to need to know the exact percentage of BRI before attempting to construct a hypothetical system. We know that both sides aren't going to agree on a split past 47% - owners and 53 % percent players so we know that there won't be a greater deviation than 3 going either way...so why not attempt to construct a system based on all three of those hypothetical numbers?! That way, although it would likely be up for debate and fine tuning, we do have a skeleton of what we're looking at AND we'd be tackling both issues at the same time.

Like for example:
BRI Split: 53% - Players, 47% - Owners
Flex Cap system: Teams can only go over the cap if they are; a) signing rookies, extending or b) Exceptions (MLE or Injury). Franchise Tag, one player per team and would not count against cap. Max salary rollback. Cap set at 58 million. Teams over the cap pay a 2-1 tax and becomes harsher the longer you stay in the tax (3 years =2-1; 4yrs+ = 4 -1)Elimination of the S&T. Minimum spending is 45 mil
MLE: Rolled back to about 4.7 - 5 mil/yr. 3 years + Team Option
Contracts: Elimination of 6 year contracts. Longest is 5 years. Rookie contract scales stay the same except for a slight roll back and more incentive ties. Slight rollback on existing contracts.
Amnesty: Gilbert Arenas rule . Another amnesty clause. The amnestied player won't count against the cap but must be paid in full over a period of 5-8yrs maximum.
Length of CBA: 6 Years

Owners to have a reasonable profit sharing agreement maybe something like 50% of local TV rights and 30% of ticket revenue to be evenly shared by all teams.

Revenue on BRI to go up or down depending on income every year.

If the 66.6 million isn't made the NBA will pay into a pool to compensate the players equally on the balance.

Something in this mould I think would help to bring a competitive balance by distributing talent around the league. A competitive league is a profitable league so the numbers would obviously need some tweaking but something like this I think is fair for both sides. Players and owners stand to make money or break even.

I doubt the owner wants to eliminate S&T. It is a benefit for teams to get back some assets.

A farm system is needed, so rookie contract makes more sense. If they are able to contribute in the NBA (perhaps over 1000 minutes, about 13m per game), they keep the rookie salary, otherwise, they should be paid less.

The tax can be changed to 2-1 for 5% above the cap, 3-1 for 10% above the cap, 4-1 for 15% above the cap.
Then you can fix the trade system, perhaps removing trading with salary range, having TPE and cash to acquire draft picks and count as an asset in a trade.

[baulderdash77]

Can we frame our discussion on what we know so far?

Here's what we know:

The Hard Cap is off the table so why are we even discussing it. With the reduction in BRI spending you're going to get a cap starting at 50-53 million and luxury tax level starting at 63-66 (that's the difference the sides are at right now).

Luxury taxes are going to get progressively more expensive in $5 million bands. The league is at 1.75/2.00/2.25/2.50 for each $5 million increase. Players are at 1.25/1.50/1.75/2.00.

With what they've agreed to so far (MLE maxes at 3/16). I believe they've agreed on dropping the LLE but I can't find it anywhere. It's going to be very hard to go more than 16-17 million over the cap so in a few years it's going to be a harder cap especially if they eliminate the S&T.

They've agreed on an amnesty clause where 75% of the players salary would come off the cap and tax but they player would be paid out the full value. They haven't agreed on the length of the payout. They haven't agreed on the payout timeframe. The players want it all upfront (yeah right- pay out Arenas $62 million up front!) The league want to have it payed out over the length of the contract.

There will be no salary rollbacks of existing contracts.

[Indeed]

Can we frame our discussion on what we know so far?

Here's what we know:

The Hard Cap is off the table so why are we even discussing it. With the reduction in BRI spending you're going to get a cap starting at 50-53 million and luxury tax level starting at 63-66 (that's the difference the sides are at right now).

Luxury taxes are going to get progressively more expensive in $5 million bands. The league is at 1.75/2.00/2.25/2.50 for each $5 million increase. Players are at 1.25/1.50/1.75/2.00.

With what they've agreed to so far (MLE maxes at 3/16) it's going to be very hard to go more than 16-17 million over the cap so in a few years it's going to be a harder cap especially if they eliminate the S&T.

They've agreed on an amnesty clause where 75% of the players salary would come off the cap and tax but they player would be paid out the full value. They haven't agreed on the length of the payout. They haven't agreed on the payout timeframe. The players want it all upfront (yeah right- pay out Arenas $62 million up front!) The league want to have it payed out over the length of the contract.

Hard cap is off the table, but the way owners demand on the proposal, it is very close to a hard cap. When you remove MLE and LLE, the only thing to make it a flex cap is re-signing players and trading players for 120%. Not only there is little chance for any team to go over, also every team has expiring to make room for any increase. Therefore, the owners claim "no hard cap", but on paper, they are proposing "hard cap" as in a system.

[baulderdash77]

From the Raptors perspective what does that mean to us?

We have $47.1 million in salary committed for next year on 10 players.

So we're going to have ~$3-$6 million in cap space available to us depending on where they end up. Essentially we'll have the MLE available for 1 player and we'll be able to fill the other 2 roster spots with min salary guys.

If we amnesty Jose we'll have a cap number of $39.8 million and space of ~$10-$13 million.

If we amnesty Kleiza we'll have a cap number of $43.7 million and space of $6.5-9.5 million.

[baulderdash77]

Say the league meets in the middle and we end up with a cap of $51.5 million.

I would be in favour of using the amnesty on Jose and then giving out a 1 year $11.5 million contract to a free agent wing player (overpaying for 1 year) and filling out the roster with min salary guys.

We could give it to Thad Young. He's a RFA and there's no way that Philly is going to go into luxury tax territory to re-sign him to that contract.

Then we'd be looking at ~$18 million in cap space next offseason when Barbossa comes off the books.

[Laowai]

If the RBI is 50/50, I doubt the hard cap is at 73m, but perhaps 60m.
As for the TV profit sharing, if they got 50/50, most likely the share would be 10% of local TV rights and 0% of ticket revenue. They can argue that given a hard cap, teams should be competitive enough to make their own revenue through ticket sales and TV rights, therefore, it is the franchise's responsibilities to earn their own money.

A hard cap could be at 73 million easily since many teams will pay below like the Raptors in there current state.
Sharing is required LAL make 150 million in local rights whether gate revenue is included is likely debatable.

Currently 71m = 57% sharing
(71m / 57%) * 50% = 62.3m (how can it changes to 73m easily?)

That is the maximum!
Yes it would be 57% again many teams will be well under the Raptors would likely be in mid 50's.
I believe actually come in about the 50/50 split

[NH]

Say the league meets in the middle and we end up with a cap of $51.5 million.

I would be in favour of using the amnesty on Jose and then giving out a 1 year $11.5 million contract to a free agent wing player (overpaying for 1 year) and filling out the roster with min salary guys.

We could give it to Thad Young. He's a RFA and there's no way that Philly is going to go into luxury tax territory to re-sign him to that contract.

Then we'd be looking at ~$18 million in cap space next offseason when Barbossa comes off the books.

As much as Jose's contract looks so tempting to cut, he is the only real PG we have on the team, and there aren't too many good PGs on the FA market. Linas is the one who needs to get cut because we can easily get another 3/4 to replace him; plus he is injury-prone. Get rid of Linas and replace him with Thad Young/Jeff Green.

I think if the owners want 50/50, they should leave the luxury tax system the way it is; you lower the cap which means teams that want to overpay will have to pay more anyways. Can't have both ways.

[HangTime]

They should have a hard cap of $70-73M.
Luxuary Tax starts at $58M.

Reduce minimum salary by 10%.

The first 3 years of a Rookie contract are the only things that you don't have to pay Lux tax for.

Rookie contracts 5 years, drafted players only, can have a max salary of $3M in year 1. But they can use the rookie scale if they want. Starting at $3M for the first pick.

Year 1: $3M max
Year 2: 10% increase
Year 3: 15% increase (team option)
Year 4: 25% increase (team option)
Year 5: Min 40% increase to $9M max (team option) counts against hardcap.

Any player that signs an extension must remain with the team for remainder of the year. If the extension is signed in the offseason, then the player must remain with the team the following season.
No signing extensions from the Feb 1 to the end of the season.

[BorisDK1]

What is going on here? You said I claimed the Nets made money in 05 and 06. I gave you the links and quoted a post that shows I did not say that. What the hell is your problem?

Pardon me, I was wrong in saying you said the Nets actually made money. Although, to be frank, I'm getting a little lost in the sea of fundamental errors you've made so far.

Over 83 million dollars is amortization and depreciation. That is 2/3's of their claimed ~120 million loss. That 120 million loss also includes 20 million in interest expenses that we could point to not being the players problem either, but Sleepy is arguing that point better than I could. Do you have a problem with the word "vast"? Do you just want to argue semantics now? Christ.

The cash losses - as in, net cash lost as shown in the Statement of Cash Flows - was $67 million. That's the number the NBA has been concerned about, and they've pointed to. The amortization and depreciation in those two years was $83. Cash flow losses, obviously, do not include amortization and depreciation. $83 million is NOT "a vast majority" compared to $67 million.

I realize that financial statements are not something you're familiar with, but damn - I've been patient up until now.

[Rapsfan07]

Something like this is okay. Not completely satisfying but a deal both sides can live with.

And that's why I don't understand why both sides are claiming to need to know the exact percentage of BRI before attempting to construct a hypothetical system. We know that both sides aren't going to agree on a split past 47% - owners and 53 % percent players so we know that there won't be a greater deviation than 3 going either way...so why not attempt to construct a system based on all three of those hypothetical numbers?! That way, although it would likely be up for debate and fine tuning, we do have a skeleton of what we're looking at AND we'd be tackling both issues at the same time.

Like for example:
BRI Split: 53% - Players, 47% - Owners
Flex Cap system: Teams can only go over the cap if they are; a) signing rookies, extending or b) Exceptions (MLE or Injury). Franchise Tag, one player per team and would not count against cap. Max salary rollback. Cap set at 58 million. Teams over the cap pay a 2-1 tax and becomes harsher the longer you stay in the tax (3 years =2-1; 4yrs+ = 4 -1)Elimination of the S&T. Minimum spending is 45 mil
MLE: Rolled back to about 4.7 - 5 mil/yr. 3 years + Team Option
Contracts: Elimination of 6 year contracts. Longest is 5 years. Rookie contract scales stay the same except for a slight roll back and more incentive ties. Slight rollback on existing contracts.
Amnesty: Gilbert Arenas rule . Another amnesty clause. The amnestied player won't count against the cap but must be paid in full over a period of 5-8yrs maximum.
Length of CBA: 6 Years

Owners to have a reasonable profit sharing agreement maybe something like 50% of local TV rights and 30% of ticket revenue to be evenly shared by all teams.

Revenue on BRI to go up or down depending on income every year.

If the 66.6 million isn't made the NBA will pay into a pool to compensate the players equally on the balance.

Something in this mould I think would help to bring a competitive balance by distributing talent around the league. A competitive league is a profitable league so the numbers would obviously need some tweaking but something like this I think is fair for both sides. Players and owners stand to make money or break even.

I doubt the owner wants to eliminate S&T. It is a benefit for teams to get back some assets.

A farm system is needed, so rookie contract makes more sense. If they are able to contribute in the NBA (perhaps over 1000 minutes, about 13m per game), they keep the rookie salary, otherwise, they should be paid less.

The tax can be changed to 2-1 for 5% above the cap, 3-1 for 10% above the cap, 4-1 for 15% above the cap.
Then you can fix the trade system, perhaps removing trading with salary range, having TPE and cash to acquire draft picks and count as an asset in a trade.

I guess the S&T can still exist under this proposed system...which means that the Traded Player Exception would still exist which is fine by me. I think it can be very useful for rebuilding.

In regards to the tax, I'd rather an instant tax imposed like how I originally had it instead of waiting until 5% of current salary is reached before imposing a tax because it'll force teams and owners to think harder before making any signings or extending rookies. Hopefully, then it force teams to release talent which hopefully could create so parity in the league. For example, a team like Memphis; should they decided to resign Gasol and Battier, that means they'd have to move Mayo. This means there would be more player movement and more chances for teams to have the pieces to compete. Under the system above, teams above the tax would have 3 years to compete before paying a SUPERHEAVY tax of 4-1.

DEFINITELY removed the salary restrictions when trading.

Pretty fair system I think.

[Fairview4Life]

That's the number the NBA has been concerned about, and they've pointed to. The amortization and depreciation in those two years was $83. Cash flow losses, obviously, do not include amortization and depreciation. $83 million is NOT "a vast majority" compared to $67 million.

I realize that financial statements are not something you're familiar with, but damn - I've been patient up until now.

That's good for the NBA. The PA has pointed to the Statement of Operations. Out of the Nets 05 and 06 books:

http://sports.espn.go.com/nba/columns/s ... als-110630

In other words, $41.5 million of the Nets' $49 million operating loss in 2005, and $40.2 million of its $57.4 million in 2006, is there simply to make the books balance. It is part of the purchase price of the team, being expensed each year. This doesn't mean they cooked their books, or that they tried to pull a fast one on the players. It is part of the generally accepted accounting practice to transfer expenses from the acquisition to the profit and loss over a certain time period. However, it's an argument that doesn't hold water in a discussion with Hunter and the players association, who would claim that the Nets didn't really "lose" a combined $106.4 million in those two years, but rather that they lost $7.5 million and $17.2 million, respectively.

We have done this before, so you can go ahead cram your patience up your ass. So you now apparently seem to believe the 22 team/300 million single year loss figure is strictly cash flow statement information? Teams income statements have nothing to do with that? That's nice and all, but I don't care.

[floppymoose]

All these losses must be why every team sale but the Bobcats was for a record high during the last CBA.

[MEDIC]

As much as Jose's contract looks so tempting to cut, he is the only real PG we have on the team, and there aren't too many good PGs on the FA market. Linas is the one who needs to get cut because we can easily get another 3/4 to replace him; plus he is injury-prone. Get rid of Linas and replace him with Thad Young/Jeff Green.

I think getting rid of Jose's contract is a must. Do you really think it would make a difference in any way if Jose was our PG or not? We'd stink either way.

We need to start making a commitment to defense. Establish a group of young players that play hard defensively. It all starts with getting rid of players like Jose & having these guys hold each other accountable. Over the long term, we'd be much better off getting out of Jose's contract & giving some young, defensively capable PG's a shot.

As for Linas, can't say I disagree with you there. There are a few players that need to be shipped out. Kleiza's contract is a little easier to absorb than Jose's though.

We have no need for a 30 year old defensively incapable, injury prone PG that has no penetrating ability.