turk3d wrote:The Rebel wrote:so who gets to decide how much of a bonus each player gets? Who is to decide what is considered a real cost, and a fake one? After all the players right now are arguing that only some of the NBA owners costs are real. What are the new investors going to get out of the deal? How many do you think are going to invest hundreds of millions without a solid percentage of the revenue going back into their pocket, and a large percentage of the upside for that kind of investment.
There's a couple of points here. You actually give two different scenerios so I'll try and address them one at a time. First off, if investors were to involve themselves (or if the owners were to be willing to "discuss" this rather than "dictate" what's going to happen (which is what real negotiations is) they were work it out (the owners would have the majority say but they would at least take player input and give it some consideration).
So the problem is not what the current owners want, but they are dictating to their employees what they are willing to give them? Welcome to the real world. You think new investors are going to give the players enough of a say to have any real power? Nobody is going to continually lose money on a company or in starting a league and give their employees a real voice in how the pay works out. Sorry in the real world that does not happen.
turk3d wrote:In the case where you have investors coming in and starting a new league, there's a couple of ways that could go: the new owners generate all the investment capital, they would have to come up with a "business plan" and all this would take time.
If it is there money they do not need a business plan, if they choose to that is up to them.
turk3d wrote:As for how much the players get (what the "split" would be) that would have to be "pre-negotiated" in other words before the leage even got started, it would have to be determined to be amenable to both sides (the players and the new owners), if not, then no deal. Another possibility in this "new league" is the players investing startup money of their own.
so who gets decide who does the books? And what the split is based on? there are plenty of ways to hide money and move it around.
As for the players putting up the money, considering there have been articles of agents having to arrange loans for players already, and that most of them have not made enough in their careers to make a consequential contribution to the startup, the money would still have to come from outside investors, who are still going to be the real owners.
turk3d wrote:This would give them more power (voting power) in the decision making process since that would give them an equity stake in the business. and in that way they would become true "partners" with the new owners.
So the players invest a little money, do you think the guys who put up the real money are going to give up a controlling interest of the company they are paying to start?
turk3d wrote:The Rebel wrote:Most employee owned companies are actually owned by the employee's pension plan, and while they all get some form of stockholder vote, there are management teams in position to actually run the company, and even still those companies have major issues. One of the reasons is overpaying employees and too rich of benefit plans for former employees as incredible as that idea is. For those who want you can look up examples with Qwest communications and united Airlines. And that is with a share of each company being owned by outside shareholders as well, and government oversight due to being public companies. What happens when the players do not have to report to anybody?
Not true today. Most (at least the good ones) do it through stock plans (which is the right way to do it). It usually comes in when you hire into the company through options. Based on performance throughout the years you are given additional shares based on the companies profit and your performance. If it's profit based, then you won't have the problem of overpaying.
So the employees get stock from an existing company and end up owning and controlling the company. How are they going to get the stocks in a company that does not exist, or are you saying that they begin with nothing and as the league makes a profit the real owners begin to allow the players to get a few stocks from the company? Because that happens in the NBA, a few players have received small ownership percentages of the teams. Now not enough to allow the player a real voice, just like anybody with hundreds of millions on the line I doubt the owners are going to just hand the players a real vote on their decisions who have nothing.
By the way something I am wondering, why would the players agree to play for a league for a low starting wage, with the hope that it will eventually make them money through profits that may or may not happen, when they already have a league willing to pay them off of revenue. Especially when someone else is going to have the controlling interest and will decide what is considered profit and what is not.
turk3d wrote:If the company starts losing money, then no bonuses but you can still receive stock (which may not be worth anything at the time but has the potential to be worth something if the companies profits go up). If things get worse and not better, you still have the option when his contract expires, not renewing or negotiating a smaller one. If you don't have stock, then you can issue bonuses.
Once again the players taking less money with the hope that the new owners will decide to give them stock or bonuses when the league makes money. By the way you should look up some of the leagues history, not to mention straight business history, most large start up companies struggle to break even for the 1st 5 years, even the ones with good products and new ideas. the ones fighting against an established competitor is usually lucky to survive for 5 years, and given the history of rival sports leagues in the United States this bears out completely.
As for losing money, given that is the concept, the players would have taken a large paycut from the NBA's total revenue last year, and would never be able to make up the money.
turk3d wrote:The Rebel wrote:while it sounds good in theory you are expecting someone to front a ton of money, for the players to own enough of a percentage of the league to be considered the owners, and allowing them to get the votes to decide what they receive from the profits in pay and benefits, while the guys putting in the money end up being out voted and getting next to nothing in return for their investment.
Of course not. Investors only invest if they believe they're going to make money. Players know this. That's why you negotiate the deal that works best for both. Right now the players don't have a league to play in. If someone were to come up and tell them, "Hey, we're starting a new league, are you interested?" what do you think they will say?
Right now the dominant league in the market place is losing $300 million a year, and needs the players to accept revenue splits of 50% to feel as if they even have a chance to break even, how much do you think a new league will have to give the players to make them join? You think the new owners are going to commit to paying 53% of the revenue that the players expect from the NBA?
let's look at reality shall we? Last year the NBA grossed $3.817 billion last year, paid the players $2.176 billion, and lost over $300 million. Using the basis of your idea let's run some numbers.
In this new league we will imagine they could just flat replace the NBA and keep the same revenue (which will never happen but for examples sake it is okay).
Now say the players agreed to take $1 billion in salaries, or $1.176 billion less then they currently get from the NBA.
this allows the league to make a profit of at most $876 million.
Now how much of that are the new investors going to want? how much are the players going to want? Does it matter? The players still have made less then they did last year in the NBA, and would still make less then they want from the NBA today. so are these new owners just going to set up a new league out of the goodness of their heart, just so the players can brag that they own a small piece? I personally would guess they would want some kind of ROI, but thats just me.
turk3d wrote:And due to their circumstance, don't you think the investors will have the advantage in the negotiations? Sure the players will lose something (some won't make what they'd probably make in the NBA although some could actually make more) but it will be better than what they're making while the league is shutdown. Who knows if it will be any less than what they'd be getting if they were to just bend over and give in to all the owners demands?
Bend over and give into the owners demands, where they would make more money today, could play by next month, and not have to worry about whether the league losses money. or make less now, hope that things change enough to give the new owners and ROI, while making up for the money they lose from leaving the NBA, for some that may be damn tough choice I guess, but it does not sound that hard to me. Give me the hundreds of million more, less time missed and waiting for startup, no risk.
turk3d wrote:Irregardless, in a league run by businessmen, the owners will always have the most power (especially if they're the ones putting up the money). The players just want a say in things which I think is reasonable.
Why should the players have a say in things? On what basis? Why would any new investors give the players any more of a say while they lose more money they the nBA owners are losing?
turk3d wrote:The Rebel wrote:Here's a better idea, why not have the players put together the league with their own money, then sale stock in a public offering to raise the money to begin actually playing the games. Then maybe the owners who just love the game will not really care that much if they get no return on their investment. of course they then have to deal with government oversight, public audits, and an arena full of owners who may not be too happy with them. then every time they overpay themselves they can do another public offering and raise more money, I am sure there are plenty of suckers that will keep paying for stock so that the players can get their extreme benefits and 57% of revenue. Pretty soon we can all own penny stocks in a league bleeding money while the players retire on the beach laughing.
The same way those same suckers pay exorbitant amounts to go see NBA games? lol
True but do you see the SEC being happy when a league starts up with little to no investment from the people starting the league, then continually issuing more stocks, and sending out cash calls every year? Especially from one that high profile? Just wait until all the news channels through grandpa up on TV, you know the guy living on social security who buys a couple of shares for his grandkids. i can see it now, the old man bitching that he has to chip in a few bucks every year so that these players can make 60% more then they could anywhere else in the world. Talk about PR damage.
turk3d wrote:The Rebel wrote:Although it they do not do the offering just right, or are forced to give the actual shareholders voting rights then they still will end up taking paycuts as the average shareholder doesn't seem to like investments where they have to meet money calls every time the company overpays on payroll and benefits, and they really do not like when companies continue to have public offerings every year making their original investment worth that much less.
It may not necessarily be shares (or at least in a public offering, probably would make more sense if it were private) and it doesn't even have to be stock based (could be a hybrid of some sort). The point is there are ways to do this so it benefits both sides (not just one) if both sides were to come to the table with honest intentions and look for equitable solutions.
Sure it could be private, but then you are looking for sophisticated investors, people who are going to look for higher returns on their money then the family man who buys a share just to have it. for the players to even come close to getting what they want from this new league that they expect from the NBA, the investors are not going to get a ROI, meaning it is still one sided, just like the players have had from the NBA for the last few years. Every startup league throughout the history of the United States has lost money the 1st few years, and most of them start out paying less for their players then their competition already in place. Fact is it is a high risk venture, and one that the investors are going to want tighter control on costs, and to pay less in payroll then 57%
Realistically a new league would not provide the same 1st class travel, medical equipment/personnel, or the same pay for players, would require billions in startup costs, and would still lose money the 1st 5 years. given that how would the players make out better short or long term? Why would investors want to invest in the league?
Not to mention if the union members all started their own league not only could the NBA end the lockout, forcing the players to honor their contracts, but they would open themselves up to severe court penalties, as it would not be hard for the NBA to prove they were not negotiating in good faith.
