Official CBA/Labour Talks Discussion Thread II

[S.W.A.N]

Your assuming that there is a better deal to be had.

Actually, I'm 100% certain there is a better deal to be had. But it takes a tremendous amount of player unity, so it's very possible that we won't ever find out.

If players have being following this crowd they would have settled for the 37% BRI. The owners offers have only gotten better at this point and every stage along the way some people have being saying its not going to get better. Why should now be any different?

Not sure what you are talking about.

The difference between offering 37% in the Summer and offering 50% in November is vast. Every week is now costing both sides a lot of money and there is pressure to reduce the offer to make up for these lost revenues.

If players don't get a 50-50 deal done this week its very likely they won't get one done period...

[Rapsfan07]

I wonder when the 20 big/mid market teams say to the 10 small market hardliners among the ownership group that it's not worth pushing the players towards decertification?

If this ever ends up in the courts as an anti-trust lawsuit, then the NBA owners will lose.

While 50/50 is the ultimate owner's goal, likely 80% of the NBA's franchises can be profitable with a 51/49 split - which the players would accept in a heartbeat. The Raptors made money at 57, so they'll do just fine at 51. Is the extra 1% worth the fight to the Raptors and most other owners?

There is a better deal to be had once the big/mid market teams decide they've pushed this far enough on behalf of the smaller markets like Charlotte, New Orleans, Memphis, Sacramento, OKC and Milwaukee.

That's a good point. I think it's also possible that small market owner back a 51/49 split if there is a reasonable revenue sharing plan in place. But it's clear that there is also a divide among owners. I believe there are some in there that are willing to settle for 50% or maybe even 49%. Then there are some that want 53%. Then there are some that are in between. Stern obviously has sold or really believes he can sell a 49-51 flex BRI percentage but what I think will happen is the mid and large market franchises would be willing to surrender even as much as 51% to the players at the last minute. My fear though is the union might have to get a decertification petition into place before that gets offered...if it ever does.

I hope not but I think the Player's could very well gather signatures and then force them pony up 51% and then sign a deal then. It's risky though and I hope they don't do that. Maybe its best if Stern just sweetens the pot with the S&T issue and call it a deal.

[hoophoophooray]

The owners (D Stern?) are too stupid to realize the players are caught up in a macho thing (53 51 50 49 etc). Gonads (the players) are not always good things during negotiations. What the owners should be doing is changing the terms of reference.

Why not say "we will give you 80% (or even 85%) after all costs(excluding interest and depeciation) are deducted. The remaining 15%-20% would allow the owners to pay interest and (depreciaton?) and perhaps make them profitable. The players might finally realize the NBA is the best thing that ever happened to them. 80%-85% with no risk? Send it in. (even if it is less than rhe players might be getting now. Who knows, maybe even the per diems might go down.

[floppymoose]

Why not say "we will give you 80% (or even 85%) after all costs(excluding interest and depeciation) are deducted.

Because then the owners have to fully open their books to the players at all times. At which point the sides will argue over how the costs were calculated. Just working with revenue numbers is already tricky enough - asking both sides to agree on costs accounting would never work. Plus the owners don't want the players in their books that much, anyway.

[Laowai]

I wonder when the 20 big/mid market teams say to the 10 small market hardliners among the ownership group that it's not worth pushing the players towards decertification?

If this ever ends up in the courts as an anti-trust lawsuit, then the NBA owners will lose.

While 50/50 is the ultimate owner's goal, likely 80% of the NBA's franchises can be profitable with a 51/49 split - which the players would accept in a heartbeat. The Raptors made money at 57, so they'll do just fine at 51. Is the extra 1% worth the fight to the Raptors and most other owners?

There is a better deal to be had once the big/mid market teams decide they've pushed this far enough on behalf of the smaller markets like Charlotte, New Orleans, Memphis, Sacramento, OKC and Milwaukee.

Its maybe 8 owners spending crazy money versus 22 and I'm not even sure of the 8.

[floppymoose]

If we go with a neutral source (Forbes numbers), then at 53% player BRI (ie, $160 million a year more for owners), then the average cumulative operating cash flow balance over the life of the prior CBA would be $47 million per team, in the black. The teams that would have been in the red:

Dallas Mavericks: -$40 million
Orlando Magic: -$9 million
Portland Trailblazers: -$25 million
Denver Nuggets: -$4 million
New Jersey Nets: -$15 million
Indiana Pacers: -$27 million
Memphis Grizzlies: -$5 million

Dallas is a special case because Cuban is the rare cat who is willing to spend more than he makes to field a great team. That's great for Mavs fans, but it shouldn't count against the players because it does not represent some systemic problem with league financial health.

Then there is the Magic, who fully deserved to lose money over the last CBA due to the ridiculous contract they signed Rashard Lewis to.

That leaves a small set of teams that would have lost money anyway with no super-obvious stupidity involved. And of those teams, each of them had the team value (ie, sale price if it were sold) go up by an amount more than the money they lost, except for the Nets. The Nets would have basically broke even between asset appreciation and cash flow losses, if the BRI had been 53%.

That is not the financial picture of a struggling league. The league would be perfectly healthy under 53%, and this is assuming no improvements to revenue sharing. With the average cash flow gains across the league as a whole, it would be easily to revenue share every team but the Mavericks into profitability. And of course the Mavs could be profitable if they wanted to be, it's just that Cuban would rather win.

Here is a spreadsheet of financial data over the last CBA based on the Forbes estimates. Sleepy51 (fellow Warriors mod) prepared this and shared it:
https://docs.google.com/spreadsheet/ccc ... n_US#gid=0

[ranger001]

As has been noted before Forbes' numbers are fatally flawed because the data they present is not net profit. It ignores interest, taxes and depreciation.

Its 22 teams losing money, not 7.

[Laowai]

Hypothetical

With a decertified union and assuming the contracts of all players become null and void.
Nothing can stop the NBA from setting up new guidelines for the league. Like these!

Flex cap from 35 million minimum to 68 million maximum.
No maximum salary
12 players per team
Minimum salary 500K
Ping Pong Balls ....... to do a new expansion type draft for ell teams.
Drafting to remain similar to current but reduced salaries.
Maximum Star contract 4 years with last year team option one Star contract per team.
Maximum veteran contract 3 years with last year team option.
Rookie contracts 4 years with team options after year 3 for 1st round picks.
No guaranteed contracts for second round picks.
Trades can be made with no restrictions except team must remain under cap.
The cap to go up as BRI income increases.
All contracts other than star can be 2 way contracts.
D league becomes a feeder league with maximum salary 100K

What this does is totally modify the teams who get LeBron? What price?

This would make a very interesting league basically a do over.
The players lose 90 jobs in NBA to start and 2 way contracts makes players earn the money.

[floppymoose]

As has been noted before Forbes' numbers are fatally flawed because the data they present is not net profit. It ignores interest, taxes and depreciation.

Taxes? So teams are losing money because of taxes? That's a neat trick.

Depreciation is not an issue. Any team leasing their arena has almost nothing that depreciates. Interest? Right, if you borrowed a few hundred million to buy the team, you might lose money. True dat. Not the player's problem. If you can't afford to buy a team, don't. If you can, they are almost all going to make very good money for you on your investment.

[BorisDK1]

Taxes? So teams are losing money because of taxes? That's a neat trick.

Depreciation is not an issue. Any team leasing their arena has almost nothing that depreciates. Interest? Right, if you borrowed a few hundred million to buy the team, you might lose money. True dat. Not the player's problem. If you can't afford to buy a team, don't. If you can, they are almost all going to make very good money for you on your investment.

Firstly, as discussed dozens of times, interest isn't the reason why teams are losing money: interest payment represent a small percentage of costs. But even so, yes, it is the player's problem. After all, the only reason people have been buying into NBA franchises is the hope of resale value: that's been your whole argument all along, right? "Who cares about operating losses when they'll make it up on resale gains?" Well, few businesses or people have $350 million + lying around in cash to buy a franchise - so that means they need to finance those purchases. If they don't do that, well, those owners taking a bath year-in/year-out in operations of the franchise won't be able to make those up in resale costs. So you can't have it both ways.

Even if the teams were losing money due nothing else but costs of financing, that is still the player's problem. Firstly, because it's in the player's interests that the league turn a profit (just like every other business); secondly, because those are necessary costs in any business and any industry. Show me companies who are purchased and operate strictly on a cash basis: go ahead, really. Especially professional sports franchises. Show me one that doesn't have to borrow at some point.

[BorisDK1]

If we go with a neutral source (Forbes numbers), then at 53% player BRI (ie, $160 million a year more for owners), then the average cumulative operating cash flow balance over the life of the prior CBA would be $47 million per team, in the black.

The CFO of the NBA has refuted Forbes' numbers, so I'm not sure what makes them "neutral"...

[Laowai]

As has been noted before Forbes' numbers are fatally flawed because the data they present is not net profit. It ignores interest, taxes and depreciation.

Taxes? So teams are losing money because of taxes? That's a neat trick.

Depreciation is not an issue. Any team leasing their arena has almost nothing that depreciates. Interest? Right, if you borrowed a few hundred million to buy the team, you might lose money. True dat. Not the player's problem. If you can't afford to buy a team, don't. If you can, they are almost all going to make very good money for you on your investment.

Floppy I'm sorry you may be a MOD but you are totally out to lunch.
So what is a team makes money the players are hardly child labour in the 3rd world.
I run 3 companies and am adding two more and one is run at a marginal profit because the 2 others are located in HK and since my income is derived from off shore it isn't taxable.
Whether team A or B is or isn't profitable really isn't the question but the stability of the league is and hopefully a more even playing field. I suggest you become a LAL, Knick, Miami, Dallas fan since your loyalty is with them.

[Ponchos]

Even if the teams were losing money due nothing else but costs of financing, that is still the player's problem.

If the players agree to subsidize the owners interest expense, the amount of debt that NBA franchises take on will increase substantially.

[floppymoose]

The CFO of the NBA has refuted Forbes' numbers, so I'm not sure what makes them "neutral"...

Wow, we've been over all this so many times. The NBA never went after the Forbes numbers until the CBA was about to expire. While they were selling all those teams, not a peep about the Forbes numbers.

As for the purchase interest, you are just flat wrong. There are buyers out there who do not have to borrow. If people who do have to borrow choose to buy, that's on them, not the players. If the NBA weren't a monopoly, this would all be solved by the free market. The owners that borrowed too much to be able to afford good players would field an inferior team, get punished in the marketplace, and eventually sell out to someone who could afford the team.

Just like someone who buys a house that they can't afford the interest payments on. They sell out (assuming they have some positive equity.)

[floppymoose]

I suggest you become a LAL, Knick, Miami, Dallas fan since your loyalty is with them.

Dallas doesn't really belong on your list.

But just because I'm against the owners power grab of money from the palyers doesn't mean I'm against the small teams being profitable. You've already hinted at the real answer with your list of rich teams (even if you got the list wrong):

revenue sharing

[BorisDK1]

Wow, we've been over all this so many times. The NBA never went after the Forbes numbers until the CBA was about to expire. While they were selling all those teams, not a peep about the Forbes numbers.

What kind of logic is this? Did anybody ever ask the NBA to speak to Forbes' numbers? No. The only time they had occasion to speak to it was when people were using their numbers for the purposes of arguing gains/losses; since Forbes did not have access to proper financial documentation, their estimates are just that - estimates. The NBA set the record straight on that.

As for the purchase interest, you are just flat wrong. There are buyers out there who do not have to borrow. If people who do have to borrow choose to buy, that's on them, not the players.

That is not the way any industry in the entire world works: purchases in the hundreds of millions of dollars are done through financing, that's the way the world works. And please - who are these buyers out there with $350 million in liquid cash sitting around? I'm curious to know. You certainly seem certain that you know who they are.

If the NBA weren't a monopoly, this would all be solved by the free market.

I concede your point: if things were different, they wouldn't be the same.

The owners that borrowed too much to be able to afford good players would field an inferior team, get punished in the marketplace, and eventually sell out to someone who could afford the team.

Just like someone who buys a house that they can't afford the interest payments on. They sell out (assuming they have some positive equity.)

Fine, but in this case owners are not in a position of loss because of interest payments. Interest only is a small portion of the total costs of NBA teams, especially with interest rates being so ridiculously low.

[dacrusha]

Fine, but in this case owners are not in a position of loss because of interest payments. Interest only is a small portion of the total costs of NBA teams, especially with interest rates being so ridiculously low.

So, where do these $300 million losses stem from, even after a record-breaking revenue year?

Zamboni maintenance? 10-cent minimum wage increases for concession workers? The cost to keep dead franchise like the Hornets afloat?

[BorisDK1]

If the players agree to subsidize the owners interest expense, the amount of debt that NBA franchises take on will increase substantially.

Nobody's talking about the players subsidizing the owners interest expenses: just admitting that it's a normal part of operating costs for any business.

Go ahead: go show me one professional sports franchise with zero interest expense. Just one. Or any business valued at $300 million or more...

[Laowai]

One of the reasons the NBA is in trouble it wasn't run like a business and in its truest form it isn't a normal business, It is an association of owner that form a league and are interdependent on each other. So it is a unique business structure.

[Laowai]

Boris is correct very few companies or individuals can finance a 350 million in cash and even those who do the NEWCO will be paying interest on the shareholders loan. Companies that are highly profitable try there best to extract concessions from Countries, States/Provinces and Cities.

Everyone who run any business from the local mom and pop to multinationals should take full benefits of the tax code. I'm quite sure the corporations of of Wade, LBJ and Bosh do exactly that.

This is business for once in 20 years the owners have the cards BOO HOO.

I will remind you the next time a player does a Vince Carter that was business as well.