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David Aldridge with his own comprehensive, informative proposal between the players and owners that would avoid a lockout: If you got 30 free minutes or so, read up.
Link
DA did a great job taking some of my ideas and putting them into his proposal.
Spoiler [+]
One man's way to avert NBA's looming lockout scenario
We're at the 58th minute of the 11th hour.
This is the beginning of the last week that can truly avert an lockout by NBA team owners. They will meet with the players' union Tuesday in New York, a meeting that David Stern indicated last Friday would be make or break. The sides have met three times in full session in the last two weeks, along with a couple of smaller sessions between the lawyers, and Stern and Billy Hunter speak on the phone all the time. Yet here we are, 11 days from a lockout that everyone says will be disastrous for the sport, while everyone seems powerless to stop it from happening.
It doesn't have to be this way.
There's a middle ground.
It will require sacrifice from both sides. It will require trust from both sides. It will require acknowledging that the other side's position has some merit and is worth considering. But it is there.
It will be difficult. Rich men are capable of doing just about anything to remain rich. This new generation of NBA owners, many of whom are leveraged up to their ears and who have tens of millions of annual debt service to pay before they pay a single coach or player their gargantuan salaries, has among its ranks those who are fully ready to sacrifice all of next season if it means a sea change in the league's financial system. The new generation didn't pay $1 million for his franchise (like the late Abe Pollin, who bought the Baltimore Bullets in 1964), or $6 million (the late Bill Davidson, who bought the Pistons in 1974). Having been in the game for decades, the old guard was more likely to be willing to cut a deal.
Today's NBA is filled with owners who paid through the nose for their teams, and have years of red ink in front of them before they ever see a return on their investment.
The list includes Joe Lacob and Peter Guber (Golden State, purchased in 2010 for $450 million), Robert Sarver (Phoenix, 2005, $400 million), Dan Gilbert (Cleveland, 2005, $375 million), Wyc Grousbeck and Steve Pagluica (Boston, 2002, $360 million), Ted Leonsis (Washington, 2010, $300 million -- an estimated price that does not include another $250 million in debt on Verizon Center and the Wizards that Leonsis also has to assume) and Mikhail Prokhorov (New Jersey, 2009, $200 million for 80 percent of the team and 45 percent of the new Barclays Center in Brooklyn in which the Nets will play beginning in 2013).
Add to that NBA owners who also own NHL teams -- a group including Leonsis (Capitals), Stan Kroenke (Nuggets, Colorado Avalanche) and Philip Anschutz (part-owner of the Lakers and owner of the NHL's Kings) and who survived the cancellation of the 2004-05 season in that sport after a lockout lasting nearly a year -- and you have a strong cross-section of owners who are emboldened to do whatever it takes to create a system that ensures profitability. That's something you have heard from Stern and deputy commissioner Adam Silver over and over again during the past 18 months.
"The old guys, they'd made a lot of money already," said a longtime and former senior executive of an NBA team who's been involved in previous collective bargaining sessions with the players. (Like just about everyone quoted in this piece, he obviously cannot be named.).
"Now you have guys saying 'I'm losing money, and I have to find a way to make this team that I bought for $350 million worth $500 million.' "
Players, of course, don't want their paychecks to finance profit certainty when no other business has that kind of arrangement with its workers.
"We've continued to try our best to be respectful and reasonable with, not only our ability to listen to what the NBA owners are asking or demanding from us, but we've also tried to express the fact that we're more than willing to negotiate," National Basketball Players Association president Derek Fisher said during The Finals. "And that we've expressed and actually committed to being willing to make some adjustments, and tweak some things, make some quote-unquote compromises in order to try and get this deal done without the event of a lockout. At the same time, we have a responsibility as a Players Association to prepare our guys for that possibility."
Until Friday, when owners made what they deemed a "signficant" concession and agreed to table a proposal that would have changed the existing NBA structure that allows teams to guarantee part or all of a player's contract -- the union argued that it's hardly a concession to agree to something that's already in the CBA -- there had been almost no major movement between the sides. The issues that have been impeding progress for 18 months continue to be daunting.
Three issues are at the heart of the impasse:
• The owners continue to seek a hard salary cap along the lines of those in football and hockey, eliminating most of the exceptions that currently exist.
A hard cap would cut hundreds of millions of dollars in player contracts, including those of star players. The league's most recent proposal to the players, a 10-year contract, would phase in a hard cap after three seasons and lock it in for the remaining seven years.
• Owners also want to reduce the players' take of Basketball Related Income (BRI) from its current 57-43 split in favor of the players to a split that favors them.
BRI, again, is most revenue that comes into an NBA team's coffers: money from ticket sales of all games, including exhibition and playoff games; national television rights fees from ABC/ESPN and TNT; sales from concessions -- including "pouring rights" deals with individual beverage sponsors -- and parking; temporary arena signage and club fees. Half of revenues from arena naming rights deals and 40 percent of revenues from "fixed" signage inside and outside arenas and from luxury suite sales. Money raised internationally by an NBA team is currently not included in BRI.
The initial proposal the NBA made during All-Star Weekend in 2010 would have reduced player contracts in length and eliminated guarantees, to the point where owners would recoup $700 million off the top of revenues before the rest was split with the players, creating a system that would have essentially given owners 61 percent of revenues, with players getting the remaining 39 percent. Stern said on Friday that both sides have come off of those initial positions, but the owners still want a major BRI shift in their favor and are holding firm.
• Owners also want to eliminate exceptions to the cap that allow teams to exceed the cap to re-sign their own players (this is the so-called "Larry Bird" exception), or to add players via the mid-level exception or veteran player's exception.
The mid-level is tied to the average salary in the NBA (this past year, the exception began at $5.765 million) and can increase up to 8 percent per year up to five years. Eliminating most, if not all, of these exceptions would take hundreds of millions more from players.
The players want to preserve much of the current system, while acknowledging that there have to be tweaks to the system -- "adjustments," as the union likes to say -- that don't fundamentally change the system. They want to keep the Bird and Early Bird exceptions and the minimum and veteran player exceptions, for example, and while they are willing to talk about the numbers of the BRI split, they have been at 57 percent since the end of the 1999 lockout and aren't crazy about going backwards.
It all sounds impossible. But it isn't. Call me crazy (you're crazy) and a cockeyed optimist (you're a cockeyed optimist), but there is room for a deal that addresses the owners' financial losses and the players' concerns.
For there to be compromise -- and, ultimately, a deal -- though, each side has to recognize some essential truths about the other.
Owners have to understand how serious the union is about preserving what its predecesors have earned over the past three decades. The composition of the union's executive committee is worker bee: the Knicks' Roger Mason, Jr., the Wizards' Mo Evans, the Spurs' Matt Bonner, the Lakers' Theo Ratliff, the Bucks' Keyon Dooling, the Heat's James Jones and the Hawks' Etan Thomas. Chris Paul is the only superstar on the committee. This group represents the will of the rank and file, and the rank and file is never going to get max contracts. They get paid through exceptions like the mid-level and veteran's minimum, and they are determined to protect them.
Owners must also respect the role that players play in not only raising franchise valuations, but their financial portfolio as a whole.
An example: Last week, Ohio Gov. John Kasich said he would approve the use of racetrack slot machines at casinos in the state that are being developed by Gilbert, along with approving tax breaks for Gilbert and his partners. Voters approved the construction of four casinos in 2009 by referendum in a 53-47 vote, a decision that will lead to a financial windfall for Gilbert over the next few years. In 2009, LeBron James was in Cleveland, the Cavs were one of the NBA's best and most visible teams and Gilbert was never more popular, having bought the team four years earlier. To say James' presence in town at the time wasn't a factor in the vote is folly (even Gilbert acknowledged, at least tangentially, that having the casinos would be good for the Cavs).
The union, on the other hand, has to acknowledge that there are several teams that are deep in the red that need some reform to the current system. (Is the number of teams that lost money in 2009 really 22, as the league asserts? Probably not. That number "sounds a little high," according to the longtime former team exec. Another source that deals directly with owners on a regular basis believes the actual number of teams losing significant amounts of money is more like eight or nine, and likely includes teams like the Pacers, Nets, Wolves and Kings. Another 10 to 12 teams, the source believes, could be losing as much as $5 million a year, but could also break even or make a little money depending on their team's fortunes. Add three to seven home playoff games, and those teams are probably OK. And then there are the six or seven teams that are really making money -- the Knicks, Lakers, Celtics, Bulls, Rockets and Heat. Maybe the Spurs.)
There are losses. Real ones. We just came out of the worst worldwide economic recession since the Great Depression, and it affected everyone -- including rich guys. The Maloofs lost a lot of money with the Kings, but their losses at their Palms casino in Las Vegas -- which is no longer going to be theirs, by the way -- were even greater. And while some franchises sold for a lot, there are teams like the Bobcats, which went for $275 million to Michael Jordan after Robert Johnson had bought them in 2003 for $300 million. The league also had to take the unprecedented step of buying the Hornets last year when majority owner George Shinn couldn't reach a deal with minority owner Gary Chouest.
So while metrics like television ratings, NBA.com visits and ticket sales have gone up, they cannot be used alone to determe the game's financial health. The Pacers, I'm told, are losing $15 million annually. The Nets lost $10 million two years ago. Those are real dollars.
"This year is great, but it doesn't make up for the five (crummy) years we just had," said another longtime team executive who, also, cannot be named.
So, where's the middle ground?
Let's take 'em one at a time.
(Please: I'm not a lawyer and you're not interested in the minutae of a collective bargaining agreement. I'm not writing the whole thing here. Just broad strokes on the big items. I don't address the folly of trading expiring contracts, waiving the players you just traded for, and having them return to their original teams 30 days later, for example. And there's a lot of numbers talk that follows, not basketball talk. I'm sorry. But we can't ignore this any more.)
The BRI Split: Make it 50-50?
It's currently 57-43, players. The league started with a 61-39 proposal for the owners. Neither is tenable. So, once again, I argue for the simplest concept that any kindergardner can understand: 50-50.
The NBA generates around $4.3 billion annually. All of that $4.3 billion isn't included in BRI, so let's say for the sake of argument that the BRI number is $4 billion. Under the current system, the players get 57 percent of that, or $2.28 billion, with the owners getting the other $1.72 billion. Owners are proposing taking an additional $900 million off the top, and then splitting the rest 50-50, arguing that their 43 percent of BRI is reduced by interest payments, depreciation of assets, taxes and amortization (all known by the business acronym IBIDA), and is reduced further when their operating expenses are eaten up by paying their staffs, turning the lights on in their buildings, etc. -- while players' expenses are far less. That $900 million also gibes nicely with the approximately $1.1 billion the league claims it has lost since 2008, a figure strongly disputed by the union.
There's no reason the players should have to take almost a billion out of their pockets to pay for the impact of a global recession.
A 50-50 split of the $4 billion alone would mean $2 billion apiece for the players and owners, a net loss of $280 million in salaries for the players -- and, really, a net gain of $560 million for the owners, since they would pocket the $280 million from the players and, in turn, not have to pay that additional $280 million out. That is not an insignificant financial sacrifice, and it would be a legitimate sign of seriousness on the part of the union to do its part to help struggling franchises. Owners could not make a credible argument that the players haven't made a good-faith effort to pitch in during hard times. It would give them skin in the game.
Fifty-fifty would be a recognition of a true partnership between management and labor. Future revenue splits could be indexed to adjust every three years. If the league continues its surge and revenues rise, the split could adjust slightly toward the players to give them a chance to recoup some of their $280 million "investment" in the league. If revenues fell, the split would go slightly toward the owners, to help soften the blow. If the money stays flat, the split stays the same.
"Capital deserves some kind of return," said the current team executive. "And the owners' position is, for that much money put at risk, I deserve to have some kind of return on that at some point. But the players' position is that talent deserves to be compensated. And they're right. Nobody comes to see Jimmy Buss. Between those two principles, it's a split; how do we split the money, so that both sides can say I have a fair chance to achieve my goal. In between that are the people who make that work for both of them. And we are voiceless and faceless. And we're the ones who get fired."
The Salary Cap: Harder, Not Hard
It should be harder. Not hard. Big difference.
The league wants to reduce the gap in salaries between its top-spending and lowest-spending teams. The Lakers' payroll this season, including the $20 million in luxury tax the team paid, was approximately $110.38 million. The Kings paid $44.8 million, well below the salary cap limit of $58.044 million, and had to take the contract of the injured Marquis Daniels to reach the minimum team salary threshold. Within that $65 million gap is the difference between profitability and hemorraging red ink, but it's the team spending more that makes money, while the one that tries to save dollars that winds up losing millions. Thus, there's the desire for a new system in which the Kings have more of a chance to both make money and compete better.
The owners' initial proposal would have created a $45 million hard cap. There's no way that can work, even if it's phased in, as the league proposed in its most recent offer to the players. The question is how big a cap small-market and/or small-revenue teams would be willing to accept if there wasn't as big a gap between teams. Forget the luxury tax threshold, which is $70.3 million this season; a lot of teams become unprofitable once they get near the $58 million cap limit.
"They'll take a hard cap that's pretty high if the players could get off of some of their guarantees," opines the former team exec. "... the (salary) floor doesn't matter. If you're Indiana and the high end is $70 (million) and the floor is $50, your fans will go crazy if you only spend $50 million."
Players won't give up Bird rights. But I think they'd be willing to talk about a modified Bird exception that would give teams with the free-agent player even greater leverage to keep him, but would be shorter with fewer guaranteed years.
One such model I like actually comes from a former player who was heavily involved in union activities for years. The former player proposes a Bird exception that would run five years, but would guarantee only parts of future seasons. For example, if Dwight Howard wants to stay in Orlando, he can sign a five-year deal. But only 25 percent of the fifth-year salary would be guaranteed in the first year of the deal. In year two, 50 percent of year five would be guaranteed. In year three, 75 percent would be guaranteed. Only if Howard played a fourth season for the Magic would the whole fifth year be guaranteed. This would give the team an out in case a player suffers a catastrophic injury during the contract.
And under the former player's proposal, if Howard wanted to go elsewhere, he could sign only a three-year deal with his new team. That would create a real advantage for his current team, lessening the advantage teams in L.A., New York and Chicago would have to sign players because of marketing and commercial opportunities off the court in those cities.
"So if a guy leaves, he's leaving because he doesn't want to be there," the ex-player said. "He's pulling a LeBron James and saying I don't want to be there. If you can stay home and make $25 million, or you leave and (only) make $15 million, you didn't want to be there."
Let's also get rid of the mid-level exception. Its intent was honorable: getting guys who aren't max players a chance at a payday. But for the most part, it's been used to overpay players who haven't provided much impact, and tying it to the average salary only means more of the same going forward, at higher and higher prices. In its place should be an exception for players that isn't tied to the average salary, but is a set amount throughout the life of the CBA. Let's call it the $20 million exception. It would be $20 million total, to be spent however the team wishes. A team could spend all of it on one player or split it up among players, as currently allowed under the mid-level. But the total dollar amount of the contract would be $20 million and wouldn't rise, even if revenues do. That is the very definition of a fixed cost.
Some disagree.
"Those are decisions," my ex-player friend says. "I've learned from being in the business that it's owners versus owners. You make those decisions. It's like guys coming out of high school. if you don't want one, don't draft one. But you don't have to put in a rule about it."
Let's keep the veteran minimum salaries, and the league contribution to sign players who've been in the league three or more years if they sign a 10-day, rest-of-season or one-year deal, so that vets don't get pushed aside. But no one player should be able to command more than 25 percent of a team's cap in a given season (in some cases, the oldest veteran players can get up to 35 percent of a team's cap).
Revenue Sharing: Time For A Re-Do
Once upon a time, the Cleveland Browns had their own TV network.
The Browns' games were televised from 1955 to 1961 by Sports Network Incorporated, a regional, fledgling fourth network that was trying to compete with CBS, NBC and ABC. (SNI ultimately was bought by billionaire Howard Hughes, who also failed to turn the affiliation of stations into a real network.) But by 1962, the NFL's young commissioner, Pete Rozelle, had managed to secure a national television contract for all of his teams -- except Cleveland. The Browns could have held out and kept the revenue from SNI. But their owner, Art Modell, saw the survival of all of the league's teams could be assured if they shared national TV revenue instead of going it alone. The first deal with CBS was for $4.6 million.
The NFL's most recent TV deals -- with CBS, NBC, Fox, ESPN and DirecTV -- were for nearly $24 billion. That means each NFL team receives almost three quarters of a billion dollars in TV money over the life of the contracts, before they sell a single ticket, or beer, or parking space. That ensures every NFL team's survival. It's why Modell once told me about his fellow owners, "we're 30 fat-cat Republicans who vote socialist."
Revenue sharing makes the NFL work.
NFL teams split the gate at each game 60-40, with the home team getting 60 percent and most of the remaining 40 percent going into a pool that is split evenly among the league's other 31 teams. (That does not include revenue from suite sales.) They evenly split money generated by NFL Properties, which markets shirts, helmets and the like and also facilitates revenue generated by the league's NFL Network.
The league also has a supplemental revenue sharing program negotiated into the last CBA it struck with its players in 2006, which pooled $220 million in 2010 that aided eight to 12 of the league's lower revenue teams. Over the six-year life of the NFL's last CBA, approxmiately $895 million went into the SRS, which was funded in part by direct payments from the league's higher-revenue generating teams. The bottom line: revenue sharing allows franchises like Green Bay, Cincinnati and Buffalo to survive -- and often beat -- the league's highest-revenue producers in Dallas, Washington and New England.
The NBA also shares some of its revenue among its teams. But the pool is much, much smaller. NBA teams split the $7.4 billion the league receives in its national TV deals with ABC/ESPN, TNT and DirecTV, as well as revenue from its licensing, digital media and merchandising. And after a handful of smaller-revenue teams took the unusual step of publicly complaining to Stern about the lack of revenue sharing in an open letter in 2008, the league instituted an additional revenue sharing plan, including contributions from the bigger revenue teams that more than half of the teams used, with a few taking the maximum $6 million payout in 2009.
There's also two de facto revenue sharing programs: the luxury tax coming from teams that exceed the tax threshold and the escrow accounts funded by a percentage of player salaries. The luxury tax threshold is set this year at just more than $70 million. Seven teams -- Atlanta, Boston, Houston, the Lakers, Orlando, Portland and Utah -- look to be tax payers this year, according to league salary figures obtained by NBA.com, with the Lakers set to pay the biggest amount, more than $20 million.
Players are putting eight percent of their salaries this season into the escrow fund. If player salaries in a given year exceed an agreed-upon percentage, the escrow money is given to the owners. From 2006 through 2010, the union estimates players gave back $1.1 billion in salary to their teams.
But the union thinks the league's teams can share a lot more among themselves, which would help alleviate some of the difference between the haves and have-nots. The union has urged the league to incorporate a new revenue sharing plan along with the new CBA.
"The issue is owner versus owner," the former player involved in labor talks said. "Jerry Buss doesn't want to pay Milwaukee."
The league says that it is committed to a new, greater revenue sharing plan. But it insists the new plan has to come after the new CBA, because any new revenue plan won't work, the league says, if the system still produces losing teams.
The NBA should change that thinking. If the players, under my proposed plan, can give up $280 million, the owners have to put a new revenue sharing plan on the table, and use the NFL's model in a couple of key areas:
• First, share a percentage of ticket sales. There currently is no model in the NBA like the NFL's 60-40 split; the league takes 6 percent of ticket revenue off the top, but that's it. The Lakers and Knicks each make almost $2 million per home game; the Pacers, according to a source, make $700,000. The league as a whole generated more than $1 billion in revenue in the 2009-10 season from ticket sales, according to the Sports Business Journal, and that amount is likely to rise for this season when all the money is counted up, with interest in the Heat driving the road attendance for that team along with increased revenues for Heat owner Micky Arison at American Airlines Arena. Before the season began, the league said it had more than $100 million in new full-season ticket revenue, an all-time record.
Even a conservative sharing of those revenues -- say, 20 percent of that $1 billion -- would put $200 million in a pool that could be split annually among the league's weaker economic sisters. After all, the Lakers don't play alone; this isn't golf. They play against someone in those 41 home games, and often times, fans come out to see the likes of Dwight Howard and Chris Paul and other stars from lower revenue-generating teams.
• Second, split local TV money. The NBA is the opposite of the NFL; in football, the national TV dollars drive the bus. In the NBA, local, unshared money often can make the difference between profitability and red ink. The Kings, according to SI.com's Sam Amick, make $11 million a year in their local TV deal in Sacramento with Comcast. The Lakers just signed a 20-year deal with Time Warner (the parent company of Turner Sports, which also manages NBA.com) to air games on two channels starting in 2012 that is worth between $3-$5 billion, depending on whose accounts of the deal you believe. You don't have to have an MBA to see how that gives the Lakers a leg up. Again, we're not talking about taking that and splitting it 30 ways. Let's say it's $3 billion over 20 years. That's $150 million per year. Even 10 percent of that -- $15 million -- would be a nice chunk of change, and the Bulls, Knicks and Celtics should be able to contribute an additional few million among themselves.
It's easy for me to tell the Buss family it should carve up hard-won money and give a portion of it to Indiana, Milwaukee or Sacramento. There is also this argument, which carries some weight: By subsidizing lower-revenue teams, the higher-revenue teams are giving those teams the very money that could make them strong enough financially to compete with the big boys for free agents. As Kings blogger Tom Ziller opines, not sharing revenues depresses player salaries.
But the Lakers' advantages when it comes to revenue generation are prohibitive across the board. They already print money from their suite sales -- only 40 percent of which is included in BRI -- at Staples Center. They get more money for local sponsorships, advertising, everything. And they keep all of that money, just as Jerry Jones found new local revenue streams after he bought the Cowboys. He ultimately had to go to court to win a settlement against the league, which sued him after he signed sponorship deals with Pepsi and Nike. But he settled. And kept the money. So asking the Lakers to chip in so that the league in which they play can stay healthy does not seem to be an unreasonable request.
Amnesty Clauses: Every Other Year
After the 2005 CBA was ratified, teams were given a one-time "amnesty" in which they could waive a player without his salary counting against that year's cap figure. Eighteen of the league's 30 teams took advantage, waiving players like Michael Finley (Mavericks) and Brian Grant (Lakers) whose contracts exceeded their production, and other veterans who weren't likely to or didn't want to play for their respective teams anymore, like Alonzo Mourning (Raptors).
Basically, the amnesty was a big eraser, allowing teams to get out from under mistakes.
But there was concern that using the amnesty more often would benefit the bigger markets, because they'd be more capable of paying off big contracts that they no longer wanted.
That's true. But amnesty also helps the smaller markets.
Yes, it's easier for the Knicks to absorb Jerome James' contract. But don't you think the Magic would love to get out from under the remaining $62 million of Gilbert Arenas' contract? How crucial is that $19.2 million Orlando will have to pay Arenas in 2011-12? It's the difference between Orlando being a luxury tax payer and being under the cap. In a summer when the Magic has to do something -- anything -- to convince Howard to stay, every dollar available to add difference-making talent is crucial.
So put in a bi-annual amnesty. Every two years, a team can get a player's salary off the books. It doesn't mean they don't have to pay him; as long as he worked out a guaranteed deal, he gets his money. (The league had sought to remove the ability for a guaranteed deal out of the next CBA, but relented on that provision last week.) It would give more teams more flexibility more often, which would facilitate trades and free-agent signings. Making player movement easier, not harder, should be a goal. Why should the Warriors have to keep waiting for Andris Biedrins to snap out of his seasons-long funk? You think Detroit wouldn't mind a reset button on Rip Hamilton? Why can't the Cavs send Antwan Jamison on his way with a hearty handshake and his $15 million, and be free to get back in the free-agent game?
Everyone makes mistakes. At some point they should be able to stop paying for them.
Gang of Six: The Would-Be Key Players
A lockout was averted in 2005 when Stern and NBPA executive director Billy Hunter were able to convince their various constituencies that a work stoppage would be devastating. They had help from the so-called "Gang of Four" -- Michael Curry, then the president of the players' union, Orlando Magic forward Pat Garrity, Madison Square Garden president Steve Mills and Rockets owner Les Alexander -- which got the final framework of a deal done after 14 hours of negotiating, days before a lockout would have been imposed. The quartet didn't magically produce a new CBA, but it was able to hammer out a consensus on some of the stickier issues that ultimately made an agreement possible.
"We had just narrowed it down," Mills said Saturday. "There were a lot of issues that we thought we could agree on. We knew that whatever we agree to, we have to find a way to sell it to everybody. And David made it real clear that the next announcement was going to be that the season was over."
A new Gang could at least try to bridge the gap between the two sides at this late hour. This time, it should be six people: three people aligned with management, three with the players. My suggestions:
• THE OWNERS: Micky Arison, Miami; Michael Jordan, Charlotte; Peter Holt, San Antonio
• THE PLAYERS: Derek Fisher, L.A. Lakers; Shane Battier, Memphis Grizzlies; Ray Allen, Boston Celtics
Arison has credibility with both the owners and players. The owners voted him the new chair of the league's Board of Governors last June. But he has shown over the years that he will spend money on everything -- salaries, practice facilties, other enhancements -- to make the Heat a first-class operation. He takes care of former Heat players like Mourning, now a vice president of player development. He had a reputation as a hawk in previous labor negotatiations, but given the boatloads of cash that James, Dwyane Wade and Chris Bosh brought to Miami brought in this season, Arison may be the last person on earth who wants a work stoppage now.
Jordan famously chided Pollin during the '99 lockout during a negotiating session, demanding that Pollin sell the Wizards if he didn't want to spend the going rate for players. Now, he's management. But he brings a certain gravitas to the proceedings, and players know he was where they are now. If any owner is going to understand player demands, it's Jordan, who chafed when Jerry Reinsdorf blanched at a balloon payment of $30 million at the end of Jordan's days in Chicago.
Holt, the chair of the NBA's Labor Relations Committee, has a strong personal story (Vietnam veteran, recovering alcoholic) combined with a background as a small-market owner who has nonetheless stepped up to pay when he had to re-sign Tim Duncan and Manu Ginobili and Tony Parker. The Spurs have won championships despite not having the payroll of others, proving that you can surround a star with enough good players without breaking the bank to win big. And Holt is, genuinely, a decent guy.
Fisher has been deeply involved in labor talks since becoming the union's president in 2006. No player knows the issues better.
Battier is a veteran player who's made good money, but never been a superstar. He'd be perfect to represent the rank and file guys whose unique talents -- in his case, great perimeter defense -- should get them their payday in the sun. In addition, he's a good ideas guy who might think outside the box when it comes to potential resolutions.
Allen is a former union VP who knows what's happening and who would be an outstanding public voice for the union in the waning days before a lockout is imposed, much like Drew Brees has been for the NFL players during their lockout and Tom Glavine was for years as a spokesman for the baseball players' union. Allen would be a good advocate for his fellow Celtics, many of whom have participated in some union activities over the years -- and whose history with the union going back to the Tom Heinsohn/Bill Russell days is the stuff of legend.
The Conclusion
So, there you have it. I'm not near naive enough to think anyone on either side will take any of these suggestions to heart. It's just one offering from someone who's seen the damage that a lockout can do up close. It took the NBA almost a decade to recover from 1999; really, it was only when the Celtics and Lakers re-established the game's greatest rivalry in the 2008 Finals that the game seemed to get back on its feet, getting casual fans to watch and generating buzz. Now, the game has never been better. The Heat are the NBA's version of the Yankees, or the Cowboys -- half of America loves 'em, half hates 'em. Everybody watches 'em.
How good were these playoffs, with the Thunder and Grizzlies emerging, with Derrick Rose winning the MVP and tearing up as he thanked his mother, with the Hawks making a name for themselves, with the Mavericks crushing the Lakers, and a terrific Finals, with five down-to-the-wire games?
How deep is the talent in this league, from its youngest stars like Blake Griffin and John Wall, to Kevin Durant and Howard and Deron Williams and Kevin Love and LaMarcus Aldridge, to the still-potent Class of '03 (LeBron, Wade, 'Melo, Bosh, and on and on), to the old bulls -- Kobe and Nash, KG and Dirk, still kicking and potent.
There's so much to see. There's so much to lose.
We're at the 58th minute of the 11th hour.
This is the beginning of the last week that can truly avert an lockout by NBA team owners. They will meet with the players' union Tuesday in New York, a meeting that David Stern indicated last Friday would be make or break. The sides have met three times in full session in the last two weeks, along with a couple of smaller sessions between the lawyers, and Stern and Billy Hunter speak on the phone all the time. Yet here we are, 11 days from a lockout that everyone says will be disastrous for the sport, while everyone seems powerless to stop it from happening.
It doesn't have to be this way.
There's a middle ground.
It will require sacrifice from both sides. It will require trust from both sides. It will require acknowledging that the other side's position has some merit and is worth considering. But it is there.
It will be difficult. Rich men are capable of doing just about anything to remain rich. This new generation of NBA owners, many of whom are leveraged up to their ears and who have tens of millions of annual debt service to pay before they pay a single coach or player their gargantuan salaries, has among its ranks those who are fully ready to sacrifice all of next season if it means a sea change in the league's financial system. The new generation didn't pay $1 million for his franchise (like the late Abe Pollin, who bought the Baltimore Bullets in 1964), or $6 million (the late Bill Davidson, who bought the Pistons in 1974). Having been in the game for decades, the old guard was more likely to be willing to cut a deal.
Today's NBA is filled with owners who paid through the nose for their teams, and have years of red ink in front of them before they ever see a return on their investment.
The list includes Joe Lacob and Peter Guber (Golden State, purchased in 2010 for $450 million), Robert Sarver (Phoenix, 2005, $400 million), Dan Gilbert (Cleveland, 2005, $375 million), Wyc Grousbeck and Steve Pagluica (Boston, 2002, $360 million), Ted Leonsis (Washington, 2010, $300 million -- an estimated price that does not include another $250 million in debt on Verizon Center and the Wizards that Leonsis also has to assume) and Mikhail Prokhorov (New Jersey, 2009, $200 million for 80 percent of the team and 45 percent of the new Barclays Center in Brooklyn in which the Nets will play beginning in 2013).
Add to that NBA owners who also own NHL teams -- a group including Leonsis (Capitals), Stan Kroenke (Nuggets, Colorado Avalanche) and Philip Anschutz (part-owner of the Lakers and owner of the NHL's Kings) and who survived the cancellation of the 2004-05 season in that sport after a lockout lasting nearly a year -- and you have a strong cross-section of owners who are emboldened to do whatever it takes to create a system that ensures profitability. That's something you have heard from Stern and deputy commissioner Adam Silver over and over again during the past 18 months.
"The old guys, they'd made a lot of money already," said a longtime and former senior executive of an NBA team who's been involved in previous collective bargaining sessions with the players. (Like just about everyone quoted in this piece, he obviously cannot be named.).
"Now you have guys saying 'I'm losing money, and I have to find a way to make this team that I bought for $350 million worth $500 million.' "
Players, of course, don't want their paychecks to finance profit certainty when no other business has that kind of arrangement with its workers.
"We've continued to try our best to be respectful and reasonable with, not only our ability to listen to what the NBA owners are asking or demanding from us, but we've also tried to express the fact that we're more than willing to negotiate," National Basketball Players Association president Derek Fisher said during The Finals. "And that we've expressed and actually committed to being willing to make some adjustments, and tweak some things, make some quote-unquote compromises in order to try and get this deal done without the event of a lockout. At the same time, we have a responsibility as a Players Association to prepare our guys for that possibility."
Until Friday, when owners made what they deemed a "signficant" concession and agreed to table a proposal that would have changed the existing NBA structure that allows teams to guarantee part or all of a player's contract -- the union argued that it's hardly a concession to agree to something that's already in the CBA -- there had been almost no major movement between the sides. The issues that have been impeding progress for 18 months continue to be daunting.
Three issues are at the heart of the impasse:
• The owners continue to seek a hard salary cap along the lines of those in football and hockey, eliminating most of the exceptions that currently exist.
A hard cap would cut hundreds of millions of dollars in player contracts, including those of star players. The league's most recent proposal to the players, a 10-year contract, would phase in a hard cap after three seasons and lock it in for the remaining seven years.
• Owners also want to reduce the players' take of Basketball Related Income (BRI) from its current 57-43 split in favor of the players to a split that favors them.
BRI, again, is most revenue that comes into an NBA team's coffers: money from ticket sales of all games, including exhibition and playoff games; national television rights fees from ABC/ESPN and TNT; sales from concessions -- including "pouring rights" deals with individual beverage sponsors -- and parking; temporary arena signage and club fees. Half of revenues from arena naming rights deals and 40 percent of revenues from "fixed" signage inside and outside arenas and from luxury suite sales. Money raised internationally by an NBA team is currently not included in BRI.
The initial proposal the NBA made during All-Star Weekend in 2010 would have reduced player contracts in length and eliminated guarantees, to the point where owners would recoup $700 million off the top of revenues before the rest was split with the players, creating a system that would have essentially given owners 61 percent of revenues, with players getting the remaining 39 percent. Stern said on Friday that both sides have come off of those initial positions, but the owners still want a major BRI shift in their favor and are holding firm.
• Owners also want to eliminate exceptions to the cap that allow teams to exceed the cap to re-sign their own players (this is the so-called "Larry Bird" exception), or to add players via the mid-level exception or veteran player's exception.
The mid-level is tied to the average salary in the NBA (this past year, the exception began at $5.765 million) and can increase up to 8 percent per year up to five years. Eliminating most, if not all, of these exceptions would take hundreds of millions more from players.
The players want to preserve much of the current system, while acknowledging that there have to be tweaks to the system -- "adjustments," as the union likes to say -- that don't fundamentally change the system. They want to keep the Bird and Early Bird exceptions and the minimum and veteran player exceptions, for example, and while they are willing to talk about the numbers of the BRI split, they have been at 57 percent since the end of the 1999 lockout and aren't crazy about going backwards.
It all sounds impossible. But it isn't. Call me crazy (you're crazy) and a cockeyed optimist (you're a cockeyed optimist), but there is room for a deal that addresses the owners' financial losses and the players' concerns.
For there to be compromise -- and, ultimately, a deal -- though, each side has to recognize some essential truths about the other.
Owners have to understand how serious the union is about preserving what its predecesors have earned over the past three decades. The composition of the union's executive committee is worker bee: the Knicks' Roger Mason, Jr., the Wizards' Mo Evans, the Spurs' Matt Bonner, the Lakers' Theo Ratliff, the Bucks' Keyon Dooling, the Heat's James Jones and the Hawks' Etan Thomas. Chris Paul is the only superstar on the committee. This group represents the will of the rank and file, and the rank and file is never going to get max contracts. They get paid through exceptions like the mid-level and veteran's minimum, and they are determined to protect them.
Owners must also respect the role that players play in not only raising franchise valuations, but their financial portfolio as a whole.
An example: Last week, Ohio Gov. John Kasich said he would approve the use of racetrack slot machines at casinos in the state that are being developed by Gilbert, along with approving tax breaks for Gilbert and his partners. Voters approved the construction of four casinos in 2009 by referendum in a 53-47 vote, a decision that will lead to a financial windfall for Gilbert over the next few years. In 2009, LeBron James was in Cleveland, the Cavs were one of the NBA's best and most visible teams and Gilbert was never more popular, having bought the team four years earlier. To say James' presence in town at the time wasn't a factor in the vote is folly (even Gilbert acknowledged, at least tangentially, that having the casinos would be good for the Cavs).
The union, on the other hand, has to acknowledge that there are several teams that are deep in the red that need some reform to the current system. (Is the number of teams that lost money in 2009 really 22, as the league asserts? Probably not. That number "sounds a little high," according to the longtime former team exec. Another source that deals directly with owners on a regular basis believes the actual number of teams losing significant amounts of money is more like eight or nine, and likely includes teams like the Pacers, Nets, Wolves and Kings. Another 10 to 12 teams, the source believes, could be losing as much as $5 million a year, but could also break even or make a little money depending on their team's fortunes. Add three to seven home playoff games, and those teams are probably OK. And then there are the six or seven teams that are really making money -- the Knicks, Lakers, Celtics, Bulls, Rockets and Heat. Maybe the Spurs.)
There are losses. Real ones. We just came out of the worst worldwide economic recession since the Great Depression, and it affected everyone -- including rich guys. The Maloofs lost a lot of money with the Kings, but their losses at their Palms casino in Las Vegas -- which is no longer going to be theirs, by the way -- were even greater. And while some franchises sold for a lot, there are teams like the Bobcats, which went for $275 million to Michael Jordan after Robert Johnson had bought them in 2003 for $300 million. The league also had to take the unprecedented step of buying the Hornets last year when majority owner George Shinn couldn't reach a deal with minority owner Gary Chouest.
So while metrics like television ratings, NBA.com visits and ticket sales have gone up, they cannot be used alone to determe the game's financial health. The Pacers, I'm told, are losing $15 million annually. The Nets lost $10 million two years ago. Those are real dollars.
"This year is great, but it doesn't make up for the five (crummy) years we just had," said another longtime team executive who, also, cannot be named.
So, where's the middle ground?
Let's take 'em one at a time.
(Please: I'm not a lawyer and you're not interested in the minutae of a collective bargaining agreement. I'm not writing the whole thing here. Just broad strokes on the big items. I don't address the folly of trading expiring contracts, waiving the players you just traded for, and having them return to their original teams 30 days later, for example. And there's a lot of numbers talk that follows, not basketball talk. I'm sorry. But we can't ignore this any more.)
The BRI Split: Make it 50-50?
It's currently 57-43, players. The league started with a 61-39 proposal for the owners. Neither is tenable. So, once again, I argue for the simplest concept that any kindergardner can understand: 50-50.
The NBA generates around $4.3 billion annually. All of that $4.3 billion isn't included in BRI, so let's say for the sake of argument that the BRI number is $4 billion. Under the current system, the players get 57 percent of that, or $2.28 billion, with the owners getting the other $1.72 billion. Owners are proposing taking an additional $900 million off the top, and then splitting the rest 50-50, arguing that their 43 percent of BRI is reduced by interest payments, depreciation of assets, taxes and amortization (all known by the business acronym IBIDA), and is reduced further when their operating expenses are eaten up by paying their staffs, turning the lights on in their buildings, etc. -- while players' expenses are far less. That $900 million also gibes nicely with the approximately $1.1 billion the league claims it has lost since 2008, a figure strongly disputed by the union.
There's no reason the players should have to take almost a billion out of their pockets to pay for the impact of a global recession.
A 50-50 split of the $4 billion alone would mean $2 billion apiece for the players and owners, a net loss of $280 million in salaries for the players -- and, really, a net gain of $560 million for the owners, since they would pocket the $280 million from the players and, in turn, not have to pay that additional $280 million out. That is not an insignificant financial sacrifice, and it would be a legitimate sign of seriousness on the part of the union to do its part to help struggling franchises. Owners could not make a credible argument that the players haven't made a good-faith effort to pitch in during hard times. It would give them skin in the game.
Fifty-fifty would be a recognition of a true partnership between management and labor. Future revenue splits could be indexed to adjust every three years. If the league continues its surge and revenues rise, the split could adjust slightly toward the players to give them a chance to recoup some of their $280 million "investment" in the league. If revenues fell, the split would go slightly toward the owners, to help soften the blow. If the money stays flat, the split stays the same.
"Capital deserves some kind of return," said the current team executive. "And the owners' position is, for that much money put at risk, I deserve to have some kind of return on that at some point. But the players' position is that talent deserves to be compensated. And they're right. Nobody comes to see Jimmy Buss. Between those two principles, it's a split; how do we split the money, so that both sides can say I have a fair chance to achieve my goal. In between that are the people who make that work for both of them. And we are voiceless and faceless. And we're the ones who get fired."
The Salary Cap: Harder, Not Hard
It should be harder. Not hard. Big difference.
The league wants to reduce the gap in salaries between its top-spending and lowest-spending teams. The Lakers' payroll this season, including the $20 million in luxury tax the team paid, was approximately $110.38 million. The Kings paid $44.8 million, well below the salary cap limit of $58.044 million, and had to take the contract of the injured Marquis Daniels to reach the minimum team salary threshold. Within that $65 million gap is the difference between profitability and hemorraging red ink, but it's the team spending more that makes money, while the one that tries to save dollars that winds up losing millions. Thus, there's the desire for a new system in which the Kings have more of a chance to both make money and compete better.
The owners' initial proposal would have created a $45 million hard cap. There's no way that can work, even if it's phased in, as the league proposed in its most recent offer to the players. The question is how big a cap small-market and/or small-revenue teams would be willing to accept if there wasn't as big a gap between teams. Forget the luxury tax threshold, which is $70.3 million this season; a lot of teams become unprofitable once they get near the $58 million cap limit.
"They'll take a hard cap that's pretty high if the players could get off of some of their guarantees," opines the former team exec. "... the (salary) floor doesn't matter. If you're Indiana and the high end is $70 (million) and the floor is $50, your fans will go crazy if you only spend $50 million."
Players won't give up Bird rights. But I think they'd be willing to talk about a modified Bird exception that would give teams with the free-agent player even greater leverage to keep him, but would be shorter with fewer guaranteed years.
One such model I like actually comes from a former player who was heavily involved in union activities for years. The former player proposes a Bird exception that would run five years, but would guarantee only parts of future seasons. For example, if Dwight Howard wants to stay in Orlando, he can sign a five-year deal. But only 25 percent of the fifth-year salary would be guaranteed in the first year of the deal. In year two, 50 percent of year five would be guaranteed. In year three, 75 percent would be guaranteed. Only if Howard played a fourth season for the Magic would the whole fifth year be guaranteed. This would give the team an out in case a player suffers a catastrophic injury during the contract.
And under the former player's proposal, if Howard wanted to go elsewhere, he could sign only a three-year deal with his new team. That would create a real advantage for his current team, lessening the advantage teams in L.A., New York and Chicago would have to sign players because of marketing and commercial opportunities off the court in those cities.
"So if a guy leaves, he's leaving because he doesn't want to be there," the ex-player said. "He's pulling a LeBron James and saying I don't want to be there. If you can stay home and make $25 million, or you leave and (only) make $15 million, you didn't want to be there."
Let's also get rid of the mid-level exception. Its intent was honorable: getting guys who aren't max players a chance at a payday. But for the most part, it's been used to overpay players who haven't provided much impact, and tying it to the average salary only means more of the same going forward, at higher and higher prices. In its place should be an exception for players that isn't tied to the average salary, but is a set amount throughout the life of the CBA. Let's call it the $20 million exception. It would be $20 million total, to be spent however the team wishes. A team could spend all of it on one player or split it up among players, as currently allowed under the mid-level. But the total dollar amount of the contract would be $20 million and wouldn't rise, even if revenues do. That is the very definition of a fixed cost.
Some disagree.
"Those are decisions," my ex-player friend says. "I've learned from being in the business that it's owners versus owners. You make those decisions. It's like guys coming out of high school. if you don't want one, don't draft one. But you don't have to put in a rule about it."
Let's keep the veteran minimum salaries, and the league contribution to sign players who've been in the league three or more years if they sign a 10-day, rest-of-season or one-year deal, so that vets don't get pushed aside. But no one player should be able to command more than 25 percent of a team's cap in a given season (in some cases, the oldest veteran players can get up to 35 percent of a team's cap).
Revenue Sharing: Time For A Re-Do
Once upon a time, the Cleveland Browns had their own TV network.
The Browns' games were televised from 1955 to 1961 by Sports Network Incorporated, a regional, fledgling fourth network that was trying to compete with CBS, NBC and ABC. (SNI ultimately was bought by billionaire Howard Hughes, who also failed to turn the affiliation of stations into a real network.) But by 1962, the NFL's young commissioner, Pete Rozelle, had managed to secure a national television contract for all of his teams -- except Cleveland. The Browns could have held out and kept the revenue from SNI. But their owner, Art Modell, saw the survival of all of the league's teams could be assured if they shared national TV revenue instead of going it alone. The first deal with CBS was for $4.6 million.
The NFL's most recent TV deals -- with CBS, NBC, Fox, ESPN and DirecTV -- were for nearly $24 billion. That means each NFL team receives almost three quarters of a billion dollars in TV money over the life of the contracts, before they sell a single ticket, or beer, or parking space. That ensures every NFL team's survival. It's why Modell once told me about his fellow owners, "we're 30 fat-cat Republicans who vote socialist."
Revenue sharing makes the NFL work.
NFL teams split the gate at each game 60-40, with the home team getting 60 percent and most of the remaining 40 percent going into a pool that is split evenly among the league's other 31 teams. (That does not include revenue from suite sales.) They evenly split money generated by NFL Properties, which markets shirts, helmets and the like and also facilitates revenue generated by the league's NFL Network.
The league also has a supplemental revenue sharing program negotiated into the last CBA it struck with its players in 2006, which pooled $220 million in 2010 that aided eight to 12 of the league's lower revenue teams. Over the six-year life of the NFL's last CBA, approxmiately $895 million went into the SRS, which was funded in part by direct payments from the league's higher-revenue generating teams. The bottom line: revenue sharing allows franchises like Green Bay, Cincinnati and Buffalo to survive -- and often beat -- the league's highest-revenue producers in Dallas, Washington and New England.
The NBA also shares some of its revenue among its teams. But the pool is much, much smaller. NBA teams split the $7.4 billion the league receives in its national TV deals with ABC/ESPN, TNT and DirecTV, as well as revenue from its licensing, digital media and merchandising. And after a handful of smaller-revenue teams took the unusual step of publicly complaining to Stern about the lack of revenue sharing in an open letter in 2008, the league instituted an additional revenue sharing plan, including contributions from the bigger revenue teams that more than half of the teams used, with a few taking the maximum $6 million payout in 2009.
There's also two de facto revenue sharing programs: the luxury tax coming from teams that exceed the tax threshold and the escrow accounts funded by a percentage of player salaries. The luxury tax threshold is set this year at just more than $70 million. Seven teams -- Atlanta, Boston, Houston, the Lakers, Orlando, Portland and Utah -- look to be tax payers this year, according to league salary figures obtained by NBA.com, with the Lakers set to pay the biggest amount, more than $20 million.
Players are putting eight percent of their salaries this season into the escrow fund. If player salaries in a given year exceed an agreed-upon percentage, the escrow money is given to the owners. From 2006 through 2010, the union estimates players gave back $1.1 billion in salary to their teams.
But the union thinks the league's teams can share a lot more among themselves, which would help alleviate some of the difference between the haves and have-nots. The union has urged the league to incorporate a new revenue sharing plan along with the new CBA.
"The issue is owner versus owner," the former player involved in labor talks said. "Jerry Buss doesn't want to pay Milwaukee."
The league says that it is committed to a new, greater revenue sharing plan. But it insists the new plan has to come after the new CBA, because any new revenue plan won't work, the league says, if the system still produces losing teams.
The NBA should change that thinking. If the players, under my proposed plan, can give up $280 million, the owners have to put a new revenue sharing plan on the table, and use the NFL's model in a couple of key areas:
• First, share a percentage of ticket sales. There currently is no model in the NBA like the NFL's 60-40 split; the league takes 6 percent of ticket revenue off the top, but that's it. The Lakers and Knicks each make almost $2 million per home game; the Pacers, according to a source, make $700,000. The league as a whole generated more than $1 billion in revenue in the 2009-10 season from ticket sales, according to the Sports Business Journal, and that amount is likely to rise for this season when all the money is counted up, with interest in the Heat driving the road attendance for that team along with increased revenues for Heat owner Micky Arison at American Airlines Arena. Before the season began, the league said it had more than $100 million in new full-season ticket revenue, an all-time record.
Even a conservative sharing of those revenues -- say, 20 percent of that $1 billion -- would put $200 million in a pool that could be split annually among the league's weaker economic sisters. After all, the Lakers don't play alone; this isn't golf. They play against someone in those 41 home games, and often times, fans come out to see the likes of Dwight Howard and Chris Paul and other stars from lower revenue-generating teams.
• Second, split local TV money. The NBA is the opposite of the NFL; in football, the national TV dollars drive the bus. In the NBA, local, unshared money often can make the difference between profitability and red ink. The Kings, according to SI.com's Sam Amick, make $11 million a year in their local TV deal in Sacramento with Comcast. The Lakers just signed a 20-year deal with Time Warner (the parent company of Turner Sports, which also manages NBA.com) to air games on two channels starting in 2012 that is worth between $3-$5 billion, depending on whose accounts of the deal you believe. You don't have to have an MBA to see how that gives the Lakers a leg up. Again, we're not talking about taking that and splitting it 30 ways. Let's say it's $3 billion over 20 years. That's $150 million per year. Even 10 percent of that -- $15 million -- would be a nice chunk of change, and the Bulls, Knicks and Celtics should be able to contribute an additional few million among themselves.
It's easy for me to tell the Buss family it should carve up hard-won money and give a portion of it to Indiana, Milwaukee or Sacramento. There is also this argument, which carries some weight: By subsidizing lower-revenue teams, the higher-revenue teams are giving those teams the very money that could make them strong enough financially to compete with the big boys for free agents. As Kings blogger Tom Ziller opines, not sharing revenues depresses player salaries.
But the Lakers' advantages when it comes to revenue generation are prohibitive across the board. They already print money from their suite sales -- only 40 percent of which is included in BRI -- at Staples Center. They get more money for local sponsorships, advertising, everything. And they keep all of that money, just as Jerry Jones found new local revenue streams after he bought the Cowboys. He ultimately had to go to court to win a settlement against the league, which sued him after he signed sponorship deals with Pepsi and Nike. But he settled. And kept the money. So asking the Lakers to chip in so that the league in which they play can stay healthy does not seem to be an unreasonable request.
Amnesty Clauses: Every Other Year
After the 2005 CBA was ratified, teams were given a one-time "amnesty" in which they could waive a player without his salary counting against that year's cap figure. Eighteen of the league's 30 teams took advantage, waiving players like Michael Finley (Mavericks) and Brian Grant (Lakers) whose contracts exceeded their production, and other veterans who weren't likely to or didn't want to play for their respective teams anymore, like Alonzo Mourning (Raptors).
Basically, the amnesty was a big eraser, allowing teams to get out from under mistakes.
But there was concern that using the amnesty more often would benefit the bigger markets, because they'd be more capable of paying off big contracts that they no longer wanted.
That's true. But amnesty also helps the smaller markets.
Yes, it's easier for the Knicks to absorb Jerome James' contract. But don't you think the Magic would love to get out from under the remaining $62 million of Gilbert Arenas' contract? How crucial is that $19.2 million Orlando will have to pay Arenas in 2011-12? It's the difference between Orlando being a luxury tax payer and being under the cap. In a summer when the Magic has to do something -- anything -- to convince Howard to stay, every dollar available to add difference-making talent is crucial.
So put in a bi-annual amnesty. Every two years, a team can get a player's salary off the books. It doesn't mean they don't have to pay him; as long as he worked out a guaranteed deal, he gets his money. (The league had sought to remove the ability for a guaranteed deal out of the next CBA, but relented on that provision last week.) It would give more teams more flexibility more often, which would facilitate trades and free-agent signings. Making player movement easier, not harder, should be a goal. Why should the Warriors have to keep waiting for Andris Biedrins to snap out of his seasons-long funk? You think Detroit wouldn't mind a reset button on Rip Hamilton? Why can't the Cavs send Antwan Jamison on his way with a hearty handshake and his $15 million, and be free to get back in the free-agent game?
Everyone makes mistakes. At some point they should be able to stop paying for them.
Gang of Six: The Would-Be Key Players
A lockout was averted in 2005 when Stern and NBPA executive director Billy Hunter were able to convince their various constituencies that a work stoppage would be devastating. They had help from the so-called "Gang of Four" -- Michael Curry, then the president of the players' union, Orlando Magic forward Pat Garrity, Madison Square Garden president Steve Mills and Rockets owner Les Alexander -- which got the final framework of a deal done after 14 hours of negotiating, days before a lockout would have been imposed. The quartet didn't magically produce a new CBA, but it was able to hammer out a consensus on some of the stickier issues that ultimately made an agreement possible.
"We had just narrowed it down," Mills said Saturday. "There were a lot of issues that we thought we could agree on. We knew that whatever we agree to, we have to find a way to sell it to everybody. And David made it real clear that the next announcement was going to be that the season was over."
A new Gang could at least try to bridge the gap between the two sides at this late hour. This time, it should be six people: three people aligned with management, three with the players. My suggestions:
• THE OWNERS: Micky Arison, Miami; Michael Jordan, Charlotte; Peter Holt, San Antonio
• THE PLAYERS: Derek Fisher, L.A. Lakers; Shane Battier, Memphis Grizzlies; Ray Allen, Boston Celtics
Arison has credibility with both the owners and players. The owners voted him the new chair of the league's Board of Governors last June. But he has shown over the years that he will spend money on everything -- salaries, practice facilties, other enhancements -- to make the Heat a first-class operation. He takes care of former Heat players like Mourning, now a vice president of player development. He had a reputation as a hawk in previous labor negotatiations, but given the boatloads of cash that James, Dwyane Wade and Chris Bosh brought to Miami brought in this season, Arison may be the last person on earth who wants a work stoppage now.
Jordan famously chided Pollin during the '99 lockout during a negotiating session, demanding that Pollin sell the Wizards if he didn't want to spend the going rate for players. Now, he's management. But he brings a certain gravitas to the proceedings, and players know he was where they are now. If any owner is going to understand player demands, it's Jordan, who chafed when Jerry Reinsdorf blanched at a balloon payment of $30 million at the end of Jordan's days in Chicago.
Holt, the chair of the NBA's Labor Relations Committee, has a strong personal story (Vietnam veteran, recovering alcoholic) combined with a background as a small-market owner who has nonetheless stepped up to pay when he had to re-sign Tim Duncan and Manu Ginobili and Tony Parker. The Spurs have won championships despite not having the payroll of others, proving that you can surround a star with enough good players without breaking the bank to win big. And Holt is, genuinely, a decent guy.
Fisher has been deeply involved in labor talks since becoming the union's president in 2006. No player knows the issues better.
Battier is a veteran player who's made good money, but never been a superstar. He'd be perfect to represent the rank and file guys whose unique talents -- in his case, great perimeter defense -- should get them their payday in the sun. In addition, he's a good ideas guy who might think outside the box when it comes to potential resolutions.
Allen is a former union VP who knows what's happening and who would be an outstanding public voice for the union in the waning days before a lockout is imposed, much like Drew Brees has been for the NFL players during their lockout and Tom Glavine was for years as a spokesman for the baseball players' union. Allen would be a good advocate for his fellow Celtics, many of whom have participated in some union activities over the years -- and whose history with the union going back to the Tom Heinsohn/Bill Russell days is the stuff of legend.
The Conclusion
So, there you have it. I'm not near naive enough to think anyone on either side will take any of these suggestions to heart. It's just one offering from someone who's seen the damage that a lockout can do up close. It took the NBA almost a decade to recover from 1999; really, it was only when the Celtics and Lakers re-established the game's greatest rivalry in the 2008 Finals that the game seemed to get back on its feet, getting casual fans to watch and generating buzz. Now, the game has never been better. The Heat are the NBA's version of the Yankees, or the Cowboys -- half of America loves 'em, half hates 'em. Everybody watches 'em.
How good were these playoffs, with the Thunder and Grizzlies emerging, with Derrick Rose winning the MVP and tearing up as he thanked his mother, with the Hawks making a name for themselves, with the Mavericks crushing the Lakers, and a terrific Finals, with five down-to-the-wire games?
How deep is the talent in this league, from its youngest stars like Blake Griffin and John Wall, to Kevin Durant and Howard and Deron Williams and Kevin Love and LaMarcus Aldridge, to the still-potent Class of '03 (LeBron, Wade, 'Melo, Bosh, and on and on), to the old bulls -- Kobe and Nash, KG and Dirk, still kicking and potent.
There's so much to see. There's so much to lose.
DA did a great job taking some of my ideas and putting them into his proposal.
