NBA is through... Have you all seen this yet?

[SequSpur]

NEW YORK (AP)—NBA commissioner David Stern said Thursday there was no quantifiable progress in collective bargaining talks over the summer, and the league revealed it is seeking a reduction in player salary costs by about one-third.

Stern said the league wants player costs to drop $750-800 million. Deputy commissioner Adam Silver said the NBA spends about $2.1 billion annually in player salaries and benefits.

“We would like to get profitable, have a return on investment,” Stern said. “There’s a swing of somewhere in the neighborhood of $750 to $800 million that we would like to change. That’s our story and we’re sticking with it.”

Stern and Silver spoke after completing two days of meetings with league owners, who are seeking major changes to the current CBA that expires June 30. Silver said the league has told the union that owners are in a “diseconomic situation,” with projected league-wide losses of about $340-350 million this season.

Though season ticket sales are up, both insisted that no matter how well the league does at the box office, it won’t change the fact that an overhaul is necessary to a system in which the players receive 57 percent of basketball-related income.

“Even though we reported we have record season ticket sales over the summer and otherwise very robust revenue generation, because of the built-in cost of the system, it’s virtually impossible for us to move the needle in terms of our losses,” Silver said.

“There’s no chance we can change the fundamental economics regardless of our success because it just costs us too much money to generate those sales.”

The league and union began meeting last summer, and Stern said the sides had their most recent discussion in a small group this week. But they remain far apart on talks toward a new deal, raising fears of a lockout next summer.

“I couldn’t give you any listing numerically or in word form of progress,” Stern said. “But there seems to be a mutual determination to push and probe and do and discuss, because there’s an increasing understanding on both sides of what the risk of not making a deal entails, and that this is actually palpable, but not quantifiable. So we’re very much engaged in it.”

The players association has responded to the league’s claims of massive losses by calling for expanded revenue sharing among owners. Stern and Silver said the owners agree it’s coming, but that it will arrive in conjunction with a new deal.

And while there’s still time, Silver—the lead negotiator for the league— acknowledged that business could suffer is progress is not made soon. Ticket holders and sponsors will have decisions to make early next year without knowing if there’s going to be a 2011-12 season.

“Before you know it, we’re going to be at the beginning of 2011, and it’s going to begin having an impact then and uncertainty is bad news for any business,” Silver said.

Stern agreed with union executive director Billy Hunter’s recent statement that February’s All-Star weekend is an unofficial deadline to know whether there’s going to be a work stoppage, saying, “We’ll have a pretty good idea how good or not good things are by the end of February.”

Also, Stern said the decision to call more technical fouls under the respect for the game guidelines won’t be an issue much longer. Players are now whistled for making overt gestures or complaining too long to referees, and some are confused by how quickly they’ve been penalized during the preseason.

The union threatened legal action, but Stern said doesn’t think it will reach that point.

“The players will do more adjusting than the referees, but there will be some referee adjustments as well,” Stern said. “I don’t think it’s going to be a problem.”

[SequSpur]

Really? Well Stern Boy...if you didn't allow teams to sign 3 frickin max players than we wouldn't have a problem... There are numerous teams with 90 million dollar payrolls... LMAO.... The season hasn't even started and really there are 3-4 legit teams that can win...WTF kind of league is that...that isn't a league..that's wrestling...shit...

I love the Spurs but this is the last year I buy tickets. Just because, it's better to watch the game on my big ass tv than it is to go park a mile away, pay to much for a water..shit...the crown is cheaper at home as well....

Oh well...

[Mark in Austin]

I still have yet to find anybody who can explain this to me. Given that the cap is calculated as a percentage of revenue, if the league is losing so much money how is it that the salary cap actually went up last year?

[ChumpDumper]

It's not a hard cap.

[Mark in Austin]

It's not a hard cap.

Yes but collectively teams are only over the cap by roughly 260 million dollars, which is a far cry from 750-800 million.

[Leonard Curse]

you guys do realize what stern is right???? dont be suprised by this crap

[GSH]

Okay, surely that's an exaggerated place to start bargaining? They don't really plan to drop salaries by $750-800 Million? That would mean reducing salaries by over 33%, league-wide. I think salaries are too high, but that's one hell of a pay cut.

Here's a fun way to look at it:

The league says that the teams are breaking even right now. And salaries account for 57% of their revenues. (So all their other expenses account for 43% of their revenues.) If they managed to reduce their salary expenses by 33%, and everything else stays the same, that would give the owners a tidy 19% net profit - plus the appreciation on the value of the team. Not too shabby.

I wonder how they'll divide that, since some teams already make a very solid profit, while others lose money? If they don't handle things right, they will only widen the gap between the large- and small-market teams.

Or maybe the owners will get together and agree to lower ticket prices?

[Latarian Milton]

i think the mid-levels will bear the brunt of the potential salary cut. superstars will earn the same giant salary as ever imho.

[Latarian Milton]

in basketball games a superstar is more than half of the whole team. if you have 3 superstars on your squad, you are guaranteed a championship ring (like the celtics 07-08), and it doesn't matter if you complete the rest of squad with dipshits.

[ChuckD]

i think the mid-levels will bear the brunt of the potential salary cut. superstars will earn the same giant salary as ever imho.

No. There were non-attributed quotes saying that $8M will be a huge salary under the new CBA.

I'm thinking they'll get a hard cap and the elimination of all exceptions, including the Larry Bird exception to keep your own players.

[NRHector]

"we make more because we spend more"

[DaDakota]

Yes but collectively teams are only over the cap by roughly 260 million dollars, which is a far cry from 750-800 million.

There are a lot more costs associated with running a franchise other than the players.

The coaches, the GM, and every other office staff person counts against that revenue too.

DD

[DeadlyDynasty]

"we make more because we spend more"

- Patrick Ewing:lol

[Mr.Bottomtooth]

Update:
Other possibilities include eliminating some teams, and performance-based contracts.

http://realgm.com/src_wiretap_archives/69685/20101021/nba_floats_contraction_performance_standards_to_av oid_33_percent_pay_cuts/

[Latarian Milton]

No. There were non-attributed quotes saying that $8M will be a huge salary under the new CBA.

I'm thinking they'll get a hard cap and the elimination of all exceptions, including the Larry Bird exception to keep your own players.

then we will see all these symbolic players fleeing eastwards to europe. numerous european clubs have been flirting with NBA superstars, with Lebron drawing the most rumors.

even under the current CBA, 8m is still a big salary tbh. the cut will be put on the total payroll of a team imho, which will be easily absorbed by the minor players so the franchise players will still be earning giant salaries. when a flood comes, the ants and rats get drowned first imo.

[ChuckD]

Update:
Other possibilities include eliminating some teams, and performance-based contracts.

http://realgm.com/src_wiretap_archives/69685/20101021/nba_floats_contraction_performance_standards_to_av oid_33_percent_pay_cuts/

They should contract the Clippers and the Grizz, by FAR the two worst franchises in the NBA, and move Milwaukee to the WC.

[ChuckD]

then we will see all these symbolic players fleeing eastwards to europe. numerous european clubs have been flirting with NBA superstars, with Lebron drawing the most rumors.

even under the current CBA, 8m is still a big salary tbh. the cut will be put on the total payroll of a team imho, which will be easily absorbed by the minor players so the franchise players will still be earning giant salaries. when a flood comes, the ants and rats get drowned first imo.

The Euro League is probably in worse shape financially than the NBA. There will be nowhere to run.

The "little people" of the league already make peanuts. If you let the wage gap get to huge by paying them less than peanuts, they will be the ones to flee to Europe. Then you will have LeBron, DWade, Melo, and a bunch of d-leaguers. No, they will cut the maximum salary.

[SequSpur]

The cap is supposed to deliver less variability within the league. That means a team like Miami couldn't sign 3 max free agents.. but the cap is soft because well, some owners can toss some jack around. There is revenue sharing in the NBA so technically teams can lose their ass and still make a profit of a Lebron Jersey in China...

The system is completely broken. When a Matt Bonner pulls in 4 mill a year, which is higher than Magic Johnson then something is fucking wrong....

Also, the cost to go to a game is ridiculous..the price point for them to break even is so high....

And yes, the players are making damn near 60%, the overhead is probably 30%, the salaries of the coaches, the doctors, the trainers and everyone else is about 9%, leaving them about 1%...dude, it's over...the NBA as you know it...

[SequSpur]

The cost of a game...$45 for 2nd row upper deck tickets, so for 2, that's $100 a game with fees...Parking is $10 for upper deck tickets! A pizza is $7, A Beer is $7+, A crown is $9!!!!, A bottled water is $3.50, Tacos are $6, WTF?

At home, I can get Direct TV with games everynight, $80 per month, bottle of crown $20 at costco, A large pizza for $10, A case of beer for $20...and the NBA, well doesn't get shit of mine...so what is Stern going to do to get my money in 2011? Think about it guys/gals...think about it....

10 years ago, at least 3 of my friends had season tickets, none of them do now, none of them even watch the games, and I have a 10 game pack. think about it...

it's over.

[GSH]

then we will see all these symbolic players fleeing eastwards to europe. numerous european clubs have been flirting with NBA superstars, with Lebron drawing the most rumors.

even under the current CBA, 8m is still a big salary tbh. the cut will be put on the total payroll of a team imho, which will be easily absorbed by the minor players so the franchise players will still be earning giant salaries. when a flood comes, the ants and rats get drowned first imo.



I disagree. If the owners' vision comes true, a lot of the slack is going to have to come out of the superstars' end.

The problem is that the AVERAGE payroll for all teams is about $70 million. According to this article, they are talking about cutting that down to $45 million. Think about what that means. If an "average" team has two players who make a total of $25M, that leaves $20M for the other 10-13 players. So if the superstars' salaries all drop to about $12.5M, everyone else is still going to be playing for near the current league minimum. That's not going to be "easily absorbed" by the minor players.

Some teams will go 30% over the cap, just like they do now - and some teams will go 30% below. That means the lower-end teams will have a payroll around $33M. Those lower-end teams could afford to have two players making around $8M, and the rest of the team would be playing for around the league minimum. (Assuming they sign some veterans.)

I don't think they can make those numbers work unless the stars' salaries drop to arount $8-10M. And yes, that may drive some of them to Europe. But you can't expect someone like a Robert Horry (in his prime) who is a great player, but not a superstar, to play for $1M per year while the big name guys keep getting $15M a season.

[ducks]

makes me think spurs will extend tp

[SequSpur]

All these contracts will be obsolete, they will have to resign new ones once the collective bargain agreement goes away...these stars know that...

Parker isn't going anywhere...Why do you think the Spurs signed all of these guys to these deals? shit, it won't matter what RJ is supposed to get...it will all be renegotiated next summer...a lock out will happen, the players and coaches will suffer, the teams will still make TV revenue and apparel and other stuff, the players will give in and their salaries will be reduced by a whatever percentage is agreed upon...probably 20-25 percent, I seriously doubt Stern boy gets his 40%... Then it's a win for the owners...teams will be back in the black and half of these mofos will be up for sale in 2 years...book it.

[Latarian Milton]

The Euro League is probably in worse shape financially than the NBA. There will be nowhere to run.

The "little people" of the league already make peanuts. If you let the wage gap get to huge by paying them less than peanuts, they will be the ones to flee to Europe. Then you will have LeBron, DWade, Melo, and a bunch of d-leaguers. No, they will cut the maximum salary.

sorry but it doesn't work this way nowhere in america, otherwise you would see no Bill Gates or Warren Buffet but a bulk of middle class. it's the middle class that makes the major revenue for the government imho. the tax rate may be slightly higher for the rich but it doesn't matter at all to those who earn millions annually.

as to the NBA games, mid-levels in general are not so much better than minimums imho. commonly a superstar earns 16-18m a year, only 3 times the size of a mid level contract, but the impact a mid-level player has is nor even 1/10 as much as an influential superstar. e.g. the celtics only had dipshits barring the big 3 and they won the championship. in the next a few years their big 3 were often battling injuries, they had more blue-collars but never replicated the glory. Rondo & perkins are just average players at their finest tbh, they just look good because accompanying superstars.

[Latarian Milton]

the new CBA would make it impossible to have two or more superstars on the same team tbh. if you get a team who agrees to trade their franchise player for 3 mid-level players of your team, then most times it'll be a bargain for you. but it would be impossible to make such a trade when the mid-level salary approximates the minimum level with the maximum remaining the same might.

[MannyIsGod]

The shit Stern is throwing around is so far from realistic its not even funny. Lockout is pretty much imminent if this is the stance.

[GSH]

as to the NBA games, mid-levels in general are not so much better than minimums imho. commonly a superstar earns 16-18m a year, only 3 times the size of a mid level contract, but the impact a mid-level player has is nor even 1/10 as much as an influential superstar.

Based on salary, Ginobili has always been a mid level player. Horry was never a top-tier guy. They both made quite a lot of impact. Or how about Bruce Bowen - how much impact did he have, without being a superstar?

What about guys like Okur, Paul Millsap, or Raja Bell? Grant Hill, the last several years in Phoenix? James Posey? David West, Trevor Ariza? Scola has a mid-level salary, and he's done okay. Or how about Mike Bibby, or Leandro Barbosa?

I agree that you can't have a great team without a couple of stars. But take the Lakers lineup and replace Lamar Odom, Ron Artest, Derek Fisher, and Sasha Vujacic with four league-minimum players, and there's no way they would have won the last couple of championships. Those mid-tier guys bring a lot to their teams. The salaries can't get so top-heavy that those guys are being offered near-minimum contracts, or they will be hopping to Europe.

[ducks]

what is bad the heat just signed 3 superstars
no team will be able to compete with that if they cut the payroll down 1/3

I am not sure how all owners would like that

[baseline bum]

This is ridiculous that players are going to be subsidizing owners' bad decisions. It's horseshit that Stern thinks every franchise should be profitable. If a franchise is stupid, they deserve to go under; not get a handout from the players who are the people that fill arenas. Why the fuck is it so ingrained in this nation's psyche that rich business owners deserve welfare? Capping what a player can earn and how long he can earn it for wasn't enough?

[buttsR4rebounding]

The league says that the teams are breaking even right now.



NEW YORK (APJune 30. Silver said the league has told the union that owners are in a “diseconomic situation,” with projected league-wide losses of about $340-350 million this season.




Graduate from public school?

[buttsR4rebounding]

This is ridiculous that players are going to be subsidizing owners' bad decisions. It's horseshit that Stern thinks every franchise should be profitable. If a franchise is stupid, they deserve to go under; not get a handout from the players who are the people that fill arenas. Why the fuck is it so ingrained in this nation's psyche that rich business owners deserve welfare? Capping what a player can earn and how long he can earn it for wasn't enough?

Stern would like to emulate the NFL where even dumbass owners make a profit because the the league rules virtually guarantee it. Also, the turnover in playoffs teams is substantial. How many recent Super Bowl participants had losing records the previous year? If that model is adopted then the Heat would be forced to move one of their stars...

[ChuckD]

The shit Stern is throwing around is so far from realistic its not even funny. Lockout is pretty much imminent if this is the stance.

You haven't seen this coming for like a year? Once the hard cap was on the table, without any other criteria, there was going to be a lockout.

[GSH]

Graduate from public school?

Two graduate degrees, shithead. How about you?

First of all, Stern's comment cited projected earnings for the upcoming year. I said that the league is currently at break-even. See how that works, Short-Bus? But to know that, you would have to have read more than just the few articles posted on forums.

The fact is that there are a lot of numbers that get thrown around about how profitable the league is, by different groups of people. They all have an agenda, and they all use numbers that support their own position. Stern's assertion that the owners will lose $350 million is bullshit, and he knows it. But the players want to talk about the league having $250 million in operating profits, which is also misleading because it doesn't take financing costs (debt) into account. There are also factors like the owners who run their franchises like a hobby, and don't really care if they operate at a loss. The truth, which is somewhere in the middle, is that the league ran pretty close to break-even last season. But that's what I already said, isn't it Short-Bus?

There are a number of problems with the league's finances: Some of the owners are too highly leveraged. (That means too much debt, butts4rebounding.) Some of the markets are just too small. The players get 57% of all revenues, which is too damned high. The economy sucks right now, and the current salary and operating expenses are built around a boom economy. Some owners focus only on keeping payroll low, then make a profit from revenue sharing - which makes for some really crappy teams, and dissatisfied fans.

The owners want to lock in a deal, using the worst numbers, and in a bad economy. The players don't want to face facts that salaries totalling 57% of revenues are strangling the league, and the fans. They want the whole league to be run by owners like Cuban, who operated at a loss and don't give a damn. If they screw around, dig their heels in, and force a lockout, they are all going to be losers.

[GSH]

Here's one more thing for you to think about, Short-Bus:


Forbes reported that 12 of the league's 30 teams lost money last year. That must mean that 18 teams broke even or made money... right?

If you really believe that the league lost $350 million last year, because of Stern's comment, then you must think that those 12 teams lost over $30 million each. Probably more like $40 million, since some of the other 18 teams obviously made money. You don't really believe that those 12 teams had an average loss of $40 million each, do you?

The point is, all of this stuff depends on whose numbers you believe. And the thing you have to know is that they are all lying. They use the numbers that are most advantageous to them. They don't care about distortions or misrepresentations. They just want the biggest slice of that $3.6 Billion they can get.

I said that they operated at around break-even last season. I guarantee you that is closer than either what Stern is saying, or what the Player's Association is saying.

One way or another, it's fans that are paying that $3.6 Billion. And if they screw around and cause a lockout, a lot of fans aren't going to be willing to pay them that much in the future.

[E-RockWill]

Unless there is significant movement towards common ground (from both sides), the NBA will not start the 2011-12 season. The league stands to lose approx. $1 billion if locked out the entire season.
No one in their right mind wants a shut-down. The NBA is going to be watched by the NFL, NHL & MLB to see how they handle things because they're all due for renegotiation's. It is very likely that there will be no professional sports next season.

[phxspurfan]

It is very likely that there will be no professional sports next season.

not gonna happen

[dbestpro]

Stern would like to emulate the NFL where even dumbass owners make a profit because the the league rules virtually guarantee it.

That is his job. He is the representative for a collection of businesses that work together to make a profit. He is not doing his job when just a few businesses are in the black. For these leagues to survive it must always be about the business.

[duncan228]

Stern concedes contraction could be on table (http://sports.yahoo.com/nba/news?slug=txstern)
By Brian Mahoney

http://sports.yahoo.com/nba/news?slug=txstern

[rasho8]

The cost of a game...$45 for 2nd row upper deck tickets, so for 2, that's $100 a game with fees...Parking is $10 for upper deck tickets! A pizza is $7, A Beer is $7+, A crown is $9!!!!, A bottled water is $3.50, Tacos are $6, WTF?

At home, I can get Direct TV with games everynight, $80 per month, bottle of crown $20 at costco, A large pizza for $10, A case of beer for $20...and the NBA, well doesn't get shit of mine...so what is Stern going to do to get my money in 2011? Think about it guys/gals...think about it....

10 years ago, at least 3 of my friends had season tickets, none of them do now, none of them even watch the games, and I have a 10 game pack. think about it...

it's over.

I bought season tickets again this year. All the games. I want to see the teams I like and give away the rest. We probably give half our tickets away every year.

Its fun to go, you get decent perks, and if you game the system right its not that pricey.

Of course our seats are terrible, but we have fun. And our rep usually can get us into the superbox if we ask on shitty team nights.

[Mark in Austin]

Yglesias (http://yglesias.thinkprogress.org/2010/10/nominal-wage-cuts-in-the-nba/) is smelling the bullshit too:

The best way out of a recession is a combination of expansionary fiscal and monetary policy to bolster aggregate demand. Failing that, you need to have a grinding process of nominal wage cuts and unbalanced deflation that can take years to end and cause massive human suffering in the meantime. David Stern wants the National Basketball Association to do its part to make the dream a reality:

Stern said the league wants player costs to drop $750 million to $800 million. Deputy commissioner Adam Silver said the NBA spends about $2.1 billion annually in player salaries and benefits. [...]

Stern and [Deputy Commission] Silver spoke after completing two days of meetings with league owners, who are seeking major changes to the current CBA that expires June 30. Silver said the league has told the union that owners are in a “diseconomic situation,” with projected league-wide losses of about $340 million to $350 million this season.

Though season ticket sales are up, both insisted that no matter how well the league does at the box office, it won’t change the fact that an overhaul is necessary to a system in which the players receive 57 percent of basketball-related income.

“Even though we reported we have record season ticket sales over the summer and otherwise very robust revenue generation, because of the built-in cost of the system, it’s virtually impossible for us to move the needle in terms of our losses,” Silver said.

This kind of pleading always strikes me as unpersuasive on the merits. If I owned a business that was losing tens of millions of dollars a year, I’d be eager to sell the business for a relatively small amount of money. When the Washington Post Company put Newsweek up for same, for example, they were ultimately willing to part with the firm for $1 on the condition that the new owner assume Newsweek’s pension liabilities. Similarly, when General Motors and Chrysler were revealed to have an unsustainably high labor cost structure, nobody wanted to buy either firm at any price so the government had to step in.

By contrast, when Mikhail Prokhorov bought the New Jersey Nets—by no means the league’s most lucrative franchise—he paid $200 million for the privilege. Ted Leonsis bought the Wizards, a terrible team, from the Pollard family for over $500 million this past summer. The high price of NBA franchises strongly suggests that operating one is valuable even with 57 of basketball-related revenue going to player salaries. Part of the issue is that the teams themselves can be in some ways loss-leaders for businesses whose real profit center is an arena or a cable network. Accounting can be misleading, actual asset prices are telling you something.

[ChuckD]

Leonsis already was fined for talking hard cap and other ownership issues. You don't think he saw the lockout as a reason to pay more for the team?

[dunkman]

The teams that lose money have something in common. They have too high payroll for their level of revenue. Some of them also have too high expenses on those revenues.

Another very important thing in common is that only 2 or 3 of the teams that lose money have good basketball performance. Those teams are owned by people that don't mind investing, as long there are good results.

However, the NBA should invite the owners incapable of putting good teams for too many years to sell their franchises. Most of them would make money in the process.

The NBA wants the players to financially support incompetent owners, reducing the salaries by 40%. That measures will only allow some owners to continue making additional bad decisions.

[rasho8]

The teams that lose money have something in common. They have too high payroll for their level of revenue. Some of them also have too high expenses on those revenues.

Another very important thing in common is that only 2 or 3 of the teams that lose money have good basketball performance. Those teams are owned by people that don't mind investing, as long there are good results.

However, the NBA should invite the owners incapable of putting good teams for too many years to sell their franchises. Most of them would make money in the process.

The NBA wants the players to financially support incompetent owners, reducing the salaries by 40%. That measures will only allow some owners to continue making additional bad decisions.

Pretty much this. If you are completely inept at running your team you should have it revoked and be forced to sell. The Clippers might not be terrible under a new owner that isn't a complete idiot.

[TDMVPDPOY]

nba team owners should get rid of the team benefits the team pays its players like meal allowances, hotel stay when on the road...pussy on the side...