Out In The Cold

Darius Soriano —  October 11, 2011

The first two weeks of the NBA season are gone. David Stern and the owners – the ones that possess the power to make such a decision – decreed it so last night after another bargaining session that did nothing to bridge the gulf that exists between the players and the owners.

Those who’ve followed my thoughts on the lockout know that I was optimistic about a full season being played with games starting on time. Obviously I was wrong. I thought logic and forward thinking would prevail and it did not. Chris Sheridan (of Sheridan Hoops) summed up how I feel perfectly with a brief post right after Stern made his ominous announcement:

I trusted wise men to act wisely. I believed in common sense prevailing. I think the NBA owners are nuts to go down this road. They just lost a significant percentage of their fair-weather fans. Idiocy rules the day. How very, very sad. Not just sad. Stupid.

For the Lakers, this means the first 8 games of their schedule are wiped away. Home games versus the Thunder, Hornets, Spurs, Nuggets, and Pistons; road games versus the Warriors, Suns, and Kings. If you’re scoring at home that’s one less chance to see Tim Duncan and Steve Nash towards the end of their careers while missing out on young up and comers like Durant (though, up and comer doesn’t do his position in the league justice), Westbrook, Curry, Evans, and Cousins.

At this point I’m a mix between extremely sad and ridiculously angry. I’ve long believed this was possible but didn’t think either side (especially the owners) would risk the progress made in recent seasons with an extended work stoppage. There’s simply too much to lose to let it play out this way but like some bad movie that we’re stuck watching here we are.

And while both sides share blame in this matter, in my heart of hearts I can’t escape the fact that the owners deserve more of it. In the past 15 years Stern and the owners have locked the players out twice. And twice we’ve lost games. After the ’99 lockout, the owners got nearly everything they wanted in the labor deal and were hailed unanimously as winners. They got their cap on max contracts, limits on contract lengths, a rookie pay scale, and a luxury tax (among other things). Today, they claim that they system they negotiated for (and got) doesn’t work anymore and it’s the players that must give back to make up for it.

But in the end, the real losers are the supporters of the game that have no say in the room where owners and players argue over BRI splits and punitive punishments on the highest spending teams. They’re arguing over how to divide the pie and we who spectate are left begging for crumbs that never come.

On that note, some choice reading on the subject:

From J.A. Adande, ESPN: You haven’t heard the fans, or the game itself mentioned much lately, have you? That’s because they don’t factor into this discussion at all. It was always about people saving themselves: owners asking the players to bail them out of bad business moves, players asking to preserve their cushy status with the highest average salaries among American team sports. The NBA was counting on you to be a sucker. You’d be a sucker because the league just intentionally damaged its brand and devalued its product by showing its willingness to do without it, secure in the knowledge that fans would still come back once this was over. Or you’re a sucker because you bought the lines the NBA fed you for the better part of two years — that the league needed a hard salary cap and salary rollbacks and other drastic changes to the fundamental structure of the league in order for the business model to be tenable — only to find out that wasn’t actually the case. That’s the realization that hit me Monday as we awaited word on the last-minute labor negotiations. At this point I was actually rooting against a simplistic end to the lockout. Because to end it without anything more drastic than a lower revenue share for the players would mean the past four months were a complete waste of time.

From Kurt Helin, Pro Basketball Talk: It would take some real fools to shut down their $4 billion a year business in the middle of the worst recession in generations because the more than $1 billion over six years they just got back from the workers was not good enough. However, the NBA owners are not fools. They think you are. The owners — and these lost games are on them far more than the players — think that no matter what, you’ll come back. Maybe right when the season starts (something many of us hard-core fans admit), maybe when the playoffs start, maybe in a year or two, but you’ll be back. You’ll come back fast and in large numbers, dwarfing the more than $4 billion in revenues the NBA got last season.

From Tom Ziller, SB Nation: The concessions Stern cites? They were willing to keep guaranteed contracts alive, willing to drop their push for rollbacks on existing contracts and abandoned the hard salary cap concept.  How generous of the owners to drop three demands that they created themselves in these very negotiations! This is like a 6-year-old demanding three cookies, a bowl of ice cream and a bag of M&Ms. “OK, we’ll make a concession on the M&Ms, I’ll take three cookies and some ice cream. Hey, I made a concession!” It doesn’t work that way. One side is not allowed to “invent” a compromise from the start and claim it has negotiated in good faith to get there. Ah, “good faith,” an odd concept where these talks are concerned. The union argued way back in May that the league lacked good faith in its negotiations, and the players filed a grievance with the National Labor Relations Board to that effect. That complaint is still floating around the bureaucracy, ready to drop in at some point. I don’t know exactly how anti-trust litigation works in America these days, where the courts stand on the issue of the NBA as entertainment company vs. sole provider of legit pro basketball in the United States. But, as Hunter said Monday, if it walks like a duck and quacks like a duck …

From Zach Lowe, The Point Forward: I’ve addressed in detail why players care about the system issues despite this percentage setup. In their view — and the views of their agents and attorneys — a hard cap or something approximating it will kill guaranteed long-term contracts for middle-class veteran players. The players as a whole might be guaranteed that set percentage of revenues, but that money would be distributed differently, with stars getting more, rookies getting whatever the rules allow and the middle-rung veterans scrapping for leftovers on short-term deals. You can understand that. It’s hard to see, but you can understand it. But why are the owners willing to lose actual basketball games, and the revenue that goes with them, over system issues? That is the harder question, since they too will receive only the set percentage of revenue to which they are entitled. If you ask the league, it will stress competitive balance — the notion that hardening the cap system will help small-market teams compete with the big boys by narrowing the spending gap. And yet, just about all the evidence we have on record suggests basketball might be inherently “uncompetitive,” relative to other popular team sports. Nor is it clear that, should the league somehow achieve parity, that doing so would increase its popularity. Maybe it will. I’d bet against it, but who knows? The point is, it’s uncertain, and you don’t cough up hundreds of millions in revenue to chase a dream.

From Henry Abbott, TrueHoop: Meanwhile, Stern has not exactly said that the league has already made the best offer, but close enough. Asked if the offers would get worse from here, Stern’s entire answer was: “Well, our economic situation gets worse, and we have to begin accounting for that.”  In other words, strong signs from both sides that they’ll be staying on their respective sides of the “gulf,” even though we know it can’t be true. There are a lot of really smart and fascinatingly subtle aspects to these negotiations. The people involved are incredibly capable. The process is in some ways rational. This is how $20 billion deals go, there is a lot of posturing and delays. However, now that the costs get real, lost revenues, disenfranchised fans, tough times for those who rely on the NBA to pay the bills, it’s worth noting that when this is all done, in addition to paying the price of change, the two sides will also have paid mightily in idiot tax. When success hinges entirely on compromise, how smart is it to build statues to inflexibility?

From Brian Kamentzky, Land O’ Lakers: Don’t hold your breath for a quick resolution. While the rhetoric following tonight’s negotiations was predictably strong, it still doesn’t appear to be a situation where after weeks of talks progress is being made, just not quite fast enough. Said Stern, “We’re further apart on where we thought we would get to on the contract length, on the length of the deal, on the use of exceptions by taxpaying teams, on annual increases for players, and for the tax levels, and the frequency of the tax.” On a positive note, I do believe, though I can’t confirm, both sides have agreed the basketball will remain orange. Monday’s news comes as a shock to, well, nobody. Pollyanna herself Tweeted over the weekend she’d be making alternate plans for opening night. Still, a very scary line has crossed, because from this point forward the math changes as both sides start losing income. At least initially, expect owners to roll back their proposals, prompted they say by the lost income of missed games. “Our economic situation gets worse,” Stern said, “and we have to begin accounting for that.” Players could very well dig in, too. Why bother forgoing checks only to accept what they see as the same bad deal a couple of weeks later?

From David Murphy, Searching For Slava: In the end, it came down to yards, not inches, and the eldest of elders turned slightly away and rubbed at his chest and wore his smile and his skin turned gray as he spun avarice into pride. And the lights blazed on and the town criers sat at devices, and fingers danced over keys marked “insert” and “delete” and they cooked their bindles grimly and inserted thin needles into delivery systems. And the trails turned to tar until the spaces had filled and villagers put away their torches and stroked long beards and headed for home. Yesterday, Derek Fisher sent a letter urging all players to attend a Monday meeting in Los Angeles if at all possible. It seemed prescient, signaling the possibility of a vote to affirm if saner voices had prevailed, or to stand for unity if the scene had gone bad. The owners stalled and snickered and eventually heard distant barking and left, their mouths wet with new want. The practice courts will not echo again. Words will not rinse clean. And we will fold our hopes into squares and place them in penny jars and cardboard boxes.

Lastly, some have been lobbying for NBA players to head to Europe to increase their leverage in these talks. But if you read the twitter timeline of Draft Express’ Jonathan Givony, you’ll find that’s not necessarily in the cards, stating agents are living in a “fantasy world” if they believe roster spots for established NBA names will simply open up:

Unfortunately the majority of NBA agents don’t have any clue about how int’l teams operate. They missed their opportunity in the summer. Speaking from experience after approaching 15-20 NBA players w/serious offers from int’l teams. Most agents just don’t understand the market. I have no issues w/that, but don’t expect these teams to bail you out now that reality finally hit you in the face. The market is 97% closed.

Darius Soriano

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28 responses to Out In The Cold

  1. I too am shocked it has come to this. The owners have a lot of guts and I respect them for it. Over 4 billions dollars in profits and they think they can get more. God bless them. It’s a time in this country where the people with all the money think they can get more than their fair share and recently they have been right. I hope this is a small step forward in this country where workers can make a stand. First millionair workers and then hopefully the rest of us.

  2. I’m finding it very difficult to sympathize with the players. Most of them are grossly overpaid and clearly don’t give their best effort every game, secure in the knowledge that their bloated contracts are guaranteed and they cannot be cut.
    They should take what they can get and be grateful that they have so much more than the average American (or anybody on this planet) will ever have.
    They are set for life and have a dream career. Cry me a river…

  3. #2. My only retort to your argument is that 1). the players don’t sign themselves to said contracts so the notion that they’re overpaid has little to do with them as individuals and more to do with the marketplace setting their value and the owners/team executives deciding to pay them that dollar amount. 2). The notion that player contracts should somehow be compared to “average Americans” doesn’t take the big picture into account. These guys are part of an industry and talented in a way that is not in line with “average Americans”. Simply put, they’re exceptional at a craft that is valued differently than most crafts the “average American” performs. So, I don’t see why what they make should be compared to what you or I make in our day jobs. Society, for better or worse, values what we do differently.

  4. More ranting. Please forgive me.

    Here is another thing irking me. The owners have put the message out for a couple of *years* now that the system needed an overhaul. They made it plain a long time ago they were out for a complete restructuring of the league financially. If that has been the case for all this time why did they wait so long to engage the players? Why let the entire summer burn away without having any substantive bargaining sessions with the players? The owners basically waited until the eve of training camp to begin the process of, from their perspective, transforming the entire system. How in the heck did they expect to go through all the particulars needed to do that so late in the bargaining process and not expect to lose games? Oh, that’s right. They expected to lose games all along.

    Waiting until the eve of training camp to begin bargaining in earnest is not a good look for either side. To their credit, the players only wanted to tweak the existing system to begin with. And that has been their public position all along. It was the owners who wanted the overhaul. So it was incumbent on the owners to start the bargaining process in earnest earlier if they truly wanted “good faith” negotiations and they cared about the possibility of missed games.

  5. 2- NBA players put people in front of TV’s. As a result advertisers can pitch their products to millions of potential customers. Not to mention they put people in seats. The sell merchandise and build the brands of the league and its teams around the world.

    When the average Joe can generate $70 million a year for the Lakers the way Kobe is believed to, then he can complain about Kobe’s compensation. Until then there is no comparison. And trying to force one says more about the person making it than the athletes themselves.

  6. Everybody have their inalienable rights to the collective bargaining or new conditions, however where is the wisdom of this lockout in a climate of a dicey national and global economy. I question the timing of both camps in going through these demands during uncertainties while at the same time wasting $$$ revenues from preseason games, first two weeks, don’t they equate that into multi-million losses too that could have filled the gap? Well, players and owners can afford to hang on with their retained earnings, how about their employees, the jobless peripherals and small businesses who are all depending on the game?

    Since nothing has been resolved by two leaders, don’t you think they should start a clean slate? First, fire David Stern as Commissioner since he has run out of ideas in the bargaining table; Second, replace Derek Fisher as the players’ representative and also the principal lawyer representing the Union who are equivocating the same demands with dead-end results. You can’t depend on these dead horses kind of thinking who can’t reach the finish line. Third, Go with new stock of guys who have visions to compromise and make a deal, guys who will not offer the barn under the new paradigm but at least sensible enough to grasp situations, pragmatic enough to reach for a conclusion.

    Paraphrasing Albert Einstein, he said: “Problems cannot be solved by the same level of thinking that created them.”

  7. #2 Yogi – I an’t buying what you’re selling.

    But I’ll follow your line of thought … if the players should be “grateful for what they have” then why not the owners?

    The owners have more, so why shouldn’t they be even more thankful for what they have?

    Re: the players being “set for life” – sadly, I think that is seldom true. I’ll anticipate your counter: that’s on them. Maybe. Nevertheless, your point that they are set for life is, in too many cases, simply untrue.

    “Dream Career”? OK, but I’ll wager these guys don’t somehow luck into the NBA because they happen to be tall!

    I’d put it this way: The players get a lot, but they pay a very high price to get it. I don’t pity them by a long shot. But I do respect their skills and drive.

  8. Rusty Shackleford October 11, 2011 at 12:45 pm

    Were guarteed contracts a product of the ’98 lockout? I wonder what the players gave up to have the owners agree to this. Anyone know?

  9. #8. Guaranteed contracts are an interesting subject because there’s actually not language in the CBA that guarantees all contracts. The owners willingly guarantee them and the guarantees can be negotiated out of any deal. For example, LO’s contract isn’t fully guaranteed – there’s a team option for the final year that can be voided with only a small $ amount paid. Caracter and Ebanks’ contracts aren’t guaranteed as they can be waived up to a certain date before the season starts with no penalty. The mechanism to make contracts guaranteed is essentially written into every contract.

    This is why a hard cap is a “blood issue” for the players. A hard cap equates to teams having to be much more prudent about how many contracts they guarantee in any given year as there currently isn’t a mechanism in place to void contracts without the contract amount still counting against the cap. This means that teams would have to negotiate contracts that limit guarantees on players contracts to ensure they have the flexibility to cut players when needed in order to stay under the cap. This creates uncertainty for a certain class of player (read: mid-level veterans and lower level veterans) where they’d end up with contracts that would not be guaranteed b/c teams would need the flexibility to cut them. The last thing this class of player wants is to be working on a year to year basis with little security. Hence, they’ll fight against a hard cap (or anything that mirrors it) because of the ramifications of it.

  10. Everyone talks about how little money separates the two sides without acknowledging that figure needs to be multiplied times the length of the agreement and also accounting for the fact that that same figure likely will have some subsequent ramifications for the deals to follow. Even the difference is ‘only’ 100M per season as some report, that’s 100M times, say, 7 years for this nascent CBA, plus it’s the starting point for negotiations for the next CBA…. i.,e that paltry 100M quickly approaches 1B over the life of this deal and the next one.

    Owners are betting the players will cave; historically, looking at various professional sports unions and analogous high-income unions such as those in Hollywood, they’re almost certainly right. Millionaires vs. Billionaires is an unfair fight and, although I detest what the owners are doing, I must admit it makes good business sense.

  11. @3 Darius,
    I have to say that I admired your optimism during all of this It wasn’t blind, it was clear and logical and you presented sound reasons why a deal should get done. And even though I’d been a doubter, I began to find hope very recently – it seemed as if definable progress had been made, real efforts were being made. I shoud have paid more attention to Billy Hunter who maintained all along, that this was long in the making and that Stern was on a committed course to shutting it all down.

    The thing that puzzles me more than anything, is why Jerry Buss and the other major market owners have been so silent. They stand to lose the most. Buss, Reinsdorf, Dolan, Arison and others are being referred to as “the taxpayers” by Adam Silver, and these aren’t even vague signals that we’re hearing – Stern, Silver and the hardline owners are coming right out and saying that they need to break the large-market stranglehold.. NOT to make more money (because that’s already built into what they players were willing to give up) but in terms of competitive balance.

    Why aren’t the “big owners” coming down like a pile of bricks on these guys? This is the one thing that I still don’t get. If the union had caved on these issues, it would have hurt them for sure… but it would also have been a devastating blow to the franchises. Yet, I haven’t heard anyone from ownership break ranks publically.

    Can anyone give me a better perspective on this?

  12. I’m sorry, I just can’t conjure up the rage against either the millionaire players or some billionaire owners. This is probably the worst time for the players to be locked out. Absent hard core basketball enthusiasts like the commentors on this site, who has shed a tear over this lockout?

    I love the Lakers and basketball (yes, this is the precise order for me), but I really do not have strong feelings either way.

  13. Passing thought: When United employees bought the company. How long until NBA players (and MBL, NFL, etc.) band together into their own consortium, and finance the purchase of teams. And then split (and administer) the revenues themselves? Realistic? Who knows…

  14. DaveM: if I were to stake a guess, I would say that Stern has in essence bought the big market owners off. If a hard cap, or a de facto one, is established and revenue sharing isn’t increased significantly, then these big market owners can expect to pocket tens of millions of additional profit each year since they no longer have to spend on players and can placate the fanbase by pointing out that there is a hard cap.

  15. Some great writing coming out, and I’m glad most of the bloggers/journalists are pointing out that the real victims are the fans. However, as the brilliant Kurt Helin points out, the league and its players can afford this because they know there is no substitute for them. When this is all over, the loyal fans and the fair weather fans alike will be back – simply because there is no competition to the NBA in the US. Boy, do I hate this.

  16. 14. Don Ford. Until said player lock themselves out because they are losing money. Much different owning. Ask Michael Jordan.

  17. @15 – OK, that makes sense to a point but is this where Buss really wants to be? Losses in revenues due to games lost, outstrips the gain in revenues due to not sharing. Plus, the loss of exceptions, level of tax and frequency of taxes will have a huge impact, one way or another. I don’t know that an L.A. fanbase is going to be placated?

  18. I feel bad, in that I consider the country is still in a recession, that the hard working people who support the sport (vendors, parking staff, etc.) are affected negatively. This is just a bad time to be having a work stoppage in the US, of any type.

  19. Now more then ever the fans will be back once the strike ends. Fans do not even factor in to the equation. This is not the NHL. The NBA encompasses every group from your ghetto to your eliteist corporate guy who loves basketball. Only the NFL and NBA have this following. The owners know this and can dig in as most owners make their money elsewhere. The players typically spend it as fast as they make it and they create lifestyles to live up to that which cannot survive too long without a check.

    The owners for the most part did not get where they are managing losing businesses. I dont know what the books say, but if the labor set up is such that a collective bargaining agreement expires that they can lock the players out, then good for them. Time to make a deal.

    If the players want a deal where the owner of the business loses money, then they are in fantasyland. The players have a unique talent and deserve what they get if it is in a good business model. If they think its the talent that matters, then go set up another players sponsored league. It wont fly and the players dont want to do that as the NBA makes them because of its history. The NBA has a history that gives the owners leverage and they paid for that in franchise fees when they bought in. It may have been a good buy at the time or it may not, but they paid and invested. No signing bonus. No guaranteed salary and they now run a business that they wont allow to lose money.

    If the owners lose less money by not playing, this is a year long strike atleast until the players understand that this is a business and while they will be well paid and deservedly so, the owners will no longer overpay.

    The players will cave and the owners will get the deal they want. Its just a matter of when and the longer it takes you know that the owners are losing money. If it was settled fast, which it was not, it would be a good indication the owners were not being honest about their losses while playing.

  20. The irony in this is that the players are prepared for the lockout.

    That actually weakens their position as they aren’t as willing to try international teams.

    If the players were dependant on those checks, they’ll be signing deals with European or Chinese teams, and they could’ve sucked a great deal of talent out of the NBA. Even if it is just guys #7~#10, their migration will degrade the NBA while increasing the value of international leagues whose fans also followed the NBA.

    Once we go down that route, NBA will be like the EPL while Spanish and the Bundesliga emerge elsewhere and offer true alternatives.

    But since the players are prepared, they’re actually more dependant on the NBA and it weakens their bargaining power as a whole. Seriously, this is when the star players should announce that they are now signing one year deals with foreign teams without opting out.

  21. Basketball players or any athlete paid to perform on a field, rink or court are entertainers and should be paid as such. Actors, actresses, grammy winning artist are all paid on a similar scale, sometimes a bigger one, but you never hear any gripes about how over paid they are. Entertainers on whatever level are the stars everyone wants to see not the person handing out the checks sitting courtside. How can the person recieving the checks, be blamed for writing it as well?

    Owners are asking an athlete of the 21st century( global recognition, brand building, reality show in the making) to think and behave as if it is the 20th century. The thought process of owners thinking that this is the only way of making money is through us will one day come back to bite them in the arse. . Just as the music industry changed when artist started paying themselves through their own label some forwarding thinking athlete will change the game and sports forever.

  22. Re my own #14:
    I was only musing about players owning their own NBA. But here’s a link with Amare talking about exactly that (albeit rather vaguely, but it’s an idea in the air, at least, anyway). He’s talking about a rival league; I was musing about the players’ union (or similar player consortium) acting to purchase many (or all) NBA teams, sort of like how CalPERS makes investments, or how United Airlines’ employees bought the airline.
    http://espn.go.com/new-york/nba/story/_/id/7088249/amare-stoudemire-new-york-knicks-says-players-talked-starting-own-league

  23. #20 Except its not clear if the league is losing money, if in fact they are, because many owners are poorly managing their organizations or because of unsustainable markets (as may be the case in Sacramento). It is not so obvious that teams are losing money because of player contracts. And these “private” ventures get fat incentives from public coffers. Who’s paying for the stadiums? And I also question whether purchasing a team is ever a poor business decision, in terms of appreciating value. It seems like the sky’s the limit with some of these franchises. Yearly losses might end in huge gains when it comes time for sale. But the league’s financial argument doesn’t attest to the increasing values of franchises. You make it sound pretty simple, but it ain’t so simple. I think that its naive to believe that business owners wouldn’t want to increase their profits and use/misuse any information at their disposal to get theirs.

  24. All this is so tiring that I am starting to long for the Shaq vs Wilt debates — well, not really.

    Incidently, the picture in this LA Times article give a whole new meaning to the term giant. Wilt’s stride simple dwarfs other players. http://latimesblogs.latimes.com/sports_blog/2011/10/the-20-greatest-sports-figures-in-la-history-no-20-wilt-chamberlain.html

  25. again, while there is business all around basketball, with merch, vendors, people who warehouse and make merchandise, television, radio etc, basketball itself is not a business. it’s a club. the club is for rich men who can afford to lose money being in the club. that’s the bragging rights that say, “i won the division”, “yes, i own that guy”.

    the club is what fantasy leagues try to imitate, that feeling of owning it all.

    this lockout has nothing to do with business, if it did, the business men, the owners, would capitulate the moment that negotiations reached the point where it was more profitable to accept a worse deal than waiting to win a better one. Jerry Buss the poker player understands this concept well, as does any accountant.

    the lost revenue no longer equals the gains from getting the agreement the owners want. it’s more than just games, it’s every aspect of “BRI” that’s lost in the end, merchandise, website hits, licensing, everything is in the toilet. that’s a lot of money lost in two weeks of games, multiplied exponentially as the season is lost in chunks. being business men, the owners, thinking about their business and it’s health would settle and it’d be back to work.

    also, if it’s business, then poorly managed clubs deserve to fold. neither worker nor owner owes the other anything more than to fulfill the agreed upon contract. the workers must work and the owner must pay. if the workers don’t want to work, there’s no business. if the owners don’t want to pay, ditto.

    what’s really going on is the classic case of “it’s my ball and i’m going home”.

    we’re gonna have to beat the hell out of that kid, just as soon as my mom buys me my own ball…

  26. A few tips: if you have a yearning for Staples in October, the LA Kings will be hosting the NJ Devils. If you come early enough, you might get a chance to see Kobe on skates, taking 5 slapshots from the red line and hoping for a hat trick! (sorry–bad joke).

    If you’re holding out for hoops, you’ll have to go to the Sports Arena in November to see UCLA, or, if you’re really desperate, there’s always USC at the beautiful Galen center.

    If you insist on seeing NBA big timers live, take a vacation, hop a jet to Europe, and you might watch Tony Parker in France, Dirk Nowitzke in Germany, Kobe Bryant in Italy, Derron Williams in Turkey, and Pau Gasol in Spain.

  27. 26,
    Well done