20 Second Timeout is the place to find the best analysis and commentary about the NBA.

Saturday, October 29, 2011

NBA Lockout: Three Ds

I have already explained The Real Deal About the NBA Lockout: my February prediction that there would be a long NBA lockout has proven to be prescient and I am confident that my other February prediction--that the lockout will not end until the players accept the reality that the NBA's broken business model must be fundamentally changed--will also prove to be prescient.

It is funny to do an internet search pertaining to the lockout and see how many so-called experts have wrongly predicted over the past few months that the lockout was about to end--but it is a bit disturbing to read/hear some of the nonsense that has been spewed about the causes, effects and ultimate resolution of the lockout; the media spin about the lockout could make even the most levelheaded, balanced person dizzier than Charlie Sheen on a bender. NBAPA President Derek Fisher boldly said that the NBA owners are lying and Dwyane Wade allegedly told Commissioner David Stern not to point at him: the players sound like whiny kindergartners ("liar, liar pants on fire"; "stop pointing at me") and yet the media full court press--blithely ignoring how broken the NBA's business model is--is mainly focused on attacking the owners, culminating in Bryant Gumbel's ludicrous, poorly thought-out (and antisemitic) rant against Stern: comparing Stern to a "plantation overseer" is offensive, a falsehood that simultaneously diminishes the true suffering of Black slaves in the American South while also slurring a Commissioner whose league has consistently been at the forefront in terms of hiring Black executives and coaches. Gumbel's attack against Stern comes straight out of the Louis Farrakhan playbook--portraying Jews as exploiters of Blacks--and Gumbel's consistent track record of expressing such bigoted attitudes would have terminated his career a long time ago if his chosen target were any group other than Jews (just imagine a White commentator speaking similarly about a Black person or anyone saying anything remotely derogatory regarding homosexuals).

Commissioner Stern just announced the cancellation of another two week block of games, meaning that the lockout has now wiped out not only the entire preseason but also the first month of the regular season. The only question now is how long it will take for the players to accept the reality that there will be no NBA games until they cooperate with the owners to fix the league's broken business model.

While we all wait for the players to come to their senses, the current situation can be summarized by looking at three Ds: a dream, a delusion and a diversion.

The dream is the players' apparent belief that they will ever recoup the money that they have already lost as a result of the cancelled games; the cold water that will eventually strike their collective faces is the reality that the deal they will eventually sign will be proportionately worse than whatever the NBA's best offer was before any games were cancelled: the players, not the owners, will ultimately "pay" for the lockout. Also, most of the owners will be able to regain their losses eventually over a period of years after the league's business model is fixed but most of the players will not be in the league long enough to make up the wages they are currently losing; the average NBA career lasts less than five years, so instead of applauding Wade's alleged toughness, the league's rank and file players should be pointing their fingers at Wade for all of the money he has helped take out of their pockets. There is much talk about the rift between big market and small market owners but the untold lockout story is that this labor dispute--like the previous one in 1998-99--is in many ways being driven by a few star players (such as Dwyane Wade, LeBron James and Kevin Garnett--guys who are insisting that the players not accept less than 52% of the league's basketball related income) and their high-powered agents. It is the stars, not the majority of players, who would benefit most if the league had no salary cap. The 1998 lockout was precipitated by the massive contract received by Kevin Garnett, a deal that was a tipping point for the league much like LeBron James' "Decision" (followed up by the Carmelo Anthony and and Deron Williams sagas) was a tipping point last season; during the 1998-99 negotiations, Michael Jordan--who felt that he was underpaid for most of his career--told then-Washington owner Abe Pollin that he should sell his team if he could not afford to keep up with the inflated salary structure being demanded by Jordan and his cohorts (it would be interesting to be a fly on the wall in the current negotiations to hear what Jordan, who is now a team owner in a small market, is saying).

The delusion is that the players can create and successfully run their own league. This pipe dream is being propagated by David Berri, a "stat guru" who has long stated that NBA owners are incompetent and that coaching does not matter; if owners are stupid and coaches are mere window dressing then why shouldn't players be able to run a league, coach themselves and play? Just reread that last sentence again to soak in the full depth of Berri's foolishness.

Reputable and responsible "stat gurus" realize that so-called "advanced basketball statistics" don't work--in no small part because, while baseball largely consists of a series of discrete and measurable actions, basketball largely consists of complex and simultaneous actions conducted by various players--and even those who put some stock in "advanced basketball statistics" have heavily criticized Berri's methods and conclusions. Berri further betrayed his ignorance with this quote in a recent ESPN the Magazine article: "Even in the ABA, which had Dr. J and George Gervin, most of the players were nobodies. But the best players could be in this new league." Knowledgeable basketball fans know that the first part of Berri's statement is false and the second part is asinine. In addition to Julius Erving and George Gervin, the ABA featured Hall of Fame players Rick Barry, Billy Cunningham, Artis Gilmore, Connie Hawkins, Dan Issel and Moses Malone, plus many other high caliber performers who deserve Hall of Fame consideration (including the vastly underrated Mel Daniels and Roger Brown). In 1976-77--the first year after the NBA-ABA merger--the 10 member All-NBA squad featured four former ABA players, seven of the 14 players who received MVP votes previously played in the ABA, 10 of the league's 24 All-Stars were ABA veterans and four of the 10 starters for the two NBA Finalists began their careers in the ABA. This was not a one season fluke, either; ABA players Erving and Malone claimed four of the next six regular season MVPs and ABA players continued to figure prominently on All-NBA, All-Star and championship team rosters well into the 1980s.

As for the second part of Berri's quote, the implosion of the so-called World All-Star Classic graphically demonstrates that the NBA's stars cannot even put together a series of exhibition games, much less organize an entire league from the ground up. Furthermore, the proposal touted in the ESPN the Magazine article--a league consisting of 100 of the top NBA players--simply proves that the real divide is not between big market/small market owners but rather between star players and the rank and file players. Even if the World All-Star Classic had been a success, what good would it have done for the several hundred NBA players who did not participate or make any money from it? Even if the top 100 NBA players could build a new league from scratch, where would that leave the other 300-plus NBA players? When Commissioner Stern said that the "agents" are preventing NBPA Executive Director Billy Hunter from agreeing to a deal he is referring to a handful of high powered people who represent the league's top players; those agents and their players are the ones who are forcing the lockout to continue, much like what happened in 1998-99 until Commissioner Stern threatened to not only cancel the whole season but start over again with new players: it is much more likely that we will see a "new" NBA with players who are willing to try to get by with the deal that the league is offering than that we will see Dwyane Wade, LeBron James and friends build a league of their own with Dave Berri as the Commissioner and Henry Abbott as P.R. director. Abbott claims to link to the best basketball writing regardless of its source but even a cursory examination of what he links to--and, just as significantly, what he doesn't--shows that claim to be false. It is puzzling and bizarre that ESPN's chief basketball blogger has been so consistently and stubbornly determined to elevate the status of Berri, an otherwise obscure associate economics professor/"stat guru."

The diversion consists of various puff pieces about which teams and/or players are most damaged by an extended lockout. Naturally, this is yet another way to continue the "great debate" regarding Kobe Bryant versus LeBron James (which actually is not much of a debate anymore: the younger, more athletic James is a more productive regular season player than Bryant at this point but James' postseason resume is a few lines--or perhaps a few paragraphs--less complete than Bryant's postseason resume). It should be obvious that the lockout is potentially much more damaging to James' legacy than to Bryant's: Bryant is a "made man" in NBA lore, a five-time champion whose place in history is quite secure--but James is a stat-sheet stuffer who has yet to win a championship. Bryant is past his prime and his Lakers are not likely to be championship favorites if/when the season begins but James is in the heart of his prime and his Heat have a limited window before either they decline and/or younger stars/teams rise to the forefront. Look at it this way: would a hypothetical 1990-91 NBA lockout have been potentially more damaging to five-time champion Magic Johnson or the then-ringless Michael Jordan?

Forget most of what you have read or heard about the NBA lockout; here is the bottom line: the lockout will last until the players agree to fundamentally restructure the NBA's failing business model, many basketball "stat gurus"--particularly David Berri--understand even less about the league's economic model than they do about evaluating players and it is baffling/infuriating that so many media outlets continue to employ writers/commentators who do not understand the basic issues that they arrogantly pontificate about. Henry Abbott cites Berri as if Berri is a basketball Yoda and Chris Sheridan is quoted/interviewed all over the place even though most of what Abbott and Sheridan have said/predicted about the lockout has consistently been proven false--and then Bryant Gumbel chimes in with a bigoted rant that should have ended his HBO career.

Labels: , , , , , ,

posted by David Friedman @ 1:52 PM

29 comments

links to this post

29 Comments:

At Saturday, October 29, 2011 11:17:00 PM, Anonymous Anonymous said...

Sharp

Gumbel's antisemitic remarks are ironic considering his reputation as a "non-threatening/white friendly black man." Then again, I suppose anyone can be antisemitic. I'm not really familiar enough with his work to know much about the things he has said in the past. Either way, this gives me an excuse to mention the classic line from Paul Mooney in Chappelle's Show: "White people love Wayne Brady because he makes Bryant Gumbel look like Malcolm X."

The assertion that a percentage of NBA players could branch off and form their own league is ridiculous. Most of these guys have little to no business acumen, and like many professional athletes, have poor money management skills. Of course there are exceptions who have been successful in business/investment (i.e. Junior Bridgeman, Dave Bing, Charles Oakley, Magic, Jordan, etc.).

To be quite frank, it would be hilarious to watch Lebron and Kobe trying to diagram plays on the side. Even as he approaches 10 years in the NBA, Lebron has never played in a structured offense. You can't teach what you never learned. Kobe is a very cerebral player, but the guy already has difficulty dealing with teammates who he feels lack commitment/effort. He's not cut out to be a coach, none of the transcendent players really are.

Bill Russell had success as a player/coach, but that didn't translate as well to his time with the Sonics and Kings. Magic Johnson lasted maybe a dozen games on the sideline before he bailed. Larry Bird's tenure in Indiana was successful, but he had the benefit of some great assistants. Rick Carlisle, if I recall correctly, served in a sort of "offensive coordinator," role, and was responsible for diagramming plays.

And as for the players serving as their own GMs, also probably not a good idea. Most of the great ones are pretty bad judges of talent, from what I've seen (there are exceptions of course, like Jerry West). Michael Jordan was mad at Jerry Krause for not trading for a broken down Walter Davis in 1991. He insisted that would've made the eventual champions a much stronger team. I think everyone is familiar with how he fared while running the Wizards.

Kobe wanted to ship out Bynum for Jason Kidd. Of course, the triangle offense would have greatly limited Kidd's effectiveness and Kidd was already well into decline.

And now, LeBron wants Miami to acquire Jamal Crawford and Steve Nash. So instead of having two guys who are significantly less effective without the basketball constantly in their hands, the Heat would instead have four of them. He seems to think that building a strong NBA team is as simple as building a strong NBA video game team.

 
At Sunday, October 30, 2011 12:19:00 AM, Blogger David Friedman said...

Sharp:

Kobe could diagram a good play but he'd break the clipboard/whiteboard if his players did not run the play correctly--much like Magic threw someone's cell phone against the wall when it rang during a team meeting.

Russell's success as a player-coach was due in no small part to the first part of that title--having Russell as your best player is quite an asset!

Anyone who knows basketball history and/or understands the NBA's business model realizes that it is absurd to suggest that the players should/could create their own league--but that has not stopped certain people from proposing this idea as if it could actually work.

 
At Sunday, October 30, 2011 2:14:00 AM, Anonymous boyer said...

Sharp, you're probably right about Kobe not being a good coach, and I think Kobe has said that he doesn't want to coach. But, I find it refreshing that Kobe doesn't want teammates who can't give good effort on a consistent basis. I think that is the main reason why he wanted Bynum out of there. Bynum was more or less worthless before Kobe's media overblown parking lot rant about shipping Bynum out occurred. Luckily, Bynum got the message, and returned in 2008 as a competent NBA center, though Bynum got surgery, much like Shaq on 'comparny time,' or he at least waited until he had his 'fun' first.

David, I much like you just don't understand stat gurus at all. Most of them, not all, are completely blinded by the stats. They have no idea of knowing if these advanced stats are even good to use or better to use than the raw stats, which you've pointed out before still aren't correctly recorded. But, probably the biggest problem I have are the ones with an agenda, like Abbott, which I don't know what agenda or why he has an agenda other than he loves lebron and hates kobe, is that when the stats don't support his 'already-made conclusion', then he shares his own argument of why that is the case, which isn't stat-driven at all. It's inconsistent reporting, at best. But, thanks for sharing how ridiculous many of these guys are, usually gives me a good laugh. I"m glad I don't really read Berri's stuff, sounds awful.

I don't know why they just don't have a sliding-scale for the BRI now, from 48-52%. A bad revenue year, then the players good 48, a good revenue year, they get 52. The owners would then get about the same amount every year, possibly more in a really good revenue year like last year. The players should at least propose this, even if the owners don't accept. Hopefully, something gets done quickly. I was worried the other issues weren't the big issues, guess not, as most everything else is cleared up, I hope. Is there any truth behind reports saying that 50% is really 47% for the players, as the owners will take a cut before revenues are even split up?

Interesting kobe/lebron article you linked to in this article, hadn't seen that before. As a kobe fan, I appreciate you at least give him a fair shake, unlike almost everything else I read about him. But, in the comments in that article, you mentioned how ironic you found that owners are complaining about losing money, but were still giving out obscene contracts. I'm sure this has been a talking point in the discussions. I still have a hard time believing the owners are really losing money. Toronto reported a huge profit in the forbes report, what are they doing differently, other than offering an awful awfully big contract to Hedo? You can easily manipulate your accounting books to make a profit look like a loss. I would also have to assume owning an NBA franchise for most of the owners would help their other business aventures. Also, the tax breaks they get have to help a bunch. A lot of these owners bought teams when the economy was great, and now the past few years haven't been great, this is obviously concern, but last year was as popular as ever. I wonder if these buying prices are part of their reported losses.

 
At Sunday, October 30, 2011 2:56:00 AM, Anonymous Ilhan said...

David:

The other side of the debate, even if for the sake of fairness only, needs to be represented in its best possible form. I believe this is it for the players' side:

http://www.nba.com/2011/news/features/steve_aschburner/10/27/lockout-q-and-a-kevin-murphy/index.html

If you can ignore the fanboy presentation by Aschburner to the effect that the interviewee is super duper smart (almost a case of argument from authority), Murphy provides, in my opinion, the best overall argument for the players' side. His points about (franchise value) appreciation; about how the NBA players are less like workers in any other industry than Hollywood stars in the sense of defining the value of the NBA brand, etc. seem to me to be deserving of careful scrutiny. I'd very much like to see your take on some of what he is saying.

 
At Sunday, October 30, 2011 4:03:00 AM, Anonymous Yogi said...

As usual, spot on analysis.

I just hope the owners hold out and get what they need to make the league better (less dominance of individual stars and big market teams).

Also, I think that the genius of Stern and the NBA management is the ability to take a very small pool of talent and spread it over 32 teams. That way 400 players make a living from basketball (and countless other non-players) instead of just one or two Harlem Globe-trotter teams made up of the league's stars.

What's amazing about the media coverage is how the owners, who gave 57% BRI last time, are now considered terribly greedy, selfish, slave-drivers. So what were they until now? What caused them to suddenly change? For ten years they were great and suddenly they went berserk? Damn, the MSM is a horrible creature...

And finally, Gumbel should have been fired, no doubt, if only for his idiocy of comparing NBA players to slaves, not to mention his blatant racism.

 
At Sunday, October 30, 2011 12:17:00 PM, Anonymous Anonymous said...

marcel

i hope they start the season soon. prob wont start till after a while tho

 
At Sunday, October 30, 2011 11:30:00 PM, Blogger David Friedman said...

Boyer:

I think that a sliding scale BRI has been proposed but the main problem is that the players simply refuse to go below 52% at all.

I give every player "a fair shake," not just Kobe or LeBron. Kobe was clearly the best player in the NBA circa 2006-08, in 2009 LeBron pulled even/slightly ahead and for the past couple seasons LeBron has been the healthier, more productive regular season performer--but I still do not trust LeBron in late round playoff series versus elite teams.

It is ironic that the owners say that they are losing money and yet they spend a lot on salaries--including overpaying certain players--but that irony can be explained by the very flaws in the NBA's business model that the owners are seeking to correct: one flaw is that the previous CBA guaranteed the players 57% of the BRI, which is too high of a number (i.e., whether the owners overpaid some players or underpaid others, overall they had to pay 57% of the league's BRI to the players collectively); another flaw is that the long term guaranteed contracts combined with the nature of the free agency process virtually compelled teams to overpay guys like Joe Johnson, a solid All-Star who is the best player on his team but not a franchise player a la LeBron or Kobe. How could the Hawks justify not paying JJ and just letting him walk? They could not have replaced him with an equally talented player yet they also likely could not have kept him without paying him more than he is objectively worth. I don't know if that market reality can ever be completely fixed but a better business model would provide some correction by virtue of a firmer salary cap, an "amnesty" rule (for contracts that prove to be absurdly bloated) and shorter contract guarantees.

 
At Sunday, October 30, 2011 11:50:00 PM, Blogger David Friedman said...

Ilhan:

The "other side" has been more than "fairly represented" in terms of how much coverage it has received; the media has by and large sided with the players.

I have never bought into the idea that the "other side" always has to be given equal time; in some cases that may be true but, to cite an extreme example, if a 1940 newspaper printed an OP-ED from Roosevelt or Churchill would it have been necessary to print an opposing OP-ED from Hitler? I am not calling the owners or the players evil by any stretch but I am just making the point that in certain situations it is clear that one side is right and the other side is wrong. In the NBA lockout, I think that it is clear that the owners are more right than the players, though I don't necessarily agree with every single thing that the owners say. Also, the larger point of my coverage has been the prediction that, regardless of who you think is right, the lockout will not end until the players accept that the league's business model must be fundamentally changed. I simply do not believe that the owners will budge from their red lines--and that is a story that you just are not hearing from Abbott, Sheridan and others.

I am acquainted with Aschburner and can say with confidence that he is a good guy and a solid journalist. The interview that you linked to is interesting; most of what Murphy says does not contradict anything that I have said but his attempt to justify paying more than 50% of the BRI to the players is obviously clouded by the fact that he works for the players. As David Stern and Adam Silver explained after the most recent round of talks broke off, the NBA has already cut all of the expenses it can cut (in terms of laying people off, etc.) without changing the CBA and the business model is still not profitable. No one is questioning the talents/value of the NBA players but it makes no sense to say that the owners should run the league in a fashion that loses money, regardless of tax breaks, "psychic value" or anything else. By the way, it is amusing that on the one hand economists want to be viewed as practitioners of a "hard" science but on the other hand they will employ concepts like "psychic value" if those concepts are useful to them. How exactly does one objectively measure "psychic value"? Furthermore, Murphy neglects to mention that the players are also receiving great "psychic value" by virtue of playing in NBA arenas and having their games broadcast around the world via TV contracts negotiated by the NBA. If Berri and Murphy discount that "psychic value" then perhaps they should help the players try to form a new league and find out firsthand the costs and benefits of running a pro basketball league.

Again, my main overall lockout points are that I agree more with the owners than the players (which is not to say that I agree with the owners about everything) and that--regardless of who one agrees with--the reality is that the lockout will continue until the players accept fundamental changes to the league's business model. Abbott's Berri-inspired funny math and fuzzy logic do not add clarity to the situation, nor does Sheridan's insistence that the sides are not far apart and should be easily able to bridge the gap; Sheridan has been repeating that same story for months, which forces one to conclude that either all of the owners and players are idiots for not making a deal that is so easy to do or that Sheridan is an idiot for mindlessly saying the same things over and over even after events consistently prove him to be completely misinformed. You be the judge.

 
At Sunday, October 30, 2011 11:55:00 PM, Blogger David Friedman said...

Yogi:

The NBA is much less profitable than the NFL yet the average player salary in the NBA is much higher than the average salary in the NFL. One has to be a complete idiot to equate Stern/the owners with slave owners and/or to suggest that the NBA is trying to somehow break the players. That is why I don't hesitate to say that Abbott, Berri, Gumbel, Sheridan (and others who have written/said similar things) are idiots. As Forrest Gump said, "Stupid is as stupid does."

 
At Sunday, October 30, 2011 11:57:00 PM, Blogger David Friedman said...

Marcel:

I don't know how you define "soon" but all of November's games have been cancelled, it probably would take at least a month after an agreement is signed to start the season and no talks are currently scheduled so it does not seem likely that there will be any more NBA games played in 2011.

 
At Monday, October 31, 2011 1:52:00 PM, Anonymous boyer said...

Yes, I realize you treat every player fairly. But, this is much different than almost the entire media, which is why it's so refreshing to read your blog. Even with the somewhat fallout of lebron after last summer's fiasco, he's still most people's golden boy. You at least point out obvious flaws about him, or 'should be' obvious flaws, such as his supposed injuries. To his credit, he has been extremely durable. But, even with the slightest injury, he seems more or less like a wuss. I have a friend who has had a myriad of injuries. His doctor was amazed how he would still play so many sports, and then he told my friend that everyone has a different threshold of pain. I think kobe and lebron seem to be on the opposite sides of that spectrum. Also, you're the only I read notice that even though Paul had a great series against the lakers, he was guarded by Fisher most of the time. You put it in good perspective. And game 2 when a hobbled, 'old' Kobe guarded Paul, Paul was extremely frustrated and the hornets offense was terrible, even though Paul's statistical line was good. And in the elimination game 6, Paul wasn't very aggressive and didn't do much. It's true, his teammates weren't the greatest, but then again Landry seemed to outplay Pau.

Anyway, it seems like the all reported CBA system changes stern/hunter agreed to will now allow all the owners to turn a profit, regardless if it's 52 or 50. Obviously, the lower it is, the better for the owners. It seems now that Kobe told Fisher that 50/50 is good enough, but Hunter has all this pressure coming from some players and agents, what is he to do? It sounds like if he agreed to 50/50, then the owners would be happy, and most of the players would accept it. But, not a good sign when additional talks haven't been scheduled yet.

I too don't understand the media's obsession for Wade yelling at Stern. But, stern's playing the PR game and it's not like he's being a model citizen in some of the stuff he's saying. I think most of the talk about the players starting a new league is just a bit of bait, nothing serious, except maybe Berri. But, you're right about how even a little exhibition tour isn't going to happen. I was hoping it would, at least it would be something.

 
At Monday, October 31, 2011 7:41:00 PM, Blogger Matt said...

Economists Tyler Cowen (Marginal Revolution) and Kevin Grier have their take here : http://www.grantland.com/blog/the-triangle/post/_/id/8300/two-economists-explain-the-nba-lockout

 
At Tuesday, November 01, 2011 12:35:00 AM, Anonymous Anonymous said...

Sharp

You might enjoy this, David.

http://www.nba.com/2011/news/features/david_aldridge/10/31/nba-lockout-next-steps/index.html?ls=iref:nbahpt1

David Aldridge making some very interesting points. Basically says that the players would be smart to give in now, because this is as good of an offer the owners will make, because this IS as good of an offer the owners can afford to make.

 
At Tuesday, November 01, 2011 12:26:00 PM, Blogger David Friedman said...

Matt:

I don't agree with everything those two economists say but their bottom line conclusion is the same one that I made months ago: the players should take the deal that the owners are offering because it is the best deal the players can realistically expect to receive.

 
At Tuesday, November 01, 2011 12:37:00 PM, Blogger David Friedman said...

Sharp:

Aldridge's column makes a lot of sense, which is not surprising--he is one of the few solid NBA commentators.

It is worth repeating that everything Aldridge said--most notably the correct evaluation that the LeBron, Melo and DWill sagas contributed to causing the lockout and the conclusion that the players will not receive a better deal than the one the owners already offered because the owners are determined to fix the NBA's broken business model--simply recapitulates things that I wrote about in great detail back on February 27, 2011.

 
At Thursday, November 03, 2011 9:12:00 PM, Anonymous Karl said...

David,

I wonder what you think about the fact that player salaries are tied to BRI. If the player salaries are tied to a fixed % of the revenues (and that % is too high) why was this CBA ratified in 2005? The NBA had record revenues in 2011 yet reported losses. How can those losses be tied to player salaries if salary is fixed? To me this means that there are other expenses causing losses not player salaries-yet the players have still offered financial givebacks as they should in this partnership. To me it seems like the owners are going for a massacre, not a win.

Also the point about the NBA and NFL players' salaries doesn't really matter. Yes, the NBA players salaries are higher eventhough NBA revenues are lower. NFL teams have a roster limit of 53 players while the NBA's is 15. So there are more than 4 times as many NFL players than NBA players, so obviously that pie has to be cut more ways.

 
At Thursday, November 03, 2011 11:52:00 PM, Blogger David Friedman said...

Karl:

The NBA owners agreed to the CBA deal in 2005 because they thought that the cost of a lockout at that time would be greater than the benefit of obtaining a more equitable deal; the owners also thought that they would be able to grow the league's business at a good enough rate to be profitable under that arrangement. What happened since that time is the economy collapsed and the league's collective expenses rose faster than revenues, resulting in a situation in which a handful of big market teams are profitable but the league as a whole is not profitable. As David Stern and Adam Silver explained in a press conference last week, the league has already slashed every expense that it can (by cutting various costs, laying off employees, etc.) but that this is still not enough to make the league profitable now or for the foreseeable future; therefore, the league's business model must be changed (as I said months ago).

To say that the players are "giving back" money misconstrues the idea behind collective bargaining, namely that the two sides meet and mutually agree upon a business model. What worked in 1999 or 2005 can hardly be expected to work in 2011. A true "give back" would be if non-productive (or under-producing) players gave back some of the guaranteed money that is pouring into their pockets as they sit on the bench (or, in some cases, are not even in the league anymore).

The average salary of an NBA player is not only significantly higher than the average salary of an NFL, MLB or NHL player but the NBA players have guaranteed contracts.

Here is a simple way to look at the whole situation: I don't think anyone would deny that the San Antonio Spurs are a model franchise, arguably the best run team in the NBA if not in all of professional sports--but the Spurs are losing money! If the Spurs cannot make money under the current system it is hard to argue against the premise that the business model is fundamentally broken.

 
At Friday, November 04, 2011 9:13:00 AM, Anonymous Karl said...

I'm not saying there shouldn't be changes to the system. I'm not even saying that I'm against BRI dropping to 50% (at this point I'll take anything to get basketball started again). But what I am saying is that I understand the players perspective. You're already offering givebacks that will cover the NBA's losses. Even offering a band that starts at about 50% if revenues are below projections, and that still isn't enough for owners. As a fan I wouldn't be opposed to non-guaranteed deals. But as a player-when this has been the status quo all all along-I get not wanting to give that up. Especially on top of taking a cut in the BRI.

 
At Friday, November 04, 2011 12:47:00 PM, Blogger David Friedman said...

Karl:

You have accurately summarized the players' perspective on the lockout (which is not to say that the players' perspective is accurate)--but the lockout will continue until the players accept the reality that the NBA's business model is broken and must be fundamentally changed.

 
At Friday, November 04, 2011 1:51:00 PM, Anonymous Karl said...

David,

I think they have admitted that. The lower BRI they are offering would address their losses. Especially if the owners had accepted the band of 50-52%. That addresses the financial health of the league far more than non-guaranteed contracts and hard caps.

I believe the owners know this to an extent too. Reports are that their two offers thus far are 47% BRI for players with minimal system changes or 50% with harsh system changes. The players have hinted at dropping to 50% if the system were right. If 50% still isn't addressing the league's issues why is 50% on the table at all?

 
At Friday, November 04, 2011 2:37:00 PM, Anonymous boyer said...

David, you're right that the business model needs to be changed, and it is, and the players are agreeing to change it. The reported agreed upon changes are already significant, and even if the owners accept the 52.5% BRI for the players, the owners will be earning a lot more money and should be well into the positive for this upcoming season and years to come. They just want to be turning even more of a profit. And even with supposed reported losses, the owners are still benefiting in many other ways from owning an NBA team. The players have it cushy, too, though. The owners have already won, and even at 50/50, it sounds like many of them don't even want that. If they don't accept 50/50, this thing will never get done, and that will be a travesty. Don't forget that the owners are locking out the players, and not vice versa.

I still don't fully agree on some ridiculous contracts like Joe Johnson. It's true if the Hawks don't sign him, they get worse. But, they're nowhere near champ. contenders, so save your money until you can possibly get that 'one' guy, which most of the small market teams do, until they get that guy, like the cavs, who once they got lebron, they spent like crazy. But, at the same time they're pleading poverty and signing maybe the 20th best player to 120mil over 6 years. Huh? That's just flat out dumb. And Rashard Lewis to 110mil over 6 years. Only maybe 3-4 players should be given that kind of cash. These are just plain bad business mistakes. There's several franchises that have shown you can be pretty competitive without shelling out a lot of dough. The spurs example is a good one. But, then I can throw out a bottom feeder franchise like the Raptors who grossly overpaid for Hedo and they made a good profit this past year. Goes both ways. Also, reducing contract length and amnesty clauses will help a lot.

 
At Saturday, November 05, 2011 3:55:00 AM, Blogger David Friedman said...

Karl:

Without being in the meeting room and knowing exactly what each side offered in terms of BRI and the system issues it is impossible to say why a particular offer (such as 50% BRI, which you asked about in your comment) is on the table.

My lockout-themed articles have consistently made two points: (1) The lockout will last a long time (this has already been proven true) and (2) the lockout will not end until the players accept fundamental changes in the league's business model. I am not advocating a specific deal or even speculating about what exactly the deal will be other than saying that I am convinced that the eventual deal will fundamentally change the league's business model. The writers/commentators who kept insisting that the two sides were not far apart (most notably Chris Sheridan but there are others) are completely clueless; I wish someone would lock out all of the self-proclaimed experts who don't know what they are talking about! I've never heard of a profession in which people can consistently make no sense--be flat out wrong, in fact--and still get paid.

 
At Saturday, November 05, 2011 4:07:00 AM, Blogger David Friedman said...

Boyer:

It does not matter if the agreed upon changes are "significant" if they still don't fix all of the problems. Also, some of the things that the sides supposedly agreed upon are no doubt contingent upon the other things that are still being disputed; the whole deal must make sense to both sides and that is why it is so stupid that Abbott and Sheridan keep repeating over and over that the two sides are close because one side wants 52% and the other side wants 50%. Why can't they split the difference and have a season? What Abbott and Sheridan apparently don't understand is that 1% or 2% is a pretty large amount of cash in this instance and that for the owners to accept a lower percentage they would need significant concessions in other areas. That is why it is stupid to suggest that it is easy to solve the other issues; everything is connected and the deal is not "close" until the two sides are speaking the same language about what the overall business model will be.

It should be pretty obvious that, contrary to Abbott and Sheridan, the sides were never close--and right now they may be as far apart as ever, because the owners are going to want the players to "pay" for the lockout (i.e., the more games that are missed the worse the deal the owners will offer, which is what David Stern said months ago).

The point with the JJ situation is that if Atlanta had not overpaid him and decided to "save" money then they would have had a disgruntled ticket base and declining local TV/radio revenue. Under the expired CBA, teams are essentially forced to overpay guys like JJ or else suffer a backlash at the ticket office. What Atlanta fan wants to hear, "We are letting our best player go to save money and hopefully if things go well we will build a good team in a few years"? The other problem is that if Atlanta "only" offered JJ, say, half of a max deal and no one else offered JJ a max deal then the Players Association would assert that the owners colluded to keep salaries down (players in other leagues have successfully sued over this kind of thing). That is why the business model has to be changed in terms of contract length, free agency, the salary cap, etc.

It is true that this is a lockout, not a strike but that really does not matter. The players are not being realistic about the economic situation of the league or the amount of leverage (or lack thereof) that they have. Most NBA players are going to have careers of five years or less, so if I were an ordinary NBA player I'd be pretty mad that Pierce, Wade and the "hardliners" are willing to risk a fifth or more of my career in a futile attempt to strong-arm Stern and the owners.

 
At Saturday, November 05, 2011 3:49:00 PM, Anonymous Karl said...

Your Joe Johnson is applicable to a number of other sports that have different systems. The fact is it is all decision making. The Hawks didn't HAVE to sign JJ to that deal because no one else could have offered him that much anyway. They essentially bid against themselves. The same can be said of the Magic's deal with Rashard Lewis.

 
At Sunday, November 06, 2011 2:14:00 AM, Blogger David Friedman said...

Karl:

The larger point is that the recently expired CBA inherently leads to bad contracts, lack of parity and a lot of teams losing money. That is why we have a lockout now and why we will continue to have a lockout until the players come to their senses. I explained all of this in my lockout related post back in February.

 
At Monday, November 07, 2011 10:11:00 PM, Anonymous JackF said...

@David

I don't understand why the players think they will be helped by decertification. They saw how it turned out for NFL players. The nfl is a more profitable sport than the NBA. The NFL players settled for 48%. If nba players lose in section 8 court, then they will have to settle for an even worse deal than what the owners are offering right now.
I dont understand the likes of Gumbel and other pundits crying slavery because it just doesn't make sense for owners to continue with this business model when they are losing money. The current model welcomes/encourages teams to go into the luxury and lose money as a result. The midlevel exception was a terrible idea as it goes against the rules of economics.
last but not least: The players have no leverage.

 
At Wednesday, November 09, 2011 8:05:00 PM, Anonymous boyer said...

I don't really see how the current deal wouldn't fix all the problems. Or by taking another view, no deal would ever fix all the problems. There's always going to be problems in the cba, some problems for the owners and some problems for the players. No cba would fix that. But, the current deal that the players would take would more than plenty put the owners into the black, even if they continue to give out some outrageous contracts. The owners are pushing the players way too hard, which is obvious that this whole lockout fiasco is so bad. Hopefully, fingers crossed, they work it out tonight, but probably not.

Now, look at this. I'm sure there's now way Forbes could be 100% accurate on this, but then how did they come up this #? And if we're all supposed to be accepting their other articles as more or less fact, why would this report be any less relevant? There's got to be some truth to this. This is not for the owners, if this is true. Hopefully, there's more follow-up to this

http://probasketballtalk.nbcsports.com/2011/11/09/forbes-wants-you-to-know-they-still-don%e2%80%99t-buy-owners-math/

Interesting side note is that Jordan seems to be wanting to kill basketball right now, and Kobe seems to be wanting to save it. Regardless of whether either is true or how valid either point is, Kobe's image is improving while Jordan's is declining, which somehow seems like a small miracle given how both have been mostly perceived throughout their careers.

 
At Wednesday, November 09, 2011 11:42:00 PM, Blogger David Friedman said...

Jack F:

I agree with just about everything you wrote.

 
At Wednesday, November 09, 2011 11:52:00 PM, Blogger David Friedman said...

Boyer:

I would not trust anything from the website you cited and am reluctant to even post your comment containing a link to that site--but I'm posting the link this time because it provides a great example of how some writers take things out of context. The Forbes article contains a projection of what the NBA earned in 2010-11, not an actual statement of what the league earned--but Forbes' statement regarding the 2009-10 season (the most recent season for which Forbes has actual numbers, not projections) shows "17 of 30 teams losing money…and that may have risen slightly in 2010-11." In other words, Helin from Pro Basketball Talk and the guy he linked to (Lowe) are frauds: Forbes has stated that in the last season for which they have numbers more than half of the NBA's teams lost money but Helin and Lowe ignored the actual numbers and instead focused on Forbes' projections for 2010-11. Why write an article based on projections? Simple--Helin and Lowe, like many other so-called journalists, have sided completely with the players and thus churn out articles filled with nonsense and distortions. It is hard to imagine a more tendentious way to present the issue than what Helin and Lowe did, but I guess they are following in the footsteps of their mentor (Abbott).

Tom Penn mentioned today that the deal the owners most recently proposed, which has been blasted by the players and the media, would still be a better deal than the ones enjoyed by the players in all of the other major sports--including the NFL, which is actually a profitable league (unlike the NBA).

 

Post a Comment

Links to this post:

Create a Link

<< Home