CBA Lockout Series: Part 3

The Metta Chronicles is back. Here we bring part 3 of a three week CBA Lockout article. The “CBA Lockout Series” will discuss everything from the salary cap to the interests of the owners and players.

Owners, what do you want?

The owners want a hard salary cap, more revenue sharing from players, shorter contracts (duration), lower salaries, less guaranteed contracts, and more control over player movement.

Money.  This is all about money, and the owners feel they deserve more of the cut. According the their side, something basic economics supports, it costs a lot more to operate a franchise now than it did 10 years ago. Player salaries have steadily moved up, arenas cost more, etc.  In fact, the players don’t disagree with them on this point.  They have offered to drop their percentage from 57 of the BRI (Basketball Related Income) to 54.

Not enough. Owners want more.  Their proposal supposedly has that number in the 40s, but a 50-50 split would do just fine. In addition, and probably one of the most important factors in all of this, they want a hard cap.  A la NHL.

Here’s the tough part.  From a fan’s perspective, we tend to raise the ‘bad contract’ factor right here.  Really, did guys like Travis Outlaw and Darko Milicic deserve those contracts?  Whether or not we support such decisions, it is exactly how the NBA works.  To remain competitive, owners ‘have’ to give out bad contracts. With a hard cap in place, owners wouldn’t have this ‘obligation’, and would make more money.

Players, what do you want?

They seek to maintain high player salaries and contract durations, current free agent and salary structures, and a more stable revenue sharing system.

The NBA is set to multiply explode financially over the next 8-10 years, and the players want as much of it as they can get.

Kevin Durant on this topic sums it all up: “The way the CBA worked before is something we really liked. There’s no need to change it. Things have been going very well for us, as far as the league, revenue and things like that are concerned. We want to stick with that pace, but of course the owners want to go a different way with it.”

The players want to have nothing to do with a hard cap.  They have already conceded $500 million off player salaries over a 5-year period to help avoid a hard cap.  They have seen what happened in the NHL, and the consequences of the 04-05 NHL lockout.  Hockey owners locked out the players and a year later got their hard cap.  Regarded as one of the biggest victories from management side, NHL players ended up taking close to a 23% pay cut.  Hockey is profitable now, even without a good TV deal. The hockey owners with basketball teams (which there are 6 of) know this process well, and are suggesting to their side that, in the long run, this is all for the best. They’ve seen the hard cap in action in the NHL, and they like it.

Who is right — the owners or players?

I’m not sure if there is a right or wrong answer here, but there is one thing I’d like to point out.  There aren’t many Kobe Bryants and Lebrons out there, meaning that the owners can wait this out a lot longer than the players can.  Billionaires versus millionaires, its simple math. Players are much more unified this time around than in ’99, but that most likely means more games missed.  Neither side wants to change much off of its current position, with players unifying and suggesting a missed season is a price they are willing to pay.

A deal, which makes some sense to me at least, would be if the owners established a better revenue sharing system of ticket sales and TV deals.  Use something like a 60/40 split in favor of the owners, but allow that 60% to be shared throughout the league, helping all franchises cover costs.  Otherwise, just agree on the 50-50.  The players are not going to agree on a hard cap, so why not use a soft cap that can only be exceeded by a player with non-exclusive franchise tag.  Players have already said they are willing to give back money ($500 million over 5 years) to make sure contracts are guaranteed and no hard cap is in place.  This way, the players get most of what they want (contract durations, guarantees) while the owners are able to operate in a better model that forces some bigger markets to concede but allows every team to share the prosperity.  The result is that teams like Sacramento or Cleveland have a bit more leverage to sign free agents.

Here we are everybody, part of a big waiting game.  I’d say we’re in it for the long haul as both sides are willing to stay stubborn.  Let’s just hope we can watch some NBA basketball by Christmas time.