Monday, June 20, 2011

Major Misconceptions Regarding the Labor Dispute between the NBA’s Players and its Owners

by Kevin L. Davis (@EsquireSports)

As most of you know, this summer the NBA faces a labor dispute that threatens to end next season before it even begins. While many view the system as broken, I completely disagree. I feel that the NBA’s luxury tax scheme is the best system in American sports, forming the ideal balance between the MLB where there is no cap and the hard cap employed by the NFL, and attempting to change that system would be a disaster.

In my opinion, all a hard cap does is tell good owners like Mark Cuban that they can't pour money into their investment (i.e. their team), because some teams have owners like Donald Sterling that would rather use their team to make a buck instead of win. To me that is counter-intuitive. We should celebrate owners who are willing to spend on their team, instead of seeking to protect owners who routinely under-spend. I'm all for increasing the luxury tax penalties to defer teams from massively overspending, but to me implementing a hard cap (and in turn eliminating the MLE, “Bird” exemption, etc.) is a bad idea.

For all the criticism that the league receives because of the system currently in place, I ask does performance of small market teams suggest a change is needed? I would say no. San Antonio, a team located in a small market, spent the majority of the season as the team with the best record in the league, Oklahoma City and Memphis, 2 other small markets, were among the final 8 teams last year remaining in the playoffs. Data suggests that if a team is managed well no matter what city you place it in it will succeed, and that if that team is not run well being in a large market won’t save it.

With that in mind I introduce my next point – the NBA is currently in a great place, and if games are lost in an effort to overhaul the system, fans might be turned off. This basically comes down to the old adage “if it ain’t broke don’t fix it.” Ratings are at an all-time high right now and as this last post-season just proved there are a lot of interesting story-lines and compelling talents both young and old to carry the game. There is absolutely no need to risk turning off the fans by labor disputes and legal wrangling when the on-court product is so good.

In addition, although Stern has made it clear that he would like to see sweeping changes to the current Collective Bargaining Agreement (CBA), history doesn't suggest Stern will get most of what he's demanding. I want to enter this profession so I study it religiously. What I've noticed is Stern talks tough like this every time there a CBA is about to expire, and media members and fans eat it up, believing that Stern is this all-powerful dictatorial leader and that the players will yield to anything that he wants. 

The problem is that unlike the picture the media portrays, the NBA has a very strong union. Billy Hunter is a solid leader who is not going to bow down to Stern. The NBA is the sports league where the players are more visible than any other sport and because of that it is very much a player-driven league. I don't see huge sweeping changes happening.

Yes I know, it sounds good in theory but unfortunately that’s not how it goes. Billy Hunter knows that the fans tune in to watch his players play not because of the Owners, and uses that fact to negotiate with strength. Want proof, just look at what happened the last time there was an opportunity to negotiate the CBA. According to Chad Ford this >>>>> is a list of demands the Owners had back in 2005:

  1. An increase of the age limit of 20 or 21 (was 18 prior to the new CBA), 
  2. Reducing the maximum length of contracts would be 3 or 4 years if re-signing (was previously 6 or 7 years), 
  3. Reduction in the maximum raises in contracts to 5% (down from 10 to 12.5%), and 
  4. Teams would be subjected to a super luxury tax if they exceeded the cap too much.

Of those things here's what the Owners and Players actually agreed to:

  1. Age limit of 19,
  2. Maximum contract length went down 5 or 6 years,
  3. Raises went from 10% to 8% if go to new team; and 12.5% to 10.5% if re-sign,
  4. No super luxury tax imposed,
  5. The players slice of the revenue pie was guaranteed at 57%, and
  6. The formula used to calculate salary went up from 48% to 51% of revenues, raising the amount of money each team could spend on players pretty substantially.

Keep that in mind when you look at the upcoming labor dispute between the Owners and the Players. I believe there is a great deal of misinformation out there and a lot of it seems unfairly biased towards the Owners. 

So with that in mind here goes my thoughts of the important issues that will come up during this summer’s lockout. Enjoy.


FAN #1: Look, the NBA Union is about to be busted. 2/3 of the NBA Owners wont stand being farm teams to bigger markets when those big markets have just as much ability to draft and cultivate their own talent.

MY RESPONSE: Too bad the other 1/3 of the Owners have power as well. Not to mention their teams are in big markets and have more power and money than the average owner. Do you really think Dolan and Buss and the Arison’s who own the Heat are going to willingly agree to a hard cap? Do you think they're going to start sharing their revenue from local TV deals so teams like the Kings and Hornets can compete on an even playing field with them? I don't.

I seriously believe that the notion that at the end of the day all the Owners will present a united front while the players won't is ridiculous. In February or March when ESPN was beginning their coverage of the NFL labor dispute they had Tedy Bruschi on. The Sportscenter anchor continually tried to get him to rip the Players Union and Bruschi wouldn't. He said they're doing the right thing, the Players should never give up money/rights because if they do the Players of the future will never get them back. Bruschi said they should fight tooth and nail to make sure they don't give back a penny, because their not just representing themselves but future generations of Players. 

If I were a leader in the NBA Players Union I would have e-mailed the Youtube link of that interview to my entire union. If the leadership does their job and stars continue their involvement in negotiations I could see the loyalty and sense of responsibility to their brothers being greater within the union than with the Owners.


FAN #2: The NBA needs to do something about teams losing out on star players ditching their teams to go to big markets when their contracts are up. If this is allowed only 6 or 7 teams will have legit chances to win each any every year.

MY RESPONSE: Every year the NBA has always had only 6 or 7 true contenders. I think everyone will agree that the league is better now than it was 5-6 years back when:

  • Kobe was playing with scrubs like Smush Parker and Kwame Brown in LA, and demanding to be traded or to have his teammates shipped out for better players
  • KG was surrounded by losers in Minnesota, 
  • T Mac was wasting his prime with the Magic, 
  • AI had a one-man team in Philly, 
  • Vince Carter was in Toronto dogging it because his team sucked


FAN #3: The NFL has 30 teams (with the exception of the typical Raiders, Bengals and Lions) whose fans actually believe their team has a chance to win the title at the start of every season, in the NBA only a few teams have a chance to win.

MY RESPONSE: First off the point about 30 NFL teams having a chance to win a Super Bowl just isn’t true. While each teams will have delusional fans who always think this year is our year, true educated football minds can normally call 8 or 9 of the top 12 teams in the league before any games are played. Yes there may be a few more surprises in the NFL but there really aren't that many of them.

Additionally I really don’t think its possible for parity to exist in the NBA. In the NBA, one elite player can make more of an impact on the win-loss record of a team than in any other sport. You generally don’t win titles unless you have a transcendent star. Because of this, there will only be 8-10 contenders no matter how the CBA is constructed.

I'd rather those contenders be good from top to bottom instead of having a league full of teams with 1 or 2 great players carrying trash. Recent history suggests that the general public agrees. Want proof? In the mid 2000s when the league was filled with more parity and there were less stacked teams ratings suffered. Now when the league is filled with teams supports multiple stars like the Heat ratings are through the roof. That’s all the proof I need that where basketball is concerned "super-teams" are more interesting than parity.


FAN #4: I hate seeing star players ditch the city that loves them when they become free agents to go to greener pastures. The NFL got it right - teams should be able to slap players who are about to be free agents with a franchise tag or something to keep them as long as they want.

MY RESPONSE: I don’t get the view that players give up basic rights that people in all other walks of life have just because they make more money. A player who honors the commitments of his contract until it expires should have the flexibility to explore his options once it ends.

If the Owners want to ensure superstar players stay home, then they should do their jobs and surround those players with talent. There is no need to give them more control over the players, plus many of the proposals people have suggested (i.e. eliminating free agency) would not be legally valid. The only options that I could imagine that would pass legal scrutiny is to either 1) impose a franchise tag or 2) change the triggering conditions for restricted free agency. 

First let’s explore franchise tagging in the NBA. I see no way that the players will go for it, and think a large chunk of Owners (i.e. those from large market teams) would be opposed as well. The only way to make this idea slightly more palatable is to give the players who are franchised a substantial raise over the maximum allowable deal they could sign as free agents. 

That leaves option #2, expanding restricted free agency. As it stands now star players tend to only hit restricted free agency once in their career, when their rookie deals end. I could see the Owners pushing to try to get players to still be restricted after their 2nd contract ends as well. This way the Owners get the opportunity to match or threaten they will match so that they get compensation when players leave during free agency, while the players don't give up any money, and still get to test free agency. While I still see the Players being hesitant to agree to this option, it seems more agreeable than allowing franchise tagging.


FAN #5: Can the Knicks add another star in free agency. They already have 2 huge commitments to All Stars (Melo and Amare) and have to pay Balkman in 2012. I’m afraid that when the NBA adds a hard cap they won’t be able to add anyone.

MY RESPONSE: Even if a hard cap (a salary level which no team can exceed) is instituted expect it to be nearer to the luxury tax threshold ($70.307 mil) than the current cap ($58.044 mil). 

Why do I believe this? Well the average salary for a player in the NBA is slightly above $5 mil a year. Seeing that I believe the Players will do everything possible to keep that salary near the same, then the cap will have to be that high to accommodate the player’s salaries.

In conclusion whether you agree or not, expect the upcoming CBA negotiations to be a lot harder fight than the media has made it out to be. Although you may not agree with me that the new CBA should retain much of the system we currently have in place, I think we all can agree that this labor dispute is not worth losing a whole season.

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