Are Mark Cuban’s Comments Evidence of Collusion?

Mark Cuban http://probasketballtalk.nbcsports.com/2014/10/08/mark-cuban-if-players-want-to-get-rid-of-max-contracts-they-have-to-give-up-guaranteed-contracts/

“If you give up guarantees, [i]t’s a trade-off….” “It was discussed during the lockout time among owners, but never got anywhere. So it was just one of those trial balloons. I’m not offering this as a negotiation, I’m not suggesting it, all I’m saying is that was something we discussed before, and max contracts are always big question, guarantees are always a big question. But we have two years before that’s even an issue, so no point discussing it now.”

While many of us read Cuban's comments and focused only on the impact on future labor negotiations; I could not help thinking that Cuban's words sounded a bit like the owners were discussing colluding to change the market which results in guaranteed deals (just as the NFL was accused of doing during the supposedly "uncapped year").

As I've stated many times before the only NBA contracts mandated by the CBA to be guaranteed are those belonging to 1st round picks on their rookie deals.  Any other guaranteed contract is the result of the negotiations as they exist in the current market.

With that in mind; its hard to not read Cuban's comments and feel that the owner's were discussing artificially changing the market which results in the lion's share of the workforce receiving totally guaranteed deals.

Kevin Durant and Mark Cuban Verbally Spar Regarding Max Contracts & Guarantees

We’re less than a week from the announcement of the new media deal and discussions about the new Collective Bargaining Agreement ("CBA") are out in mass.  We've already heard from the movers and shakers such as Mark Cuban, LeBron and Kevin Durant regarding restructuring maximum deals and the possibility of removing guaranteed contracts.

After LeBron and Kevin Durant publicly lobbied the owners to remove maximum salaries; Cuban responded with the following:

Mark Cuban http://probasketballtalk.nbcsports.com

“If you give up guarantees, [i]t’s a trade-off….” “It was discussed during the lockout time among owners, but never got anywhere. So it was just one of those trial balloons. I’m not offering this as a negotiation, I’m not suggesting it, all I’m saying is that was something we discussed before, and max contracts are always big question, guarantees are always a big question. But we have two years before that’s even an issue, so no point discussing it now.”

These contrasting viewpoints have polarized much of the NBA fan base; and as such I thought I could shed a little light on the issues being discussed:

Maximum Deals.  As a direct result of explosion of contracts given to star athletes which occurred during the mid-to-late 90’s; one of the owner’s biggest wins during the lockout of 1999 was the imposition of maximum contracts.  Fresh off the megadeals signed by Shaquille O’Neal (signed seven-year, $121 million contract in 1996) and Kevin Garnett (in 1998 signed six-years, $126 million while only 21 years old) the owner’s had a legitimate reason to fear the increasing costs of superstars.  Additionally the owners had an unlikely ally here as they had the support of the vast majority of the players in the union.  These players realized that the star’s salary being capped leaves more money available for the rest of the players on the team; and because these players represent the lion’s share of the union this alliance was enough to approve the inclusion of max deals. While I am optimistic that the value of max deals will increase substantially; I doubt the influx of money will be enough to defeat those two powerful forces and totally remove max deals.

Guaranteed Contracts.  While most of us know that the bulk of NBA contracts are fully guaranteed; most of us do not seem to know why, mistakenly believing that the basis of the guarantee lies with the CBA.  The truth is the only NBA contracts mandated by the CBA to be guaranteed are those belonging to 1st round picks on their rookie deals. Any other guaranteed contract was the result of the negotiations as they exist in the current market not the CBA. Therefore any changes in the structure of contracts would be the result of a change in the market and not the CBA.

So while it was interesting to hear these powerful voices make their stances known regarding labor issues; I am not optimistic that this will result in any changes. 

NBA, I Salute You

Congratulations NBA.  In just 3 short years; the league has gone from being perceived as full of “thugs” and hemorrhaging money to having its future interests firmly secured by totally restructuring their image and taking progressive financial steps to secure a massive influx of revenue.

Image.  While no one is ready to claim that the NBA is ready to rival the NFL, the fact that ESPN/ABC and Turner sports are willing to triple the media deal with the NBA proves just how desirable the league currently is.  Players like LeBron James, Kobe Bryant, Kevin Durant, Carmelo Anthony, Dwight Howard, Blake Griffin, and Chris Paul are among the most recognizable faces in sports. Don’t believe it?  Try to tune in to an hour of TV without seeing one of their commercials.   

While it can be argued that much of this is due to those respective stars and not the league, the league’s contribution cannot be denied.  The NBA’s implementation of the dress code, exile of Donald Sterling and willingness to embrace ideas other leagues have been historically tone-deal to (i.e. gambling), that have made it easier for the casual fan to accept the product. 

Influx of Revenue.  Beyond the revenue being produced by the new TV deal; the NBA has taken several steps to make the NBA a more financially healthy league.  The first and likely most significant was the CBA of 2011 which not only increased the money that the owners are entitled but also strengthened revenue sharing among the teams to ensure that cash-strapped teams have an additional stream of cash.

While the effects of the mega media deal on the CBA, salary cap, etc. are yet to be determined; the most significant development of this new deal is how expertly the NBA has navigated the tumultuous waters that permeated the league after the ugly labor battle.