Free Ballin’

Stern spent the first few minutes of the press conference talking about how well the league had been doing – which he always does – especially internationally – which he always always always does.  The whole world is embracing the NBA, yadda yadda.  He even said that the Association’s revenue hadn’t been hit as hard as initially predicted – after the market crash.  Then he turned to Collective Bargaining Agreement negotiations with the Player’s Union and said that the league expects to lose around $400 million this year.  Henry Abbott astutely asked Stern, “huh?”  Well, essentially: he asked how it was the league was doing so well and also doing so poorly.  Stern said that revenue had not changed, that wasn’t the problem, but the cost structure, the expenditures…  Basically, the league’s income isn’t changing but their costs are rising.  Part of this, Stern said, was due to the cost of investment abroad – I think he said investment in securing the new revenue, opening up new offices abroad, hiring new employees, shipping employees over there, etc.  So really this means that the league has chosen to invest more money abroad and because of that investment, players need to make less money.  Right?  Am I missing something?

For one thing, showing losses on your books doesn’t mean your company/business model is failing.  The NBA offices and owners are spending capital to make long-term improvements in the league, and that costs money.  Why is that the concern of the Player’s Association?  It is, sort of, but only because of past blunders.

I don’t know much about common business practices, deals with unions, and such, and I don’t know the details of the NBA’s CBA; but it seems to me that the salary cap is the biggest problem here.  As I see it, it’s not the responsibility of labor to worry about the overall income of the company.  That’s management’s problem.  But in submitting to the owners in previous agreements, accepting a salary cap, they also agreed that that cap would be based on league revenue; the players get 57%.  That doesn’t and never did make any sense to me.  They’re agreeing to receive a percentage of the overall revenue, but they don’t have a say in how the league’s business is conducted, how the owners choose to invest revenue.  Basically, the players allowed themselves to be subject to the ups and downs of the league without getting a seat at the table.  I don’t think having a seat at that table is really anything the players ever wanted, or should want.  Leave the direction of the league to ownership, sure, but players allowing their salaries to be directly tied to the owners decisions about expenditures is just silly.

Now of course employee payroll is always based on the state of the companies for which they work, but not directly, not as a collectively agreed percentage of revenue.  Rather, without a salary cap, the free market would determine the value of a player.  Why not just let supply and demand determine value?  Of course, that an old issue, fifteen years old, to be exact.  Ever since Kevin Garnett signed that immense contract (it was what, $126 million over 7 years?) back in ’95 (I believe) ownership has been loudly freaking out about player salaries.  The real problem there is that owners couldn’t keep other owners from breaking ranks and offering huge salaries without colluding.  But small market teams and owners who are only $100 millionaires, not $800 millionaires or billionaires, didn’t want to compete with Mark Cuban or big market teams.  The answer to this was never to institute a salary cap and unnecessarily entangle league income with player salaries.  The league should have just instituted smarter revenue sharing practices with huge luxury tax penalties.  The luxury taxes are currently dollar for dollar.  Well, go ahead and get rid of the salary cap and require owners to pay $2 for every $1 they go over the luxury tax line.  So when the Knicks spend $100 million and the cap is $50 million, instead of the other owners crying foul, they can just divvy up the $100 million in luxury tax the Knicks will be paying them.

This is way too long already, so I’ll just stop here.  In the end, the labor discussions for the next CBA will probably look like they always do: owners being dishonest about their financial burdens, players being stupid enough to put themselves in a position to be smacked around by ownership.  That Billy Hunter is still the head of the Union ten years after he f#cked up the last CBA indicates how things will turn out this time.

And I wouldn’t give a damn about any of this, except that it directly impacts the quality of play, the quality of talent the teams can put on the floor.