NBA Lockout: Why It Is More Serious Than the NFL Lockout Was
Now that the NFL lockout is resolved, only one professional sports league is in jeopardy of losing its season: the National Basketball Association.
Comparing the two lockouts is akin to comparing an apple to an orange, but what is relevant to compare is the NFL's success in the same places where the NBA is currently failing in negotiating a new collective bargaining agreement.
From the start, the NBA's labor situation and the issues of conflict have been graver than those in the NFL; the NBA truly has a larger hill to climb to achieve labor harmony and get the 2011-2012 season back on track.
The NBA and its Players Association could learn a lot from the example the NFL set in navigating a labor settlement in a time-sensitive manner. Certainly following that recent model could aid in progressing toward an accord.
However, the NBA lockout paints a bleaker picture than the NFL lockout ever did.
Here are the reasons why the NBA lockout is much more serious than the NFL lockout ever was.
Misplaced Blame for the $340 Million in Lost Revenue Last Season
The NBA owners keep claiming that they incurred a loss of $340 million for the 2010-2011 season. Players Association head Billy Hunter and his clients have always debated that figure, and the league's recent audit shows that number as the possible result of some creative accounting on the owners' part.
My focus is not the argument over exactly how much money the owners lost, or the fact that they're losing money at all. We should be much more interested in what it is about the current NBA system that dictates annual losses for a league in the midst of its most popular, compelling and competitive stretch since the early '90s and coming off one of its best seasons in league history.
Why are the owners allegedly losing money?
Their biggest sticking point for a new CBA is a higher percentage of the revenue pie. Under the last agreement, the 57-to-43 percent split between player salaries and owner share is the suspected culprit for league losses. The owners want a significant increase from that 43 percent of all basketball-related income (BRI) to shore up the revenue deficit.
However, the problem doesn't lie with the income breakdown. Yes, the players, whose average salary was $5.15 million last season, probably don't need 57 percent of the BRI and will likely compromise on that point.
In surrendering some of the BRI pie, the players will strengthen their case on other issues they believe to be the real engine driving league losses: frivolous spending on player contracts and the absence of a revenue sharing system.
The players claim that league losses are not the result of inadequate sharing of BRI; the players insist that the owners have no one to blame but themselves and the system they have set up for their losses.
The Owners Got Lazy and Handed Out Too Many Unruly Contracts
Gilbert Arenas, who will exercise his player option to make $43.1 million over the next two seasons, is the poster child for the players' argument on this point.
It's ironic that the Players Association uses the bloated contracts of its own members as ammunition against the owners.
The owners and general managers don't have to assent to these contracts, the argument goes. The players are not to blame for earning as much money as they can, and the owners are to blame when they hand out salaries that have the potential to cripple their franchises. The teams need better negotiators, more discretion in scouting/signing players or a willingness to put financial stability above all other priorities, no matter how noncompetitive the team ends up being.
Once their franchises are set back by underperforming players, the owners blame the BRI breakdown for their annual losses. How does that make any sense? The problem is the contracts they hand out, not the income split.
Because of rising payrolls, the luxury tax (which requires an owner to pay one dollar for every dollar that exceeds the set tax level) has become a necessary evil to traverse instead of the strong deterrent it was intended to be. Almost every contender now brazenly blows past the tax as they accumulate more star players, which isn't a problem for deep-pocketed owners in the league's biggest markets (Los Angeles, San Antonio, Boston, Orlando, New York, Dallas).
Is it surprising that each of the league's last four champions—Dallas, Los Angeles, Los Angeles and Boston—all exceeded the luxury tax threshold? The league has become an arena where only the high rollers, with few exceptions, have a shot at winning a championship and earning juiced-up playoff revenues.
In today's NBA landscape, four teams exceeded the $70.1 million luxury tax threshold, while four more approached it within $5 million. Not surprisingly, these are teams that can afford to pay for premium talent, much like the Yankees are known to do in MLB.
Year after year, this creates a league of haves and have-nots, a lack of parity that is plaguing the league and spells L-O-S-S for many low-revenue teams.
A Revenue-Sharing System Encourages Parity and Ensures League Health
To prove this point, all one has to do is look at the NFL. Sure, pro football has some moribund and pathetic franchises in Jacksonville, Oakland, Minnesota and Buffalo, but none can claim to have lost money in any single year.
The reason is that the league shrewdly employs a revenue-sharing system that both holds up owners who can't make any money on their own and doesn't cut too far into the coffers of the revenue-generating franchises.
This allows those lowly teams to spend more on players, thereby raising the quality of the on-field product. The Raiders, Jags, Vikings and Rams have had some runs of poor years recently, but each had at least a 7-9 record last season and narrowly missed the playoffs. The Vikings are the only exception in that group, and they were a Brett Favre interception away from the Super Bowl just two seasons ago.
Nobody stays down in the NFL for too long because of revenue sharing, and the teams that perennially contend (Pittsburgh, Green Bay, Indy, New England and Atlanta) are the teams that are smarter than everybody else anyway—whether in evaluating talent, finance or business.
The NBA needs revenue sharing to hold up the Sacramentos, New Orleans, Charlottes and Minnesotas. The league doesn't benefit, financially or competitively, from having teams go 17-65 like the Timberwolves do every year. Dr. Jerry Buss wouldn't take kindly to buoying the frivolous Maloofs' sinking ship in Sacramento, but for the health of the league, he needs to come around on it.
The owners aren't trading blows with the players on this issue; they're bashing each other. The rich owners have no interest in supporting the strapped ones, implying that they don't care if those franchises are folded, moved or otherwise altered because of financial hardship.
The writing is on the wall: 22 of the league's 30 teams, nearly three-quarters, lose money because the eight teams that make money are allowed to keep it all for themselves. The owners respond to the players by saying that it doesn't matter how they lost $340 million in one of the league's best seasons ever, only that they lost it.
Meanwhile, the Timberwolves and Kings play to half-empty arenas with D-League rosters because their owners are fighting for every penny, looking to shed anything they can off of payrolls that are already meager.
Revenue sharing is one of several creative solutions to the problem, but the owners' stubbornness and insistence that the players give up some of their privileges will prevent it from ever coming to fruition.
Sinking Franchises Present a Problem That Only the Owners Care About
And a significant problem it is. No less than four franchises are currently on the chopping block or primed for relocation: the Sacramento Kings, Minnesota Timberwolves, New Orleans Hornets and Charlotte Bobcats.
First, let's unearth why this is a problem in the first place. The prospects of contraction present two consequences for the NBA. One is a catastrophic PR blow to the league. Everyone outside the league sees David Stern fold a team and immediately the league is deemed unhealthy or sputtering. What contraction essentially means is that the league in a certain city failed and there isn't enough revenue there to keep that team running.
Revenue is the second consequence. Logic tells us that the more teams that exist, the more revenue the league will make overall. Thirty teams can generate more revenue than 29 teams can, even if that 30th team plays in Sacramento.
These are two consequences that need to be avoided at all costs by the owners.
The players, on the other hand, don't care a lick about the health of the league's franchises because it doesn't really affect them at all. If the Hornets fold, Chris Paul and Emeka Okafor will get thrown into a supplemental draft and become key players on a new (probably better) team. They'll make the same money and might have a better shot at a championship.
(Chris Paul is thinking, "Wait, what? I want to play for the Knicks! Come on guys, let's go sabotage our franchise so David Stern can fold it while feigning sadness and disappointment!")
Simply put, this is an issue that won't even be addressed in negotiations for a new labor deal, at least directly. The players don't care, and there's probably nothing they can do about it anyway. It's perhaps the owners' biggest problem out of all the ones listed, and they need to get it figured out first before they try and pillage the players in the new CBA.
Contracts Are Too Big and Too Long
The issue of player contracts is one that both sides might actually agree on. Get this:
The owners want shorter, capped contracts written into the rules for obvious reasons. It limits their risk and the consequences of poor negotiating. The short- and long-term ramifications of large deals are mitigated when a player's limit is a four-year commitment.
Long contracts allow players like the pictured former teammates Rashard Lewis and Vince Carter to mail in multiple seasons in a row because they've already got their money guaranteed. Short deals keep players interested and hungry, because they've always got a new contract right around the corner.
The players might actually support the restructuring of contract rules because long trades make them look bad as a group for the reasons described above. Lewis' contract and subsequent performance not only make him look bad, but they also make all players seem overpaid, entitled and underachieving.
If the players want to correct poor assumptions of them and the owners want to avoid dead weight, they should come to accord on a four-year-max contract length. This will make the players happy, limit the possibility of accumulated bad blood between a player and his team's management and raise the level of play on the court. After all, players are notorious for absolutely killing it during their contract year to secure a better deal for the future. It's simple math: more contract years equals better basketball.
And that would be a huge win for all involved parties.
NBA Owners Want To Change the Whole System, NFL Owners Just Wanted More Money
This is the main difference between the NFL and NBA lockouts: the NFL owners, already receiving a big chunk of a $9 billion sport every year, simply got greedy. Every issue they harped on was focused toward getting them a bigger piece of the revenue pie.
The NBA owners aren't just after money. They want stability for all 30 franchises and a revamped league; they want to completely alter the system. This demand is something that they're willing to fight to the death over, to sacrifice an entire season's revenue to change in their favor. We're beginning to see why this conflict has much deeper roots than the NFL's ever did.
The problem is the owners are attributing their messes to the wrong things. They blame the length of player contracts for the failing health of one-sixth of the league's teams. They say they want more basketball-related income when they don't share the truckloads of revenue brought in by their wealthiest colleagues, the Lakers, Knicks, Bulls and Celtics.
The NBA lockout is imminently fixable. The hang-up is the owners' stubbornness and need to get their way. This is why they're wasting a valuable summer offseason by not dialoguing with the players at all. They're behaving like a rebellious preteen: "Fine, if you don't give me what I want, I'm not talking to you ever again!" (door slam)
The reason this lockout stands to cut into the NBA schedule, if not devour it, is that the owners are taking a fight to the wrong people. This isn't owners versus players, it's owners versus owners. The issues with the Players Association, as stated before, are easily surmountable, but no progress will be made on that front until the owners stop being stubborn and start attributing their problems to the correct causes, then proceed to iron them out.
Until that happens, we're all going to have to settle for watching football and enviously stewing over the NFL's labor luck.
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