NBA Lockout: What the Players' Refusal to Compromise Will Cost Them
Yesterday, the NBA Players Association officially rejected the owners' offer of a 50-50 split and began the process of disbanding the union. It's a move almost certain to cost everyone the 2011-12 NBA season. Did the players make the right decision in jeopardizing the season over a 2.5 percent difference in basketball related income? Let's look at the numbers:
Under the old agreement, the players had a 57% share in basketball-related income (BRI), and it was inevitable their share would decrease under this new agreement. The Players Association stood firm on its 52.5 percent offer, while the owners wanted nothing less than a 50-50 split. When a season is cancelled, everyone is going to suffer. However, if the players hold out and get a favorable split for the next season, will it have been worth it?
Total basketball-related income was calculated to be about $3.81 billion in 2010 (a 4.8 percent increase from '09-'10). We'll assume BRI will increase at a conservative 2 percent per year into the future and look at the revenue splits over the next few years to see what would have happened had an agreement been reached.
|Season||Basketball-Related Income||Players' Share (50%)||Players' Share (52.5%)|
|2011-12||$3.89 billion||$1.95 billion||$0|
|2012-13||$3.96 billion||$1.98 billion||$2.08 billion|
|$4.04 billion||$2.02 billion||$2.12 billion|
|2014-15||$4.12 billion||$2.06 billion||$2.16 billion|
|2016-17||$4.21 billion||$2.11 billion||$2.21 billion|
|2017-18||$4.29 billion||$2.15 billion||$2.25 billion|
|2018-19||$4.38 billion||$2.19 billion||$2.30 billion|
|2019-20||$4.46 billion||$2.23 billion||$2.34 billion|
|2020-21||$4.55 billion||$2.28 billion||$2.39 billion|
|2021-22||$4.64 billion||$2.32 billion||$2.44 billion|
|Total||$42.54 billion||$21.3 billion||$20.3 billion|
By forgoing essentially all income in 2011-12, the players are just putting themselves in a hole they just won't recover from, even with the 2.5 percent they desire. Not to mention that by having the 2011-12 season cancelled, they are potentially hurting future interest from fans and thus possibly decreasing future basketball-related income growth when the league does return. Over the course of 10 years, the players' total share of basketball-related income will be a whole billion dollars less if this season is cancelled as compared to taking the owners' 50-50 offer. One billion dollars is not an insignificant amount of money by any means.
That's what makes the players decision to disband the union and severely jeopardize the season appear so foolish. It just doesn't make economic sense. By the time this deal would actually break even (the 52.5 percent share being worth more than the 50 percent share), it's safe to say almost every player currently involved in the negotiations will already be retired. Not to mention the life of a collective bargaining agreement is only in the six- to seven-year range, and then they'll be back to this debate again.
While this is an oversimplification of the situation, it still paints the picture. If this is truly about money, the players are only hurting themselves. At some point you have to recognize that less is better than nothing.
If the players' desire was to prove a point, they certainly have—that point being they are in it to keep as much money as they can in their hands and out of the owners'. If this lockout continues and the season becomes a wash, everyone will lose: owners, players and, most of all, the fans.
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