Influx of Money Across League May Not Guarantee NBA Labor Peace, But It Should

Howard Beck@@HowardBeckNBA Senior WriterJuly 21, 2015

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We have just witnessed an NBA spending spree unparalleled in speed and scope: two weeks, $2.6 billion in new player contracts. Everyone who loves the game should celebrate it.

The players, obviously.

The owners, too, even if their fingers are sore from writing all those zeroes.

And most certainly the fans.

Celebrate, because your team just improved its roster, or kept its best player.

Celebrate, because the hailstorm of transactions is wildly entertaining.

Celebrate, because it means the NBA is in fabulous shape—and therefore has no need for another torturous labor war.

This is, admittedly, not the predominant view right now. But it just might be the right one.

Yes, Commissioner Adam Silver recently asserted that "a significant number of teams" are losing money, which sounded like a rhetorical warning shot.

Susan Walsh/Associated Press

Yes, union chief Michele Roberts has been rattling her saber since the moment she took office last fallblasting the salary cap, max contracts and the age limit, while repeatedly threatening to opt out of the collective bargaining agreement in 2017.

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Doomsayers are predicting another nasty showdown, another lockout, everything short of basketball Armageddon. The sky is falling. The end is nigh.

Don't believe the rhetoric. Believe the numbers.

Start with $24 billionthe value of the NBA's new, nine-year national television deal, which begins next year.

Or $3.2 billionthe record sum players will make in 2016-17, in part because of the TV money.

Or $7 billionthe NBA's projected revenues in 2017-18, up from $3.8 billion in 2010-11.

Times are good. Very good. Spectacularly good. The league is enjoying an unprecedented wealth of talent and star power, with LeBron James, Kevin Durant and Stephen Curry in their primes, and a new generation led by Anthony Davis rising quickly.

Last month's NBA Finals between the Warriors and Cavaliers was the highest rated in history, averaging nearly 20 million viewers per night.

Team owners are making more money than ever, thanks in part to the concessions they won from players in the 2011 lockout.

Players are making more money than ever, too, despite those concessions.

And while more money might create more reasons to fight, the opposite could also be true: It might convince everyone not to mess with a good thing.

And there are an increasing number of voices on both sides who believe the latter axiom just might win the day.

"The recognition is that this is an embarrassment of riches for both sides, and what's the point?" said a longtime observer with intimate knowledge of NBA labor relations.

The current CBA, signed after the 2011 lockout, runs through 2021. Either side can terminate the deal in 2017, with notice to be given by Dec. 15, 2016. The 2011 stoppage cost the league $400 million; the next shutdown, if it comes, would be much more damaging.

John Minchillo/Associated Press

In 2017-18, basketball-related income could exceed $7 billion, with the players earning 51 percent, or $3.57 billion.

"You miss a third of the season, you lose a billion dollars," the longtime observer said. "What are you going to gain? The numbers are just so extraordinarily high."

It's been assumed that the union would opt out of the CBA, largely because Roberts has repeatedly indicated that was her intent since taking office last summer.

But that was before the $24 billion TV deal with ESPN and Turner Sports (B/R's parent company) was announced, and before Roberts, a career prosecutor with no NBA experience, had much time to absorb her new surroundings.   

Roberts, who declined comment for this story, has never articulated why the union should opt out, especially in light of exploding player salaries. But it's not hard to surmise.

Some players and agents have been itching for another fight since 2011, when the union grudgingly signed a deal that cut player salaries by $300 million a year, and reduced their share of basketball revenue from 57 percent to a "band" of 49 to 51 percent. (The surge in TV revenue now guarantees they will make 51 percent for the duration of the deal.)

Although Roberts was hired amid labor peace, she was tapped in part for her tenacious spirita fighter who could match wits with the NBA's seasoned negotiators and their fraternity of billionaires.

Players wanted a wartime president, and they got one. Before she had been on the job for two months, Roberts had blasted the salary cap as "un-American" and called the age limit offensive.

Observers around the leaguefrom NBA officials to team executives and player agentswere startled by the fiery rhetoric. There had been at least some hope that Roberts and Silver might forge a more collaborative and genial relationship than their combative predecessors, Billy Hunter and David Stern.

Joe Cavaretta/Associated Press

"I think it's been the same tone," one veteran player agent said, comparing Roberts to Hunter. "Last summer, when they hired Michele, it definitely was from the perspective of: Who's going to be the toughest person for the fight."

At that time, players and agents were concerned that the NBA economy had become more restrictive than ever. Few teams had cap room in any given summer, and most were operating in fear of the luxury tax, strangling the free-agent market. There was little freedom of movement for players, and little meaningful competition for their services.

That all changed radically this summer, with the cap leaping by nearly 11 percent, to $70 million, creating a remarkably robust market. More than a dozen teams had major cap room and they spent it, generously.

Reggie Jackson, a talented-but-still-unproven young guard, got a five-year, $80 million deal, close to the maximum allowed, from the Detroit Pistons. Enes Kanter signed a similar deal with the Oklahoma City Thunder, who plunged into luxury-tax territory after years of fiscal conservatism.

Carolyn Kaster/Associated Press

The Dallas Mavericks gave $70 million to Wes Matthews, though Matthews is recovering from a devastating Achilles injury. Ed Davis, a journeyman backup center, signed a three-year, $20 million deal with the Portland Trail Blazers.

The system that players were railing against has suddenly, indisputably, turned in their favor. And it will only get better in the years to come.

In 2016-17, the average player salary is projected to hit $7.5 milliona staggering 44 percent increase from 2010-11, the last season before the lockout. Total player salaries will surpass $3.2 billion, according to league and union projections.

Some agents believe Roberts is still determined to opt out of the labor deal, based on her heated rhetoric. But most of the sources who spoke to Bleacher Report believe Roberts is simply sending a message to NBA officials"I'm no pushover"and that she recognizes this deal is benefiting her constituents.

The salary cap won't be abolished anytime soon. Ditto for the age limit and max salaries. These are battles the players cannot winnot without a midseason strikeand veteran union officials and agents know it.

Players still dispute the NBA's claims of heavy losses in 2011, and bemoan the concessions they were forced to make. But they are unlikely to win back any percentage points at the bargaining table.

The players have neither the riches nor the resolve to outlast the NBA's new class of billionaire owners. Given the coming windfall, it's arguably not even a battle worth engaging.

"I have a hard time sitting here today thinking you're going to get the majority of players saying, 'This is not working; we want to fight,'" said a second veteran agent. "I just have a hard time seeing a lockout happening."

Spending will surge again next summer, when the salary cap spikes to a projected $89 million, and even further in 2017, when the cap is expected to hit $108 million.

"It's my fond hope that the union will not opt out," said agent David Falk, who represents Greg Monroe, Roy Hibbert and Jeff Green, among others.

Falk and others interviewed for this story said they preferred to see the union focus on "system" issues: relaxing or eliminating restricted free agency; adjusting the rookie scale, minimum salaries and the mid-level exception to rise in proportion to the cap; higher salaries for players in the D-League.

These are all areas that can be addressed in an amendment to the CBA, without reopening the agreement or risking a labor stoppage.

As the first veteran agent said, "Why would we opt out of the system? It's clearly working to the players' advantage." But, he conceded, this view "wasn't met with a lot of agreement" when he expressed it to union leaders.

Worth noting: Roberts has never directly indicated to Silver that she intends to opt out of the CBA. And league officials have detected a softening of her rhetoric since last fall.

The owners, of course, might welcome a reopening of the CBA. The hard-liners would push again for a hard salary cap and an even lower share of revenue for playerscloser to 47 percent, based on the 2011 talks.

Silver seemed to be setting the table for such an agenda last week, when he again alluded to teams losing money. Some sources indicate that up to a dozen teams may be in the red. (The union is, of course, profoundly skeptical of such claims.)

Then again, every owner is about to receive, on average, another $88 million a year in TV rights fees. It's fair to ask: How many will still be losing money in 2016-17? Six? Three? Any?

Even if a half-dozen teams were losing money, would the other 24 be willing to shut down the league and risk billions, just to squeeze another percentage point or two from the players?

Jae C. Hong/Associated Press

Remember, the 2011 lockout was staged amid the worst national recession in generations. Several teams were, in fact, struggling. There was, at least, a plausible basis for the NBA's claims of fiscal strife. The same cannot be said today, with the economy sound and the NBA on the verge of a revenue bonanza.

Franchise values are skyrocketing. The Los Angeles Clippers, a longtime laughingstock, sold last year for $2 billion. The public will be less tolerant than ever of billionaires fighting with millionaires over a $6 billion business.

Sure, owners might be alarmed at the notion of $200 million contracts for superstars, and max salaries in excess of $40 millionperks that will come with the influx of new revenue. But the CBA ensures that players will never earn more than 51 percent in the aggregate, and that owners will continue to rake in billions.

"Times are good," said the second veteran agent. "Times are great. They should only be better two years from now…There's so much room for growth. I don't get the impression the league and the union are in a horrible relationship."

Indeed, Silver and Roberts have made plans to meet this summer, to begin initial discussions over potential changes to the CBA. They could conceivably leave the basic system intact, make any changes via an amendment and let the current deal run its course, through 2021.

We're a long way from that happening, but there is ample reason for optimism.

So yes, brace yourself for the onslaught of provocative rhetoric, and the doomsaying that will follow. It's coming. But don't put too much stock in the words. The numbers tell a more reliable story.

Howard Beck covers the NBA for Bleacher Report. Follow him on Twitter, @HowardBeck.