No deal. Not yet.
Negotiations wrapped in New York Tuesday after about four hours with both sides claiming progress was made, but just not enough. Basically, we’re at that point where nobody’s going to budge until they have to. Which means nobody’s moving until money starts getting lost. Which means the rest of the preseason has been cancelled and we’re probably going to have to cross off that Nov. 1 showdown with the Lakers and the next 10 or so games after it (at least). (We’ll know that for sure by Monday, David Stern said.)
Here’s where we’re at: The owners, previously proposing a 46 percent split of revenue to the players have come up a whopping one percent to 47. The players, who get 57 percent under the current CBA, have come down to 53. So… if you’re good at math, could you tell me that mystery number that sits between 53 and 47? What is it? Would could it be?
The reality though is that eventually someone’s got to deal. Someone has to bend. It’s not like the NBA will cease to exist because owners and players can’t agree ever. I understand it’s a negotiation and using tactics like losing games which leads to losing money is what forces the bending, but why not just get to that place now? The players know that eventually, they’ll have to relinquish more of the BRI. The owners know that at some point, they’ll have to come up from 47. WHY CAN’T WE JUST DO THAT NOW? Why do we have to go through all this crap just to get there?
Why? Let me answer myself: Because that’s just the way it is. That’s the way people negotiate. Nobody gives until they feel like they’re losing something. Money is what’s at stake here. LOTS of it. And when that’s what the two dogs are scrapping for, they aren’t going to let go.
The players have said they aren’t budging on BRI or the owners’ insistence of a hard cap (which they don’t have to now, because the owners have moved off of it). Owners have said they are sitting firm on their offer. Well here’s some news: Someone’s going to have to budge. At some point, a deal will be made. And when it happens, it’ll be because someone gave in. Right now the owners and players are playing a game of chicken trying to dare the other to giving in prematurely. Supposedly, you bring your best offer to the table last. Well, where’s that at?
(Since I’m a bit of an optimist though, I do have to say I’m at least encouraged by the fact the owners aren’t demanding major systematic changes. That’s at least SOME progress. If we’re really just left to bridging the gap in BRI, I think that can be done.)
We sit at a crossroads where no new meetings are scheduled, where it seems both sides are resigned to losing at least a portion of the NBA season. It’s a pathetic position. There’s no reason for it to happen, but we should’ve been prepared for this. The owners want systematic changes that guarantees profitability and the players want a system where they rake in cash for big rims and fancy shoes.
It’s a frustrating position. Not for the league, the owners or the players. Screw them. It’s frustrating for the fans, the arena employees, the bar owner in Bricktown that saw his business boom because of 41 Thunder home games. It’s frustrating for the dad that has to explain to his 10-year-old why after three awesome years of the NBA now he doesn’t get to see Kevin Durant for a while because everyone is super greedy. It’s frustrating for the taxpayers of Oklahoma City who are seeing their money go towards an unused arena. It’s frustrating for the people that don’t have a dog in this fight, who aren’t in the bargaining room, who don’t get to have a say. That’s who is really getting the short end here.
The whole thing, well, the whole thing just sucks.
But it’s not over yet. The fact the owners have moved away from the hard cap is a good thing. That’s progress. I fear once games are being missed though, the owners will come back with their stronger demands because they’ll have the upper hand. We’ll see. Bridging the gap between 53 and 47 is possible and it’s what’s left to do. They’re going to get there eventually. Stern even said a 50-50 proposal was dropped right as the players walked out. So a deal is hanging out there somewhere.
Let’s just hope it happens soon.
I understand the points you are making and they help balance things. I just wanted to show that I was aware of your points and included them to a degree in what I said initially.
Yes the owners want a 10 year deal and the givebacks would become greater over that time span, higher than the short-term losses from continued hold-out. I don't think though the union will accept more than a 5-6 year deal, especially if the deal isn't particularly palatable to them.
In the end, it is their mess, their decision. I am not that worked up about it.
Also on the math side of things it's important to remember that up until yesterday the players were asking for a six year deal but the owners were insisting on a 10 year deal, and over a ten year deal the difference becomes enough that waiting to sign a deal becomes more profitable for either side then agreeing to unfavorable terms now even with the loss of 30 games.
True Crow, and I wasn't trying to call you out or anything only the very first bit was directed at you. Overall I agree with your analysis, I just think the long term matters a lot more than the short term for a variety of reasons because the way things have trended over the last twenty years is progressively better bargaining position for the owners with the players conceding more and more. Obviously that can change, but part of any effort to help that change is preventing full scale capitulation now that sets a precedence that's hard to change, even if that means short term economic losses compared to a deal that guarantees no lost games.
OBCD.epi, I mentioned that the length of the deal mattered several times and that there would be concerns about precedents. I wasn't inferring that that there was no reason for the sides to continue to fight for more, just that is will be fairly costly.
Sorry, I'm with the owners on this so far. Although we have a great team right now, what about 20 years from now? We need to set up a system where all teams have the opportunity to compete, not just the big spenders/cities. That will take big systematic changes to the NBA. The only way that is going to get done is by some pain now. I am OK with that (and as a season ticket holder too who has essentially given the team a loan of my money). The NFL went through this pain when it instituted a cap and limits on free agency in the early 90s. It will be better for the league in the long run. Otherwise you get the same teams winning over and over...same with MLB. Besides, both the players and owners want the most money they can get, that is how it works. I'm fine with that too.
I wonder if the owners have considered the unintended consequence of pissing off their entire tax-paying, arena-subsidy-voting fan base by depriving us of our ALREADY PAID FOR GAMES!!!! While we can confort ourselves in Thunderland that OUR owners and GM are probably not the bitter, greedy, heartless bastards at the crux of the negotiations, it still is galling, and I can't say this is feeling I will not be taking with me into the voting booth next time Mayor Mick asks for a penny! Many of the other city(s) residents who will be asked in the coming years to vote for arena deals and practice facilities may not be so quick to sign on, when they realize how very little their interests really matter!
But I AM willing to sacrifice a few games if the players can at least gain a moral victory by holding tight to the 50/50 or greater split. One of the things I took from reading "The Snowball" (Warren Buffett's authorized bio) is that his strategy for buying stocks and later companies was really very simple. If a company (team) has a combined asset + revenue base greater than their expenses they were a profitable organization, and if not they weren't, and any company (team) owner worth his private jet ought to be able to make his business profitable with 50% of the revenue or LESS, when we (the customers) are PAYING THEIR RENT AND OVERHEAD FOR THEM!
(okay, I feel much better now that I have that off my chest....sorry for the diatribe)
Won't somebody please think of the children?
And now, back to football!
Crow your math depends to an extreme amount on the length of the deal. As an example losing 30 games of a season on a three year deal is .878 of a full three year deal is slightly better for the players then the lost revenue and even over a six year deal it comes out about even, but what your not factoring in is the long term results over 9+ years it starts to become a serious net loss and unless you honestly think the players can renegotiate up relatively soon it's a bad idea for them. Let's just say there's a reason the agents are saying don't go below 52%. Beyond all of this the whole thing is kind of disgusting to me, why should the owners even get 47% of things? What is it they're bringing to the table? leases on arenas that for the vast majority of cases are owned by the city and subsidized by tax payer money? We pay to watch incredibly skilled athletes play an incredibly difficult game, and yes we develop allegiances based on where they play and who is playing, but not really on who owns the team. Frankly the owner's cut is already absurd. I'm 100% behind the players even though I wish it would end soon, I wouldn't take a 7% pay cut and be happy with it either and it's absurd that we're asking some of the most talented individuals in the world to do that, and not so that the whole operation can give back to society or something, but so that a few high multimillionaires and billionaires can be guaranteed a yearly profit on top of their investment gains on a high value piece of property. Frankly I find it disgusting.
Taking a 50-50 deal after losing 30 games would be about the same as taking 47% for yourself right now for the time period of the deal. Both sides may feel precedent matters for the long-run. But it didn't for the NBA this time. It wouldn't have to for the players next time either.
If the first 2 weeks are wiped out, we'd lose road games at the Lakers, Suns, Mavs, Knicks, Bulls and Bobcats and home games vs. Pacers and Raptors.
That would've been a difficult two weeks (esp. the road games), so if there's a silver lining to this whole thing, it's that we might have a tough 2-week stretch wiped out. Those games at the Lakers, Mavs, Knicks and Bulls could all be losses to start off the season.
like i said, i'll believe when i see it. fifa comes in the mail tomorrow, 2k will come around this weekend, my soccer league kicks off (hopefully) next week so i've got things to take my mind off the sadness that is the lockout. i agree with everybody else though, if the middle ground is 50/50 and you'll end up getting just barely better than 50/50 over the length of the new cba (with lost games) then why not just do it now and call it a day.
So was the "proposal" a true 50/50? Or was it this 50/50 with split/BRI modifications? Seems fishy. I take the DRose stance though, there's no way billionaires should be arguing with millionaires when the unemployment rate is whatever it is in this country. Now why would the players call off all negotiations if they couldn't agree on a split? By the way Silver was speaking, they had other systemic issues to negotiate & those doors were left open. Does calling off all negotiations for the day & not scheduling further meetings seem childish to anyone else?
Clarification:
If they do a 6 year deal that is equivalent to losing 2.5 – 3 pts of BRI "per season for that time period".
Merchandising revenue during the lockout and some other on-going revenue might change these numbers a bit, but not really change the basic story.
A $20 million loss from absorbing overhead expenses without revenue to cover it isn't really the final word of owner impact for every team. Some owners expecting big profits will lose part of that opportunity. Some teams who were going to lose big in a regular season might see less change from that fate.
Every point of BRI for this season is worth a bit over $40 million. If the sides pay $600 million and $700-750 million for a 30 game lockout that is the equivalent of losing 15-19 points of BRI / season. If they do a 6 year deal that is equivalent to losing 2.5 - 3 pts of BRI. So if you want 53% and endure a 30 game lockout to get it then for that 6 year period after you deduct your lockout losses you are just yielding about 50%. Same sort of thing for the owners. If the 30 game lockout gets them a deal where the players get 47% and they get 53%, the cost of the lockout pulls that down to a net yield of about 50%. Of course both sides are thinking beyond a 6 year window to gains and losses in the long run future. But still, unless you can get better than 50% - 50% in your favor a 30 game lockout may eat up your gain over a 50-50 deal now for this time period.
I'm sure I'd feel a lot worse if I wasn't under such heavy sedation.
Storyteller's NBA website says "other expenses" for the league besides player compensation are about $2.4 billion. When the league plays it covers about $1 million of that per team per game. If they miss 30 games * 30 teams that equals $900 million of normal expenses that are not being covered by revenue. If with previous and upcoming staff reductions the NBA cuts their overhead to just 60% of normal then it would appear they would no longer cover about $600 million in expenses and would have to pay them out of pocket. If this formulation is close to appropriate it would suggest the owners would lose about $20 million each for a 30 game lockout. Players will lose in a lockout, everybody knows that. Some out there might think the owners avoid losses or significant losses but I think they lose almost as much as the players. 30 game lockout would be a bit less than 40% of the player's cut of revenue, so the players would lose about $700-750 million, or about 16-25% more than the owners under this calculation. This estimate is not exact but it is probably reasonably close.
I'm as sad as I am unsurprised. Even though I expected today to turn out this way, it's no less depressing.
The players are at 53. The owners are at 47. Correct me if I'm wrong, but halfway between 53 and 47 is......50?
Yet we can't there. Lovely.