CBA Primer: Contraction is not a conspiracy theory

If you missed the first part, “Introduction to the Collective Bargaining Negotiations,” that discussed the imminence of a lockout, you can catch up here.

Since most Oklahoma City Thunder fans were originally New Orleans/Oklahoma City Hornets fans, we are already fully aware of the problems the Hornet franchise was going through. In the days when I was a contributor at HornetsCentral.com, the discussions on the message board typically centered on how the New Orleans market was never a fit for the NBA, the ownership being atrocious, and how the team should have stayed in the 405 permanently.

Being that we still believe all three statements to be true (even though, in retrospect, we are pleased the third did not come to fruition) it was of very little surprise when we saw news that the league had wrestled ownership away from George Shinn. The guy was a cancer to the league brain trust that openly poisoned the Charlotte market so he could take his team to be the second banana in a place that had already failed the NBA despite having a hometown hero and basketball legend in Pete Maravich to buoy the team’s appeal. Then, if rumors are to be believed, Shinn lobbied to stay in Oklahoma City rather than return to hurricane-ravaged New Orleans, only to have David Stern veto that idea to keep the Hornet owner from ruining the emerging market permanently.

Of course, why the league chose to take the strange step of assuming control of one of their thirty franchises at this time had little to do with getting Shinn out of the picture.

In October, league commissioner David Stern floated the possibility of “contraction” as one way of helping to make the league more profitable. For those unfamiliar with the term, contraction is the opposite of expansion. Instead of increasing the size of the league, which has been the method used by every major sports league in history, the NBA would take the unique approach of reducing the number of franchises, reportedly by two, to 28 teams.

[pullquote]Even more important to the union than getting it’s best performers more money is keeping their current membership intact.[/pullquote]

While actually contracting would be unprecedented, the concept of contraction is not new. When labor negotiations were underway for Major League Baseball in 2001, Commissioner Bud Selig also suggested reducing their league by two. At that point, the teams most often considered on the chopping block were the Montreal Expos and my beloved Minnesota Twins. As the NBA will argue now, the reasoning was that certain teams in smaller markets just could not compete and that fewer teams would create a better product. While that is truer in the salary capless world of baseball, it is hard to argue that basketball is only represented in places where success is sustainable.

The first step MLB took to assure the players union that they were serious about wanting to make a cut in their ranks was to buy out the ownership of the Expos. See where this is going? By the NBA taking control of the Hornets, the possibility of eliminating them becomes much easier because the difficult first step of convincing the team owner of stepping aside has been handled. In a recent podcast, ESPN’s Bill Simmons mentioned this as a “conspiracy theory” when talking to Stern. Stern then took exception to it being called a conspiracy because there was definitely a chance that this would be the final outcome.

Why would the owners voluntarily reduce their membership, and more importantly, why is this a valuable bargaining chip against the players?

From the ownership perspective, it is a way of making more money for the remaining teams. While total revenue may decrease as a result of losing some local revenue streams that generally only benefit that franchise, most of the league’s money comes in lump sums. For instance, the television contracts with ESPN, TNT, and ABC go into the league bank account and are currently distributed thirty ways regardless of how much or how little each team actually appears on those networks. It makes no difference to network executives if there are 30 or 28 teams. To the league, though, knocking it down by two, the total dollar amount per remaining team increases by 1/15th, which sounds minor until you factor in that it is applied to more than $4 billion over six years.

In addition, the teams that would disappear are not going to be teams that are yearly contributors to the luxury tax pot. This would be two teams that generally accept the revenue sharing rather than contribute to it, so that would also increase the shares given to the remaining teams. Another win for the owners.

One could also discuss it as a way of improving the product. Lowering the number of teams means that the threshold for becoming a player in the league is significantly higher. Borderline players will find it tougher to land on a roster, and as a result, the median skill level of players will shift to the good. Theoretically, this would reduce the need to “take a flyer” on a player in hopes that he would become a valuable commodity because the increased competition for fewer roster spots should improve the value of proven players. Of course, this is hardly on the radar for the owners and exactly why the Player’s Union is staunchly against this coming to fruition.

Even more important to the union than getting it’s best performers more money is keeping their current membership intact. Losing thirty roster spots means layoffs to their brotherhood. That is really tough case to make to the NBPA constituents.

It also means two fewer teams bidding up player salaries. Even Memphis, who has to be team 1A when discussing who might be cut from the league, is useful in getting union members big contracts. Ask Rudy Gay and Mike Conley who just signed big, long contracts with the financially strapped franchise. Even when a player does not sign with one of those teams, just the wild card factor of a small market team desperate to land a big name player increases the value of a desirable free agent.

How does this apply to the Thunder?

Very little. It could be a financial boon for Clay Bennett, Aubrey McClendon, and Tom Ward who write and cash the checks, which means they may be more willing to open said checkbook in the future. (Since moving to OKC, the franchise has always been one of the lower salaried teams.)

A few pundits have suggested that the Thunder could be a target of the contraction, but most of the time, those people are either stupid or just trying to be different. As we should get used to as the smallest market in the league, less successful teams in slightly bigger markets will want to throw our team under the bus, assuming that our success is not sustainable. Even if they are correct, which is *knock on wood* doubtful, this is a decision that is bound to have a major “What have you done for me lately?” approach. Being the “feel good” story of the league definitely takes the Thunder out of contention, since in the previous case of potential contraction, it was the Twins inspired play that killed any argument by the baseball owners that they simply could not compete.

How likely is Contraction?

To put it in terms Dean Blevins would understand, I think the likelihood of the NBA shrinking in size is less than 5%. This is most likely a tough talk act designed to make the players give concessions in other areas. If it is not, I still doubt the players accept reduced membership. To make up for the thirty roster spots disappearing, the league would probably have to agree to expand maximum rosters to 16 players and require that teams use a minimum of 14.

______________

NEXT: Part III — Why the owners are asking for a hard cap even though they don’t want one.