The marathon has ended. The guys who have been camped out at whatever hotel in New York can go home and they won’t have to go back for a few days, at least. Actually, sadly, they might not have to stake out a lobby for a while.
As I type, Billy Hunter and the Players Union are wrapping up their press conference. 3 full days of mediation. Not just negotiations, mediation. A federal mediator, which means a full on, boss, serious lawyer, mediator, George Cohen sat with the owners and players seperatly Monday; went into a meeting mid-morning on Tuesday that didn’t end until after I went to bed on Wednesday morning; met for hours on Wednesday, and went back at it again today until 8 PM tonight and nothing, NOTHING has been agreed to or accomplished.
You can talk about Bird rights, MLE’s, Luxury Caps, Hard Cap, Soft Cap, all the rest of the ways the money is handed out to the players. But what really matters, the blood issue with the owners is their split. The assumption is that $4 billion, which is what they made last year, will be there every year going forward. The players pulled in 57% of that for themselves. That leaves the owners with $1.72 billion of “BRI” (some magic number that only they know how to come up with). The owners have been spinning out this $300 million number as far as “losses” for last season as a whole, with only 9 teams making any money at all or some odd ridiculous thing. So if you lost $300 million last year, and you don’t want to just break even, you want to make money to pay David Stern, Adam Silver and the rest of the league offices, you add $300 million to $1.72 billion, and add a couple points of profit, 1% of $4 billion is $40 million, so let’s make 2% more, $80 million. So, under the owners assumption (and my assumption of their assumption), there will be $4 billion again next year and they need $2.1 billion to make any money, so they require, and can’t sell to the other owners that aren’t at the negotiating table, they would need to walk away from these negotiations, in the new collective baragining agreement with 52.5% of the Basketball Related Income.
The owners want a 10% shift, like they feel like they have to have it to survive. They want their share of basketball related income to go from 43% to almost 53%. 10% of $4 billion is $400 million. The owners want the players share to decrease by $400 million dollars, per year.
When I say this is the blood issue, I mean it. This is the only issue. They can talk about how players get it and other items besides that, and they’ve said as much, but until that split gets agreed upon there is no deal on anything else. All the mediation in the world can’t help that. If the owners truly think that they can’t live, well, their business can’t survive without having their 52.5%, they are willing to not lose more money this year in order to accomplish that. We have seen it tonight with both sides walking away shaking their heads.
The chain, as I put it together via the press conference on NBATV and twitter is that the players have come down from 57% to 53%, pretty quickly. The owners want them at 47%, as we figured out above, and they are holding to that. So, someone, it’s not clear if it was an owner, a player rep or what said “Hey, 47%, 53%, let’s meet in the middle! 50/50 split?!” The players were ready to accept that as far as I can tell from tonight’s festivities and they were under the impression that the owners were too. It’s like on Pawn Stars when Rick sticks his hand out there to make a deal with the guy, the guy thinks he’s about to say his number and he says something about 10% below it. Billy Hunter said as much in his press conference, saying that he thought the owners had put “50/50″ forward and were willing to accept it and it was pulled out from under them. So, the owners are playing hardball and the players sort of are too. They were actually not ok with “50/50″ but were saying “We’ll start at 50% and if the economy, or the league grows and revenues go up, so will our share, topping out at 53%”
The owners simply won’t take less than a 47% share for the players. 50% is still a 1% loss for them.
The much larger issue that none of them see at this point is the simple fact that with a continued loss in games will result in that “magical” $4 billion figure that they’re all counting on will shrink by about 10% next year and then maybe another 30% the year after that. You can look at the ratings and see that the abrivated season in 1999 had a 10% loss, that has to equate to 10% across the board in earnings, whether it’s tickets, concessions, jersey sales, ad revenue. Hockey regular season ratings in 2003-2004 were .47 on ESPN and when they came back after losing an entire season, the ratings on the OLN which became Versus were .2. Give .07 credit to ESPN, because I can tell you ESPN is channel 1500 on my cable and I could not even tell you where Versus lands on that thing. And you can go ahead and say an entire season lost, cuts your ratings in half.
If the players were to accept a split of 47 to them and 53 to the owners, they would be losing 10%. The players, generally, get all their money from their contracts. It is only a handful that make any legitimate endorsement money. Larry Coon’s wonderful FAQ puts the average player salary at $5.765 million for last season. Now, there won’t be salary rollbacks but, the next contract the average player will sign in the NBA will be around $5.189 million. Now could you tell your consitiuents that they will be making $576,000 less PER YEAR less in their next contract?
This is why we are at a legitimate impasse. It’s sad, it sucks. The math makes sense, if you assume that the math will continue to stay the same. If we’re still talking about $4 billion, yes, I understand the fight. But we aren’t. Simply put, every day there isn’t a deal done, the entire system not only loses revenues from those games, but they lose a little bit of hope of ever getting back to that $4 billion plateau.
I went to my local card shop to get some old packs of Upper Deck stuff and whatever else he was selling for $2 or $3 a pack. The old guy who owns the place says to me “You know, Upper Deck doesn’t do basketball anymore and neither does Topps! Wouldn’t play ball with the players association! You believe that?” I said “Yeah, but do you think there will be a Players Association much longer?” He laughed and said how I was probably right. We talked for a solid 30 minutes about collecting and how sports have come and gone but the one thing that stuck with me he grabbed my arm like old folks do when they want to tell you something important, and he said “You know, every time they talk about labor, any of ‘em and I mean even baseball and have loved baseball all my life. Every time they bring it up, it makes me care about them less,” and he held his hand up just above my head, “and less,” brought it to my chin, “and less,” brought it down to my chest. “And you know what? I sell the stuff! It’s my livelyhood and I’m saying that to you!”
If only it meant as much personally to the men in suits in those meeting rooms as they do to the old guy in the Duke t-shirt in his little store in the gas station annex in a small town in Eastern North Carolina.