Commentary on the Impending NBA Lockout
by ak2themax on Jul 7, 2010 9:45 PM CDT
in Random Commentary
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Have you ever been walking up to a smoking hot chick, and then behind her came the ugliest human being on the face of the earth? I'll break it down in basketball terms.
2010 offseason: Smoking hot chick
2011 offseason: ugliest person ever
As pissed off as people are about how frustrating this offseason has been (count me in this group), just wait until the next one. Lost in the shuffle of the free agency saga are little men trying to feed their egos. And lost in those egos are the fact that they are not going to make any money the year after next. None at all.
With the Collective Bargaining Agreement (CBA) expiring at the end of this season, the owners and Players' Union have been trying for some time to come to an agreement. Players want more of the same (more or less) but the owners want more (way more).
Currently, players make 57 percent of basketball-related income. Tickets, merchandise, you name it, they get a piece. The NBA makes roughly $3 billion a year. The players' cut of that is $1.71 billion. That means the average player in the league makes in the neighborhood of $4 million per year.
As Rockets fans, we've gotten used to Daryl Morey and Les Alexander spending wisely. On the other hand, most owners and GMs are crap. Some spend an inordinate amount of money on Joe Johnson, which is bad but not awful, but some spend too much money on Eddy Curry. Here's where the owners want out.
The owners want to reduce the limit of guaranteed contracts to get them out of hot water when they screw up. The players don't give a shit when the owners screw up. They just want to get rich, bitch. And who can blame them? They're spoiled, and it's the NBA's fault.
The NBA wants a hard cap. No more luxury tax or threshold. It's time for the LA Lakers to stop paying upwards of $95 million for their players while the Minnesota struggle to put a product that resembles an NBA team on the court for about half that much. It's not fair to fans or the owners when they're competing with teams with bottomless pockets. The crazy part here: this goes against everything the NBA always wants. The NBA would still benefit from a LA-NY Finals, but not the same way. There won't be as many stars on those teams for the league to market, and eventually the teams would suffer. But the bottom half of owners are winning. It's like playing poker against someone who gets an extra card every hand. You might win every once in a while, but you'll mostly lose. As stupid these owners are with their money in paying free agents, they know the league needs them.
The most likely solution? Max salaries getting cut dramatically. Lower the max contracts, and so even when LeBron, D-Wade, and Bosh become free agents again, they'll be looking at much less money. Second- and third-tier players will make about the same amount of money, but if the league makes LeBron worth less to his owner, there will still be enough money for the rest of the league and owners. The top 10 salaries last year were worth about $20 million each. If the NBA lowers the max to $15 million, they could save $50 million from those ten players alone. Pretty enticing move for the league, right? I mean, what's the difference between $15 and 20 million?
A lot, according to the players. Enough for the players to lockout the 2011-2012 season. Next year's free agency bonanza, with names like Carmelo Anthony, Yao Ming, and Tony Parker becoming free agents, will be a farce.
Now to local matters. The Rockets have positioned themselves beautifully. They have only $18 million committed to 2011-2012 (Kevin Martin and Trevor Ariza). Expect Morey to wait this thing out a little, and start extending the guys he wants as the season goes on or completely leaving them if he doesn't like them. It will also factor into every decision as the season goes on. Why trade for a guy who becomes a free agent at the end of 2011 or even 2012? Those contracts become worthless during a lockout. Some team may even take on some seriously bulky contracts and go for a big run this season, banking on a lockout to ease their money.
Lots of things to consider here, but here's the take-home message: There will be a lockout barring the Players' Union stepping down (unlikely). What are your thoughts? Who's to blame: greedy owners or greedy players?
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I'd like to know the owners' cuts before I decide.
That being said, 57% spread out over all the players vs. whatever the owners’ percentages are, still sounds like the owners are getting a heck of a lot more bank than the players. Still, I’d need numbers to be sure.
I'm pretty sure it's a 57-43 split
Though I’m not 100% positive. Remember, though, that the owners have the salaries of employees and other basketball-related costs. So though they do make more than each of the players, it isn’t like they’re completely pocketing the other 43%.
How many Biletnikoffs does he have? NOT TWO!
What the owners pocket is what I'd consider the owners' cut.
As you pointed out, everything else covers expenses.
by DribbleHooper on Jul 7, 2010 11:01 PM CDT up reply actions
Well
there’s no real definitive way to know how much they make. Each owner probably makes a different amount, depending on where their team is and how much they spend on the team. I bet Donald Sterling pockets a higher percentage than Les Alexander, but that’s just a guess.
It really depends on the owner and team.
How many Biletnikoffs does he have? NOT TWO!
forbes sorta estimates a teams net earnings,
and I believe if those numbers are right max contract players still pocket more than the most profitable owners. 57% to the players is just retarded. The owner has to pay for the entire front office, arena rental, maybe travel expenses (not sure if nba takes care of travel expenses or if owners foot that bill). Not to mention the wine and dine that is going on during this FA.
Honestly I feel like by definition an owner should make more than his employee. But this is sports after all so conventional thinking doesn’t apply.
On the side note, wonder if kobe made more money than Jeanie Bus by now?
rec'd for great insight
it really makes sense why the Lakers don’t trip about the luxury tax and teams like the Hornets and Pacers are trying desperately to dump salaries.
GO ROCKETS, GO TEXANS, GO ASTROS (EVEN THOUGH THEY SUCK)!!!
Both are at fault
Yes, NBA players were born with an incredible gift but are way overpaid compared to other athletes of major sports
And yes, NBA owners are greedy and offer ridiculous amounts of money hoping their teams do good and lure more ppl to the arenas increasing ticket sales and revenues
And for what? NBA players are known for wasting money on luxuries, huge mansions, big parties, etc. What do they want more money for? Same goes for NBA owners
If a hard cap is to be put in place, then I think ticket prices should be lowered or some kind of fund be created to set money aside to invest in the community
No point in making the rich richer at the expense of the rest of us
by Carlos_HoustonSportsFanatic on Jul 7, 2010 10:48 PM CDT via mobile reply actions
Thats why part of me wants a lockout
As much as it pains me to say, I want a lock out, not nearly as bad as I do for the NFL. But when a solid cap is put in place ticket prices should go down.
This kinda makes me sick....
When did we wake up and decide that the boss men (owners) shouldnt be making a killing. I agree that 43% minus the overhead of running everything seems like sick money to me, but so does that $4 mil for dribbling, and shooting the rock. These primadona glorified divas have forgotten what it means to be loyal to those that love them. With the salary caps this high and owners who have super big pockets (due to endorsements and all) it is kinda ruining the fun for me. This is why I LOATHE baseball. Even Houston. If owners cant go above a certain cap (no matter what) this would make players dance with the ones who have brought them, and bring focus back to not the superstars, but the roleplayers. ie Rockets championship seasons with Hakeem. We had other good players, but no superstar other than Olajawon.
I dont know, maybe im talking out of my arse, but I feel lucky as hell to be making my 50k and seeing these guys out there act foolish with the money that owners give them for the talent that God lent them kinda makes me sick….
The worst part of all is...
a lot of players us NBA as a job but they don’t even enjoy it! They are just playing for the money, and only show up during contract years and dog the other years. THen you have ppl like Lateral Spreewell that bitched about his 16 mil a year or something i guess and not 17-18 mil a year stating he has a family to feed. You fucking kidding me? Cap that shit, and correct those spoiled bastards.
Also I believe in incentive based contracts like NFL, you don’t play you don’t get paid. Why pay tmac 24 mil last season on the bench. Have guaranteed money, and then get paid for every game u play. You want your full 24 mil a year, you better play all 82 games + playoffs.
Its tricky
I think the owners should get a larger cut because at the end of the day, they are the ones that are taking the vast majority of the risk. They also are the ones that have to pay for staff, facilities, ect. They put millions of dollars every year with absolutely no guarantee of success.
I don’t necessarily agree though with the fact that there should be a limit to guaranteed contracts, I think the owners should be smarter with the decisions that they make. I mean if I am running a company, and I make bad decisions, do you think that anyone is going to change the rules to help me out? No. I would get fired or my business would start going down and I would be forced to sell it. Thats how the big boys do business. I have absolutely no sympathy for owners that give out bad contracts like for example, Joe Johnson’s, and Pierce’s contracts and then complain about them a few years later.
If you look at soccer all over the world, they don’t have caps for teams, its a free for all. For example, in the English Premier League, Chelsea used to be really bad, but a Russian Billionaire came in and bought the team and turned it around. Another example is Manchester City, they were never a good team, but they got new owners two years ago from the Abu Dhabi and they are currently one of the most competitive teams because they brought in great players. Just because it was a free for all, it didn’t change the popularity of the sport.
I think soccer actually makes way more money than basketball.
Soccer is the worlds NFL after all, and NFL makes way more than NBA. In forbes i think Man U was the highest net worth or most profitable team or something along that line.
Second highest
Yankees got the first.
I'm always right, this isn't conjecture, merely statement of fact.
Re: EPL
As a long time fan of the EPL, there are a couple of things that I have to point out before we start singing the praises of the model. First, there’s more to play for than just league winner (the winner is whomever has the best record at the end of the season, btw, there are no playoffs). The top seven teams (give or take) each season also qualify for European tournaments and the bottom three teams are relegated (sent down) to the next lower league (imagine the KC Royals being sent down to play minor-league ball). The upshot of this is even though the title race narrows down pretty quickly to 3 or 4 teams, most of the teams have something to play for down the stretch of the season, even if it’s just frantically trying to avoid be one of the last three teams. As a result, games stay pretty competitive throughout the year.
If we were in a top-heavy league in the NBA, the regular season would be relatively meaningless as we would know who the contenders were coming in to the season and we would know that they would make the playoffs. The other teams wouldn’t have as much to play for.
Secondly, it should be pointed out that with no salary cap, rampant spending is an ongoing problem in all the European soccer leagues. Very few teams make a profit (which I must admit, as a fan I don’t really care as long as it doesn’t affect the product on the field), many of the teams are saddled with debt (even, or maybe especially, the rich ones) and there seems to be at least one team every year that dallies with the possibility of bankruptcy and is feverishly looking for new investors while selling off their best players.
I’m not trying to downplay the EPL; I’m a big fan. Great league, great sport, consistently exciting despite knowing who the big boys are going in every year. But before we start clamoring to import different business models you have to look at the big picture.
This contract spike in soccer has been a more recent trend right?
I remember a few years ago CR9 was only making 3-4 mil a year. Now its like over 12 mil or something. And then these ridiculous buyouts i read about. These clubs are forking over A lot of money to bring a player from one team to another. How is the Spanish League compared to EPL? Same debt problems? I mean they got like Messi, Kaka, Cr9, and more all over there. gotta imagine Barcelona and Real Madrid are paying outta their asses like NY yankees are to win.
Barcelona is hurting...
http://news.bbc.co.uk/sport2/hi/football/europe/8797183.stm
Massive debt, failed to pay wages in June…I expect they’ll turn it around (hard to imagine the world without FC Barcelona) but right now they’re in a mess.
As for recent, it’s definitely been more recent, but think more like a decade or a decade and a half, not 3-4 years.
And regarding the buyouts, they’re certainly massive and a few of them are no doubt ridiculous, but I think it’s a sensible system. We have trades in our sports. Well, what happens if you don’t want to give up any assets, but you want to add? In this case, you just buy the player. It’s pretty straight forward from a business standpoint. You’re purchasing a contract (in finance that would be futures trading). And as it turns out, it can be a huge source of income for smaller clubs. The well-run small clubs will identify talent, develop it and then sell the player to a larger club and use the revenue to support the club.
About the EPL example
I was just trying to show that even though there might be teams that aren’t doing well, the rules arent changed for the owners and eventually someone else can come in and change the culture of the team even in a league with no cap. Obviously there are a lot of differences, but I was just talking generally.
Also the point of the post was basically to say that the NBA owners should get a larger cut of the profits (either locally for each team or shared between all the owners) because they are taking much more risk. If they do get a larger cut the pie though, there shouldn’t necessarily be a cut in the guaranteed contracts. This I think would be a good compromise. I say this because every business person has to make financial decisions, and if you aren’t making correct ones as an owner, then you are going to have to pay for it, like in the real world. But if you know what you are doing, you can make smart moves and use guaranteed contracts to your advantage.
Fair enough
But there’s still consequences. Free economies tend to result in a market being dominated by a handful of operators. Think major airlines, or Microsoft vs Apple. It tends to be good for society in many regards, but what we value in sports isn’t always what we value in the rest of our lives. Most of the American leagues are built around parity with the presumption that there’s more excitement and entertainment that way. There’s a lot of excitement in the EPL, but it’s created by the addition of other incentives (staying up, qualifying for tournaments, etc) that we don’t have over here. If the only thing you changed in the NBA was to remove the salary cap, I’m not sure you would maintain interest levels in many markets. I think you would end up with a handful of teams dominating the league.
Certainly there’s a difference between a well-funded team and a well-run team, but there’s a huge advantage associated with a larger budget and only so much that a talented front office can overcome. Currently, the poster child for the young, low-budget team that was skillfully assembled is the Oklahoma City Thunder (and many kudos to Sam Presti), but even their payroll is going to be $39 million this year (down from $55 million last year). The Lakers had $91 million last year, but spent closer to $115 million in order to get that. If they had $115 million of talent on that team, can you imagine how monstrous that would have been?
Real revenue sharing
The NBA-unlike the NFL-doesn’t share local market media sales. The Lakers signed a huge TV deal a couple of yrs ago that raised the Salary Cap a couple of million-and the min teams needed to spend-and got to pocket all the money. Small market teams saw their payroll automatically increase yet didn’t get any corresponding increases in revenue.
So a reasonable answer is to split local media revenue-say 50% of local revenue to be split among the teams w/some player rollbacks(shorter contracts,First Rd picks getting same salary,etc) would help small market teams and stil leave enough for the big market teams to venture into a Lux Tax(possibly staggered w/higher Taxes the more a team spends).
The unexpectedly higher Salary Cap announced(an increase over last Season and MUCH higher than the teams were told to expect in Feb),large contracts being given to players this Summer is going to reinforce the players belief the League is in much better shape than Stern is claiming. It’s going to be a brutal lock-out.
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