NEW YORK — What if someone made you this offer:
If you give me $4 today, I will give you back $40 in a month. But if you refuse to give me $4, you are guaranteed to lose $40 within a month. So you will either gain $36, or lose $40.
You’d be nuts to turn that offer down, correct?
Well, multiply that $4 by 10 million, and then ask the same question: Would you let go of $40 million today if it ensured that you’d get $400 million back? Your net gain would be $360 million, and your only alternative would be a $400 million loss.
It’s a no brainer, right?
Apparently not.
It is clear to anyone with a brain that the way for the sides in the NBA lockout to have closed the deal yesterday was to agree on a 51/49 split of revenues. As I wrote last night, 51 was the magic number. Instead, the union dug in its heels at 52 percent, and the owners wasted an opportunity to end this madness by announcing on the third consecutive day of talks that they were not willing to budge off their previous offer of a 50/50 split.
So with 99 percent of the work done, they let the final 1 percent become a deal-killer. They are $80 million apart, and they are willing to flush $4 billion down the toilet to show what badasses they are.
How could this be allowed to happen?
The best explanation of the morning comes from Ken Berger of CBSSports.com, who has analyzed this asshattery (his new favorite word) better than any other NBA writer throughout the entire NBA lockout:
“There is no rational way to explain this behavior, so there has to be something wrong. And the only answer is that neither Stern nor Hunter had the authority to negotiate beyond his established position. No wonder the NBA is in such sorry shape, losing $300 million a year and destroying the interest of people who might consider spending money on their product some day with every illogical decision they make. It’s easy to figure out who is giving Stern his marching orders; he works for the owners, many of whom are going for a bloodbath in this negotiation instead of a rational victory. Given the scope of the owners’ initial demands, the players have won a couple of surprising “victories” by holding onto guaranteed contracts and a $5 million mid-level exception and beating back the owners’ pursuit of a hard team salary cap. But every other aspect of the deal that’s been negotiated to this point is in favor of the owners: minimally, a $1.3 billion reduction in salaries over six years, shorter contracts, smaller raises, a more punitive luxury tax, and on and on. But Stern has done what I warned him not to do. A lawyer by trade, he failed to see the sure victory of a plea bargain in his midst and stubbornly — presumably not of his own free will — decided to take this one to the jury, where everybody loses. The one thing Stern remains empowered to do is own the spin game, and he did that masterfully again Friday by pinning the blame on Hunter for walking out. And as with most spin, there was an element of truth to Stern’s account. He and deputy commissioner Adam Silver conveniently omitted the part when there was an opportunity — both when Hunter was still in the room and after he left — for Stern to communicate a willingness to make the economic move he’d said he was prepared to make. He didn’t do it, he blamed Hunter, and he won the P.R. battle while failing to realize he’s losing the war.”
What I love about the pantomime now (and it had become a pantomime) is that a month ago, the Players wouldn’t go a dollar below 53%, led by the Boston Elite.
Then when George Cohen was the man in the middle, the number was 52.5%. No Less!
Now here we are approaching November, the start of the ‘season’ and the start of the previously mentioned missed paydays and now the Players won’t do a cent below 52%.
That’s a full percentage point in a month. In all that time, the Owners have stuck to a 50-50 split. They are the winning team here. Give it a month and a few more hotel suite meetings and the Players will give up another 1-1.5%.
Season will start at Christmas.
“Pantomime.” Nice call.
even if they drop to 50 in a month, thw owners are gonna drop to like 45
honestly the owners have messed up the most during these negotiations. it started by making it clear they were going to lock out the league before the cba was up. they changed the rules of the league without consulting players (tech rules basically which cost players tons of money). they then canceled the summer league in June, before the cba was up. They then made ridiculous demands they knew they wouldn’t get until games were already canceled when they finally made the more reasonable 50-50 proposal without the hard cap. both sides have been rude to each other in the media and it doesn’t surprise me that we are where we are. I was all for the system and BRI being changed, but the owners have had a monster victory this cba the way things are now, but they want more. at this point it is about ego, about rich white men not wanting to take shit from people they deem as less than worthy. Who here thinks that a deal could not have been made at 51-49?
The owners have decided that the players and their agents will not run the league. The Lebron and Melo fiascos last year were too much for the owners to take. They are merely asserting their control and I doubt they ever intended to resolve this prior to inflicting pain on the players. On the flip side, the players should have taken the 50-50 deal but they are delusional into thinking the public really cares if they don’t play. I would bet a lot of players are angry that they are forced to go along with the union on this.
KBerger is so wrong so many times on the numbers. It is laughlable that he is allowed to write stuff like that. The guy does have good sources but man oh man, he needs an accountant checking his stuff.
Anyway, I am hoping for the NBA will cancel the season and the next season too.
Dan,
That’s great that YOU want this AND the next NBA season cancelled. But there are workers out there that depend on the NBA being played. That in this ecomonic climate these greedy owners and players think about how they are going to afford the 6th wing expansion on their houses, others out there are suffering at their expense.
As stubborn as agents are, there are 10-15 even more so. The Wizards owner has made it clear he’d be fine w canceling season since July. He wants the NBA to become the NHL. The NHL is so great it stop being a top 4 league after missing a season and when their CBa is up they’ll lockout again and miss a season..Gilbert, Sarver and Allen are major league clowns who rule these negotiations from afar. As Mickey arison tweeted..you’re barking at wrong owner.
Chris, again you and Berger are missing the math here. Last night Berger was somehow taking $400 million in lost revenue from the first few weeks and extrapolating it into a $1.5 billion loss like Jesus multiplying loaves and fishes.
Sure, each point of BRI is worth $40 million. But over a seven year deal, that works out to $280 million (7*$40 million). So if the owners cave on two percentage points of BRI, that would be $560 million over the course of the deal. They aren’t $40 million apart.
And that assumes that revenue over the next seven years is static at $4 billion a year and never changes. Let’s say however that the league does grow with a net gain of $12 billion (or we just get inflation) over the life of the CBA. Now the owners miss out on two points of that BRI or another $240 billion. Now we are talking a net change of $800 million lost by the owners.
And don’t forget the MLE ban for taxpaying teams. That perhaps prevents five teams per year from paying out $15 million dollar contracts or saves the owners from incurring an additional $75 million a season in contract liabilities. Multiply times seven years of the agreement and you have another $525 million.
I’ve just laid out for you how simply caving on two BRI points and possibly the MLE indicates the sides are about $1.5 billion apart right now.
Are both parties losing money? Of course. But this isn’t necessarily as close as you, Aldridge and Berger keep thinking it is.
@paulpressey25 You’re missing the math also. Yes, the owners would be “losing” that money, but if they can agree on 51/49 split. The owners are gaining $240 million a year and $1.68 billion over the course of the deal from the old deal (assuming everything remains static). I’d say that’s a pretty big win for the owners right there and if they can’t make money on that deal, then you have to start looking at questioning some of their business practices.
@chicagojoe. I think one of the challenges is that everyone keeps looking at the numbers as if this is still 1999 or 2005. And then measuring “givebacks” based on that.
2011 is an entirely new situation and new economic landscape. I’d like gas to still be 1.89 a gallon as it was in December of 2008. I can sit and complain that I’m paying too much today based on the percentage move over three years, but at the end of the day I have a choice. Pay the new price or drive less.
A large contingent of owners are tired of trying to work within a screwed up system and are offering the players a choice of a new system, or they can find another league to play in. If this particular group of players are 100 percent essential to the league making all sorts of money, the owners would have rationally caved months ago. But these group of players aren’t essential and the owners haven’t felt compelled to give in.
I think you are right. The media are misunderstanding and misrepresenting the numbers. $560 million is a big deal. It’s understandable that this is a difficult situation for the players but the reality is that if they do not put enough money on the table, the owners will not have the incentive to do the deal now. Reality number 2 is the economics get worse for the players as games are missed.
Apparently the players are in denial about the numbers as well.
Quote from Stern press conference “Hunter said the AGENTS won’t let him move off 52%!”
I think this is the most telling statement this week. If Hunter actually held a vote of ALL players yesterday whether to take 51% and not lose another 2 weeks or more, I honestly believe the rank and file would agree to it.
There are only 30 owners so it is easy to ask all of them to vote on the issues so we truly do know their majority stance. Unfortunately (like many things in life) the silent majority of players who would happily agree to 51% and play now are being overwhelmed by the more vocal agents (who have a vested interest in as high a % as possible) and superstars who can easily lose checks as their other incomes/savings put them in a position where they can lose games and not worry. This stance of “we have to protect the players who are not in the NBA yet” is a joke. A Union is responsible for its members NOW; not its future members. When the future members join then they can use their union to fight for the best CBA for them.
The minimum salary players now are NOT being represented adequately by their union!
Median NBA salary is only $2.33million per year. Therefore the majority of players (who would win a Union vote) earn less than (only in NBA terms) $2.5 million. These are the players who are effected by the lockout.
A message to all the players on salaries of $2.5 million or less. “MAKE YOUR VOICE BE HEARD!” Your Union is NOT representing you here
Why the agents have so much power here is beyond me. Still need owners to come to 51 though.
The best way to give every team (please won’t happen) a chance at winning is to get rid is several of the small market teams and have atleast 22 strong teams. What teams to get rid of the ones losing money and lottery their players away
that might be true, but neither side is rushing to contract. It means less money over all, and it means less jobs for the players and less options to progress their careers.
Also- as long as there are teams with 3 superstars on them playing against teams with no all stars every given night, the league will try and address that first.
having said all that- the system looks like it is close enough to fiddle around with and get a deal if the BRI works. The system is going to be what makes the league more competitive, not the BRI split.
80 million dollars a year is such a small amount for these guys. My guess is that they could develop a plan for each team to raise an extra 2-3 million a year (totalling the 80 million) without a problem at all. They could auction off signed jerseys and basketballs that were used in actual games, Players could show up early on some of the big home games and sign autographs for 15 bucks each or something. Teams could cut the expenses of the little guys giving out pizza, and the guys jumping off trampolines during the timeouts…. and all the other BS that the real basketball fans wouldnt care about at the games.