NBA lock out. Money Talks

The 2011 National Basketball Association lockout brings forth the nasty side of sports business. The first two weeks of the NBA season have been cancelled and this lockout appears to be coming nowhere near resolution as the NBPA (National Basketball Players Association) and the NBA are admittedly miles apart in their negotiations.

Essentially the players of the NBA and the owners of NBA teams ordered a billion dollar pepperoni pizza to be distributed evenly between the players and owners. Now that their initial pizza agreement is over, the owners want more pieces of the new pizza and the players want to change what toppings are on the pizza.

To understand this situation, it is important to know that the NBPA is a certified union just as factory workers producing break pads are unionized. Unions operate in accordance with their owners to ensure the two sides have amicably agreed upon a set of rules for employment in the industry. These agreements establish “fair” rules most notably in line with salary and specifics of job externalities.

To set these rules, employers and employees within the union must agree upon a bargaining agreement. The issue at hand in the NBA is that the Collective Bargaining Agreement (CBA) that had been in effect since 2005 expired at the end of the 2010-2011 NBA season.

Both players and owners see parts of the 2005 agreement as no longer reasonable and now need to find a new agreement through restructuring the league.

In 2005, the agreement was that the players would receive 57 percent of the pizza and owners would receive 43 percent of the pizza. The pizza in this case is Basketball Related Income (BRI). BRI includes just about every revenue stream, from tickets to parking to broadcast rights to concessions.

Players are willing to accept an agreement on a BRI split of 53-47, but owners are adamant on receiving a 50-50 split.

In the previous CBA the players and the league agreed that the NBA would operate with a “soft” salary cap leaving numerous exemptions in place for teams to retain and acquire players at a cost above the salary cap. The league initially wanted to implement a hard salary cap in the new CBA that eliminated teams paying above a finite number in player salaries.

The owners have now backed off a hard cap just as the players conceded a 53 percent split of BRI, but the two sides still feel miles apart. This lack of agreement has led NBA Commissioner David Stern to cancel the first two weeks of the season in an effort to get the players to drop their demands.

Carmelo Anthony loses over $771,000 by two weeks of the season being canceled and was recently quoted in GQ magazine as saying “I personally don’t see any way you can have a competitive balance if you don’t spend money. At the end of the day it’s all about money. It’s kind of taking the fun out of the game because we just want to play basketball.”

Anthony may not exactly understand the intricacies of the economic sports world, but as he said, money talks. With players losing millions of dollars it is likely they will begin to ease off their demands.

And owners are the same way. Target Center and all other NBA arenas cannot legally be used for anything within 24 hours of a scheduled basketball game. With each team having 41 scheduled home games the owners of these teams will lose a substantial amount of money by their half billion dollar stadiums going unused. In time, both sides will begin to feel a sense of urgency.

However, the fact of the matter is, NBA viewership suffers during the first three monthsof the season regardless of the year. During these first three months (Oct. – Dec.) the rest of America is watching football. Professional and college football trump the NBA in viewership.

The 2010 NFL Draft aired on the same night as a crucial NBA playoff game featuring Lebron James, the face of the NBA, and the league’s Most Valuable Player, Derrick Rose, yet the NFL draft trounced the playoff game with twice the TV ratings that evening.

Last years NBA Finals were one of the most watched Finals in years drawing 17.3 million viewers over the six-game series. In contrast the Green Bay Packers versus Pittsburgh Steelers NFL Super Bowl attracted 111 million viewers to one game.

The NBA can go ahead and continue canceling games during this unnecessary lockout, but the reality is that the NBA season is too long as is. Furthermore, they may only alienate their limited fan base.

While this new pizza may be difficult to agree upon, the NBA is a multi-billion dollar professional industry and it is the owners’ and players’ jobs to agree on a few aspects they may not see perfectly in line with. If the two sides do not agree all NBA fans will be starved of the game they love.

8 thoughts on “NBA lock out. Money Talks

  1. FANTASTIC ARTICLE, DON’T KNOW THIS WRITER, BUT HE PUTS IT EASY FOR THE READER TO UNDERSTAND. THIS WRITER I THINK WE WILL BE READING HIS STUFF IN SPORTS ILL. SOME DAY!!

    1. A source tells SheridanHoops.com that the most scingfiiant impediment to a deal remains the owners i Players have offered to have 10 percent of salaries withheld, but a problem has continually arisen when the sides have discussed what mechanism would make up for the shortfall if the 10 percent withholding did not get the players’ share down to 50 percent. Would the shortfall carry over into the next season? Or would the players have to make up the difference in some other way to balance the books at the end of each season to provide for a fresh start at the onset of the next season? Jeffrey Kessler

      1. your logic is backward if a guy skips cgoelle and gets hurt as a rookie if he is a top 5 pick he will have made 9-12 million dollars in guaranteed salary not to mention endorsements he will be set for life and be able to pay for a cgoelle education if he so chooses on the other hand if a guy suffers a catastrophic injury in cgoelle he wont ever be able to go pro i don’t know how many cgoelle grads make 12 million in their lifetimes nonetheless at 18 or 19. the fact of the matter is cgoelle will always be there for a guy who wants to get an education the nba is far from promised. besides the fact that the guys who could go right out of high school are gonna turn pro asap whatever the minimum is so school is just something they need to do to play ball really how many 1or2and done players are there to get a degree less than 5% prob. if a guy has the skill to go pro right out of HS he should be allowed.

  2. It’s time to serve the pizza! If it has to be Gluten free…. so be it~ Where is the responsibility to the fan?

    Well done article!!! It made complicated details of collective bargaining digestable 😉

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