RealGM Analysis
According to NBA commissioner David Stern, the fate of the 2011-12 season may come down to this weekend’s labor negotiations: “Either we’ll make very good progress, and we know what that would mean -- we know how good that would be, without putting dates to it -- or we won’t make any progress. And then it won’t be a question of just starting the season on time. There will be a lot at risk because of the absence of progress.”
It’s hard to know how seriously to take him, as escalating rhetoric before a big meeting is a basic element of negotiating. A shortened season, while far from ideal, would not seriously harm the NBA. However, if the season is lost, the decision should ruin Stern’s legacy.
Stern took over the league in 1984, the same year Michael Jordan entered the NBA. He has been widely credited with helping the league grow over the last 27 years, and is often called “the best commissioner in sports.”
Now, at the age of 69, his career is coming to an end. If he can’t get a deal done, he should be remembered more like Gary Bettman (NHL) and Bud Selig (MLB), inept managers unable to control more hard-line owners at the cost of the league’s overall popularity, than Pete Rozelle, beloved for shepherding the NFL to new heights of popularity.
When the NBA first locked out the players on July 1st, it claimed a net loss of $340 million for the last season, a figure met with considerable skepticism throughout the financial world. On the basis of these numbers, Stern said the NBA’s financial situation was so dire the league would cancel the entire 2011-12 season unless fundamental changes to its business model were made.
Several of the league’s most overextended owners are undoubtedly in financial distress, but that’s quite different from saying the league as a whole is in jeopardy. Since 2010, eight teams have changed owners; there is no shortage of buyers for any owner who needs to sell.
The biggest problem with Stern’s rhetoric is Stern himself. He presided over the renegotiation of the CBA in 1999 and 2006, both of which were seen as huge wins for owners at the time. If the league’s business model is in such bad shape, why is the person most responsible for creating it still in charge?
To be fair, there are many well-run business with financial problems because of the worldwide economic downturn. But even if we accept the owners' dubious claims of complete financial distress, and ignore all the ancillary benefits that come with owning an NBA franchise, the explosion in the value of sports television rights over the last two years should have made them whole.
In 2007, Stern negotiated a nine-year deal with ESPN/ABC and TNT, locking in the NBA’s TV contract at the worst possible time. If he had negotiated a five-year deal, as was customary, the league would be in the middle of a TV bidding war that has already made college conferences hundreds of millions of dollars.
On the strength of NBA Finals featuring super-teams from Boston, Los Angeles, Miami and Dallas in recent years, Forbes estimated the league that the NBA’s new TV contract would be worth an additional $300 million a year. That’s almost all of the owners’ dubious loss claims, and it’s Stern’s fault the money isn’t there.
When seen in that light, the league’s financial situation is hardly as dire as Stern’s proclamations. Most of it could be resolved by increasing revenue sharing between the teams, something which doesn’t even involve negotiating with the player’s union.
The players, meanwhile, have shown themselves more than willing to negotiate. Their latest proposal significantly reduces their share of BRI (basketball-related income). There is a fair deal to be made for both sides, a deal that would not cancel an entire season and completely derail the NBA’s surging popularity. A lockout over how to distribute $4 billion dollars while unemployment is over 10% would be devastating to the league’s image.
If the owners cancel the season, it would be the equivalent of a man with minor heart problems shooting himself in the face in order to get his cholesterol levels right. And if David Stern wants to earn the many accolades he has received and one day become a member of the Hall of Fame, he cannot allow them to pull the trigger.
It’s hard to know how seriously to take him, as escalating rhetoric before a big meeting is a basic element of negotiating. A shortened season, while far from ideal, would not seriously harm the NBA. However, if the season is lost, the decision should ruin Stern’s legacy.
Stern took over the league in 1984, the same year Michael Jordan entered the NBA. He has been widely credited with helping the league grow over the last 27 years, and is often called “the best commissioner in sports.”
Now, at the age of 69, his career is coming to an end. If he can’t get a deal done, he should be remembered more like Gary Bettman (NHL) and Bud Selig (MLB), inept managers unable to control more hard-line owners at the cost of the league’s overall popularity, than Pete Rozelle, beloved for shepherding the NFL to new heights of popularity.
When the NBA first locked out the players on July 1st, it claimed a net loss of $340 million for the last season, a figure met with considerable skepticism throughout the financial world. On the basis of these numbers, Stern said the NBA’s financial situation was so dire the league would cancel the entire 2011-12 season unless fundamental changes to its business model were made.
Several of the league’s most overextended owners are undoubtedly in financial distress, but that’s quite different from saying the league as a whole is in jeopardy. Since 2010, eight teams have changed owners; there is no shortage of buyers for any owner who needs to sell.
The biggest problem with Stern’s rhetoric is Stern himself. He presided over the renegotiation of the CBA in 1999 and 2006, both of which were seen as huge wins for owners at the time. If the league’s business model is in such bad shape, why is the person most responsible for creating it still in charge?
To be fair, there are many well-run business with financial problems because of the worldwide economic downturn. But even if we accept the owners' dubious claims of complete financial distress, and ignore all the ancillary benefits that come with owning an NBA franchise, the explosion in the value of sports television rights over the last two years should have made them whole.
In 2007, Stern negotiated a nine-year deal with ESPN/ABC and TNT, locking in the NBA’s TV contract at the worst possible time. If he had negotiated a five-year deal, as was customary, the league would be in the middle of a TV bidding war that has already made college conferences hundreds of millions of dollars.
On the strength of NBA Finals featuring super-teams from Boston, Los Angeles, Miami and Dallas in recent years, Forbes estimated the league that the NBA’s new TV contract would be worth an additional $300 million a year. That’s almost all of the owners’ dubious loss claims, and it’s Stern’s fault the money isn’t there.
When seen in that light, the league’s financial situation is hardly as dire as Stern’s proclamations. Most of it could be resolved by increasing revenue sharing between the teams, something which doesn’t even involve negotiating with the player’s union.
The players, meanwhile, have shown themselves more than willing to negotiate. Their latest proposal significantly reduces their share of BRI (basketball-related income). There is a fair deal to be made for both sides, a deal that would not cancel an entire season and completely derail the NBA’s surging popularity. A lockout over how to distribute $4 billion dollars while unemployment is over 10% would be devastating to the league’s image.
If the owners cancel the season, it would be the equivalent of a man with minor heart problems shooting himself in the face in order to get his cholesterol levels right. And if David Stern wants to earn the many accolades he has received and one day become a member of the Hall of Fame, he cannot allow them to pull the trigger.
