RealGM Analysis
“It’s just business. Everything is just business for us. Buy for a nickel, sell for a dime.” -- The Wire.
Unless you inherit a team, you don’t become an NBA owner without being a good businessman. And you don’t make hundreds of millions of dollars without being willing to step on people’s toes.
That’s become clear after this weekend’s negotiations on a new collective bargaining agreement, dubbed as “pivotal” if the season was to be saved. The owners aren’t interested in compromise or making a deal; they’re trying to make as much money as they possibly can. In short, they’re being good businessmen.
The reality is simple: they have all the cards, now it’s just a matter of waiting for the union to fold. The vast majority of NBA players, like most people in their twenties, live paycheck-to-paycheck. That was the lesson of the 1999 lockout, and it’s unlikely much has changed since, as 60% of NBA players declare bankruptcy within five years of retirement.
Just as important, an NBA player’s career lasts, on average, only 4.7 years. If the owners refuse to pay them for an entire season, that’s money most players will never get a chance to make up.
This lockout is more like the NHL’s than the NFL’s; the casual sports fan will not care if the NBA loses a good portion of its season. And while the economic model the NHL instituted after missing the entire 2004-05 season has been a mixed bag, six years after the lockout, hockey’s popularity hasn’t been tremendously affected. The fans returned to hockey, just as they will return to basketball.
On the one hand, the owners know the players have no ability to withstand a work stoppage. On the other, they know that they will be able to recover from even a year-long lockout. So, from their point of view, why not ask for the moon?
The math is irresistible. The players currently make 57% of BRI (basketball-related income). The owners initial offer was to give them 46% of BRI over the next ten years. After four months of “negotiating”, their new offer was for 47%.
If you assume the league’s revenue grows by an average of 4% a year over the next decade, the difference between what the players make under the old CBA and what they would make under the owners’ proposal is over five billion dollars. That’s billion with a 'B'.
From a financial perspective, that’s just too much money to pass up. There’s no point in looking at it morally. It doesn’t matter that thousands of arena workers’ livelihoods depend on NBA games, nor does it matter that the public has spent $1.75 billion over the last decade to finance NBA stadiums. Not getting the best deal possible just isn’t good business.
The players’ only real bargaining chip was decertification, disbanding the union and challenging the CBA on an anti-trust basis, a step the NFL players tried when they were locked out earlier this year. But when the NFL owners were able to keep decertification tied up in the courts, a process which would likely have taken several years, that option was effectively off the table. What good would would a multi-year court victory be for the players if half of them would never be able to reap the benefits because their basketball careers were already over?
Now, with the cancellation of games almost unavoidable, the owners’ bargaining position is clear: they are going to take as much money as they possibly can from the players, and there is nothing the players can do to stop them.
It doesn’t matter if it happens now, if it happens three months from now or if it happens a year from now. It’s nothing personal. It’s just business.
Unless you inherit a team, you don’t become an NBA owner without being a good businessman. And you don’t make hundreds of millions of dollars without being willing to step on people’s toes.
That’s become clear after this weekend’s negotiations on a new collective bargaining agreement, dubbed as “pivotal” if the season was to be saved. The owners aren’t interested in compromise or making a deal; they’re trying to make as much money as they possibly can. In short, they’re being good businessmen.
The reality is simple: they have all the cards, now it’s just a matter of waiting for the union to fold. The vast majority of NBA players, like most people in their twenties, live paycheck-to-paycheck. That was the lesson of the 1999 lockout, and it’s unlikely much has changed since, as 60% of NBA players declare bankruptcy within five years of retirement.
Just as important, an NBA player’s career lasts, on average, only 4.7 years. If the owners refuse to pay them for an entire season, that’s money most players will never get a chance to make up.
This lockout is more like the NHL’s than the NFL’s; the casual sports fan will not care if the NBA loses a good portion of its season. And while the economic model the NHL instituted after missing the entire 2004-05 season has been a mixed bag, six years after the lockout, hockey’s popularity hasn’t been tremendously affected. The fans returned to hockey, just as they will return to basketball.
On the one hand, the owners know the players have no ability to withstand a work stoppage. On the other, they know that they will be able to recover from even a year-long lockout. So, from their point of view, why not ask for the moon?
The math is irresistible. The players currently make 57% of BRI (basketball-related income). The owners initial offer was to give them 46% of BRI over the next ten years. After four months of “negotiating”, their new offer was for 47%.
If you assume the league’s revenue grows by an average of 4% a year over the next decade, the difference between what the players make under the old CBA and what they would make under the owners’ proposal is over five billion dollars. That’s billion with a 'B'.
From a financial perspective, that’s just too much money to pass up. There’s no point in looking at it morally. It doesn’t matter that thousands of arena workers’ livelihoods depend on NBA games, nor does it matter that the public has spent $1.75 billion over the last decade to finance NBA stadiums. Not getting the best deal possible just isn’t good business.
The players’ only real bargaining chip was decertification, disbanding the union and challenging the CBA on an anti-trust basis, a step the NFL players tried when they were locked out earlier this year. But when the NFL owners were able to keep decertification tied up in the courts, a process which would likely have taken several years, that option was effectively off the table. What good would would a multi-year court victory be for the players if half of them would never be able to reap the benefits because their basketball careers were already over?
Now, with the cancellation of games almost unavoidable, the owners’ bargaining position is clear: they are going to take as much money as they possibly can from the players, and there is nothing the players can do to stop them.
It doesn’t matter if it happens now, if it happens three months from now or if it happens a year from now. It’s nothing personal. It’s just business.
