OT: NBA losing $400 million this year

[mook]

http://sportsillustrated.cnn.com/2010/writers/ian_thomsen/02/13/stern.all.star/index.html

David Stern's smile was meant to take the edge off his knifing statement."This year,'' the NBA commissioner told reporters in Dallas on Saturday, "we are projecting a league-wide loss of about $400 million."
A $400-million loss cannot be expressed as good news, and in the context of Stern's initial negotiations Friday with the players' union, it rang out like the gavel of a judge as he sternly regained control of the proceedings. Over the previous four years, added Stern, the league has been losing at least $200 million annually.
The current collective bargaining agreement is supposed to be paying the players 57 percent, but league sources say they are raking in more than 60 percent thanks to the excessive salaries paid out by the 13 franchises that have surpassed the luxury-tax threshhold this season.

....
Hunter had acknowledged the union would respond with its own proposal after hearing Stern suggest that the players accept salary cuts equal to 40 percent of revenues, as well as partially guaranteed contracts no longer than four years and a hard cap. That wish-list was so off-base, said Hunter, that the owners agreed to "tear up" the proposal and start over.

....
Stern has promised to open all of the books and let the players see the red ink for themselves. Both sides can argue all they want, but nothing can change these two starting points: The owners can withstand an anticipated 2011 lockout far longer than the players, and the public will ultimately support a reduction in player salaries.
....
In other words, Stern is going to tighten the message that is coming from his side of the bargaining table.
"We will manage to get to a place where we always get to," he Stern. "There is always a deal, and we plan to make a deal this time, too."
An eventual deal? Definitely. A lockout after next season? Highly likely.
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Hard to believe the players won't eventually cave on this. You compare their salaries to any other sport and it's hard to argue they aren't being overpaid.

Of course, on the flip side the owners are still seeing the value of their team appreciate. So while they may not make money on a franchise, they can always register huge gains just by selling to some other well-healed organization or person who wants the ego trip of owning an NBA franchise.
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[MIXUM]

scary times for the nba...

i think lockout is all but certain

 

[SpanishFly]

well almost everyone else in this country is and has suffered significantly from this economy, the ridiculous money these athletes get should be cut back, especially the guaranteed contract part IMO

 

[GriLtCheeZ]

The owners don't have to pay these ginormous salaries, but they always do, and then demand protection against themselves every time a new labor contract comes up. S.O.S Fucking idiots!

 

[Denny Crane]

Maybe they should go to 1 year contracts with some sort of insurance to cover a few years' worth if a player gets hurt.

 

[THE HCP]

Denny, we should have 1 year contracts on here. Filter out some of the scrubs and us superstars will get their deserved respect for their greatness!

 

[SlyPokerDog]

What I'm wondering is if Stern actually does get the salary reduction that he wants won't that just make it easier for European teams to not only keep their players but to get a few stars?

 

[BGrantFan]

Maybe they should go to 1 year contracts with some sort of insurance to cover a few years' worth if a player gets hurt.

It would be impossible to build a team with that sort of system. You'd never know who would be around the following year.

The NFL system isn't bad, but the NBA would still need to scale rookie contracts. NFL players make their money primarily from guaranteed bonuses, and the contract still counts on the cap if a player is cut early.

That's a system I could live with, and it is fair to both the owners and the players.

 

[Minstrel]

Hard to believe the players won't eventually cave on this. You compare their salaries to any other sport and it's hard to argue they aren't being overpaid.

How so? Baseball player earn quite a bit more. NBA players have "max salaries," a concept that doesn't exist in any other sport.

It will be interesting to see. Generally in these types of disputes, there haven't been viable leagues for players to jump ship to, like there are now in Europe for basketballs.

In terms of sympathy, I've never sympathized with the owners' position of "We need rules to stop us from spending. We're just poor businessmen with no idea how to individually control our own spending." To me, it's simple: if you, as an owner, think players are paid more than they're worth to you, offer less. Why should there be rules to force you to do what you believe you should be doing?

The answer is, of course, that the owners know full well that the players are worth the salaries...that is the only reason the owners offer them and pay them. They want to use rules to get the players for less than they're worth, thus artificial market restrictions.

 

[Denny Crane]

How so? Baseball player earn quite a bit more. NBA players have "max salaries," a concept that doesn't exist in any other sport.

It will be interesting to see. Generally in these types of disputes, there haven't been viable leagues for players to jump ship to, like there are now in Europe for basketballs.

In terms of sympathy, I've never sympathized with the owners' position of "We need rules to stop us from spending. We're just poor businessmen with no idea how to individually control our own spending." To me, it's simple: if you, as an owner, think players are paid more than they're worth to you, offer less. Why should there be rules to force you to do what you believe you should be doing?

The answer is, of course, that the owners know full well that the players are worth the salaries...that is the only reason the owners offer them and pay them. They want to use rules to get the players for less than they're worth, thus artificial market restrictions.

The artificial market restrictions work both ways. There's no way that a guy like Brad Miller deserves to be paid 3x what Derrick Rose gets paid.

 

[handiman]

In terms of sympathy, I've never sympathized with the owners' position of "We need rules to stop us from spending. We're just poor businessmen with no idea how to individually control our own spending." To me, it's simple: if you, as an owner, think players are paid more than they're worth to you, offer less. Why should there be rules to force you to do what you believe you should be doing?

The answer is, of course, that the owners know full well that the players are worth the salaries...that is the only reason the owners offer them and pay them. They want to use rules to get the players for less than they're worth, thus artificial market restrictions.

That is a way oversimplified view of how it works. If an owner opts to not overspend, they know full well someone will swoop in and steal their players. If you want to play the game, you have to pay the going rate. And as long as there aren't limits in place, that will likely be higher than the league can sustain.

 

[maxiep]

Denny, we should have 1 year contracts on here. Filter out some of the scrubs and us superstars will get their deserved respect for their greatness!

^^Derek Anderson of S2^^

 

[mook]

How so? Baseball player earn quite a bit more.

Really? I didn't realize that. I don't really follow baseball. I stand corrected.


Anyway, teams could save a ton of cash if they just made the Allan Houston rule an annual event. Every year each team gets to cancel one absurdly bad contract without it going toward luxury tax. Add in that if such a contract is cancelled, the team owes the player only $.50 on the dollar.

So you could unload a guy like Brad Miller, who would probably just get re-signed somewhere else for significantly less.

 

[Minstrel]

That is a way oversimplified view of how it works. If an owner opts to not overspend, they know full well someone will swoop in and steal their players. If you want to play the game, you have to pay the going rate. And as long as there aren't limits in place, that will likely be higher than the league can sustain.

It's not oversimplified at all. What I described is how the marketplace at large works. "Paying the going rate" on players is not somehow unfair to owners, just as "paying the going rate" on iron is not unfair to business owners.

 

[Minstrel]

The artificial market restrictions work both ways. There's no way that a guy like Brad Miller deserves to be paid 3x what Derrick Rose gets paid.

Heh, using yet another artificial market restriction that is in favour of owners is not an example of it "going both ways." Miller's price hasn't been artificially inflated...he's getting the market rate as a veteran. Derrick Rose's price has been artificially reduced by the caps on rookie deals. That's why their comparative salaries are out of whack.

 

[OddEnormous]

That is a way oversimplified view of how it works. If an owner opts to not overspend, they know full well someone will swoop in and steal their players. If you want to play the game, you have to pay the going rate. And as long as there aren't limits in place, that will likely be higher than the league can sustain.

The main reason I don't own an NBA team is because I can't afford it.

 

[oldmangrouch]

What I'm wondering is if Stern actually does get the salary reduction that he wants won't that just make it easier for European teams to not only keep their players but to get a few stars?

That's one way to reach his goal of "taking the game international"....drag the NBA down and reverse the talent flow.

 

[oldmangrouch]

I find it interesting that people will complain about jocks being overpaid - but they never apply the same argument to actors or rockstars.

 

[Samuel]

Given the upcoming renegotiation of the collective bargaining agreement, it appears to be in the best interest of the league to go public with the sour state of their finances.

 

[Denny Crane]

Heh, using yet another artificial market restriction that is in favour of owners is not an example of it "going both ways." Miller's price hasn't been artificially inflated...he's getting the market rate as a veteran. Derrick Rose's price has been artificially reduced by the caps on rookie deals. That's why their comparative salaries are out of whack.

Derrick Rose is probably getting close to his worth, but certainly Miller is overpaid for what he contributes. Longevity is irrelevant, it's production that counts. Miller did earn his big bucks contract for the few seasons when he was all-star or near that level.

The NBA is losing $400M, there's about 1/3 the owners paying the players handsomely (deep in the Luxury Tax), and there are a bunch of over the hill veterans getting paid way too much. The consequence is the league isn't as talent rich as it should be, IMO.

Like I said, the things that players are concerned with seem to be insurable type things. Salary maintained for X seasons if they get hurt, and even an annuity based upon years of service is an insurance thing. The latter assures guys who play a long time get paid for that.

 

[BlazerWookee]

"The League" or "All The Teams In The League Combined?"

 

[Minstrel]

Derrick Rose is probably getting close to his worth, but certainly Miller is overpaid for what he contributes. Longevity is irrelevant, it's production that counts.

Just to be clear, I think you misunderstood what I meant by my "as a veteran" phrasing. I didn't mean he deserves more due to his veteran status. What I meant is that, as a veteran, he got to be an unrestricted free agent and let the market determine his worth.

As opposed to players on rookie contracts, who are locked into contracts well below what they'd be paid on the open market.

 

[OddEnormous]

I find it interesting that people will complain about jocks being overpaid - but they never apply the same argument to actors or rockstars.

Or themselves.

By the way, now seems the perfect time for me to mention that I think the guys who make the fluffy stuff that goes in couches are grossly over paid.

And don't get me started on the guys who operate the machines that create the threading on screws.

 

[handiman]

It's not oversimplified at all. What I described is how the marketplace at large works. "Paying the going rate" on players is not somehow unfair to owners, just as "paying the going rate" on iron is not unfair to business owners.

Since when is the NBA the marketplace at large? This is real world, not a textbook.

 

[Minstrel]

Since when is the NBA the marketplace at large?

It's not. That was my point. I don't feel sympathy for owners not being able to artificially constrain the marketplace as much as they'd like.

This is real world, not a textbook.

That simply makes no sense. I wasn't talking about academic exercises, I was talking about the real world market. You know, the ones companies actually exist in, in the real world.

 

[handiman]

Look at it this way, if your assumptions held true, the NBA would not be in such a supposedly dire situation. That should be proof aplenty that you need to revisit your reasoning.

 

[Minstrel]

Look at it this way, if your assumptions held true, the NBA would not be in such a supposedly dire situation. That should be proof aplenty that you need to revisit your reasoning.

It means NBA owners need to run their businesses responsibly, like all other business owners, rather than tossing business principles out the window and looking for artificial constraints to rein themselves in.

Look at it this way, if your assumptions held true, no industries would be able to function without artificially capping all worker salaries and all goods that they use, which is clearly not the case. That should be proof aplenty that you need to revisit your reasoning.

 

[oldmangrouch]

Guys, reality check time.

$400 million spread over 30 teams comes to $13.33 million each. That is less than a single max contract per team.

This is worth a lock-out?

 

[handiman]

Look at it this way, if your assumptions held true, no industries would be able to function without artificially capping all worker salaries and all goods that they use, which is clearly not the case. That should be proof aplenty that you need to revisit your reasoning.

Clever comeback, but I already said that the NBA does not fit "marketplace at large" examples. Try again. The entertainment industry is well known in economic circles to follow a much different formula than typical supply and demand.

 

[Minstrel]

Clever comeback, but I already said that the NBA does not fit "marketplace at large" examples. Try again.

And I already pointed out that does nothing to contradict what I said. My entire point was that the NBA is not following the "marketplace at large" format. My point is that it should be.

The entertainment industry is well known in economic circles to follow a much different formula than typical supply and demand.

Again, you're confused about my point. I'm not saying it does. I'm saying it should. What is your reasoning for why it can't follow typical supply and demand principles?