The conventional wisdom — based on the words out of the mouths of David Stern, Billy Hunter and basically everyone who has been in on one of the NBA labor negotiations — is that the two sides are nowhere near a deal. They are finally getting serious about the negotiations, but the sides remain far apart.
Or are they?
Not according to Chris Sheridan — he formerly of ESPN and the Associated Press, one of the better league-wide reporters out there, who has started his own site sheridanhoops.com. (We wish him luck, he’s one of the good ones and you should be reading his stuff.)
Sheridan reports the two sides are closer than you think to a deal.
Yes, under the 10-year collective bargaining agreement the owners have proposed, the gap is indeed somewhere in the area of $7-8 billion range….
Moreover, if you look at years 1, 2 and 3 of the proposals, the sides are a total of $870 million apart. (The players are asking for $2.17 billion in salaries and benefits in 2011-12, $2.33 billion in ’12-13, and $2.42 billion in ’13-14. The owners are offering a flat $2 billion per year.) Or to put it another way, in a business that brought in $4.2 billion in revenues last season, the sides are only $170 million apart for next season….
But here is the key thing, the two most important words to keep in mind as this lockout plays itself out: Aggregate dollars. Right now, the owners have offered the players slightly more than $12 billion in total compensation over the next six seasons. The players are seeking just under $15 billion.
Somewhere in between $12 and $15 billion lies the settlement number, and they’ll get there one way or another.
I want to believe, but….
First off, that is still three billion dollars we are talking about, a healthy chunk of change by even Warren Buffett’s standards. Also, the owners last proposal decoupled league revenue and the salary cap — the players will not stand for that. The players know big television deals are coming and they want a cut.
The other real question to me is: Who is driving the bus on the owners side? Remember, David Stern works for the owners, he has a lot of power but he works at their discretion. There are some owners out there — small to middle market owners who leveraged themselves to buy these teams in the last decade — who want to radically change the economic landscape of the league right now. So far, the harsh rhetoric and the harsh proposals from Stern have been put out to placate those hard liners.
But how far can Stern come off that line? He’s not coming all the way to the players side, certainly. But how far can he come, and on what timeline can he make those steps? As Sheridan notes, issues like a hard-cap are tricky. Do you think the league — coming off a season of the best television ratings and fan interest since the Jordan era — wants a true hard cap that breaks up the Miami Heat? You may hate the Heat, but you watched them in very large numbers. Is breaking up that trio (or forcing the Lakers and Mavs to break up their teams, or squashing what the Knicks are trying to do in New York) really good for the business of the league? Do the smaller market owners care? Is this something where the transition to a harder cap (stiffer fines for going over a luxury tax number, which is the likely compromise) takes place over five to six years not two to three? And we haven’t even touched yet on getting the owners to agree on a revenue sharing deal.
The players are going to have to give up more than they have given up right now to get a deal done. Their best offer is not on the table yet. Neither is the owners. In that sense, there is room or optimism. But when those offers are down on the table, I’m not convinced the gap is as small as Sheridan suggests. Even if I want to believe he is right.