This much is clear — the NBA and its players union are much closer to a deal today than they were a week ago.
Tuesday’s intense negotiations may have ended with threats of the first weeks of the season being canceled, but it also saw real progress. First, they are finally talking about the real issue at the heart of these talks, the split of “basketball related income.” (BRI is made up of all the money that comes into the league — national television contracts, ticket sales, etc.) In the just expired labor deal, the players got 57 percent of BRI.
In terms of formal offers on the table, the two sides remain divided on the BRI split of with the players staying at 53 percent and the owners offering the players 47 percent. But in reported “informal concepts” discussed the owners offered closer to 50 percent while the players (who have already surrendered $160 million a year in these talks) held firm at 53 percent.
What does that really mean? ESPN’s Larry Coon — the best writer on NBA collective bargaining agreements out there — breaks down the numbers.
Three percent. It’s the difference between an opening tipoff and an empty arena. For both sides, the negotiating process boils down to a simple question — should we accept the offer on the table, or can we do better if we say “no” and wait?
For the players, the cost of saying “no” can be easily quantified. The owners have offered the players 50 percent of BRI. This season’s BRI is expected to be around $4 billion, so the owners are offering the players a $2 billion slice of the pie. The players are holding out for a 53 percent share, so they’re looking for $2.12 billion.
That’s $120 million that separates them. Of course, that’s just in year one. Over the course of a six-year agreement, assuming four percent growth per year, the total is closer to $796 million.
Now, nearly $800 million apart is a lot closer than they were, but it is still serious bank.
Coon’s assuming something there I’m not willing to easily concede — how the two sides define BRI. There was the definition of BRI that was in the old labor deal (which Stern said the owners 50 percent offer was based on). But the owners have made previous proposals that would take $350 million a year off the top of BRI for expenses such as NBA building renovations or the NBA’s international outreach efforts. How many of those expenses work their way back into the proposal will define how big the total pie will be, and that impacts how the sides want to define it.
Coon also makes this point with his numbers — by mid-December both the owners and players will have cost themselves all the money they stand to gain from holding a hard line on this deal.
The players are holding out for an additional $120 million in 2011-12, but holding out costs them $82.4 million per week. They would lose everything they stand to gain this season in less than two weeks. On Monday the league is expected to announce the cancellation of the first two weeks of the season, which will cost the players $164.8 million. Over a six-year agreement, the players would burn through the $796 million in a little under 10 weeks.
Then there’s the fan anger impact on money — if the NBA misses games, will fans come back? Some will be offended and walk away from the sport, the die hards will return no matter what. The real question is this: If the league is playing regular season games by Dec. 1, in time for the Christmas showcase day and the All-Star Game, will fans even notice they were gone? Will there be a significant ratings dip, or with the fans focused on the NFL and college football will they not care until later?
There are a lot of questions out there and no easy answers. Which makes it hard to see why talks on Sunday — if the two sides even have them — could lead to a deal on Monday. There is still a gap between the sides that is not easy to bridge.