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Is the NBA Headed For a Lockout?

B-Dub Written by B-Dub, Saturday October 23 2010
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NBA commissioner David Stern said on Thursday that there has been no quantifiable progress in the collective bargaining talks with the NBA players union over the summer and the league is looking to make drastic changes.

Stern said that the league wants to drop player cost by $750 million to $800 million.  That would be a reduction in player salary cost of about one-third from the $2.3 billion the NBA currently spends.  It's no wonder the NBA and the players union haven't agreed to a new collective bargaining agreement (CBA) since they started negotiating over a year ago.  The current CBA expires after this season on June 30.

Under the current CBA, the players receive 57 percent of basketball-related income.  A reduction of one-third of player salaries would reduce that percentage to 41.  The players aren't likely to accept that under any circumstances, which is why a lockout is looming after this season.

NBA deputy commissioner Adam Silver claims that the league has projected losses to be about $340 million to $350 million this season. That's hard to believe with how popular the NBA is these days during the "Summer of LeBron" and the current Lakers dynasty, but that's what the league is going to use as a basis for their stance at the bargaining table with the union.

Reducing salaries aren't the only changes the NBA is looking to institute in the next CBA.  The owners are also looking to install a hard cap and have considered contraction as a way to reduce costs.  Again, these are two things that will not go over well with the players.

Let's start with the idea of contracting some of the 30 current NBA franchises.

I believe this is an idle threat by the owners since the league is much more interested in expanding their brand than contracting it.  But for the sake of argument let's look at it.  Based on gate-receipts data, the teams that have struggled the most in the past two years are Memphis, Minnesota, Milwaukee, Indiana, Atlanta and Charlotte.  

The result of eliminating a few of the lesser teams in the NBA would certainly improve the quality of the game.  Less teams, means that there will be less players on each team with borderline talent.  Back in the 1980-81 season when the NBA had only 23 teams, a team like the Miami Heat with future Hall of Famers LeBron James and Dwayne Wade, and to lesser extent Chris Bosh, would have been nothing special.  Back in those days plenty of teams had multiple Hall of Famers.  Remember the Lakers team with Kareem Abdul-Jabbar and Magic Johnson and the Celtics team with Larry Bird, Robert Parish and Kevin McHale?  Those teams would have destroyed the current Heat team.  It's just too bad contraction is an idle threat by the owners.  It could actually be good for the game.       

The NBA is looking at a hard cap as a way to control salaries. Unfortunately for the NBA, the union is saying that a hard cap would be "a total deal-breaker".  That may be an idle threat on the part of the union, but they have to at least start at that point in order reach a compromise.  

A significant number of owners believe that a hard cap would help competitive balance.  The National Hockey League uses a hard cap as a way to control their player costs and they have had a different Stanley Cup champion in each of the five seasons under a hard salary cap.  But that isn't proof that a hard cap works since Major League Baseball has no salary cap at all and they have had five different World Series winners in the same time span.  

One of the problems with a hard cap is how the league would grandfather in existing salaries.  LeBron James, Chris Bosh and Dwayne Wade are due to make a combine $48 million next season.  If there was a hard cap of say, $60 million, how would the Heat fill out the rest of their roster?  and the Lakers are in even worse shape with Kobe Bryant, Pau Gasol and Andrew Bynum.   

And a hard cap may lead to championship teams being dismantled before the confetti is even done falling on the parade.  That's what happened to the Chicago Blackhawks after they won the 2010 Cup because of the NHL's hard cap.  That type of thing is not good for sports.

As with the talk of contraction, a hard cap may simply be a bargaining ploy to get the players union to agree to reducing player costs.  One person familiar with the owners' position said it would be "stunning" if they fixated on a hard cap, and a hard cap alone as the solution to their problems.  Eliminating or tweaking the bogus mid-level exception, reducing the number of guaranteed years on contracts and having shorter contracts are all things that could be a good compromise for both sides.  

Neither side wants a lockout after the 2010-11 season.  The NBA is coming off its highest rated NBA Finals Game 7 of the post-Michael Jordan era.  This summer's free agency class generated daily headlines for months.  And the NBA had their best summer ticket sales in league history.  

One of the most anticipated NBA seasons ever is about to tip off with the Heat against the Celtics.  Kobe is talking trash about LeBron and the Heat.  And everybody is looking forward to a Lakers-Heat Finals.  I can't see Stern shutting down the league after all of that happens this season.

Instead of eliminating entire franchises or forcing the players to accept a nearly billion-dollar pay cut as part of a hard cap, the league and its players need to find a middle ground.  Shorter contracts with less guaranteed money and a revamped revenue-sharing system with what Stern called "modest performance standards" would go a long way towards improving competitive balance and satisfying Stern's goal of assuring that "all teams will have an opportunity to be profitable."

"There is an increasing understanding on both sides of the risk of not getting a deal done," Stern said.  Let hope so, because nobody wins when there are no games being played.


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