1. The current CBA (collective bargaining agreement) between the owners and the players' association is far more heavily weighted towards players than any other major sport in America.
% League Revenues
MLB: 48% Players
NFL: 48% Players (current proposal)
NBA: 57% Players (in CBA that is expiring)
2. There is not enough revenue sharing in the league to protect smaller-market teams. Witness the recent tv contracts signed by the LA Lakers ($3 billion/20 year deal with Time Warner Cable), Portland Trailblazers ($120 million/10 year tv contract in 2007), and Houston Rockets (splitting $1 billion revenues with Houston Astros for Comcast deal).
When the NHL signed it's latest CBA, they made provisions for revenue sharing for its smaller markets, those that ranked in the bottom half of league revenues.
MLB has its own CBA revenue sharing plan, with $433 million redistributed to smaller market teams last year.
The NFL also has a form of revenue sharing among its teams, but as the league is highly secretive on the financial details of its individual franchises, exact numbers are unknown. There hasn't been any direct evidence that any of the NFL franchises are in any financial difficulty. Most of their issues regarding spending involves tight-fisted owners.
Here's a breakdown of NBA franchise Operating Profits, as estimated by Forbes.
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| For the data listed in the above graph, go here |
With roughly half of NBA franchises operating at an estimated loss, it's clear that owners are going to be digging in for what could be a long lockout period.
3. Owners believe that the major issue in cutting expenses is reducing player salaries. Currently, owners are required to spend 60% of team revenue on players. They want to reduce that to 40% and eliminate guaranteed contracts.
They also want a hard cap, much like the NFL, that would eliminate teams from finding loopholes around the current soft salary cap. That would also eliminate the building of "super teams", much in the way the Miami Heat were put together this year. Top-tier talent would have to be spread more equally around the league.
In any case, all signs point to a protracted lockout for the NBA. Clearly, the league's owners have reached a point where they realize the way the league has operated financially needs to change. Players will resist strongly reducing salaries or implementing a salary cap.
It's far more possible that the 2011-2012 NBA season will be a complete loss, but ultimately (as in the NHL lockout a few years ago), the League should be better for it.
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