Friday, September 23, 2011

NBA Lockout Cancels Training Camps/Several Pre-Season Games: When Will Fans Really Care?

News came out of the NBA today that, due to the lockout, all training camps have been cancelled.  Along with that, 43 preseason games were also cancelled.

That brings the season up to October 15 in the NBA schedule.  As the lockout continues, more and more games will be cancelled  but it unknown as of yet when the regular season, set to begin on November 1, will be affected.

What It's All About

There are two major issues that are blocking these negotiations:

  • Revenue sharing - Currently, the players have been receiving 57% of league revenues. Recent leaks out of the talks have indicated that the owners want to reduce that to 46%. That's an 11-point reduction, a huge pill for the players, who have proposed a 54% share, to swallow.  
    • As noted in my earlier blog post, the NBA's players receive a far higher percentage of the league revenues than either the NFL or NHL (both around 48%).
    • Owners are REQUIRED to spend 60% of their profit cut on players (salaries, travel, etc). They want to be able to reduce that to 40% and pocket more of the profit
    • It seems that the compromise would be in giving the owners a larger share of total revenue (cut the players to 50% in this bargaining agreement), but also allow them to not have to be required to pay the players as much (reduce the required spending amount to 50%). I know that it's not a great compromise for the players to lose on both ends, but it's not nearly the reduction that owners really want.
  • Hard Salary cap - To be frankly honest, if the players won't cave on revenue sharing, they will have to allow a hard salary cap.  I'm not worried about the owners of teams like the LA Lakers and the Dallas Mavericks, but I am worried about the financial health of teams such as the Orlando Magic and the Charlotte Bobcats.
    • Currently there is a soft salary cap in place.  This soft cap allows for several exceptions:
      • Rookie exception - Teams can sign their draft picks to their rookie-wage scale salaries even if they're already over the cap. No penalty.
      • Mid-level exception - Once a year a team is allowed to sign a player to a contract for a salary equal to the average NBA salary at that position, even if they're already over the cap. Again, no penalty for exceeding the cap.
      • Larry Bird exception - Players can re-sign their top star, even if their salaries exceed the salary cap. It doesn't count.
    • There are at least a half-dozen more exceptions to the salary cap.  Basically, it allows for the richer teams (like the Lakers, Heat) to go over the salary cap several times without getting punished.  The smaller-market, less financially-stable teams just can't compete.
    • The soft salary cap is a major reason why there isn't more parity in the NBA
    • If expenses can't be reigned in, expect the NBA to contract at least a couple teams in the near future.
When Will The Fans Really Care?

Most certainly there's already a hardcore group of NBA fans fretting about losing regular season games.  However, I believe that the majority of the fans are more casual and tend to pick up their viewing of the NBA once the NFL season ends in February.  Typically, the NBA All-Star Weekend helps with that.

The NFL's labor issue was a completely different monster.  Compromise was needed, and ultimately everyone benefited.  In this NBA lockout impasse, the players know that compromising means they lose something.  They seems willing to give a little, but not nearly as much as the owners are wanting.

The amount of concessions the owners are asking of players is so high that the players will be willing to sit for an extended length of time.  Prepare for this to be a very long lockout. I'm predicting the entire season is lost, but that we still won't even get an agreement until a year from now.

In the end, however, the players are fighting a losing battle.  They've had it pretty good for quite a while now, and if the NBA is to thrive again everyone needs to be on board.

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