Monday, October 25, 2010

NBA Preview: Labor woes are coming
SUNDAY, 24 OCTOBER 2010 19:51

National Basketball Association Commissioner David Stern has sent Billy Hunter the Executive Director of the National Basketball Players Association a happy New Year note. The note included something about the league needing to cut player costs somewhere around $700 to $800 million and that the league's 30 teams combined would lose $340-350 million in 2010-11 and something has to be done and that would start by players giving back items earned in collective bargaining.
The NBA no longer wants to give the players 57 percent of the revenues.
Of course not every team is going to lose an average of ten million dollars a season. The New York Knickerbockers franchise, despite putting a poor product on the court, sells out every game and the Dolan family owns the franchise, the building (they pay no New York City property taxes despite owning a good chunk of Manhattan real estate) and, of course, the Dolans have the Madison Square Garden TV network and Cablevision. There is no way without creative accounting the Knicks franchise is losing money given the team's revenue stream availability.
Also on the table is a threat by Stern aimed right across the bow of Billy Hunter's ship. The elimination of financially wobbly franchises. The best guess is that those markets could be Memphis and Charlotte. The contraction of the league would mean fewer jobs for players. Left unsaid in the possibility of lopping off teams is what happens with the leases between the franchises that didn't make it into the future and the municipalities which built the arenas and gave away the house to the owner of the local franchise that was set adrift.
"Easy Dave" is not someone who is to be taken lightly. He divided the players in the 1998-99 lockout pitting the lesser valued players against the Patrick Ewings, Charles Barkleys and other high salaried players and got a cap on top salaries.
This isn't the first time the NBA hierarchy has thought about dropping franchises. In the early days of the league, many teams dropped out every year. The last time a team folded was on November 27, 1954 when the Baltimore Bullets ownership gave up after 14 games.
It almost happened again in the early 1980s.
Despite the fact that Larry Bird was the star in Boston and Magic Johnson was winning titles in Los Angeles and a strong presence in Philadelphia where the old ABA star Julius Erving was winning a title, the NBA was at the crossroads in 1983. A good many franchises were losing money, the Collective Bargaining Agreement was up and the 23 team NBA could have been whittled to 16 with Cleveland, Denver, Indiana, Kansas City, San Diego and Utah losing an enormous amount of money. Some teams fell behind on their deferred payments to players, estimated to be between $80 million and $90 million, which nearly prompted a player's strike in 1982.
There were rumors that Denver and Utah were going to consolidate into one franchise and that other teams would move.
Starting in 1982, the players and owners met for nine months and completely rewrote the Collective Bargaining Agreement from its foundations. The league opened their books and let the players see what the profits and losses really were and a deal was brokered. The agreement came in March 1983.
"I think it just had a number of important consequences," said then NBA Deputy Commissioner Russell Granik who was part of the NBA management and negotiating team in 1982-83. "One, by having rolling around in that stuff, for the first time, I think that process in the nine months or the year of negotiations, was that the players for the first time got complete financial information. Everybody knew everything.
"That really, I think, sort of created a feeling of we are in this together as a partnership that maybe hadn't existed between the players and the league. I think that was a great boast. The other thing by having the salary cap and the revenue sharing system in place, we were able to go out and attract new ownership in places that up until then we were struggling."
Two franchises that were struggling were the Cleveland Cavaliers and the Indiana Pacers. All together the league might have been left with just 16 teams without the new bargaining agreement.
"I believe Gordon and George Gund at the time would not have purchased the Cleveland Cavaliers shortly thereafter except we had this deal. The same we got at that point Indiana was really struggling. Shortly after that we got Herb and Mel Simon purchased the team in Indiana. Both are still in the league (in 2001) many years later. Two of the strongest ownership groups we had. I think there were others that followed thereafter that probably would not have happened if we hadn't been able to say okay I think we got a system that's going to make sense.
"At the time we were very seriously and I think (NBPA Executive Director) Larry (Fleischer) and the players, you know your first reaction is they are bluffing, but again having been in the process and learn all the numbers, we were seriously thinking of at least right away folding two or three times, buying them back or merging them or something. I don't have any doubt but for that kind of deal that would have happened as well," said Granik.
The 1983 Collective Bargaining Agreement that put a salary cap in place is considered to be the turning point in the league's history by the owners and by the players. The 23-team league survived and both sides formed a working alliance, which would allow the league to grow. It also helped that two entities were about ready to join the league, Michael Jordan and Nike. The salary cap was the brainchild of a new lawyer that came on the scene named Gary Bettman. Bettman would become one of the three key people that would run the NBA in the mid-1980s and beyond. David Stern would be the boss, Russell Granik the number two guy followed by Bettman.
The Collective Bargaining was Commissioner Larry O'Brien's last major work for the NBA.
O'Brien was in a sense a transitional commissioner. The NBA was a business under his predecessor Walter Kennedy, but under O'Brien it became a bigger business. O'Brien replaced Walter Kennedy in 1975 and guided the NBA in the league's "merger" with the ABA. O'Brien was the lead negotiator in two Collective Bargaining Agreements in 1976 and 1983. During O'Brien, gate receipts doubled and TV revenues increased by threefold. Still O'Brien was unable to financially stabilize the league and without the 1983 labor agreement which established a partnership with the Players Association and its Executive Director Larry Fleischer, the NBA might have contracted franchises.
Following the March 1983 deal, some franchises ended up in different cities. Donald Sterling moved the San Diego Clippers to Los Angeles following the 1983-84 season without the NBA's permission. The Kansas City Kings, a franchise that tried to regionalize itself in the 1970s by splitting home games between Kansas City and Omaha after leaving Cincinnati in 1972, went west to Sacramento in 1984-85. Utah attempted to solve some of its financial problems by playing a number of home games in Las Vegas.
Knicks and Nets patrons need to be careful in what they wish for. If either team gets Carmelo Anthony in a trade from Denver and the league has new salary restrictions, there is a real possibility that paying Anthony the max six year deal allowed under the present CBA could blow up a team's future payroll and that Melo could end up playing with Chico, Harpo, Groucho and Zeppo. The Miami Heat's Lebron James-Dwayne Wade-Chris Bosh trio could also be torn apart.
Stern's "Happy New Year's" greeting will send shock waves throughout the NBA world but it is just part of collective bargaining. The present CBA ends after this season and a lockout may come as early as July 1, 2011 right on the heels of an NFL owners' lockout of the players.
Evan Weiner is an author, radio-TV commentator and speaker on "The Business and Politics of Sports." He can be reached at

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