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Mysteries of the NBA Lockout - Part 3

The longer the lockout goes on, the more I try to understand it all, the more mysterious it gets. At the most basic level, there's the mystery of whether the league is actually losing money. They say yes, but the closest thing we have to a legitimate outside source (Forbes magazine) says no. But there are other, smaller puzzlements along the way as well. In the absence of almost any other news, I've decided to write a series focusing on the lockout mysteries that currently have me scratching my head.

So far we've covered:

Mystery the first - Why does the league want a hard salary cap when they already have one?

Mystery the second - Where did the money go?

Which brings us to:

Mystery the third- Why Does David Stern Still Have a Job?


OK, so maybe I'm being a little dramatic on this question, but seriously. If the NBA is asking us to believe that the league has lost money, even excluding interest and amortization costs, in every single season of the current CBA, then it begs a fairly obvious question - who the hell signed off on such a disastrously bad CBA? That would be Stern.

Oh, and in addition to the current CBA that the owners now characterize as untenable, there's some indication that the latest TV deal the NBA signed may have left a significant amount of money on the table. That deal runs until 2016 with fixed revenues for the league, while ABC, ESPN and TNT benefit from ever-increasing ratings and ad sales. I don't know a lot about being a commissioner, but I would venture to guess that collective bargaining with your players and the National TV contract are pretty important responsibilities, perhaps the two most important. If he got those wrong, what exactly did he get right? The dress code?

The guy has a tough task, I realize that. Most of the time he has to sell how great the league is, but now that he's trying to get the best deal he possibly can from the players, he has to convince everyone what a train wreck it is. It's beyond a balancing act - it's downright schizophrenic.

The last time the NBA experienced labor strife back in the summer of 1998, there were definitely issues. Kevin Garnett had signed a 6 years/$120M contract to stay with the Timberwolves just a year earlier; that is still the most lucrative contract ever signed by an NBA player. (Garnett was an NBA pioneer in many ways. He was at the vanguard of the new generation of high school to NBA players, and as such was the first mega-star to become a free agent at such a young age in the post-Bird-Magic NBA.) Considering that the Wolves generated a TOTAL of $52M in revenue during the 1998 season according to Forbes' estimates, you can see how that contract was completely unsupportable for a small market team. The 1999 CBA's salary cap, and perhaps most importantly maximums on individual salaries, were major victories for the owners in their tug of war with the players. Kobe Bryant, drafted out of high school a year after Garnett, signed his new contract after the new CBA was in place - for 6 years/$71M - saving Jerry Buss about $50M. For once in his career, Bryant was not at the right place at the right time.

But there's no such narrative in this lockout. There's no cautionary Kevin Garnett tale. Are player salaries bankrupting the league? I suppose they could be, but it doesn't make a lot of sense as they are set at a fixed ratio (57%) of Basketball Related Income (BRI). As a function of BRI, player salaries are neither higher nor lower than they have been since 1999, because that's what the current deal requires them to be, and presumably they are lower than they were in 1998.

It's not unreasonable to suggest that maybe the league just got the number wrong back in 1999. That things really were badly, badly out of whack before, that the 57% figure was little more than an educated guess (and certainly better for the owners than no limit), and that it turned out to be just the wrong number. But if that were the case, then why was the CBA renewed with only minor modifications (and with no changes to the percentage of BRI dedicated to salaries nor even really discussions of changes that I can recall) back in 2005? (If you're curious, Larry Coon's Salary Cap FAQ has an appendix detailing the differences between the 1999 CBA and the 2005 CBA - it may seem long, but most of the changes are minor tweaks to existing clauses. A large portion of the changes are reducing the maximum length of contracts by a year, that sort of thing.)

Now, it's important to remember that the NHL had just lost the entire 04-05 season when it came time for a new NBA CBA in the 2005 off-season, so Stern and the owners were more than a little spooked by the prospect of a lost season at the time. Partly for that reason, they quickly ratified a new deal. Then again, do they really have such short memories that they are any less concerned now? Do they not know what losing games in 1998 did to the NBA? Or what losing an entire season did to hockey?

At the end of the day, something doesn't make much sense. The owners got the cost control they were seeking back in 1999. They played under that deal for seven seasons, and then renewed for another six seasons with more or less the same terms. And now things are so bad that they'd supposedly miss an entire season rather than play under the same terms? Or even under the better terms that the players have offered them?

What changed? The league has done an exceedingly poor job of defining their plight, but there may be good reasons for that. I get it that small market teams are in trouble. But more than anything else that tells me that the league needs more robust revenue sharing - which is a conversation that Stern and the owners apparently do NOT want to have. Is the current crisis entirely a function of the drying up of public money to pay for arenas? That might be a legitimate issue for the owners in a new paradigm in dealing with municipalities, but it hardly paints them in a sympathetic light. Let's see, you billionaires are going to lock out the players and potentially cancel the season because you're no longer having the taxpayer foot the bill for part of your operation?

David Stern doesn't do contrite - I understand that. But doesn't this situation call for at least some contrition? He won't resign - but it seems to me it would make a lot of sense for him to say "We are asking the players to help us come up with a new CBA because I got it wrong last time."

Next mystery: Why Hasn't the NBA Addressed Revenue Sharing?