The NBA at Large

Written October 23.2012

There's nothing productive for the fans with a lockout in professional team sports. With momentum being necessary to continue growth in ratings, ticket sales, merchandising and global penetration, major sports leagues can ill afford down time. The NFL locked out its players this past year but only as a pretense to solidify its position and reaffirm the agreements preemptively put forth by both the owners and players union. There never was any real danger to losing games and while key players did attach themselves to a "just-in-case" anti-trust lawsuit against the NFL, the league was not about to risk removing itself from the position it values most: Number 1. That's right, make no mistake about it, the National Football League is no. 1 in professional sports in terms of size, money, ratings, tv deals, merchandise, momentum and appeal. What Major League Baseball and the National Basketball Association want to achieve is success by its own standards while making enough noise to rotate at different times of the year as a top 3 sport while capturing top numbers during All-Star weekends and its playoffs. With billions of dollars at stake and systems in place to assure all parties involved a healthy piece of the pie, there's no question that any collective bargaining agreement in place will make the players millionaires. Whether teams are profitable or not in a given year, owners will continue to operate as billionaires with fluctuating levels of wealth most people can't ascribe to in multiple lifetimes.

Major events in sports always draw a dividing line when it comes to fans and whether based on emotions or rationale, these reactions are very much paid attention to by sports leagues. One of the more interesting ideas from naysayers is how too many fans "take it personally." To quote the legendary Tom Hagen, "It was business, not personal Sonny!" And with completely the opposite meaning, the calculating and meticulous Michael Corleone resolves, "It's not personal Sonny. It's strictly business." The same directly emotional decision Michael makes to both avenge his father and assure his future safety under the cool guise of business comes from the same place we hold our sports teams close to our hearts and not our brains. You should take it personally. When a franchise player up and decides to leave your team for greener pastures whether flavored with snide arrogance or humble aspiration, fans have the right to feel heart broken and prone to irrational emotions. Isn't that how it feels right after and during a nasty break-up? You don't wish that person well as they leave for a better pairing with someone else, you stew and marinate in the calamity of your freshly ended relationship. Or you put up walls and pretend everything's great and right with the world.

So when fans of NBA basketball start proclaiming from the skies that they'll be protesting basketball by not attending or watching games, its from that deep seeded place that resents the momentum shifting from the passion of the fans to the bank accounts, contracts, percentages, rights, and business of the players and owners. There are levels of merit to what problems in life elicit empathy or sympathy. When a hardworking family of 4 with both parents striving to make ends meet with their collective $40,000 per year income, there isn't a sensible person who wouldn't empathize with their struggles to pay bills and take care of their children at basic needs levels. So when billionaire owners complain that the economic model and system of the NBA needs to be restructured because their teams are in a state of non-profitability, it's at first glimpse a tough pill to swallow. Billionaires don't buy teams because the want or need them to be profitable. I'd love to own an NBA or NFL team. It's any sports fan's dream come true at first bite. How much fun would that be? Unlimited access to games, great seats, etc. and clearly a lifestyle befitting of someone who has the money to spare to afford a team. The average NFL team is currently valued at 1 Billion dollars. That's your number to get started at the bargaining table to get your offer submitted if you're working alone or in tandem with an ownership group. Of course, if you bring in an ownership group of investors, you start to dilute power and have people to answer to even as the majority owner. So in keeping the dream in total ownership, you're going to have to accept writing a billion dollar check with enough cash and credit in reserve to withstand the ups and downs of the business. Let's assume you don't need an M.B.A. or even be business savvy to own your team (afterall, great CEO's and owners hire great managers) to get approved by the commissioner and owners to make your purchase. You start to realize that if you're going to make this dream a reality, your probably not going to want your shiny new team to cost you more than 20 or 40 percent at most of your total net worth. That means at worst you're billionaire at around the $2.5 billion level. NFL too rich for your blood? Let's move to the NBA then. The average NBA team is valued at around $370 million dollars, a bargain compared to the NFL. If you shot for the Stars (no pun intended) and went right at the heart of Jerry Jones, you'd better be prepared to show him $1.85 billion dollars (most valued team in the NFL) to start, assuming the immortal owner is willing to part ways with his most prized possession in the Dallas Cowboys. Want a piece of the most valuable NBA team which typically toggles between the New York Knicks and Los Angeles Lakers? Well this year New York tops the values list at a premium $655 million. (The San Antonio Spurs currently value in at $404 million) So the point is, to quote Anthony Hopkins' Charles Morse in 'The Edge,' "Never feel sorry for a man who owns a plane." Billionaires don't buy teams for profit potential or investment opportunity. They buy teams because they can. Because it's fun, or a dream come true, or a symbol of wealth, or the next checkmark on a list of luxury to-do's that never ends or some other personal level of achievement that might otherwise have seemed insurmountable until there were millions and billions to spare.

The previous split in the NBA's collective bargaining agreement gave players a 57 percent share of total BRI (basketball related income) that includes ticket sales, concessions, merchandise, television contracts, and other sources. The overall inflation of player salaries from the 1980's to now has been staggering in its increase that has seen contracts reward players far beyond their comparable relative worth. With the owners left to use that 43 percent to operate the give and take between expenses and revenues, players were guaranteed their 57 percent regardless of what type of season the owners endured from an economic standpoint. So you begin to see where the issues began, with the mid 2000's collapse of the housing market, stock market, corporation bankruptcies and bailouts bore the fruit of the bad economy. So now, any business or individual could look at their financial holdings and know the bad economy was and is to blame for any necessary cutbacks. Mind you, there are millions of Americans who lay claim to the disastrous effects of the economy with lost jobs, salary reductions, injured investments and such that have significantly altered how life is lived. Speaking as someone who knows what it felt like to be sat in a room with my superior and the human resource representative to be given the standard issue notification that my position was no longer able to be supported due the available budget, I could now testify that the long arm of the economic law even applied to public educators. Some owners of professional sports teams also saw losses as the split of BRI dictated that their players be paid regardless of how much money went to operate their team and how much less money came in from ticket sales, merchandise, television ratings and contracts, etc. The players side is really quite easy to understand. They want to maintain their current split percentage or improve it while loosening the restrictions that allow them to maneuver via trades or free agency to large market cities after paying their dues with the teams that drafted them (typically small market teams).

Fans have criticized both sides for their greed, egos, pride, etc. that is to blame for the loss of games and the shortened season that will now ensue. And rightfully so, there is accountable blame on both parties. The owners take a new hardline stance that says the new deal will bring the BRI split to a more even 50-50 or 49-51 in favor of the players to shift some of the billions of dollars of pie back in the owners corner. The owners also institute newer versions of the luxury tax that will more harshly penalize teams with deeper pockets or at least pockets willing to be deepened at will to sign and pay multiple star players while surpassing the salary cap to do so. The NBA has operated under a soft cap which allows teams to surpass the cap amount that is the same for each team under a number of allowances and exceptions. Once the tax threshold was passed, teams paid a dollar for dollar tax on their team payrolls. The owners originally pushed and hoped for a hard salary cap. This would have provided two benefits: One: every team has the same amount to spend on a team and can't exceed it for any reason thus cutting costs to maintain a team and two: further create competitive balance among the 30 NBA teams vying for playoffs and championship contention by trimming the differences between small and large market cities/teams.

While's there no doubt the upcoming season will return basketball to a dedicated and loyal fan base, there's sure to be unseen fallout over time but the reality is this; At what cost will a condensed season come at? Surely a large increase in sporadic injury, coaches resting veteran starters on the final leg of a 4 games in 5 night stretch, less filled arenas, and prime time games not delivering as much with fatigue contributing to miserable shooting percentages. One thing is certain, on one end you'll have players making millions of dollars playing the game we love and owners making millions of dollars selling the game we love. Ok two things are certain. We'll always love this game too. Your move NBA.