The Official S2 NBA Lockout Thread!

NBA Lockout Update: Sides are closer than they’re saying

Posted on September 5, 2011

By Chris Sheridan

NEW YORK — Here’s the dirty little secret about the NBA lockout, despite what both sides — the owners and the players — would have you believe:

They are a lot closer to a settlement than most people realize.

I know this because I talk regularly with a bunch of important people who tell me important things, and I am going to explain why I believe a settlement will be reached that will not only save the season, but also enable the NBA to have an “all is forgiven” honeymoon period (similar to what the NFL just experienced following its labor settlement) in which the frenzy of free agents signings, trades, training camps and exhibition games will make everyone forget all of the doomsday talk they’ve been hearing all summer.

First, some background. If you only listened to union director Billy Hunter, as NBA players were doing in late August while Hunter was touring the country giving status updates to his locked-out membership, you’d think the sides are currently $8 billion apart in their stagnant negotiations. That is the party line from the union.

But it is not entirely true.

Yes, under the 10-year collective bargaining agreement the owners have proposed, the gap is indeed somewhere in the area of $7-8 billion range.

But if you look at the six-year deal the players have proposed, which includes $500 million less in annual revenue (than what they would have received under the old deal) over the six upcoming seasons, the simple math tells a different story:

Over those six years, the difference in proposed revenues that would go to the players adds up to $2.97 billion.

That is still a significant amount of money, but it is nowhere near as significant as what is being put out there publicly.

Moreover, if you look at years 1, 2 and 3 of the proposals, the sides are a total of $870 million apart. (The players are asking for $2.17 billion in salaries and benefits in 2011-12, $2.33 billion in ’12-13, and $2.42 billion in ’13-14. The owners are offering a flat $2 billion per year.)

Or to put it another way, in a business that brought in $4.2 billion in revenues last season, the sides are only $170 million apart for next season.

Does that seem like an insurmountable difference that would justify the cancellation of the season? No — especially given the fact that neither side has said it has put its “last and best” offer on the table.

The gap in what each side is seeking financially in Years 4, 5 and 6 is more significant, and what the owners are asking for in Years 7, 8, 9 and 10 is not completely germane to the equation right now because the players have not indicated they would be willing to do a deal for longer than six years, and history shows the sides traditionally have negotiated six-year labor agreements.

Owners and players are scheduled to reconvene Wednesday or Thursday to set in motion a series of meetings that will determine whether the lockout is settled in time to save a full 82-game season. If the owners come to the table with an offer that promises more money than the flatlined $2 billion in Years 1-7 that they have been proposing, they’ll be getting somewhere. So that’s the first thing to watch for.

Another major sticking point, for now, is the owner’s desire to transition from the current soft cap system to a hard cap system in Year 3 of the new CBA, which would necessitate an unprecedented giveback, perhaps through an unlimited escrow tax, perhaps from an across-the-board salary cut for every NBA player, that the players would simply not accept. (If Hunter put that proposal forward to his membership for a vote, it would be rejected, he would be out of a job, and the sides would go back to square one.)

Also, a transition to a hard team cap in Year 3 would almost certainly necessitate the breakup of LeBron James, Dwyane Wade and Chris Bosh in Miami. You think the NBA really wants that?

So the Year 3 transition that the league is seeking is actually a red herring. But if there were to be a transition to a hard cap (or a harder team cap through a more punitive luxury tax system) in Year 5 or Year 6, it would allow teams a half-decade of long-term financial planning to get ready for the new harder-cap system. This is one of the areas where it seems the owners have no choice but to soften their current stance.

But here is the key thing, the two most important words to keep in mind as this lockout plays itself out: Aggregate dollars.

Right now, the owners have offered the players slightly more than $12 billion in total compensation over the next six seasons. The players are seeking just under $15 billion.

Somewhere in between $12 and $15 billion lies the settlement number, and they’ll get there one way or another. Once that happens, it’ll take only a few days to tweak other aspects of the CBA – pensions, the anti-drug policy, the draft, the age

 

Kegger at HCP's house Saturday if the NBA and players union reach an agreement by Friday!

 

Tell me something important, HCP!

 

League and union agreed to bring full committees to New York

for meeting this Tuesday.

Per the Twitters!

 

Re: League and union agreed to bring full committees to New York

"We think it's getting to be an important time and it was a good idea to have larger committees."

- David Stern