November 23, 2010
It's worth remembering that "NBA lockout" doesn't have to mean "the NBA will cancel games."
Or even exhibition games, or parts of training camp. All a "lockout" means is that the NBA will shut down business, all business, for an indefinite amount of time once the league's collective bargaining agreement (CBA) with its players expires in July. It means the players will not be paid, which is kind of weird considering they signed legal contracts to be paid by the owners, and it also means the players will not be on strike. The players will want to play. It will be owners taking their ball, and going home.
Which is probably a good thing, because it will stop them from that annual rite of passage we see every July, the one that allows for NBA owners to bid against themselves and ignore the provisions already in the CBA designed to save them money, and sign player after player to terrible deals. Not because players have them over a barrel, not because players have untold leverage, but because ownership (like the fans that they are, giddy at the thought of getting it right this year, or putting themselves over the top) will be making bad decisions.
This is also why Billy Hunter is wrong when he tells Howard Beck of the New York Times that he is "99 percent sure as of today that there will be a lockout," because there is a one hundred percent chance there will be a lockout next July. If even for a day, a week, a month, or (as was the case during the 1995 lockout) until school starts again.
Beck has the lowdown:
According to the union, league revenues will grow this season by 3 to 5 percent, or about $100 million to $200 million. Meanwhile, negotiated player salaries will decline for the third year in a row and will fall below the 57 percent threshold for the first time, according to union projections. As a result, the players will receive a full refund on the 8 percent escrow tax taken from their paychecks.
The decline in player salaries is due in part to conservative spending by owners during a poor economy. It also reflects the changes made in the 2005 labor deal, which reduced annual raises and the length of contracts.
"Our contention is that the system that was put in place delivered everything it was supposed to deliver," Hunter said, referring to the initial framework adopted in 1999. "The players never got a cent more than they were supposed to get. And ironically, if you review the press clippings from that era, you will see that the deals that were struck were lauded by the N.B.A. as having been major successes for the owners. So why now at this stage are we now saying that the system doesn't work and it's got to be overhauled?"
Once again, all the framework is in place for owners to spend their money judiciously, without having to collude against the players. Restricted free agency continues to be ignored by management, as does the burgeoning advanced statistical movements that could tell you why, exactly, it might not be the best idea to send an average of eight figures a year at a guy in his 30s, just because he was on a very good team the year before.
To their credit, the players are preparing for the inevitable. A great piece from David Biderman of the Wall Street Journal has the insight:
In the meantime, Mr. Hunter has been sending flyers to players' homes for two years to make sure they know to cut expenses. Derek Fisher(notes) of the Los Angeles Lakers, who is the president of the players' union, has been recording lockout-themed podcasts that are emailed out to players, and the union is issuing an instruction manual that explains tips for saving money, like renting houses instead of buying them and trying to keep a strict limit on fancy cars.
New Jersey Nets guard Jordan Farmar(notes) said every penny he spends is part of a long-term budget he prepares for himself to make sure he doesn't end up like "the players who make millions of dollars and still somehow end up living paycheck to paycheck."
One of the first things Mr. Farmar said he did with his money was purchase several rental properties in Los Angeles, so he could "make my money work for me."
Mr. Jones of the Heat, who is the players union's secretary-treasurer, was a finance major when he was at the University of Miami. He said he tried to keep himself on a 20/80 budget when he joined the league in 2003 --spending 20% of his salary, saving 80%. When he played for the Suns from 2005 to 2007, he rented an apartment in Phoenix while paying off a mortgage and taxes on a home he bought in Miami. If he came into the league now, he said, he would have only had one property at a time.
None of this is quoted to get you to feel sorry for millionaires on either side of this impending battle. But it is important to note that this latest NBA lockout -- as opposed to the much-needed and rightfully one-sided (in the owners' favor) 1998-99 lockout -- will not resemble anything we've seen in the past.
The owners have a lot of work to do to convince us that they're not the biggest part of the problem, and that their solutions are the solution.