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Thursday, October 27th, 2011 at 9:00 am  |  37 responses

‘Significant Progress’ After 15 Hours of NBA Labor Talks?


by Marcel Mutoni@marcel_mutoni

Yesterday’s labor negotiations between the League and its Players’ Union stretched into the wee hours of this morning. The two sides came out of the meeting expressing guarded optimism, but according to some published reports, meaningful progress towards a deal may have been made.

The thorny issue of Basketball-Related-Income wasn’t discussed; the focus instead being on the “system”. Talks are expected to resume in Manhattan this afternoon.

Should a deal be reached within the next week or two, both sides seem to believe that a full 82-game season can still happen (which would start around December 1st.)

The NY Times reports:

Negotiators for the league and the players union staged a marathon, 15-hour bargaining session that went from midday Wednesday until 3 a.m. Thursday. They emerged with bloodshot eyes and weary gazes but with a faint glimmer of hope that had not been seen in many months. There was even talk of restoring a full, 82-game season — a possibility that had been all but ruled out earlier this month, after the league canceled the first two weeks of the season.

“I think it’s too early, not just in the morning, but still in the negotiations, to express confidence that we’re at a deal,” the deputy commissioner, Adam Silver, said at a press conference just before 4 a.m. “There’s no question, though, that we did make progress on some significant issues. But there are still some very significant issues left.” The progress was made on a number of so-called “system” issues, most notably the luxury tax and other mechanisms for controlling team payrolls. The parties will reconvene at 2 p.m. Thursday to continue the talks, with the goal of reaching a deal this weekend — perhaps in time to construct an 82-game schedule. “I assume if a deal can be achieved between now and Sunday or Monday of next week, I think it’s possible,” said Billy Hunter, the executive director of the players union.Commissioner David Stern was more circumspect about the prospect of a full season, but he said the league and the union shared the goal of holding as many games as possible. The season had been scheduled to start on Nov. 1. If a deal is reached in principle by Sunday, the season could conceivably start during the last week of November.

Given the wild and never-ending swings between hope and utter despair in these NBA labor talks, I think that going forward, it’s important to keep in mind this quote from David Stern’s closing remarks late last night:

“There’s no deal on anything, unless there’s a deal on everything.”

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  • nicholas

    pls end the lockout.

  • Thomas

    There will be a season. I know it!

  • 23

    Haha nice quote at the end

  • Thor

    Make it happen yall!!

  • SKITTLESO5

    lets go , a deal will be done i can feel it

  • LA Huey

    I just hope they reach a deal they’ll both be satisfied with. I don’t want to go through this again in another decade.

  • jt_dopesole

    All I want for christmas is the NBA!!!

  • neaorin

    They missed one of Stern’s favourite quotes:

    “I am altering the deal. Pray I don’t alter it any further.”

  • MUBWAR

    cosign LA

  • freezy

    Darth Stern

  • add

    im done with lockout news, i aint checkin any of these stories unless the word “ended” is in them

  • http://www.tumblr.com arthurissupreme

    David Stern needs to step down, he’s been the comissioner for too long. a 68 year old shouldn’t be in charge

  • http://www.nba.com/2011/news/features/steve_aschburner/10/27/lockout-q-and-a-kevin-murphy/index.html Allenp

    Cubicle Worker I got something for you in response to a question you’ve asked and others have asked.
    NBA.com: Many people understand that NBA players as a select group of specialized, highly skilled workers. Are there many many instances, though, in which labor commands more than 50 percent of an industry’s costs?

    KM: In certain sectors, there’s a ton. You go to a law firm, most of its cost is labor. You’ve got to remember, labor is 60-something percent of the economy. In the service sector, it can be much higher than that. And these people really define the product. These are the ones people come to see.

    What separates the NBA from a different basketball league? Well, it’s the players. The basketball’s’ the same, the court’s the same, it’s the players who really are the distinguishing feature. That’s not to say that the league doesn’t have value. But the defining characteristic and the scarce resource, if you think about it from an economic point of view, is the talent. It’s not unlike Hollywood, the music business or any of the other ones where the thing that distinguishes one person from another is the talent.

    You can click my name for the full story.

  • http://www.nba.com/2011/news/features/steve_aschburner/10/27/lockout-q-and-a-kevin-murphy/index.html Allenp

    Damn, I just made this argument yesterday.
    BA.com: Why do you think it’s more so in basketball than other sports?

    KM: The difference between being an NBA Finals team and being an also-ran is a couple of guys — maybe one guy. It’s only five guys and you can give the same guy the ball every time you come down if you want to. … And the players are very visible. It’s more of a player-driven sport than [the others], and the advent of the Internet has made it even more so.

    It’s also changed the game in that people aren’t as parochial as they used to be. At one time, people followed their team because they read the local paper and watched the local news. But now I can be a fan of the Lakers and live in … Seattle. I’ve got all the Internet access, I’ve got NBA TV, I’ve got a zillion ways to be a fan long-distance.

    NBA.com: That plays right into the structure issues the owners have. They want Milwaukee fans, for example, to not only root for the Bucks but to have most seasons with hope that their team can compete with bigger-revenue markets.

    KM: There’s an element of that. But also, be careful what you wish for. When you get a Sacramento-Charlotte NBA Finals, guys will be crying over the TV ratings. We know that even with baseball — it’s an exciting World Series but the ratings aren’t there because it’s the Texas Rangers and St. Louis [Cardinals]. Basketball is even more star-driven. You get to an NBA Finals that doesn’t have one of the premier players in the league in it, it becomes a lot less interesting. And with 30 teams, not everybody is going to have one of the premier players.

    NBA.com: There are fewer franchise players than there are franchises.

    KM: For sure. Especially not created equal. You have a relatively small number of true franchise players. Then you have kind of wannabe franchise players. But there aren’t 30 Kobe Bryants, LeBron James or Dwyane Wades — wherever you want to draw the line, but there aren’t 30 of them.

    And that dude is considered one of the most intelligent economists in the world.

  • http://www.nba.com/2011/news/features/steve_aschburner/10/27/lockout-q-and-a-kevin-murphy/index.html Allenp

    Here is a little more to consider:
    would say the primary disagreement is not over the accounting numbers. It’s what you include and how you interpret the numbers. For example, the accounting picture of the NBA isn’t very different from what it was five years ago or 10 years ago in terms of ratio of revenues to costs and all the rest — it’s changed very little. Which immediately tells you, wait a minute, if the underlying financial picture is similar today to what it was five years ago or 10 years ago, and people are paying $400 million or whatever for franchises, and you’re telling me that these things lose money every year, something’s missing, right? These people aren’t stupid, right? These guys are worth billions of dollars. So why did they pay all this money for franchises that, it looks like, lose money?

    Well, the answer is pretty clear. There are a couple of things that are really attractive. One is, historically, you’ve seen franchises appreciate in value and that appreciation has more than outstripped any cash-flow losses that you’ve had. And if you’re in the right tax position, it’s actually pretty good because you’ve got a tax loss annually on your operating and you’ve got a capital gain at the end that you accumulate untaxed until you sell it and then pay at a lower rate. So you get a deferred tax treatment on the gains and an immediate tax treatment on the losses, that’s not a bad deal.

    Let’s say the NBA is a $4 billion revenue business — that’s not exactly right but it’s close enough. Then let’s say you lose $200 million. That’s 5 percent. OK, my franchises are worth — let’s make it simple, 2½ times revenue, which is well below Forbes [valuations] — that’s $10 billion. Now let’s say it’s appreciating at 4 percent a year. I’m getting $400 million in appreciation even though I only have $200 million in losses. I’m getting better tax treatment on the $400 million that I’m making, and I deduct at a higher rate the $200 million that I’m losing. Suddenly this picture doesn’t look so crazy any more.

    Secondly, it’s a lot of fun to own an NBA franchise…

  • http://www.nba.com/2011/news/features/steve_aschburner/10/27/lockout-q-and-a-kevin-murphy/index.html Allenp

    I would recommend people read that article to get a better grasp of the economic issues from the player’s perspectives, which give a critique of some of the “facts” being tossed around.

  • http://slamonline.com nbk

    “I can be a fan of the Lakers and live in Seattle” – Or you could be like a real Laker fan like Lakeshow and move to Los Angeles.

  • LA Huey

    Allen, can you link me to something with more pictures and smaller words in large print. And only simple arithmetic because math like that at the end there discourages me from facts and enables me to hold on to my contradictory ideals.

  • El_Black_Mamba

    I can feel it guys a deal will be done by the end of the weekend… CAN’T WAiT

  • http://www.slamonline.com UNFROZEN CAVEMAN LAWYER

    ALLEN AND HUEY FOR WINS. THE TAX STUFF IS INTERESTING.

  • http://slamonline.com LakeShow

    …kinda random nbk…

  • JJ

    @allenP. Your article is correct but it doesn’t take away from the fact that some teams are still losing money and are actually depreciating. The Hornets, Bobcats, Kings, and Wolves come to mind. The NBA is a monopoly, in economics you can not have a business losing money if a monopoly exists.

  • robb

    I gotta pray harder I guess

  • http://www.facebook.com/joe.l.brewer3 BlackPhantom

    @nbk you don’t have to neccessarily live in LA to be a fan of the Lakers

  • blakos

    Great read allenP. Appreciate your continued effort to educate the masses. lol @ NBK, took that set up. Too easy….

  • blakos

    BlackPhantom, that wasn’t the point. It was in reference Lakeshows history with the sonics and the lakers.

  • LA Huey

    The Wolves have been mismanaged since their inception, the Hornets are in an awful market, the Bobcats former owner mismanaged them, and the Kings owners are running themselves broke. When you make bad business decisions, you usually incur losses.

  • http://www.triplejunearthed.com/dacre Dacre

    I really would love to see GMs/team owner actually MAKE money on their arenas/teams… know why? Because then they can’t dodge tax payments which filter down and help everyone else…. if they ‘run their business at a loss’ that does 2 things… the players lose out (i.e. lockout..>!??!) and they avoid tax payments… i probably pay more tax than these guys?!?!?

  • Ballislove

    sig·nif·i·cant/sigˈnifikənt/
    Adjective:
    Sufficiently great or important to be worthy of attention; noteworthy.
    Having a particular meaning; indicative of something.
    I really hope they can end this lockout soon : /

  • P.barr

    This is funny…how many times do they effin have to say,”they should have a deal within the nxt week or two..”ridiculous!!!
    How about dont get everyone hyped up and jst let us know when it starts..we are all sick of this ish!!

  • Blue

    ending this week! optimism!

  • http://dodgers.com Joey E.

    “Mr. Gorbachev, tear down this wall!”

  • Yesse

    Not the first time i heard this.

  • DukeFromDeep

    @Blackphantom… If you don’t live in LA, you got no excuse to go for those wankers… F**K LA Lakers. As of now I am a Clippers fan. Bring it on!!

  • DukeFromDeep

    A few years from now, when Blake is smashing LBJ and co, I will proudly say ‘ i told you so!’

  • wzzup

    there’s gonna be a deal soon. way too much money on the line if they lose an entire season. Some franchises could never afford losing income for a whole year. the players as well. the average, lower salary player who maybe plays 5 to 7 seasons in the NBA just can’t afford losing a whole year of income. They only have so long to make an earning while able to perform at NBA level, let alone risk of injury.

  • Justin

    Allen, I don’t know if you can compare the entertainment industry with the NBA in that regard. Avatar, for example, made $2.7B. James Cameron made $250M of that. Now, obviously a good chunk of change went to the actors and crew but I bet the studio made a lot more than half.

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