The Lockout & the Raptors: Players approve CBA, Owners too! (1944)

[MyMomLovesMe]

What if a guy gets injured and can't play another game in his life?
The team that he sacrificed his livelyhood for should be allowed to just drop his contract because he can no longer produce? That doesn't seem fair to me.

And without these "spoiled players" then the owners wouldn't be making any money at all in this business. What then?
It is because of the athletes that the owners are able to bring in the money that they do.
Yes they provide the Venue with which to play, but it is the Athletes that fill those seats.
You think bringing in the Globe Trotters will sell 20,000 tickets every night?

With PRO sports taking such a centre stage in our society. Lots of kids are sacrificing their entire lives to make the league. This means they are not spending as much time reading books, or developing other life skills. You can very easily dedicate your life and have a career ending injury just before you get your pay day. We want to see the best, but we do not want to worry about the consequences.


Paying for on field production seems like a slum lord practice to me, especially when you realize that these players work a lot more than the 60 minutes you see them on TV for. In fact, some may be dedicating their entire lives just to play some backup minutes. You may think those backup minutes may not be worth money... but to the player its his entire body of work and his life.


(I also think that boxing and UFC are horrible models, and there is no reason why a HUGE league like the NFL should resort to "pay day" practices, its kind of a shame.)

[Apollo]

What if a guy gets injured and can't play another game in his life?
The team that he sacrificed his livelyhood for should be allowed to just drop his contract because he can no longer produce? That doesn't seem fair to me.

It depends on when he is injured. If its off court, dicking around on a scooter like Monta Ellis, then no he shouldn't continue to get paid.

And without these "spoiled players" then the owners wouldn't be making any money at all in this business. What then?
It is because of the athletes that the owners are able to bring in the money that they do.
Yes they provide the Venue with which to play, but it is the Athletes that fill those seats.
You think bringing in the Globe Trotters will sell 20,000 tickets every night?

Based on what I've read the owners only want enough to turn a profit. I've said it in the past and I'll say it again... I don't want any part of a business where my goal isn't to turn a profit. How many businesses do you know outside the NBA that are losing money and are being applauded by the public? It's ridiculous.

The players are always profitable and yet they don't carry any of the risks of operation. At the end of the day the teams need to be profitable. Beyond that most of the advantages held by the big market teams are obliterated with the owner's plan. We should all be on board with this.

The owners seem to be making a stand. When times were good back in 2005 the CBA sailed through no problem. Times have changed and you are seeing the owners react. The PA is now looking to be in desperation mode.

With PRO sports taking such a centre stage in our society. Lots of kids are sacrificing their entire lives to make the league. This means they are not spending as much time reading books, or developing other life skills. You can very easily dedicate your life and have a career ending injury just before you get your pay day. We want to see the best, but we do not want to worry about the consequences.


Paying for on field production seems like a slum lord practice to me, especially when you realize that these players work a lot more than the 60 minutes you see them on TV for. In fact, some may be dedicating their entire lives just to play some backup minutes. You may think those backup minutes may not be worth money... but to the player its his entire body of work and his life.


(I also think that boxing and UFC are horrible models, and there is no reason why a HUGE league like the NFL should resort to "pay day" practices, its kind of a shame.)

Right, so for guys making millions playing sports, they deserve special treatment above society because they don't care about education.

[MyMomLovesMe]

The players are always profitable and yet they don't carry any of the risks of operation. At the end of the day the teams need to be profitable. Beyond that most of the advantages held by the big market teams are obliterated with the owner's plan. We should all be on board with this.

Are you kidding me?


You don't think getting there is a risk?

The owners seem to be making a stand. When times were good back in 2005 the CBA sailed through no problem. Times have changed and you are seeing the owners react. The PA is now looking to be in desperation mode.

The owners are making out like bandits, and only the players are risking their health and well being. What do the owners have without the players? With them they have a golden goose.

Why does a little kid have to buy the fridges super bowl ring for 8K? The man was the NFL in his time.
http://ca.sports.yahoo.com/nfl/news?...l_ring-6486464

[Apollo]

The owners are making out like bandits, and only the players are risking their health and well being. What do the owners have without the players?

The league had to take out a loan last year on behalf of half the league so that those 15 teams could pay the bills. I guess this is where a conspiracy theory enters the picture with someone suggesting that was all an elaborate ruse to stick it to the players... What we have to go on is what's been reported and what's been reported is that the teams are losing money. You're guiding yourself based on emotion and attachment/loyaty to the players you watch on TV and you're not stepping back and looking at this from a neutral position.

• Why would the owners not claw back in 2005 when the economy was good?
• Why would they choose to claw back in 2011 when the USD is teetering towards totally collapse, along with their economy?
• Why would the owners need a loan from the banks to pay the bills?

[MyMomLovesMe]

No one is loosing money, otherwise the franchises would be getting dumped like hot cakes and no one would want one.


There is an atmosphere to go after unions in the US, and that is what the owners are taking advantage of at this point.


In accounting, its always best to break even on both sides of the ledger, showing too much profit is bad. You can utilize that money better by spending it against the business, therefore never letting the tax man take a bite out of the surplus. (you can get dinged on capital gains, but there are tricks for that too)

I contend, that the NFL franchise value has grown over the last 10 years. Hence the base value of the franchise has steadily increased and actually has made an NFL franchise in demand and sought after. Year to year expenses are quite easy to juice. All corporations do this in their favour. In fact you can write off some capital losses against existing businesses in the US. So owning a few business interests helps too.


Their books are about as credible as my tax returns for this year.

[Apollo]

No one is loosing money, otherwise the franchises would be getting dumped like hot cakes and no one would want one.

Dumped like hot cakes? To who? Who's going to give them fair market value on a company that is losing money? They probably are holding their stakes in anticipation of now, when a re-balancing can occur so that can recoop loses and try to turn it back into a profitable venture.

There is an atmosphere to go after unions in the US, and that is what the owners are taking advantage of at this point..

Really? Then why in 2005, while the economy was booming, did a new CBA get signed with no issues to hold it up?

In accounting, its always best to break even on both sides of the ledgers, showing too much profit is bad. You can utilize that money better by spending it against the business, therefore never letting the tax man take a bite.

You're wrong. There's a big difference between reinvesting returns into the business to avoid taxation and taking a net loss. We're talking about tycoons of industry here. Do you honestly think they can rationalize the idea that it's a good thing to spend their companies into the hole to the point where they cannot pay bills and require loans? All well run companies in ideal times carry a cash balance large enough to cover anything in the business plan, to pay for unforeseen costs and to make distributions to the owners.

I contend, that the NFL franchise has gotten more expensive. Hence the base value of the franchise has steadily increased and actually has been in demand. Year to year expenses are quite easy to juice. All corporations do this.

No, they don't. Cooking the books is called fraud. Please read the case of Enron for further details.

[MyMomLovesMe]

Dumped like hot cakes? To who? Who's going to give them fair market value on a company that is losing money? They probably are holding their stakes in anticipation of now, when a re-balancing can occur so that can recoop loses and try to turn is back into a profitable venture.

It's the way competition works in a fair market. When something is of no value it gets dumped. When something starts loosing money its sold. No one is interested in owning it. TV DEALS go down in value, ticket prices go down in value, fans no longer are interested in seeing it.

To me it looks like none of the latter is happening that much. Yet the owners are insisting they are losing money, as if they are morons. I have my suspicions. Lots of markets would take them with open arms, and they are not so keen on moving.

Really? Then why in 2005, while the economy was booming, did a new CBA get signed with no issues to hold it up?

I don't understand this? What does 2005 have to do with my comment?

You're wrong. There's a big difference between reinvesting returns into the business to avoid tax and carrying a net loss. We're talking about tycoons of industry here. Do you honestly think they can rationalize the idea that it's a good thing to spend their companies into the hole to the point where they cannot pay bills. All well run companies in ideal times carry a cash balance large enough to cover anything in the business plan, to pay for unforeseen costs and to make distributions to the owners.

LOL. Love the Tycoons of industry comment. As someone who has run business after business I will tell you that there are plenty of times that you want to show a loss. I have shown losses many times and never lost. My salary needs to come from the business and that in itself could be a loss.

No, you're they don't. Cooking the books is called fraud. Please read the case of Enron for further details.

Lots of fraud out there. Banks getting caught laundering drug money. Making up court documents. Investments run by former NY Stock Exchange heads turning out to by ponzi schemes... in case you have not been paying attention, the accounting profession is not enjoying a lot of credibility at the moment.

[Joey]

It depends on when he is injured. If its off court, dicking around on a scooter like Monta Ellis, then no he shouldn't continue to get paid.

Injured during the game.
Monta was a very rare exception and they usually have stipulations ALREADY in contracts that would allow the team to void said contract if they wanted too. Golden State absolutely had the opportunity to void it. They chose not too. Same with Gilbert Arenas.
They already allow for these exceptions.

Based on what I've read the owners only want enough to turn a profit. I've said it in the past and I'll say it again... I don't want any part of a business where my goal isn't to turn a profit. How many businesses do you know outside the NBA that are losing money and are being applauded by the public? It's ridiculous.

The players are always profitable and yet they don't carry any of the risks of operation. At the end of the day the teams need to be profitable. Beyond that most of the advantages held by the big market teams are obliterated with the owner's plan. We should all be on board with this.

The owners seem to be making a stand. When times were good back in 2005 the CBA sailed through no problem. Times have changed and you are seeing the owners react. The PA is now looking to be in desperation mode.

But the owners can't even prove that they are losing the money they say they are. They have ZERO proof to show this to be a fact.
That is one of the reasons the PA sued. Because the owners are making these claims, but have taken ZERO steps to prove them.
If they would only present the facts which show all these teams losing money, then fine, its a different story. But they aren't. Which leads me, and many others, to believe that it is all fabrication to get their way.
The League reported RECORD audiences for the Playoffs and Regular Season.

No way they were making money 10 years ago and not anymore.

[slaw]

Do you honestly think they can rationalize the idea that it's a good thing to spend their companies into the hole to the point where they cannot pay bills and require loans?

Once again.... from the owners' own numbers. The problem isn't that the model doesn't work but that various franchises are poorly run or exist in crappy markets. A new CBA won't change either fact.

http://ken-berger.blogs.cbssports.co...38893/25772987

The NBA projected a 2.5 percent to 5 percent drop in revenues last season, and it never materialized. In fact, revenues went up to the highest level in league history. Now, sources tell CBSSports.com that the league’s number-crunches are projecting a significantly rosier 2010-11, with current projections calling for a 3 to 3.5 percent rise in basketball-related income (BRI). That would amount to a second consecutive season of record revenues for owners who are insisting they’ll lose another $370 million this season – a figure they cite as the reason they are seeking a decrease in payroll of between $750 million and $800 million annually, including rollbacks on existing contracts. It seems farcical. But with bargaining entering a crucial phase leading up to the February All-Star break, league negotiators have been trying to impress on the players in recent bargaining sessions that it costs about 75 cents for the league to generate each additional dollar in revenues. Here’s the model league negotiators have been peddling to the players, according to sources: If revenues went up 3 percent this season, that would be an increase of $120 million. Under the current labor deal, which guarantees players 57 percent of BRI, roughly $68 million of that would go to the players. That would leave $52 million for the owners, but not really. League negotiators say it costs about $20 million in non-player expenses – staff, marketing, sponsorship activation, etc. – to generate that $120 million in revenues.

http://www.businessinsider.com/heres...season-2010-11

Assuming NBA revenues rise 3 percent, or $120 million, the players get 57 percent of that, or $68 million, under the current agreement. The remaining $52 million goes to the owners. But they spend $20 million in non-player expenses to generate that revenue, leaving $32 million to the 30 NBA owners.

Because the league doesn't open its books, it's difficult to see how it arrives at those aforementioned $370 million in losses.

The league generated $4 billion in revenue last year. After the players take their $2.3 billion, that would leave $1.7 billion for the owners. If it takes $1 to generate every $6 in revenue, then the owners would spend about $700 million to get their cut. That still leaves $1 billion to pad their pockets.

Granted, that might not cover the expenses owners encountered when they purchased their team, but over time, that appears to be a sustainable model.

[MyMomLovesMe]

It's been no secret that a few owners in the NFL are using their franchises to book losses they can write off on to other ventures. If I had a new CBA, I would use it to my advantage too.

[Joey]

Nice Find Slaw. Those are exactly the quotes I was looking for.

[Apollo]

This might make help you better understand the league's position.

Adam Silver says league doing ‘great’ in generating revenue but spending too much on player salaries

SILVER: From a revenue standpoint, things are great. We generate more than $4 billion a year, and growing, on a global basis. This season, (TV) ratings were up double-digits on all our networks. We’re seeing the same growth for local television rights. The Lakers just entered into a fantastic new television deal for the next 20 years. Global (marketing) expansion is terrific. Merchandising sales are going well.

We’re spending too much on (player) salaries, though, and under our current CBA, we pay roughly 57 percent of gross (income) to our players. At our meeting during All-Star weekend, we told them prospects are wonderful, but the model is broken, and no business is sustainable over time that pays out more than it takes in. By definition, if we pay out 57 percent of the gross, it has to cost us less than 43 cents to generate every dollar, and that’s not the case.

Our expenses are up across the board. When I first came to the league 19 years ago, virtually every team had a waiting list for season tickets. The world has changed. There’s a ton more competition now for the entertainment dollar. In every one of our cities, there are a thousand-plus channels on most cable networks and unlimited amounts of programming on the Internet, and we’re competing against those things. The cost of marketing and selling are that much greater.

Having said that, under any new deal, our players will continue to be the highest-paid team athletes in the world, hands down. Shame on us if we can’t find a way to make this work. We are not only the only sports league, but probably the only business, that shares all its audit financials with its employees. That’s what we do with our players association. We’re open book. We’ve said, these are all the financials of our 30 teams. Here are our tax returns, just so there’s absolutely no issues over our financials.

But there is, maybe understandably, a fair amount of skepticism by our players. They ask, how can it be that these wealthy, highly successful businessmen are willing to enter into a business like this and lose the kind of money they are? My response is, they’re living up to the current CBA. I would expect nothing less of them. At the conclusion of this deal, though, they’re saying we need to negotiate a new deal.

Approximately three-quarters of the teams are not making money.

Source: Portland Tribune


Also, it's not common for businesses to turn over the books during negotiations. I'm not sure how things will work out but a mediator may be one route to get things back on track.

[slaw]

But here's where the owners numbers make even less sense to me. They say they are losing (in aggregate) ~$370mm/year. Okay, accept that at face value. They want an adjustment of about ~$750mm in player salaries. Okay. That means the losses are replaced by a per team profit of ~$12mm/per team (in aggregate) but that's only if there is 100% revenue sharing and the league has ruled that out. We also know certain teams generate far more revenues than others. How does this adjustment help the teams in real trouble? Reducing the cap by 12 or 13% surely won't do much to help these teams especially since by the NBA's own admission other costs are soaring. We saw in the NHL that the cap jumped immediately and that small market teams got almost nothing out of it.

To me, this only makes sense if the owners really go for the kill. Get a 30% reduction in salaries and a cap of $39,000,000. Now, you've really affected the cost structure significantly. I don't see anything short of that making a material difference if the owners are in that bad of shape. Obviously, the players cannot agree to this which is why I see this dragging out into the new year. Teams like NY and LA would see massive profit increases and you might even see some smaller teams break even or make a buck.

[MyMomLovesMe]

If there are serious losses, opening the books would not be such a problem. If my business was loosing this sort of money I would be pushing the books on all my creditors. I would be putting it in their face any chance I got.

You can't expect one side to take a cut, without seeing what the other side is making. The owners know what the players make, that is public info for them (since they pay it), the other side know little about how ownership is using its take.


As far as Adam Silver is concerned, you can't get a much more biased point of view from ownership other than asking Stern for his opinion.

At our meeting during All-Star weekend, we told them prospects are wonderful, but the model is broken, and no business is sustainable over time that pays out more than it takes in. By definition, if we pay out 57 percent of the gross, it has to cost us less than 43 cents to generate every dollar, and that’s not the case.

Are you kidding me? It costs them more than 1.7 Billion to run the league? This is with players salaries subtracted of 2.3 Billion which are also deducted against your revenue as an expense. How much are the suits paying themselves? What cuts are they going to take to their salaries?

Where is this money going? if Players make up 2.3 billion, but running the league costs 1.7 Billion, than it seems to me that the problems are in the bureaucracy and management. The owners signed the deals in good faith, now the minute their business model gets stagnant, it is the players that must make ALL the concessions.

We are not talking 1% or 2%, we are talking about taking 20-30% from one group, and ignoring more efficient ways of doing business. Why are the players being asked to make up the ENTIRE SHORT FALL?


Who forced the owners to sign these deals? (if teams are losing money, let them move or fold. That is the way business works, no one should be asked to subsidies inefficiency. If clubs don't have the money, they will not sign the contracts. This is not complicated. There is no reason to isolate PRO sports from the REAL world of competition.)


These owners are acting like children. Fold it or don't sign the contract. If you can't reach solidarity with fellow owners as to how much money is being paid out, than maybe some owners are simply lame ducks that are holding the others back. Why would an old boys group need these policing strategies if they were really losing money?

[Joey]

Great posts Slaw & MMLM. Left me with nothing else to say. :P haha