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

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  • Bendit wrote: View Post
    Disclaimer: I am not up on the rules of the cap.

    I have noticed multiple references to the Miami Heat being back-slapped for being under the cap/luxury tax non-payment and yet doing well. Apart from that league-destroying act of signing 3 of the best players in the league and creating a new class of team (super haves with a bunch of serfs relatively speaking) this fiscal discipline was not entirely self imposed.

    Is this not because of their gutting of their team the previous year which made it impossible under the cap system to go over the cap? I had read this somewhere and someone here may be better able to verify/explain this.

    If true, the Heat would have in all probability gone over and not resorted to deficiencies at centre and the point on that team.

    Personally I could care less about the division of the spoils (money). It's the system that in the absence of proper revenue sharing which allows teams in smaller markets and less wealthy demographics to lose their star players. The time it takes to recover from such departure is just too onerous and at some point will reach critical mass leading to the dilution and viewing of the product except in the very few super team cities.

    And for those who provide the rationale that this is a business like any other or the league is able to sell its franchises at ever increasing prices have a read here: http://www.grantland.com/story/_/id/...ts-nba-lockout

    Coincidentally I had reason to post this link on the main page this morning. It has an interesting take.
    Nice read. I read Malcolm Gladwell's Tipping Point and Blink. He is a talented writer.

    When reading this article, the term "Psychic Benefit" seemed very similar to the accounting term "goodwill".
    Never, under any circumstances, take a sleeping pill and a laxative on the same night.

    Comment


    • Bendit wrote: View Post
      Disclaimer: I am not up on the rules of the cap.

      I have noticed multiple references to the Miami Heat being back-slapped for being under the cap/luxury tax non-payment and yet doing well. Apart from that league-destroying act of signing 3 of the best players in the league and creating a new class of team (super haves with a bunch of serfs relatively speaking) this fiscal discipline was not entirely self imposed.

      Is this not because of their gutting of their team the previous year which made it impossible under the cap system to go over the cap? I had read this somewhere and someone here may be better able to verify/explain this.

      If true, the Heat would have in all probability gone over and not resorted to deficiencies at centre and the point on that team.

      Personally I could care less about the division of the spoils (money). It's the system that in the absence of proper revenue sharing which allows teams in smaller markets and less wealthy demographics to lose their star players. The time it takes to recover from such departure is just too onerous and at some point will reach critical mass leading to the dilution and viewing of the product except in the very few super team cities.

      And for those who provide the rationale that this is a business like any other or the league is able to sell its franchises at ever increasing prices have a read here: http://www.grantland.com/story/_/id/...ts-nba-lockout

      Coincidentally I had reason to post this link on the main page this morning. It has an interesting take.
      Bendit you pretty much nailed it.

      They shed all contracts and salary (remember they gave away Daequan Cook and #17 for a second round pick to OKC if I recall.

      They then signed Bosh/LBJ/resigned Wade to max contracts.

      They used MLE on Miller. Haslem and Anthony were Bird's rights (I believe). Minimum contracts can also go above old soft cap.

      In the old CBA they would have been at the cap within a season or two on LBJ/Wade/Boshtrich. Exemptions and minimum contracts would be all they have to add salary and they would most definitely be luxury tax payers within another season or two.


      However given the CBA and the rules, Pat Riley has to be given credit for putting the team in a situation to do what they did. Actually, credit goes to Wade for leaking the idea to Riley. Nobody does what they did without knowing it is a sure bet. But again, credit to them all for making it happen.

      Comment


      • Bendit wrote: View Post
        And for those who provide the rationale that this is a business like any other or the league is able to sell its franchises at ever increasing prices have a read here: http://www.grantland.com/story/_/id/...ts-nba-lockout
        Whenever Gladwell says someone else is missing the point you can usually be assured that it is Gladwell that is actually missing the point. Of course, Gladwell's assertion that owning a basketball is not a business is utter nonsense. Whether his view is shared by all 30 individual owners is highly unlikely. I suspect the boys at MLSE would beg to differ. There is no doubt that there is a bit of Picasso Theory at play in individual situations but he fails to make the case that it is what drives professional sports ownership.

        His "Sale Price - Forbes Valuation = Psychic Benefits" is not only overly simplistic it ignores two rather large issues: first, the fact that the Forbes valuations of franchises are unreliable (Forbes has no books); and, second, he does not mention the recent sales of various franchises that have sold at a loss. Even assuming Gladwell had perfect information, which he doesn't, any difference could be attributable to a variety of business considerations.

        He also runs into serious issues when he tries to value "psychic benefits" as a portion of total asset value. First, this seems impossible. The 28% figure he throws out is total guesswork at best and utter bullcrap at worst. Does Herb Kohl get the same psychic benefit from a franchise that Mark Cuban does? I have no idea. And neither does Gladwell. Until you can value it, which he can't, you simply don't know at what point actual losses and opportunity cost surpass psychic benefits.

        This is classic Gladwell. Take an age old concept that way more intelligent men imagined eons ago and re-package into some pap that appeals to his smug, over-credentialed, uneducated, pseudo-intelectual yuppie fans (complete with racist reference to remind them of the morally superior leftist leanings!) in a way that completely misses the mark but appeals to his insufferable fanbase of modern cretins. Hey, Grantland is perfect for him! Maybe him and Simmons can write some 10,000 opus about the tragedy of the commons and the Karate Kid! Remember Miyagi Generation Xers? He was awesome!

        Comment


        • Owners budge on hard cap?

          (FWIW, I find Wojnarowski to be the most trusted and reliable reporter in the NBA.)

          With the owners backing off a hard cap, are the owners trying to put public pressure on the players to give up more BRI after already getting them down 3%?

          The owners proposed at Tuesday’s negotiating session an idea similar to the current system that allows teams to pay a luxury tax for going over the cap. Only, now there would be ultra-punitive measures against higher-spending teams. The current system has teams pay a dollar-for-dollar tax for exceeding the cap.


          Players Association executive director Billy Hunter has called the hard cap a “blood issue” for the union, and insisted the players would never agree to it.


          The owners’ proposal on Tuesday “would still have the affects of a hard cap,” one source with knowledge of the talks said.
          It must be something obscene to "have the affects of a hard cap."

          Regardless, I hope something gets done sooner than later. The season can still be saved.

          http://sports.yahoo.com/nba/news?slu...meeting_092711

          Comment


          • Owners started to budge?


            NBA commissioner David Stern offered a new proposal to the players' union in Tuesday's labor talks that modestly budged from the owners' long-held position on establishing a hard cap, according to league sources familiar with the negotiations.

            Sources told ESPN The Magazine's Ric Bucher that the owners did not offer players a finite annual team limit on salaries but as of Tuesday night were willing to relax the cap only if the following conditions are met:

            •The "Larry Bird exception," which allows teams to exceed the cap to retain their own free agents regardless of their other committed salaries, is limited to one player per team per season.

            •The mid-level exception, which the league valued at $7.4 million last season and could be extended by as many as five years, is reduced in length and size.

            •The current luxury tax, the $1-for-$1 penalty a team must pay to the league for the amount it exceeds the salary cap, is to be severely increased.


            In last week's negotiating session, the owners proposed that the players' share of basketball-related income, or BRI, be sliced from 57 percent to 46 percent, and a source told ESPN.com's Chris Broussard that the players were offered 48 percent of BRI on Tuesday. The owners also want a five-percent reduction on all existing salaries for this season, a 7.5 percent reduction of all 2012-13 salaries and 10 percent reduction of 2013-14 salaries, a source said.

            Even before Tuesday's session, several agents expected that the owners would relent on the hard cap but dubbed it a negotiating ruse. One prominent agent, who requested anonymity, said the players already were effectively working under a hard cap in the last deal because of the existing escrow system, whereby owners were allowed to hold and keep eight percent of each player's salary if total salary expenditures exceeded 57 percent. Although it was not outlined in Tuesday's proposal, presumably the same escrow system would be in place, only with the threshold being 46 percent of BRI.

            That means, then, sources said, that the only concession owners made Tuesday -- in the face of an array of cuts sought by the players -- is no concession at all.

            Stern hinted that Wednesday's negotiating session will determine when more discussions are warranted. It's been expected there would be no talks Thursday because members of both bargaining teams will be observing the Jewish holiday, but they could resume talks before the weekend.

            "They and we have both agreed that so long as there is reason to keep discussing, we will keep discussing, undeterred by the calendar or weekends or things like that," Stern said. "We will know more after tomorrow's session."

            Both sides said neither concern nor optimism should be read into the brevity of the meeting. They simply needed time to think about what had been discussed.

            "We've talked extensively in ideas and concepts, these are things that if we can get into the range of, get into the zone of, then maybe we can put a deal together," players' association president Derek Fisher of the Lakers said.

            Unlike last week, Stern grinned often while speaking to reporters, but he said that was "only because when I didn't smile the last time I was described as something between dour and surly, so this is my smiling face. And we're looking forward to reconvening tomorrow."

            He repeatedly said the sides discussed "concepts," but wouldn't get into any of them. And when asked if more exhibition games would be scrapped without a breakthrough this week, he borrowed a line from Rasheed Wallace in answering.

            "Both teams played hard," he said. "And the calendar is not our friend."

            Training camps were postponed and all 43 preseason games scheduled for Oct. 9-15 were canceled Friday. With the lockout nearly three months complete, players and owners are trying to agree on a labor deal in time to avoid any further damage to the NBA calendar. The regular season begins Nov. 1.

            The format was again with small groups, and that will remain the case Wednesday. However, Deputy Commissioner Adam Silver said the owners' labor relations committee would be prepared to return to the table this week if necessary.

            "They stand ready to come to New York, or wherever else, if there's a reason to continue on Friday," he said. "So the groups may expand."

            Stern and Silver were joined by Spurs owner Peter Holt, who leads the labor relations committee, and NBA senior vice president and deputy general counsel Dan Rube.

            Fisher and union executive director Billy Hunter had attorneys Jeffrey Kessler and Ron Klempner with them, and economist Kevin Murphy will return Wednesday.

            Stern was asked if the sides would continue to meet often if this wasn't headed somewhere. Though he assumed they would, a clearer idea could emerge Wednesday.

            "We won't really be able to answer that question fully until after tomorrow's session," he said.
            Last edited by Joey; Wed Sep 28, 2011, 09:05 AM.

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            • Matt52 wrote: View Post
              (FWIW, I find Wojnarowski to be the most trusted and reliable reporter in the NBA.)

              With the owners backing off a hard cap, are the owners trying to put public pressure on the players to give up more BRI after already getting them down 3%?



              It must be something obscene to "have the affects of a hard cap."
              Regardless, I hope something gets done sooner than later. The season can still be saved.

              http://sports.yahoo.com/nba/news?slu...meeting_092711
              That actually gets mentioned in the article I just posted.
              They argue that because the owners could already hold 8% of playres salary in escrow, that it was essentially a Hard Cap system ALREADY in place. And that by reducing the BRI to 48%, it is just making it more of a "Hard Cap" system, where by, 48% is the 'MAX' that the players can receive.

              ADD Underlined the excerpt.
              Last edited by Joey; Wed Sep 28, 2011, 09:06 AM.

              Comment


              • Wait, I thought it was all about competitive balance? You mean to tell me it's just about money? I am shocked! Shocked I tells ya!

                This seems positive to me though you never really know if this information is good and we don't know what the luxury tax looks like. Still, they are now back to simply talking about dollars. That can be worked out. There may be basketball after all....

                Comment


                • slaw wrote: View Post
                  Wait, I thought it was all about competitive balance? You mean to tell me it's just about money? I am shocked! Shocked I tells ya!

                  This seems positive to me though you never really know if this information is good and we don't know what the luxury tax looks like. Still, they are now back to simply talking about dollars. That can be worked out. There may be basketball after all....
                  I think the owners are all about competitive balance and cash flow balance.

                  The players have said flat out no to a hard cap. The owners appear to be saying, fine, no hard cap but here are the conditions. To me that is progress and negotiation.

                  Limiting Birds Rights to one player per season certainly helps create balance.

                  As for what the 'new' luxury tax will entail, that is an unknown. Maybe they are talking something as high as $5:$1. While some teams may be able to go over the soft cap by $6M and pay the $25M hit, one would think (read: assume) the owners are not going to sign a player for $4M knowing he is going to have to pay another $24M per year (keep in mind I made the numbers up).

                  Also, it appears the exemptions, especially MLE, is decreasing. Outside of an exemption and Bird's Rights, they are the only way a team can go over the cap.

                  To me it sounds like a step closer to financial competitive balance.

                  I'll be very interested to hear what the results of today were.

                  Comment


                  • Based on what I'm reading the owners showed up with gifts... A box of chocolate covered crap(in the eyes of the players). I'm not sure who they thought they were fooling with the soft cap which penalizes teams to the point where no one is going to be crazy enough to go over anyway. Why would the players find a token soft cap any more appealing than the hard cap when it essentially means the same to them in the end?

                    Comment


                    • [QUOTE=slaw;97639]Whenever Gladwell says someone else is missing the point you can usually be assured that it is Gladwell that is actually missing the point. Of course, Gladwell's assertion that owning a basketball is not a business is utter nonsense. Whether his view is shared by all 30 individual owners is highly unlikely.....partial of original post /QUOTE]



                      Slaw,

                      I can see that you are not a fan of Gladwell's writings which is fine of course but aren't you much too harsh on his assumed readership constituency? There seems to be either an age or political/philosophical negativity to a fairly broad base of preferred thinking. But nevermind and on to the substance of the piece itself.

                      I submitted the link because I thought it was appropriate to the forum discussion and as is his modus op. Gladwell provided a unique take/perspective on one fundamental element of the NBA impasse....is the business making money?...and some of the questions and theories, innuendo and guesses which surrounds that central question. We have all seen the tired cliche explanations and I thought this was a fresh one...for myself in anycase. I also learned a bit more about the dark side of Tom Yawkey which was framed in a way that only good writers can do. More importantly, it helped make the point why otherwise successful and rich people get into the sports business and willing to lose money quite consciously/leaving money on the table.

                      In regard to your ref. of MLSE (thinking of the Raptors as a real business), I can assure you that as a standalone acquisition, owning the Raptors as a single entity would have been a non-starter for the Teachers Pension Fund (the current owners). You must also remember that MLSE only became the behemoth sports org. that it is (and worth owning as a cash generator) when the various pieces including the Leafs, condo developments and TV/media content provided by all its sports properts propelled their bottom line nevermind the cross promotions and mandatory Raptor ticket purchasing requirements by the clearly besotted and psychic Leaf fans.

                      Are you seriously arguing against Gladwell's assertion (you call it "utter nonsense") that the pro team sports business is fundamentally unlike other businesses of similar revenue/size? You do realize that at the core we are talking near monopolies here and this alone would make the Justice Dept. come calling if the league were considered a normal business. I assume you read that the NFL is considered a non-profit org. !! Different leagues I know but do you still think Gladwell miss-wrote? How many normal businesses do you know of where the govt. builds their office building (read arena) for them? Apart from other issues this process has dried up and any further building renovations will be totally at team cost. A lot of the "poverty" rhetoric is being driven by this reality.

                      I shall give that I have no idea whether the 28% premium (psychic benefit) is accurate. But a couple of points here: a) these are not Gladwell's numbers but those of some economists b) it's not the amount so much (for me) but the possibility that something called a "psychic benefit" can have a value attached to it c) the possibility that many of the new crop of owners may have over calculated this and are rueing their deal (I understand this is not the player's fault but it is reality) d) it is a viable explanation given the dearth of data why there is a substantial difference sometimes between the Forbes valuation and the latest selling price.

                      The NBA is in trouble. And both sides have to be on the same page here. As outsiders not privy to the boardroom machinations nor financial info (even Forbes only produces best available guesstimates to arrive at their valuations) we as fans only have anecdotal examples and events. To name a few...the Miami Heat fiasco of last year...individual teams in financial trouble...lessening attendance...smaller number of haves/larger have nots in profits, star players and championships...long term guaranteed contracts...no profit sharing...free agency without compensation. A pox on all of them if all they address is splitting the revenue pie. My wish is a system where as a fan I can clearly point to bad fiscal/operational management as the sole reason for the product on the floor given all teams in the league have the same opportunity. Do you think Proctor & Gamble can operate under such circumstances? Set pricing with Johnson & Johnson and have access to the same worker groups etc.

                      Finally, I dont know quite how to respond to your last paragraph. All good writers and thinkers are in the habit of voraciously absorbing thoughts, customs and history of eras past and try to reformulate and calibrate it to current circumstances. This is being progressive and provokes thinking. Even science to a degree has a constant advancement to it. All I can say is that Malcolm Gladwell is a fine writer. He writes on wide ranging subjects. Is an essayist of renown with the one of the prestigious magazines of the century (the New Yorker...which doesn't suffer mediocrity) and apart from also being a best selling author, happens to be Canadian. I regret you find nothing worthwhile in the many scribbles he has produced.

                      Comment


                      • Fantastic post Bendit.

                        Comment


                        • Bendit wrote: View Post
                          Are you seriously arguing against Gladwell's assertion (you call it "utter nonsense") that the pro team sports business is fundamentally unlike other businesses of similar revenue/size?
                          I find discussing Gladwell at all tedious, so I'll make this my last response on the article. First, his assertion that an NBA franchise is not a business is patently nonsensical. He's not arguing that basketball isn't like other businesses, he's arguing it isn't a business at all. Here's his quote:

                          "The issue is that basketball isn't a business in the first place — and for things that aren't businesses how much money is, or isn't, made is largely irrelevant".

                          That statement is just absolute nonsense.

                          Basketball teams aren't businesses cause they don't operate in a free market, the way real businesses do. Well, no. Basketball teams compete against other sports league and all sorts of other enterntainment options for your dollar. They also have to compete with other businesses for sponsorships and corporate dollars.

                          Their employees are 25 years old and make millions of dollars a year. Their customers are obsessively loyal and emotionally engaged in their fortunes to the point that — were the business in question, say, discount retailing or lawn products — it would be considered psychologically unhealthy. These are non-sequitors but easily refutable anyway. The guys who started FB were millionaires in their twenties, does that mean FB is not a business? My company has a few guys in their early 30s pulling in 7 figures and some of the traders can pull in millions of dollars in bonuses well before their 30s. Are banks not businesses? Fanatical fans? Take my wife past a Tiffany's store and you'll see psychologically unhealthy.

                          They get to control their labor through the draft in a way that would be the envy of other private sector owners, at least since the Civil War. So, the draft is like slavery? Ask medical school grads about finding placements or law school students about the articling process. Better, ask oil companies about buying leases at government auctions. Is that slavery, too?

                          And they are treated by governments with unmatched generosity. Congress gives professional baseball an antitrust exemption. Since 2000, there have been eight basketball stadiums either built or renovated for NBA teams at a cost of $2 billion — and $1.75 billion of that came from public funds 2 billion? UNMATCHED generosity. Really? I see your 2 billion and raise you: Since 2009, the DOE has issued over $10 billion in loan guarantees for 21 projects — including Solyndra. The Feds gave $5 billion in ethanol subsidies. Or there was TARP and the $70 billion bailout to AIG. Governments subsidize all kinds of industries, basketball is not unique.

                          But most of all professional sports owners don't have to behave like businessmen. For every disciplined and rational operator like the Patriots' Robert Kraft or Mark Cuban, there is also someone like Washington Redskins owner Dan Snyder. Uh, wait. I thought we were talking about basketball? Is this a column on the NFL? Okay, but wait, Mark Cuban is rational and disciplined, so, does he act like a businessman? I'm so confused....

                          Let's delve into the psychic benefits stuff. Is it real? Yes, no question. Economists use the term to explain what to them is irrational behaviour and it clearly does have relevance in this discussion. But the fundamental problem is that Gladwell starts by saying that you can't treat basketball teams as businesses and then goes on to show by valuating them as businesses that "psychic benefits" are in play. Then he starts to run into trouble because you can't truly value them except as a catch-all in specific, individual situations. The further issue is that once actual losses plus opportunity cost reach a level where they exceed "psychic benefits" you have your reservation price. That's where are now. So, for the sake of argument admitting Gladwell has everything right, he still misses the point that owners are reaching their reservation price, so that actual losses and opportunity cost must be diminished.

                          I grant you that Gladwell is a good writer of prose. Hell, it's the reason he gets away with so much of this nonsense. Well, that and his audience.....
                          Last edited by slaw; Wed Sep 28, 2011, 08:00 PM.

                          Comment


                          • The most recent proposal made by NBA owners to players in an attempt to end the lockout includes a luxury tax that has four levels, SheridanHoops.com reported Wednesday.

                            According to the report, each ascending level would impose a greater tax on teams exceeding that dollar amount with their payroll.

                            Under the last agreement that expired June 30, teams paid a 100 percent tax on every payroll dollar above the established threshold of $70.3 million. The threshold is determined annually by a computation of basketball-related income that also establishes the salary cap.

                            The report said the 100 percent level would remain in place for teams slightly above the threshold and the highest level would impose a 400 percent tax for teams that exceed the threshold by $10 million to $15 million.

                            The sides are meeting Wednesday in New York. The NBA season is scheduled to start Nov. 1.

                            http://www.hoopsworld.com/owners-pro...el-luxury-tax/
                            NEW YORK — As noted in this earlier post, a few details of what was in the owners’ latest proposal to the players’ union have come to light.
                            Here is another one: SheridanHoops.com has learned that the owners have proposed four different levels of the luxury tax, with the tax increasing from a dollar-for-dollar levy on teams slightly above the luxury tax threshold (which was $70.307 million last season, when the Lakers, Magic and Mavericks were reportedly the only tax-paying teams), up to a 4-to-1 tax for teams that go more than $10-15 million over the threshold.
                            There are also separate triggers for a 2-to-1 tax and a 3-to-1 tax.
                            Negotiations are resuming this morning in New York, and David Stern has called it a “key day” as the sides are not expected to meet Thursday or Friday because of the Jewish holiday Rosh Hashanah.
                            But from what I can gather through my discussions with sources is this: Don’t expect any significant breakthroughs today, as the 11th hour has not yet arrived. That’ll come roughly a week from now, when a deal must be cut in order to save the scheduled Nov. 1 start of the regular season.

                            http://sheridanhoops.com/2011/09/28/...ut-luxury-tax/
                            Unfortunately this system does not prevent the wealthiest teams from going in the $80-90M range - which is where teams currently are UNLESS exemptions are decreased and/or eliminated, sign and trades are banned, and Birds Rights are eliminated or cut back.

                            Comment


                            • Matt52 wrote: View Post
                              Unfortunately this system does not prevent the wealthiest teams from going in the $80-90M range - which is where teams currently are UNLESS exemptions are decreased and/or eliminated, sign and trades are banned, and Birds Rights are eliminated or cut back.
                              The exceptions will be reduced in size and scope but if you cut them out entirely then you just have a hard cap. This sliding scale certainly is the basis for the new deal. If I'm a player I'm fairly happy right now cause I know that there are enough owners willing to spend into lux tax territory that it will force the hands of other owners and drive up salaries. Now, we just need to get the BRI at 50/50 and it's basically done... the rest is just detail.

                              Comment


                              • Oh how this is a bad move for the owners. In the end, they're gonna cry poor. If they want to really deter spending, it should start at a 10:1 ratio. Then you'd really think twice before going over the cap. Then again, to the richer teams, it wouldn't phase them at all..and it creates a gap - the richer teams constantly win because they can afford to pay the salaries, much like in Major League Baseball.

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