NBA Lockout 2011: Class Action Lawsuit Filed by Players

In one of two class-action lawsuits filed, thus far, against the NBA owners there is reference to statements allegedly made by NBA Commissioner David Stern that, if true, really make his title that of Czar. They also show he never planned on real negotiations, but, rather, strong-arm tactics and ultimatums to crush the Player’s Union.

The suit filed in the Northern District of California names plantiffs Carmelo Anthony and Chauncey Billups of the New York Knicks, Oklahoma Thunder and NBA scoring leader Kevin Durant, Memphis Grizzlies forward Leon Powers and NBA rookie Kawhi Leonard against the NBA and the owners of its 30 teams.

The filing states that David Stern, during negotiations with the Player’s Union back in 2007, demanded that the players drop their Basketball Related Income (BRI) percentage from 57 to 50, much as the last offered deal by the NBA this year.

As well, Stern demanded “a much more restrictive salary cap, which would restrict the market for player services.” Deja Vu.

According to documents filed with the court, it is further alleged that Stern stated the NBA owners were “prepared to lock out the players for two years to get everything.”

One wonders if Stern would be paid during the two year lockout…

An additional czar-ish comment supposedly made by Stern is that “the deal would only get worse after the lockout.”

Enter the 2011 “bargaining” talks with Stern’s recent statement that if players did not accept a deal offered by the owner’s that it would get worse and the player’s BRI share would be reduced to 47%.

All of the good that Stern has done for the NBA during his tenure is all but wiped out with his handling of this lockout. Threats, such as those tossed around by Stern, even if they might legitimately be classified as risky bluffs, can, and do, backfire. In this case, they did. Horribly.

Stern and the NBA owners (perhaps not all) have taken these “negotiations” way too far over the top. There does not appear to be any real good faith on the part of the owners.

And, perhaps billionaires who own sports franchises simply because they wish to own a championship title and not because they love the game should be discounted, or eliminated, from the process because, during their several year quest for the title they seek, they have not cared about the bottom line when spending money foolishly.

The player’s current share of BRI is not the actual and total cause of any paper losses by a franchise. Yes, there may be some contribution to it, but it is not the “why.” Please bear in mind that a loss on paper is not the same thing as an actual loss in cash or cash flow to an owner.

Perhaps players are overpaid. However, that blame goes to the owners who, at the time they did the deal for the player they so dearly wanted, were more than happy to agree to their agent’s demands. They could have simply said “no.”

Over For Now.

Main Street One

NBA Lockout Ultimatum – Who Is To Blame ?

There does not appear to be any specific “who” when trying to decide where the blame lies in the NBA Lockout. Fingers point in all directions.

The union representing all NBA players certainly did well during the previous lockout (1998-1999), garnering an unprecedented 57% of all BRI (Basketball Related Income) being directed to the player’s pockets.

Under the time period of the “57% players – 43% owners” split the popularity of basketball grew, as did gross BRI – up over 4% in a year, to a total of $3.8 billion during the 2010-2011 season.

Unfortunately, some small market owners are claiming they have sustained losses that cannot be endured.

The result? Certain hard-line owners, including player-turned-owner Michael Jordan (Charlotte Bobcats), want to change everything and demand that players receive a maximum 47% of BRI.

That the loss-generating owners could even think that is fair simply means they should, minimally, have their heads examined.

Another owner, super mega-billionaire Paul Allen (Microsoft, Portland Trail Blazers), spent money extravagently trying to buy himself a title in the NBA. The net result: no title and a financial loss, on paper anyway. He feels players, not he or his management team, are to blame.

Allen wants owners, like himself, who own teams that are in the red, to be given a larger share of the pie.

Perhaps there is some logic in that. Players do make awfully good money for playing a game that they love. And super-stars earn even more with their endorsements, which, in the end, adds to the price tag of that product or service they hawk.

However, the owner logic probably does not exist.

How do owners of successful businesses (afterall, they are all billionaires) lose money in the NBA? More than likely it is due, pure and simply, to their huge ego.

For most, owning a pro sports franchise is primarily a sideline, not a mainline activity. And they simply do not manage their teams as they do their businesses. Otherwise, they would not allow themselves to be “luxury taxed.” They would not let an agent lock them in to an unrealistic over-the-top contract for a player who really does not deserve it.

And then there is NBA Commissioner David Stern. At a press conference Stern claimed there was a deal on the table. A couple of sentences later he states that if the deal is not accepted by close of business Wednesday the next offer will be even worse. That is not good-faith negotiation. That is intimidation. That is dictatorship.

So what does all of this mean in terms of negotiating a settlement that both the owners and the players feel is fair? Unfortunately, no one knows.

There is no crystal ball that will inform one and all that “this is the magic number, this is the way mid-level exceptions should be handled, etc, etc.”

In the end it comes down to common sense and, possibly, that the opinions and desires of owners who spend lavishly should be discounted, if not tossed out in their entirely. They only hinder the process.

And, when an agreement is finally reached, owners will still be billionaires and players will still be millionaires.

Meanwhile, the sports fans, who ultimately put every single dollar into the pockets of both sides by subscribing to NBA TV, attending games, purchasing team and player gear, even buying a hot dog while rooting their team on, can only sit on the sidelines, frustrated as the drama continues.

Over For Now.

Main Street One

NBA Lockout – David Stern, Owners, Union, Players … Listen Up, Then Play Ball

NBA Commissioner David Stern is an illusionist and a bully of sorts. The owners are all, pretty much, billionaires, with their primary fortune coming from places other than their franchise(s). Unions may or may not be good. The players, while possibly being overpaid for the sport they enjoy and perform, are trying to protect themselves and future generations of players.


What is the lockout all about?

Point blank, it is about money. Who gets what and how much.

Though no balance sheets have been examined, it is a good bet that none of the owners are in the poor house, despite what their basketball operations balance sheet and income statement may show.

Afterall, there are many business expenses deducted from income that are non cash, i.e., they do not take away any cashflow from the owner’s already deep pockets. So, are owners really losing money…are they losing cash?

Egos and greed are powerful motivators and those two characteristics show very clearly on both sides, to one degree or another.

Perhaps Stern, the owners, the union and the players should remember that it is the fan base that puts money into all of their pockets. Without fans, there simply is no money.

That comes from Sports Econ 101.

And regardless of what new Collective Bargaining Agreement is finally approved by both sides, owners can increase their revenues in many fashions, as can athletes with endorsements and other deals.

Thus, as this drama continues and as fans grow weary reading about how far apart the two sides remain, it would be wise for them, for the future of the sport and for their own pocketbooks, to examine their real motives for creating this situation. For, make no mistake, it was created.

The NBA hit an all-time high during the 2010-2011 season that will likely not be matched for quite some time once the bickering parties kiss and make up.

If Mr. Stern really wants a positive legacy he ought to remember that he is not on the court making fabulous, often incredible, plays. That job belongs to Kobe Bryant, LeBron James, Ray Allen, Dirk Nowitzki, Kevin Durant, Dwyane Wade, Derrick Rose, and countless others.

And, regardless of how this ends, Stern will be remembered as the one who pulled the plug and cost fans the enjoyment of cheering their favorite teams and players.

The Commissioner can attempt to portray players as greedy but it was, and has always been, the owners who started paying exhorbitant salaries and bonuses, in an effort to win a title. True, a strong agent can force a player’s price up. But, an owner can always say no. End of argument.

To the owners…is this really about losing money on an accountant-creative balance sheet? Do you really think fans perceive you as broke paupers? Time to wake up.

What’s the old saying, “You made your own bed, now sleep in it.”

Over For Now.

Main Street One