By The Associated Press
NEW YORK (AP) — NBA owners, losing hundreds of millions of dollars a year, wanted an overhaul of the financial system to ensure themselves a chance to profit.
Players, believing they were the driving force behind record TV ratings and revenues, wanted to keep what they felt they deserved.
Now, negotiations that have lasted nearly two years need to end in the next few days.
Commissioner David Stern said he will cancel the first two weeks of the regular season in there is no agreement on a new deal by Monday, costing both sides money and driving away some basketball fans who might never come back.
“There is an extraordinary hit coming to the owners and to the players,” Stern said.
Not to mention the people who work in the game and the businesses that depend on it.
Stern has repeatedly said owners had two goals in the talks: a way to escape losses and a system where all teams could compete equally, noting that the NBA’s small-market clubs aren’t nearly as successful as Super Bowl champions like Indianapolis and Green Bay.
The problem, they said, was a system that guarantees players 57 percent of all basketball-related income, which includes gate receipts, broadcast revenue, in-arena sales of novelties and concessions, arena signage revenue, game parking and sponsorship dollars.
Another problem is a salary cap structure that allows teams to go well beyond it if they were willing to pay a luxury tax, which the big spenders in big markets such as Los Angeles and New York could easily afford.
The sides are still divided over the revenue split and the cap, and players insist they would rather sit out games than take a deal that would eliminate gains they fought for years ago.
“They’re going to sacrifice — if they lose games, they miss money and all that. They feel they have to take a stand the same way players took a stand for them before they were here. It’s actually quite inspiring to listen to them articulate that,” said players’ attorney Jeffrey Kessler, who also represented NFL players during their four-month lockout this summer.
“I think they saw how the NFL players stood together through tough times and ended up with a deal the NFL players thought was fair. They’re thinking they’re going to do the same thing.”
The cost, for both sides, would be staggering.
Stern predicted a $200 million loss just for the cancellation of the NBA’s entire preseason schedule. If arenas are dark on Nov. 1, when the real games are supposed to start, the damage will be even greater.
“They’re in the hundreds of millions of dollars,” Deputy Commissioner Adam Silver said. “We’re not prepared to share the specifics. But, yes, we’ve spent a lot of time with our teams walking through those scenarios of lost games, and the damage is enormous, will be enormous.”
Players’ association executive director Billy Hunter said players would lose $350 million for each month they’re locked out.
The hardest hits likely will be felt by those off the court — from the 114 people the NBA laid off in July to businesses that depend on fans flocking to the games.
From the parking lot of his Crown Burgers restaurant in downtown Salt Lake City, Mike Katsanevas can see the edge of EnergySolutions Arena, its blue-and-green lights already twinkling at dusk.
What he may not see at all this year are the hundreds of fans who routinely pack his 224-seat restaurant before each Utah Jazz game, parking their cars for free if they order $14 in food, including his famous made-to-order patties crowned with pastrami.
“For us, it’s a tremendous impact if these games don’t go through,” said Katsanevas, whose family owns the restaurant just a block north of the arena and five others in the metro area. “Before it used to be our gravy. But now with the economy and everything else that’s going on, it’s become a necessity.”
He said all of his 41 employees will see their hours cut if the lockout continues.
Players and owners did narrow the financial gap before talks broke down Tuesday. Players proposed lowering their BRI guarantee to 53 percent and owners increased their formal offer to 47 percent. Stern also said he discussed the idea of a 50-50 split, which was rejected by players.
With each percentage point equivalent to roughly $38 million of last year’s BRI total of $3.8 billion, the union (believes) feels a reduction from 57 percent to 53 percent is enough of a concession, saying it would transfer more than $1 billion to owners in six years.
So while sharing 50-50 sounds great in kindergarten, it may not work for NBA players.
Stern said the league had backed off other demands, such as (like) salary rollbacks and non-guaranteed contracts, while offering players a chance to opt out of the agreement after seven years. So there is hope of a compromise in the coming days.
Both sides insist they are committed to making a deal, although Silver confirmed last season that some money-losing teams would be better off if there were no season.
Fans wonder how the NBA could be on the brink of self-destruction over a few measly percentage points when its popularity has rarely seemed higher (has soared?) The historic free agency period of 2010, which put LeBron James in Miami alongside Dwyane Wade and Chris Bosh, brought a new level of interest that carried right through the Dallas Mavericks’ victory over the Heat in the NBA finals.
But in announcing the lockout on June 30, Stern noted that small-market owners didn’t particularly enjoy the season or feel included in it, and many have little incentive to go back to a system that looks like the old one.
Nor would players want to play (labor) under a system that restricts free agency or limits their earning potential. Hunter and union president Derek Fisher of the Lakers have said they are prepared to sit rather than accept a bad deal.
That could be the outcome, as damaging as it seems, without a big change in a short amount of time.
“I haven’t talked to all 400-plus guys, but the guys that I have talked to are all on the same page. While it would be devastating for fans and everything like that, right now we’re dealing with some serious business,” Detroit’s Ben Gordon said. “One thing Derek said is we have to stand for something. It’s not only today we’re playing for — it’s also tomorrow, for the guys who aren’t in the league yet.”