Posted by: Mike Cornelius | December 15, 2016

The NBA’s TV Money Buys Labor Peace

What a difference a few billion dollars can make. The last time NBA players and owners negotiated a collective bargaining agreement (CBA), basketball fans were unhappy spectators to a 161-day lockout that shortened the 2011-12 season from 82 to 66 games, cost the parties an estimated $400 million, and inflicted the greatest hardship not on billionaire owners or millionaire players, but on regular folks living paycheck to paycheck while working for the league, one of its thirty franchises, or at an empty and dark arena.

The 2011 lockout was declared by the owners on July 1st, upon the expiration of the old CBA; but there was little immediate impact since that was less than three weeks after the Dallas Mavericks had defeated the Miami Heat to win the NBA Finals in six games. The two sides continued to engage in fitful negotiations, but by September it was apparent that the structure of the salary cap and the percentage of revenue allocated to player salaries remained as major issues. In short order first the entire preseason, then the initial two weeks of regular season games were cancelled. By November the cancellations were running into December, and the players voted to dissolve their union. Two separate lawsuits against the NBA were filed by groups of players in California and Minnesota. There was public dissension among both owners and players, with Commissioner David Stern handing out hefty fines to owners who spoke publicly about the ongoing stalemate.

A new contract was finally agreed to in early December, with the union reforming in order to ratify it. The owners won a drop from 57% to 51% in the players’ share of Basketball Related Income (BRI), but failed to get the hard salary cap and stiff luxury tax that small market teams had hoped for. Still the consensus of opinion at the time was that the owners had emerged from the five month fracas with the better end of the bargain.

The CBA that was the product of the 2011 lockout had a ten-year term. But both sides had the opportunity to opt out of the deal this month, which would have meant a reopening of the sort of public negotiations that nearly cost the NBA a season five years ago. This time a new commissioner, Adam Silver, and a new executive director of the Players Association, Michele Roberts, engaged in very private discussions over the past several months.

The new leaders and their new approach were surely instrumental in striking the deal that was announced this week. But the biggest factor that led to a new seven-year CBA and assured labor peace in the NBA well into the next decade was the fact that the league is enjoying unprecedented popularity and the revenue that comes along with all those cheering fans. The NBA’s national television deal with ESPN and TNT, signed in 2014, nearly tripled the annual payments from the networks from $930 million to $2.66 billion.

Since the last CBA LeBron James, the most recognizable player in the game, played the role of prodigal son and returned to his roots in Cleveland, instantly transforming himself in the eyes of many fans from money-hungry pariah to hometown hero. Dominant super teams have arisen, including James’s Cavaliers in the Eastern Conference and the Golden State Warriors and San Antonio Spurs in the West. Golden State’s Steph Curry now vies with James for the role of most popular player, and he seems capable of making shots from virtually anywhere on the court, or perhaps even from the locker room, almost at will.

Surely neither Silver nor Roberts wanted to risk alienating a large and happy fan base, and the TV money made it easy for them to strike a deal. The players could agree to continue to have 51% of BRI dedicated to salaries, because the amount of that revenue has doubled since the last contract. The new CBA also broadens the definition of Basketball Related Income, meaning that in the contract’s first year 51% will be more than $1.5 billion greater than was available to the players the last year their share was the old 57%. It’s expected that the average player salary will top $10 million by 2020.

The agreement also means fewer preseason games and an earlier start to the regular season. This will cut down on the number of times a team has to play on consecutive nights. That means less wear and tear on players’ bodies, but it should also be a boost for fans. Just this week fans of the Memphis Grizzlies packed FedExForum for the only visit of the season by the reigning champion Cavaliers. But the game was the back end of a home-and-home two-night series, so those fans never saw James, Kyrie Irving or Kevin Love. Cleveland coach Tyronn Lue chose to rest his three biggest stars, as many coaches around the league do in similar situations. The only solace for Memphis fans was that at least their team triumphed over the depleted Cleveland lineup.

In ten days’ time the NBA will put on its annual Christmas extravaganza of televised games, with three on ESPN and two more on ABC. The Celtics and Knicks will kick off the action from Madison Square Garden, and hours later the Lakers and Clippers will battle for Los Angeles bragging rights. In between the Spurs will host the Bulls, the Thunder will entertain the Timberwolves, and the day’s feature matchup will be a rematch of last season’s Finals as the Warriors travel to Quicken Loans Arena to face the Cavaliers. It will be a great day to be a fan of NBA basketball, as is every 25th of December. But this year the assurance of years of labor peace thanks to Adam Silver, Michele Roberts, and a boatload of cash, means that NBA fans have already received the best present of all. The only sad note is that Craig Sager couldn’t help unwrap it.

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