Since 1995, this is the pattern of NBA labor relations: Team finances go sideways, owners declare crisis, the league demands the whole enchilada of fixes it desires, players entrench, both sides cave and we do it all again a few years later. It's predictable, boring and annoying.
In 1995, the two sides avoided losing games to a lockout because the players got rolled on a couple major items and David Stern didn't let his owners get greedy. They saved that for 1998, when the season began in February. In 2005, again the owners got a few things and called it a day, with only free agency being slightly delayed as a protracted lockout was avoided. Approaching 2011, the owners trumped up the doomsday outlook and nefariously warned about a lost year. The players gave up billions of dollars to cut a deal in November, preserving most of the season.
Really, it's hard to overstate just how much in the way of concessions the owners got in 2011. Players were getting 57 percent of basketball revenue before 2011. Now, they get 50 percent. That's a gap of $280 million a year, and rising. Based on the losses that the owners claimed publicly (through Stern and his agents in New York), teams should by-and-large now be making money. Chances are that all but a few were making money before 2011, but now it's going to be much more difficult to hide that, especially with the Kings selling for $535 million, the Lakers pulling in $150 million per year just in local TV money and with every franchise in a stable ownership situation.
That's why Adam Silver is going to have a really tough time selling a lockout in 2017.
The labor deal negotiated in 2011 is for 10 years, but there's an opt-out option for both sides in 2017. NBA owners have not passed up an opportunity to opt out in at least the past two decades. Even in 2005, seven years after that crushing 1998 lockout that capped individual player salary, broke the union and was within days of costing the league an entire season, the owners opted out, because they wanted more. Owners have not shown an inclination to pass up opportunities to wring more concessions from players. Will they stop now?
It may not be up to Silver, in all honesty. He works for the owners, and a lot of current owners are new-money types who paid huge sums of money to get their clubs. The number of owners who bought their franchises for a song continues to dwindle. Most of these guys financed their purchases, so they have interest payments to make. Some even have loans through the NBA's credit bank, one assumes to cover some operating costs or capital upgrades.
Sure, it looks like every franchise makes money hand over fist. But it is a guarantee that they all want more.
If owners are intent to drop expenses even further, it's likely to come in the form of hardening the salary cap. That's been a regular goal of the owners in labor negotiations. Stern and Silver have always claimed competitive balance as the purpose of a hard cap. Research has indicated that all hard salary caps lead to is reduced player salary. So, this could be the siren song of 2017. The cap's not hard enough. Look at the Nets. Look at the Heat. We need a harder cap to make the league more balanced.
In reality, that siren song will be a Trojan Horse for the further reduction of individual player salary. While the revenue split (which is now at 50 percent) determines gross league salary, a tighter cap drops the highest team salaries, which is mighty helpful for owners unwilling to far exceed the luxury tax threshold. With a hard cap, Peter Holt in San Antonio and Herb Simon in Indiana don't need $80 million payrolls to compete with the big spenders because the big spenders have limits, too.
Will a demand for a hard cap spell a lockout in 2017? Keep in mind that Silver was the loudest public voice on the topic of competitive balance during the 2011 lockout. He pounded on the concept repeatedly in those late-night press conferences. When the deal was struck, he touted its expected impact on competitive balance. This is, perhaps, the key pillar of his vision for the league. So it's easy to see him arguing passionately for a hard cap.
That said, the opportunity to present an image of a stable NBA, a thriving NBA, an NBA apart from the hard image Stern often projected, has never been greater. The league will come into a huge national TV contract up to two years before the opt-out comes. That deal, currently $900 million per year split evenly between teams, is going to be massive. The league is already having talks with networks.
Money will be flowing, and right now the product on the floor looks to be in wonderful hands with LeBron James, Kevin Durant, Paul George and the scads of exciting young players trying to keep up. The allure of avoiding the first potential stoppage of his tenure will be powerful for Silver.
To do so, he'll need to convince players to accept small but useful modifications to the salary cap and luxury tax structure, and he'll need to convince owners that the finances are fine and that the fixes will strengthen competitive balance. It's a tough sell both ways. Players resisted the cap rules included in 2011 even after the revenue issues seemed resolved, and, again, owners really want to lower expenses. And don't rule out owners wanting to sculpt Silver's tenure themselves. By all accounts, Stern ran the league not as an employee of the owners, but as their boss. Surely the owners would like to reverse that relationship in the new era.
The wild card not yet mentioned is the players' union, which still does not have an executive director. (They should hire one by the end of February. Finalists will present to the executive committee at All-Star Weekend.) Remember, the players can opt out of the deal, too. They have not done so in the past 20 years: It's always been the owners. But that's something Silver has to prepare for and guard against. Avoiding another labor crisis is a highwire act that involves convincing owners things are going fine without letting players think they should be taking back some of the salary they lost last time around.
And the worst part about the whole thing is that even if Silver does break the lockout pattern, the specter of stoppage still hovers over every single aspect of the business. Silver's in a really tough position, which is to be expected in such a high-profile, high-revenue industry. Let's hope he's as good a leader as Stern and the owners say.