The NBA lockout will reach a head on Tuesday, all because the league's owners can't get enough money and refuse to prioritize anything over the quest for wealth.
Oct 4, 2011 - After two long years of posturing, two months of inactivity and a few weeks of fruitless talks, the NBA lockout threatens its doomsday scenario. The league and players' union will meet Tuesday in New York City with the basketball season at stake. Commissioner David Stern won't give a deadline by which a deal must be done to prevent the cancellation of regular season games, but it's coming. Without major progress Tuesday, Wednesday and maybe Thursday and Friday, the league's schedule will be affected.
That means that paychecks would be affected -- not just those for the locked-out players, but those for arena workers, owners themselves and all of the small businesses that have popped up around the league. When you have a $4 billion company, your tentacles tend to reach far and deep. The NBA as a business has dug into our economy and our community economies; to pull the league out of the system cold turkey will send some shocks through the markets.
That's why, if Stern's gang refuses to relent on its incredible demands, these communities that have made the NBA what it is deserve answers from their team's owners. Fans have financed the arenas that the NBA's teams play in, paid ever-increasing ticket prices and supported their local team through thick and thin. They deserve answers.
The people of Oklahoma City have spent more than $100 million to build the Chesapeake Energy Arena and a practice facility for the Thunder. They deserve to know why Clay Bennett is holding out for more money from Kevin Durant, Russell Westbrook and James Harden. The people of San Antonio have spent hundreds of millions of dollars in taxes to build and renovate the AT&T Center, and have turned out in droves to celebrate the Spurs' success. They deserve to know why an ownership committee headed up by Spurs owner Peter Holt has made so little progress in negotiations that a shortened season seems inevitable.
In the NBA, fans aren't just customers. We are investors. We bankroll the whole operation. Of the $2 billion spent on building and renovating NBA arenas since 2000, $1.75 billion of it has been public money. Without a public willing to play Stern's extortionist games -- ask Seattle what happens if you refuse to build a gym on the league's terms -- the NBA would be hosting its biggest games in rinky-dink arenas, or worse, on college campuses. Instead, the public plays along and bites on the threats, Stern's NBA rakes in $4 billion a year and owners have the luxury of demanding a bigger slice.
We deserve answers. When Robert Sarver sits across from a collection of players and says that he hasn't gotten the return he wanted on the Suns, and that's why he and his buddies are demanding massive concessions before he'll sign their paychecks, the fans left in the cold deserve answers. Those fans built U.S. Airways Center in the '90s and paid for its renovation just before Sarver took over. They ought to hear directly from Sarver's mouth why they are being deprived the product their investment in the arena guaranteed. Season ticket holders deserve the opportunity to ask Sarver why bringing the mid-level exception home to his wife in a designer handbag is more important than providing the product they have already paid for.
Sarver bought the Suns for a then-record $400 million in 2004. The market was about to peak, and Sarver -- a banker -- was rolling in dough. When the housing market and economy crashed, Sarver's investment didn't look so great. He bought high, and would be forced to pay for his mistake.
Except that he's refusing to pay for his mistake. He didn't pay for the mistakes his bank, Western Alliance, made: he took $140 million in taxpayer bailout funds in 2008. Now, a year after signing Hakim Warrick, Channing Frye and Josh Childress to a combined $15 million a year, a year after trading for Hedo Turkoglu's awful contract and months after being forced to flip that for more bad contracts, Sarver is refusing to pay for his mistakes. He wants the players to bear the burden. Sarver will certainly take the fans' money, just as his bank took its customers' money. But he's sure as Hades not going to take responsibility for what happened to it.
Sarver is dead weight. As Adrian Wojnarowski wrote on Tuesday, he brings no value to the NBA. None. People bitch about Eddy Curry, but Eddy Curry isn't holding the league hostage. You want to blame Eddy Curry for the lockout? Robert Sarver is Eddy Curry, a man who spoiled the trust of those who paid him and does absolutely nothing to improve the game. People joke about NBA players who buy Maybachs they don't need, jewelry instead of bonds. Let me tell you this: no player in NBA history has squandered as much money as Robert Sarver has just on the Suns since he bought in. You wonder how a player like Antoine Walker can go broke after making $108 million in the NBA? Ask how Sarver can do the same thing on a much grander (if less stylish) scale. Ask how the mighty Maloof brothers can crush their family's empire and take a whole city's sports identity down with it. Ask how Bruce Ratner can burn through stacks of money like firewood without even one eye on the product on the court. But the biggest difference is that when Antoine Walker burns his loot, the guy has to shimmy down to Puerto Rico and to the D-League to making a living. He has get back on his feet on hustle. Sarver? He gets a bailout. The Maloofs? They pawn off one of their dad's businesses. Ratner? He remembers that the Nets he lost so much money on were simply Vaseline for a real estate project in Brooklyn that will make his company billions more than an NBA team could ever be worth.
This is what bothers so many about what the NBA is doing: there is no ownership of the problem from ownership. Watch the language that the league will use. David Stern will be "forced" to cancel games -- nuh uh, no one is forcing the boss to call the shots. Without a deal, the NBA will make a conscious decision to cancel games. The owners will decide that extracting more money from players takes precedence over serving the communities that have put them in fancy suits, meeting in fancy hotels over fancy lunches. Robert Sarver will decide that the bailout the players' union has offered him -- $200 million in future salary rollbacks and a sure concession of escrow funds, which amount to 8 percent of payroll -- isn't enough, that he needs to twist the screws and get more, more, more.
Notice that the NBA is looking to make up all of its losses and gain leaguewide profits on the backs of the players. Sure, Stern has cut league expenses. But he's not asking teams losing money to cut their expenses. The biggest crock of s--t about the whole lockout is that rising player salaries are to blame for the league's red balance sheet. It's logically impossible for that to be the case: leaguewide salaries are capped at a percentage of leaguewide revenue. If revenue grows 4 percent, payroll grows 4 percent. If revenue stays stagnant, payroll stays stagnant.
No, if the NBA is truly losing money, it's because other expenses are growing faster than revenue. The league refuses to discuss those other expenses, of course. Interest payments on team purchases -- you know, the interest Robert Sarver is paying to finance his record-breaking purchase of the Suns -- is a big chunk. That whole racket has become a self-perpetuating scandal that ensures that non-payroll expenses increase for eternity. The values of NBA teams as properties will continue to rise, and the players (through lockout-forced rollbacks) and fans (through higher prices and worse service) will be forced to help finance those deals. But when Sarver sells the Suns, when Chris Cohan sells the Warriors, do those players and fans get cut in? Nope. They're left helping the next guy finance the takeover.
If owners like Sarver don't wake up, realize how ridiculous they have been and find a way to open up our gyms on November 1, we're all going to be left holding the bag: the players, the fans, the arena workers, the city and county governments. Entitlement is a dirty word in American business, but we're applying it to the wrong people. Enough of the bulls--t. Take your insatiable greed back home to the wife in a designer handbag, and end this lockout.
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29 comments
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Comments
I'm all in favor of viewing fans as stockholders
if, you know, they actually owned stock in the team. Sorry, if you don’t demand accountability by owning stock in the team (hello, Green Bay), you don’t get a say. Community ownership in the NBA is only community ownership when it’s convenient. The owners don’t owe anybody anything, particularly if the fans are dumb enough to keep giving them chances.
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"Voetbal is pas totaal als je wint"- Coach Adun
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by Londonjoe on Oct 4, 2011 9:29 AM EDT reply actions 1 recs
The problem there
Is that there’s no offer of ownership shares. Given that option, fans would leap at it. If fans hold out for that option, the team will simply move to a new city.
The simple fact is that despite a lack of legal ownership, the fans do invest in the league. As Ziller lays out, this is particularly true when it comes to stadium financing. Cities are held hostage. They either come up with the cash to placate the NBA, or the team leaves. Sacramento, a city hit as hard as anywhere by the recession, has until March to prove they have stadium financing lined up. If they don’t, the NBA is moving the Kings to Anaheim. Will that deadline be changed at all if the NBA cancels games? Absolutely not.
In most polarizing arguments, the truth is found somewhere in the middle.
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by Exhibit G on Oct 4, 2011 9:55 AM EDT up reply actions 2 recs
I think municipalities should demand some share of the team for financing a stadium
mostly because stadiums have dubious. dubious benefits. On the one hand, owners can move the teams if they want and the cities become intractable, on the other, major markets should really, really push to create shareholder agreements because, for instance, there’s not a chance in hell the NBA leaves say New York or Chicago.
If cities and fans are dumb enough to keep giving the owners and league this much power, the owners are going to keep abusing it.
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Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 10:00 AM EDT up reply actions
What leverage do they have?
Yes, the NBA isn’t leaving LA, New York or Chicago, but those teams aren’t at risk. The smaller markets tend to be the biggest losers. What leverage does Sacramento have to demand an ownership share? If Sacramento were demand an ownership share, the Maloofs and the NBA would reject the offer and move the team. Because if Sacramento won’t do it, there will always be another city willing to accept the team.
In most polarizing arguments, the truth is found somewhere in the middle.
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by Exhibit G on Oct 4, 2011 10:06 AM EDT up reply actions 4 recs
You have to be willing to take the hit. Individual team ownership is the last gasp of feudalism
hell, start up a parallel league if you feel like you can support a team.
Here’s the thing: under the current arrangement, fans aren’t that important to the teams. I’m sorry, but fans are basically participating in a dual share system of ownership where they don’t even have B shares. It’s basically tax farming with a captive base. As you can see with a team like the Bengals, people complain, but still buy Carson Palmer jerseys, and hell, the Clippers still make money. As long as the leagues exist under such a system, you’re going to have individual owners, who, for the most part, do a bad job (this is true of any single leader corporation, anyway), but face no consequences for their actions.
I’m advocating broad based revolt by the fans, particularly in major markets. Demand a share of the teams and change the dynamic. If a team moves, make them move to Flint or Gary and so tie them up in litigation regarding leases and assets that it’s literally a poison pill to move the team. Wealthy fans in particular should be incensed at the way these teams are run, there’s literally nothing else out there like it.
The twitter
Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 10:19 AM EDT up reply actions 2 recs
Willing to take the hit?
Let’s stick with the Sacramento example. I keep coming back to this because I’m a Kings fan and their current situation is very relevant.
You suggest the cities should be willing to take the hit. In other words, they should be willing to lose the team. This would mean that your suggestion for how to gain an ownership share is to escort the team to Anaheim?
I understand that in theory there should be some unified revolt that ends in the situation being forever changed. In reality, NBA teams are a hot commodity. If Sacramento takes a stand, Anaheim will welcome the team with open arms. You talk of relegating the teams to locations like Flint (which only works if they rename the team the Tropics), but in reality there are cities like Anaheim or San Jose which would love to have a team.
If Sacramento loses the Kings because they couldn’t build a new arena in time, the NBA will likely never return to the city. The economic impact will be massive. The new sports complex is projected to create thousands of jobs and billions of dollars of positive impact for the city. If the Kings leave, not only do you miss out on those future opportunities, but you also lose the current jobs and the current economic impact.
As it stands, no city can make the stand you propose with the exception of the huge markets. Those huge markets, once again, have no incentive to make such a stand.
In most polarizing arguments, the truth is found somewhere in the middle.
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by Exhibit G on Oct 4, 2011 10:29 AM EDT up reply actions 1 recs
Lets take this piece by piece
1. NBA teams were overselling forever- there’s a market correction taking place (thus Sarver with Phoenix, Gilbert with Cleveland, and the Hornet’s problems, where adjustments to valuations have been giving them problems in financing operations) where teams are returning to a more appropriate valuation. Despite this, you get fringe effects as new market realities take hold at different times in different places. One of these fringe effects is probably going to be the Maloofs selling the team- not really by choice either, it sounds like, for a discount. Anaheim is going to extract a price of blood. They have for all their teams. it’s just a California reality. If Sacto is a shrinking market, I can’t really fault them- it sounds like they need that team to make money.
2. The impact of new arenas is marginal at best and deleterious and depressive at worst. Particularly when municipal and state funds are used to fund them. Any study will tell you that the ROI doesn’t justify the expense of publicly financed stadiums
3. As you can see, many major markets already have shareholder agreements for that reason (LA, NY, and randomly OKC- I’m sure there are others. They are certainly there for other sports)- While they aren’t technically publicly traded entities (which Sarver should seriously consider, an IPO would help tide him over until he found a buyer), they are accountable to their shareholders. Frankly, if I’m a company that has a box license, I want some say in how the team keeps its house in order.
The twitter
Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 10:55 AM EDT up reply actions
RE: stadiums are bad for the economy
http://jse.sagepub.com/content/8/3/244.full.pdf+html
The twitter
Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 11:01 AM EDT up reply actions
I don't see a Green Bay type situation being used for NBA ownership.
The closest thing to it is MSG for the Knicks, but when you have a share of MSG, it also includes the media ventures, the Rangers, Liberty, and AHL team.
by thewiz06 on Oct 4, 2011 10:18 AM EDT up reply actions
which is a smart way to do it.
The Thunder are also a conglomerate with a divided share structure.
The twitter
Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 10:22 AM EDT up reply actions
Most ownership groups have a share structure of some kind. The Thunder isn't any different there.
But I am not aware of the team openly soliciting shares for purchase at a set price.
by thewiz06 on Oct 4, 2011 12:10 PM EDT up reply actions
Men who made their life's work amassing wealth want to amass more wealth?
Shocking. It’s up to the players to explain to the billionaires how the players’ deal is in the self-interest of both sides. At the end of the day, the billionaires are still loaded. The players? Not so much. Some can play overseas, but most will be SOL.
Don't pay attention to anything I just wrote. It's total bullshit.
by Slum C on Oct 4, 2011 10:14 AM EDT reply actions
Well...
I almost liked this article. That was until I recognized the writer is from Sac and is obviously angered (and rightfully so) that he may (most likely will) lose his NBA team next year. Unfortunately he is just missing on too many points.
The fact that he says player salaries aren’t at all to blame is just a croc of shit. And he knows it. But he’s angry and I understand. Escalating salaries ARE the reason why me, us, as a fan, can barely afford to go to a game, not what Sarver is putting in his wife’s coffers. Try looking at the player agent’s acting on their behalf threatening holdouts until a player gets 8 million a season and averages 4.5 points and 3.5 rebounds. Cmon – anyone who has followed BBall past 10 years is aware of this. To blame it all on owners (they do share a lot of the blame I concede) is just anger and sensationalism draped in a cape of self-pity.
NBA, MLB, NFL, all boils down to one thing – greed. I have NY Giants season tix. I pay thousands of dollars (and had to pay for my PHYSICAL seat that to seat licenses) and I sit in the 2nd to last row from the top of the stadium. Corporations fill up lower levels of NFL arena, MLB parks, and NBA stadiums to the point where casual fan can’t afford tix. And we wonder why we can’t see passion and cheering on TV when we watch these games. Corporate types don’t move their bodies.
Point being it’s not JUST the owners, as the writer seems to promote. It takes TWO to tango. Players, their agents, and their unrealistic expectations of what they are worth contribute just as much to this ridiculous dilemma.
by jasonrak on Oct 4, 2011 10:16 AM EDT reply actions
Sarver's problem is he can't afford the team but can't offload it without taking a major hit
The twitter
Anfield Asylum, sbnation's very own open zoo for the most dangerous game: Liverpool fans
"Voetbal is pas totaal als je wint"- Coach Adun
"The greatest sin is to spurn the gift"- Coach Alistair
by Londonjoe on Oct 4, 2011 10:20 AM EDT up reply actions
Like a whole lot of homeowners right now
Who don’t seem to have the option of changing the rules to negate the crappiness of their investment risk.
Get The Frickin' Rebound
by fuhry on Oct 4, 2011 11:35 AM EDT up reply actions 2 recs
Did you read the whole point about player salaries?
Full disclosure: I’m a Kings fan, so you might want to immediately dismiss anything I say.
Player salaries are a set percentage of revenue. 57% under the current deal. Players keep part of the salaries in escrow, and if player salaries exceed 57% they have to give money back to the owners. Similarly, if salaries do not reach 57%, the owners have to pay out extra at the end of the season. If revenue goes up, so do salaries. Salaries have gone up because the NBA is making more money.
Now, if the owners are losing more money than ever, despite paying the exact same percentage of their revenue, that means they have increased other expenses. That was the point.
Again though, you should probably dismiss this point based on which team I root for.
In most polarizing arguments, the truth is found somewhere in the middle.
Follow me on Twitter
Author of Inside-Out Game
by Exhibit G on Oct 4, 2011 10:33 AM EDT up reply actions 3 recs
Sorry, but I disagree
1. The owners agreed to a CBA in 1998
2. A lot of owners made a bunch of really bad decisions, and a lot of guys paid very high prices for teams. Every NBA contract was willingly signed by an NBA owner.
3. Now that the 1998 CBA has expired, the owners refuse to continue that system. They want a system more favorable financially to them.
4. They have locked out the players and are threatening to cancel the season.
5. The players have offered concessions, reducing their share of income from 57% to 53%. It’s not enough for the owners.
The. Owners. Locked. The. Players. Out.
Get The Frickin' Rebound
by fuhry on Oct 4, 2011 10:37 AM EDT up reply actions 1 recs
Way to explain how Ziller being a Kings fan has to do with anything
Also, way to understand how player salaries are tied directly into BRI.
SB Nation DC | Bullets Forever | SBNation.com | Twitter.
by Mike Prada on Oct 4, 2011 11:30 AM EDT up reply actions
Good Lord!
Ziller, you are on fire! Preach brother, preach!
Get The Frickin' Rebound
by fuhry on Oct 4, 2011 10:28 AM EDT reply actions
Very provocative TZ
I do think there’s more at stake here than a few greedy owners. If somehow the upcoming deal – and there will of course be a deal, makes the league more balanced, more fair – I’m all for it.
If somehow the resolution of this will bring down tix pricesfor the fan – I’m all for missing a few games. These negotiations don’t sound any nastier than many collective bargaining talks, the rhetoric is always high.
I do think a chunk of revenue sharing should go into a fund for building new facilities. If the NBA could come up with even the first $20 mil seed money, well, Sac’s problem not-withstanding I believe Milw is next on the ‘need new arena’ list, what then?
Doesn’t it seem a relatively simple task to have every team deposit $1mil or even each year into a facilities fund? $30 mil a year. Say a new facility gets built somewhere every 3 years? Good seed money.
I read the revenue sharing article the other day and frankly it still doesn’t seem enough. LA has a $250 mil/yr or so TV deal while Charlotte has $12mil – and LA will spread $50 of that around? Shouldn’t every TV deal be split say 70-30 with all the visiting teams? Hell, I think having the LA or Chicago or NY market more than a little interested in what Fox Sports is negotiating with Memphis is a Good thing – maybe not for Fox Sports but . . .
Anyway, rambling today
"Victory goes to the player who makes the next-to-last mistake."
- Chessmaster Savielly Grigorievitch Tartakower
by lietothegirls on Oct 4, 2011 11:57 AM EDT reply actions
Good Points LTG
If the only issue was the league losing money, I would blame the owners completely. BUt to me the cap is a big deal that the players say is a complete deal breaker. I’ve lost interest in MLB because of the fact that a few teams can spend ten time what others do and buy championships. The NBA is becoming exactly the same way. Frankly, I’d rather lose an entire season than see another ten years of completely unbalanced spending.
When you lay all the blame at the feet of just one group in a situation like this, you are almost always going to be wrong.
It comes down to reality
And it's fine with me 'cause I've let it slide
by SavageBeast on Oct 4, 2011 12:06 PM EDT up reply actions 1 recs
Teams purchases were financed by loans
and the loans were transferred to the team.
If that’s not shady deal making than nothing is. Stern has the capacity to disallow this type of deal, and he didn’t. This is a lesson to future commissioners to be selective about who you let into the small circle of owners. (Hint: they need to love basketball and be great decision makers).
by JockstrapNoah on Oct 4, 2011 12:06 PM EDT reply actions
Well said TZ.
No mistakes in the tango, Donna. Not like life. Simple. That's what makes the tango so great. If you make a mistake, and get all tangled up, you just tango on.....
by pookeyguru on Oct 4, 2011 1:05 PM EDT reply actions
Agreed
by otis29 on Oct 4, 2011 1:45 PM EDT up reply actions
That's it! Where's my pitchfork?!!
by hoodieNation on Oct 4, 2011 2:32 PM EDT reply actions
Just wanted to say,
Ziller, you’ve been killing it in your lockout articles. Another great read.
by Some Guy Named Gabbo on Oct 4, 2011 2:45 PM EDT reply actions 1 recs
Unionize the fans!!! ARGGHH!!
"If an expert says it can't be done, get another expert"
- DBG
by LasEspuelas on Oct 4, 2011 3:20 PM EDT reply actions
Tom - the best piece in a full summer of excellent posts
I think at this point desertification may be the only way to get the the bottom of this byzantine steaming pile of horse crap which allows interlocking businesses to hide the true degree of profits the owners make on the entirety of their business interests.
Just because they follow GAAP doesn’t mean that the owners are providing enough information for the union or the public who have largely financed the arenas the NBA franchises play in to determine whether they are making or losing money on their basketball interests.
I hate the idea of losing a whole season but at this point I am more disgusted by Stern’s intolerable arrogance and his constant threats than I am by the thought of losing the season. Rich people rarely are this open in showing their naked desire for more. Just do it Stern, cancel the whole season and let’s see if 22 of your owners are really better off rather than incurring the spurious losses that they allegedly incur running their teams.
Frances Amthor: I think you're a very stupid person. You look stupid, you're in a stupid business, and you're on a stupid case.
Philip Marlowe: I get it. I'm stupid Farewell My Lovely (1975)
And in this vein I get what I want how I want it because I am the customer. You might want to remember that you thieving scumbag mongrel bitches.
nate21h@evilcowtowninc.com
by Bluejohn on Oct 5, 2011 2:45 AM EDT reply actions
Great piece
by disgrunted on Oct 7, 2011 12:37 PM EDT reply actions
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