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The 50/50 Fallacy, And Other Myths Driving The NBA To Armageddon

David Stern had the flu, the owners took his place, and the NBA lockout negotiations fell apart again on Thursday. Now, with the the lockout looking like it's going to last much longer, let's try to understand why this is happening.


"It's time to make a deal. If we don't make it Tuesday, my gut is that we won't be playing on Christmas Day." That was David Stern seven days ago, handicapping our lockout future should a federal mediator George Cohen fail to broker a deal between the two sides.

Now, after Tuesday—and Wednesday, and Thursday—brought interminable meetings in a Manhattan hotel and gag orders from all involved, Cohen finally threw up his hands, with his office saying in a statement that "no useful purpose would be served by requesting the parties to continue the mediation process."

So... Okay! Good to know the mediation was a complete waste of time.

But of course it was. Each time we've had some shred of hope that there's progress being made, that hope's been doused in gasoline, set on fire, packed into a t-shirt cannon, and rocketed into outer space. All in front of an army of NBA reporters who are slowly going insane.


Each time these talks fall apart, everyone that loves basketball gets a little more hopeless. For God's sake, the head of the owners' negotiating committee reportedly told the players, "You haven't felt enough pain yet."

Uhhhhh. Is this Goodfellas

We're supposed to believe the owners are ready to compromise? 

That's been the number one myth all along—that the owners are willing to partner with the players to find a solution that works for everyone. If you're looking to understand the NBA lockout negotiations and why the two sides are farther apart than ever, we may as well start there. As for the other issues driving the NBA lockout, let's break it down.

Myth No. 2: The 50/50 Split Is Fair. It may ultimately be what the players take, but splitting basketball revenue 50/50 amounts to NBA players cutting their earnings by 12 percent to help cover the NBA's losses. On its own, that's a pretty significant demand after the league enjoyed the most successful season since Michael Jordan left, but let's not forget the owners are also demanding to overhaul A) contract length B) salary cap structure and C) guaranteed money.

In other words, if the players sacrifice a significant chunk of what they've been getting paid, the owners still want to overhaul the system that pays them. So no, this isn't about partners working things out with a fair deal; it's about employers telling employees to fall in line.

It only compounds the problem when Stern, Adam Silver and the NBA owners portray 50/50 as a "fair compromise" for everyone, with the pretty explicit implication being that players are greedy and unreasonable by rejecting it. This hardens everyone's resentment and resolve when it's time to negotiate, and if the NBA ends up missing the season, this little "50/50" charade will be a big reason why.

Myth No. 3: The Players Need To Recognize It's A Different Economic Climate. You mean like, the players need to realize that the old collective bargaining agreement won't work anymore? They need to sacrifice some of the 57 percent of basketball revenue they'd been getting? Because they've done that already. Players have already offered to sacrifice 4.5 percentage points, or roughly $180 million. No, what needs to happen is that the owners need to realize that the struggling economy isn't a public relations tool that allows billionaires to browbeat their employees into concessions. Speaking of which ...

Myth No. 4: This Is About Billionaires Vs. Millionaires, Plain And Simple. Wrong. This is about millionaires who've already offered to sacrifice $180 million vs. billionaires holding out for more.

Myth No. 5: NBA Owners Are Losing Money. Uh-uh. Owners may be losing money in an immediate sense—in other words, not all of them profit off their teams each year—but the idea that the NBA's immersed in some sort of profound fiscal crisis is beyond the pale.

Historically speaking, even as the league's added more teams (and theoretically watered down the value of existing teams) the value of NBA franchises has grown exponentially over the course of several decades. In other words, the owners may be losing money in the short term, but as the league grows in the coming years, there'll be ample opportunity for them to compensate for any losses when they sell the team. In that sense, owning an NBA team is a little bit like owning a very expensive stock. Owners pay a gargantuan premium to enter the market, but the silver lining is that over time, you're guaranteed to make a profit on that premium if you hold onto the stock long enough. The thing is, NBA owners want that stock to make them money while they wait to sell it for even more money.

In any case, not to make this into a macroeconomics column, but any owner "losses" have to be weighted against the profits they stand to make by maintaining their investment over time. Possibly related: The most expensive franchise sale in NBA history happened last year.

Myth No. 6: This Lockout Is About Restoring Competitive Balance. Of all the fallacies being perpetrated during the NBA lockout, this one's probably the most reprehensible. Sure, it's dishonest and greedy for owners to pretend they're experiencing meaningful financial hardship, but if the league office sincerely believes a revamped CBA would restore "competitive balance", then it means the NBA doesn't understand the NBA.

We dealt with this issue in depth over here, but the cliffs notes explanation is this: Basketball is a game that thrives on superstars. There are only so many superstars to go around. No hard cap, or no amount revenue sharing, is going to suddenly make two Kevin Durants or two Dwight Howards. The idea that wealthier teams will make the league more competitive is pure fantasy.

Wealthier teams just means wealthier owners. All while teams exist within the same caste system as always, entirely dependent on the handful of elite superstars that define it.

Myth No. 7: The NBA Would Be More Popular With Parity. More popular than it was this year, when the NBA Playoffs had the highest ratings they've seen in a decade? Okay, fine.

Let's say the owners are ambitious and think parity will make the game better. That doesn't change the fact that tying parity to NBA finance is ludicrous. If the NBA wants parity that rivals the NFL, then they should go ahead and turn the playoffs into a single-elimination tournament. Or maybe just let the whole league play and make it like March Madness. Or they can have LeBron James switch teams at halftime. Any of those ideas would level the playing field, but none of them have anything to do with what's driving the lockout.

Myth No. 8: Players Lack "Intellectual Capital". First of all, the whole reason the NBA's in this mess is because today's players are more self-aware than ever, and owners like Dan Gilbert are threatened by it and trying to take back control any way they can. Whether it's through the rise of the internet or general increase in player awareness, today's NBA players are better educated on the issues driving the lockout than any players association in any pro sports labor dispute, ever. But if you really want to talk intellectual capital ... What about the owners?

They've been under strict gag order, but just on Thursday, we heard of one owner who asked players to take the deal and "trust his gut", another who foolishly galvanized the players with a quote ("You haven't felt enough pain yet") that was destined to be leaked, while the whole lot of them keep comparing themselves to the NHL, divorced from the irony of comparing themselves to a league that was decimated by a year-long lockout and still hasn't recovered.

So who, exactly, are the idiots in the room?

Myth No. 9: All Sports Are Doing This! Just Look At The NHL. Right, speaking of the NHL ... As Yahoo! Sports reported in the wake of Thursday's meetings:

Silver said the owners are not willing to trade a better revenue split for system issues designed to improve the competitive balance among the league’s teams. Silver and Holt said the league wants a system more similar to that of the NHL.

A number of NBA owners have bought into the league during the past 10 years. They've seen the favorable system the NHL forged during a lockout, they see the league's current crisis as similar to the NHL's earlier this decade, and suddenly, the lockout looks like a means to an end.

But just for the record: in 2004, the year preceding the NHL lockout, the Stanley Cup Finals averaged a 2.6 rating on ABC. In 2011, the NBA Finals garnered a 15.0 10.2 rating for ABC. This is probably over-simplified, but just working on those numbers, the NBA is roughly four times more valuable to TV networks than the NHL was in 2004.

Yeah, the NHL was losing money and so is the NBA, but the reason the NHL was in so much trouble seven years ago was because the sport was losing value to advertisers and network television at the same time, so the situation was only going to get worse. Meanwhile, the NBA's doing the exact opposite.

So ... yeah. Just a little perspective when owners point to the NHL as an example of a sport that had to overhaul its system in light of economic realities. Comparing the economic realities of the NHL and NBA is like comparing the guy having his house foreclosed on to a guy that needs to renovate his basement.

Myth No. 10: David Stern Is Controlling The Lockout. Wrong. And I was wrong on this one, too. Last week I wrote, "The owners are using this lockout to increase profits and eliminate any risk, and they're willing to sacrifice a season to make it happen. It'd be one thing for Stern to go along for the ride, but he's driving this more than anyone." But Thursday was different.

After two days of meetings that showed promise, Stern stayed home with the flu on Thursday. And after the NBA's owners convened in Manhattan earlier in the day, something changed. In Stern's absence and in the wake of owners brainstorming on their own, two days of incremental progress gave way to a third day of outright animosity between the two sides charged with saving pro basketball. That one's on the owners.

I still say this lockout will taint Stern's legacy forever, but if anything, the greatest indictment against Stern may be his inability to wrest control of his league from the likes of Dan Gilbert, Robert Sarver, Peter Holt and other basketball bit players somehow steering the direction of the NBA.


Anyway, there you have it. If you want to understand what's driving the lockout and why it could last all year and why the owners are willing to jeopardize the future of the league to keep this going, it all comes down to a handful of issues that are misleading at best and in some cases downright lies. But David Stern and the NBA owners think you'll believe. And whether you believe or not, they think the players will cave.

And as someone that loves basketball more than just about anything on earth, it makes me sad. Not even because we're going to miss a lot of great basketball. It's because if there's common thread to all the issues above—other than greed, dishonesty, and ignorance—it's the owners' fundamental lack of understanding of the NBA.

That's what's killing the league right now.

They don't understand that superstar players are already playing at a massive discount, because a lot of them weren't around when Michael Jordan made $35 million-a-year. They don't understand that the NBA's had "super teams" on-and-off for 60 years.

They don't understand that mainstream America has always had a hard time embracing a sport that glorifies imposing black millionaires, and a prolonged labor dispute will only make the relationship more tenuous. They don't understand that empowered players is a good thing, and ultimately what makes the NBA arguably the most progressive sport on the planet. Likewise, they don't understand that today's NBA players are more self-aware than any professional athletes in the world, and they know when they're being treated like fools.

They don't understand that if they overpaid for players and wasted money for years, then part of the responsibility for losses lies with them. They don't understand that the NBA's core fans are more intelligent than those of any sport in America, and we see what's happening here.

The owners think they provide the infrastructure that makes this game possible. They built it, or bought it, and the players and fans came naturally. But what they really don't understand is ... If you ask almost any fan in the NBA how and why they fell in love with basketball, they'll answer with a story about one, great player that got them hooked. Not a team, not a stadium, not a logo. It's the players who breathe life into the infrastructure.

And as the lockout plods forward, if you really want to understand why this is happening, the biggest problem isn't greed or egos or ignorance or David Stern as a plantation owner. It's the NBA owners driving this lockout who don't understand the dynamics that make the NBA unique.

And without understanding, there can't possibly be respect.

And when there's no respect ... Well, prepare for a long ass fight.