Thursday, June 23, 2011
A Celebration of Labor Strife
So as one lockout/labor war is subsiding, another is just beginning. It’s like how the football season slowly gives way to the heat of the NBA playoff race, except not at all.
Whereas last month the NFL’s immediate future looked bleak, now it looks bright. Maybe not a beautiful day in June bright, but at least a few rays of light are breaking through the haze of a football-less September. Reports indicate that a deal could be voted on as early as July seventh-eighth, and free agency (which will be bananas crazy this year because all players on expiring deals with four-plus years of experience will be eligible rather than the six-plus stipulated in the previous labor agreement) could start July 15th with training camps opening as they were originally scheduled.
Assuming the cult of excess led by Jerry Jones, Robert Kraft, and Jerry Richardson doesn’t decide to low-ball the players any further; we may have a season after all.
Unfortunately, the picture is not so bright on the basketball side of things. In the back of our minds, we always knew football would make a triumphant return, right? The NFL pulls in way too much money; television ratings are way too good, and the system isn’t broken, per se. In the NBA, it’s an entirely different story…one just a little bit hazier and more depressing.
You see, the NFL pulls in more cash on a yearly basis than you or I could possibly hope to comprehend. The NFL is a NINE BILLION A YEAR enterprise, and a quick Google search tells me the average American with a bachelor’s degree makes $2.1 million over his/her lifetime. That means the NFL could give me 1/4500th of their yearly earnings and I would live the rest of my life like your average college-educated American. MIND. BLOWN.
The NBA isn’t quite so fortuitous. Stern and friends rake in roughly $4.3 billion annually—less than half of what the NFL makes. Whereas revenue sharing forms the backbone of competitive balance in football and serves to keep all franchises—no matter where they are located—on equal footing, it has the opposite effect in the National Basketball Association. Tough luck if you’re the Kings stuck in Sacramento, wasting away in one of the smallest markets imaginable. You wish you were the Knicks—the miserable, awful Knicks—who can spontaneously blow $100 dollar bills out of their buttholes because they reside in New York City. You never hear about any financial woes coming from, say, the Kansas City Chiefs, even though they’re in Missouri. That’s all thanks to revenue sharing, a decidedly socialist policy in capitalistic America.
But here’s the problem: if you’re on the top of the world, revenue sharing is abominable. If you’re Mark Cuban, owner of the Dallas Mavericks, annually one of the biggest spenders and most successful teams in basketball, why should you have to donate money to the Charlotte Bobcats? Let’s do a hypothetical. You’re in a 12-person fantasy football league, and you held your draft a week ago. Along comes one of the commissioner’s buddies who really, really wants a spot in the league. Of course, since they’re buddies, the commish gives him a team. To allow him to compete—rather than just pick players off the scrap heap—he sets up some sort of supplemental draft where every owner nominates a few players that the new guy can pick up. That’s totally unfair, right? Why should you have to donate to the little guy when you’re doing just fine all by yourself?
Therein lies the problem with revenue sharing. It requires compromise and a willingness to give something up—however valuable—for the good of the league.
To truly understand where professional basketball stands, let’s examine how the NFL became the national powerhouse it is today. Football didn’t become a real national sport until the 1950’s, after World War II. In 1961, Commissioner Pete Rozelle (you may have heard of him) insured the NFL’s success for the next five decades and beyond by first, instituting that revenue sharing thing I keep babbling on about, and then inking the NFL’s first league-wide television deal. Here’s what revenue sharing did: it took the $4.65 million the league earned from their T.V deal with CBS, and split it up equally amongst all the franchises, meaning each organization started off the year with roughly $332,000 in the bank—before ticket sales, parking, and concessions was even added on. $300-grand was greater than most team’s payroll, so essentially everyone was making a profit right from the get-go. It allowed each and every franchise to begin the year on equal footing—unlike in the NBA or MLB where the big markets dominate and the smaller ones face a distinct disadvantage. And then there’s this: The NFL has a Supplemental Revenue Sharing Program on top of its normal allocation of earnings that is designed to aid eight-to-twelve of the league’s lowest revenue teams. Guess who is largely responsible for funding this? Yup, you guessed it, the really, really, really rich owners!
But that’s not to say the NBA completely lacks any sort of revenue sharing system…they have one, it just sucks. Here’s what happens in the NFL: teams split the ticket sales 60-40 of every game, with the home team getting 60% and the other 40% split up among the remaining teams in the league. According to David Aldridge, in his piece about the NBA lockout, no such system exists in the NBA. Six percent is taken off the top by the league, but the rest of it goes to the home team. Aldridge sites this example: The Lakers make $2 million a home game, while the Pacers pull in $700,000. Ouch. Since a greater percent of that isn’t split up among the other 29 teams, the Lakers are rolling in $100 dollar bills, while the Pacers are struggling to survive.
Increased revenue sharing would certainly increase competitive balance in professional basketball, but it begs the question: what good is parity? You could make the case that there were nine championship contenders last season: Miami, Boston, Dallas, Los Angeles, Chicago, Portland, Oklahoma City, Orlando, and San Antonio along with four other reasonably competitive playoff teams (Memphis, New York, Atlanta, and Denver). That’s 13 good teams. The NFL, last season, had ten teams most folks were confident had a real shot at the Super Bowl: Philadelphia, Chicago, Green Bay, Atlanta, New Orleans, New England, New York Jets, Pittsburgh, Baltimore, and Indianapolis, with three others that had an outside chance (Kansas City, Tampa Bay, Giants). So, based on that completely subjective and unofficial ranking, both sports had 13 solid play-off type teams with real title aspirations.
Looking at it in that light, parity sure seems to be equal between both leagues, doesn’t it? But here’s where this idea of equal parity falls apart: The NBA’s bottom feeders (Sacramento, Minnesota, Cleveland, and Toronto, for example) are way, way, way worse off than the NFL’s perennial losers. That’s the biggest difference. Parity might be at an all-time high in the top half of both leagues, but towards the bottom it’s a precipitous drop off. Take, for instance, the St. Louis Rams, ranked as the 29th most valuable franchise according to Forbes Magazine’s annual rankings. Thanks to the drafting of number one overall pick Sam Bradford, the future looks bright for the Rams. For a variety of reasons, including the franchise tag, revenue sharing, and a hard cap, Sam Bradford should stay with St. Louis for a loooooong time, assuming he continues to grow as a franchise player. They don’t have to worry about Bradford bolting for a better market, unlike in the NBA, or even baseball, where it’s a regular occurrence. That’s the type of thing the NBA’s smallest markets have to worry about.
Depending on the way you look at the issue, it’s either a drastic problem or merely a slight hindrance. Basketball was great this year, and the playoffs have never been better. Do we want the teams at the top of the league sharing their earnings with the franchises stuck in neutral (or reverse in some cases)? I would argue that there are too many teams in the NBA—I think the league needs to downsize. The league-pariahs perennially stuck in last place need a better chance to compete, but not to the extreme detriment of the top teams. By cutting down and eliminating some of the least valuable franchises (I’m looking at you Charlotte); the guys at the top would remain strong, and wouldn’t have to expend so much money keeping the bottom-feeders afloat. It’s cold-blooded, I know, but I really believe it’s the most viable solution. It won’t happen because Commissioner David Stern would rather swallow nitric acid than shut down a franchise under his watch, but it just makes a ton of sense. And don’t you think the owners would more readily agree with stronger revenue sharing if they had to pay for say, 28 franchises, rather than 30?
To summarize, the league either has to drop a couple of franchises or install a revenue sharing plan similar to the NFL’s so the lowest of the low have at least a Shaquille O’Neal free throw attempt of a chance. Right now, it’s more like a blind baboon tripping on LSD chance. Which, to say, isn’t very good at all.
If the NFL lockout is truly coming to a close, what can the NBA learn from it? Plenty of things! Since day one the NFL’s labor war has largely been painted as billionaires vs. millionaires—owners vs. players. It doesn’t seem to be that way in the NBA, as the owners are against each other. Here’s why: there’s a faction of owners who have owned teams for a long time and have made a lot of money out of it. Then, you’ve got the other owners who have purchased teams fairly recently—in the last 10 to 15 years. They haven’t been so fortunate, and haven’t made enough money to see their purchase pay off. Obviously, they would like a return from their investment, and thus, are driving a hard bargain with the players, demanding a harder salary cap and a larger percentage of all basketball related income. The old guard understands the cost of a lockout, while the owners making less of a profit seem willing to do whatever it takes to revamp what they see as a failing financial system. The task at hand is not only finding a middle-ground with the players—splitting up revenues between owners and players more evenly than the current 57-43 split—but getting all the suits on the same page.
On the football side of things, I’m squarely in the player’s corner. The system was working, no one was losing money, and the owners decided to put a hold on everything because they couldn’t figure out what to do with NINE BILLION DOLLARS. The situation is much grimmer in the NBA, as the system is broken. Players who don’t deserve $80 million dollar contracts are receiving them and some teams are practically flushing money down the toilet. Teams at the bottom are hopeless while those at the top are living large and choosing not to spread the wealth. It’s a model built to fail. That’s why; if you’re intent on picking a side (which we all should be) you’ve got to go with Commissioner Stern and the moderate owners. Those that understand the importance of revenue sharing and the devastation a full-blown lockout will wreak. The split of basketball related income needs to angle more towards an even 50-50 rather than the 57-43 split in favor of the players it is now, or the 61-39 split the owners first proposed. Revenue sharing needs to increase to give the little guys a fighting chance, and the salary cap needs to get harder. It’s worked in professional football and hockey…why not basketball?
But this is the heart of the matter: the NBA is broken, the NFL is not. The system needs to be fixed; otherwise struggling franchises will continue to spiral out of control, and enormous contracts will still function as a noose if the player under contract fails to perform up to expectations or suffers a devastating injury. The NBA has to continue the momentum that has been building ever since the Celtics and Lakers squared off in the most anticipated Finals since Michael Jordan’s finale. Everything but the system is incredible and couldn’t be better. Think of it like a house: beautifully furnished, stunning yard, complete with an indoor basketball court, movie theatre, and 30-car garage. Everything is mind-blowingly awesome except for the foundation built with aluminum foil, used fire-wood, and rusted piping.
It’s like the most beautiful thing you’ve ever seen…too bad it’s ready to fall apart.
Posted by Richard Owens at 2:34 PM