The NFL dodged a labor bullet this summer en route to the most highly anticipated season in league history.
The NBA is coming off its most successful season ever. However, rather than preparing for encore act, the league is on the verge of killing the goose that laid the golden basketball.
The NBA lockout entered its 83rd day Wednesday, with no immediate end in sight. Though this isn’t the first time NBA Commissioner David Stern and Players Association head Billy Hunter have squared off in the boardroom, never before have the adversaries faced such a cataclysmic “issue gap.”
First, let's discuss the revenue split. Though the NBA made more than $4 billion last fiscal year, Commissioner Stern claims the league’s 30 teams lost a combined $300 million. Owners want to change the 57-43 percent revenue breakdown that currently favors the players. The sides have negotiated down the gap, yet remain at least $500 million apart.
Second, the NBA wants to limit the length of guaranteed contracts to 3-4 years, down from their current maximum length of 5-6. In this case, NBA contracts would look more like the less guaranteed NFL deals than the more guaranteed MLB ones.
Finally, small-market owners insist on including some device to keep a superstar with his existing team – similar to the "franchise tag" in the NFL. Doing so would limit high-profile free agents from jumping to bigger markets, a problem that seems to plague the NBA more than the other major sports leagues. Imagine the NBA life if the Cleveland Cavaliers were able to "tag" LeBron James before last summer (at the very least, no “The Decision” or “Big Three”).
Despite the work stoppage, here’s a few good basketball business signs. The NFL’s unprecedented 10-year collective bargaining agreement gives the NBA hope that they too can find long-term labor peace. Sprint Nextel recently signed a four-year, $250 million sponsorship deal, while the Atlanta Hawks and Philadelphia 76ers sold for nearly $300 million each.
But there are still a handful of negatives.
NBA superstars have legitimate playing options overseas, especially with teams and leagues willing to give players the right to terminate their contract once NBA labor peace is restored. To date, 54 NBA players have committed to going overseas. Each NBA team could lose between $500,000-1.5 million in ticket revenue for every regular season game lost to a lockout, according to John Lombardo of SportsBusiness Journal. Adding to the potential losses, all NBA teams have promised refunds plus interest for cancelled games. There’s also an unfair labor practice claim against the NBA that’s moving forward with the National Labor Relations Board.
Finally, the NBA is battling expectations. The NFL was "expected" to resolve its lockout during the off season, and it did. The NBA, on the other hand, may be "expected" to follow the parallel track of 1998, which led to a missed first half, and a 50-game schedule.
If we learned anything from the NFL lockout, it’s that nothing gets accomplished until a substantive deadline puts both sides up against a wall.
Well, that deadline is fast approaching. It was on September 24, 1998, that Commissioner Stern cancelled preseason games during the last lockout. On October 14 of that year, the regular season cascading postponement began. Will history repeat itself? We’re calendar watching once again.
Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the $750 Billion Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.
Brian Finkel is Creative Director for Horrow Sports Ventures. You can follow him on Twitter @TheFinkTank.
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