It’s been a pretty smooth ride for still-newish NBA Commissioner Adam Silver. In less than 18 months on the job, he’s already removed an awful, racist owner, saw the players union appoint the first woman chief in major American sports history, witnessed LeBron James return to his hometown team and enjoyed record TV ratings in the Finals as Golden State won its first title in 40 years.
Now, it all gets infinitely harder. The first hints were dropped last month in his State of the League address in Oakland, before Game 1 of the Finals. In a makeshift, curtained-off room just inside O.co Coliseum, a tunnel walk from the Warriors’ lame-duck home of Oracle Arena, Silver addressed the media on a range of topics, including the Collective Bargaining Agreement, which either side (players or owners) can opt out of in two years, after the 2016-17 season. Silver talked like he was eager and optimistic about discussing any possible CBA changes as soon as possible. “My feeling is the league is doing incredibly well,” he said. “The players are doing really well. Popularity is at an all-time high. So I think it would be very constructive to sit down sooner than later to start talking about, to the extent there should be changes in the Collective Bargaining Agreement, what both sides would like to see.”
Turns out that doing incredibly well is just a euphemism for holy shit, what do we do with all this money?!? The NBA operates in such a way that the players are guaranteed to receive roughly 50 percent of all league revenues. Obviously, player contracts will make up the majority of that figure, but however much that total number falls short of the promised revenue, the league’s 30 team owners must cover the difference. Well, the NBA is coming into so much money, thanks to the new TV contracts it signed last year that, according to Silver, the owners may have to pony up as much as a half-billion extra dollars to the players during the next payout. As you can imagine, the owners are somewhat less than pleased about having to do this. So Silver hinted last night, speaking to reporters at the Las Vegas Summer League, that, well, that’s going to have to change.
“There are projections that for next year we could be writing a check moving close to half-a-billion dollars to the Players Association,” he said. “That’s not, of course, the ideal outcome from our standpoint. It’s not something we predicted when we went into this Collective Bargaining Agreement. Now it’s happened because the revenue we generated was much higher than we had ever modeled. But we’re also learning that when you have all that money coming into the system, team behavior isn’t necessarily predictable either.”
OK, just to sum up, the NBA owners are making more money than ever before, players are making more than ever before and this presents some kind of intractable and untenable economic reality for the teams. Got that? The good news is that player salaries are slated to rise considerably when the team cap goes up some $20 million after next season, inevitably taking up a larger piece of that pie. The bad news is, it may not matter – not if the NBA team owners opt out of the CBA, lock out the players and shut down the league for any appreciable period of time to try and leverage a more “fair” agreement. One that preferrably lowers the revenue percentage coming to the players. The NBA is run by billionaires who can wait out the non-billionaire players. The economics can get much more complicated, but they’re also that simple.
Silver says “a significant number of teams are continuing to lose money” and that’s a major reason why the CBA needs a complete overhaul, but it’s hard to see A) how that’s even remotely accurate; B) why that should even matter to the players, who are the entire reason anyone watches the NBA, or; C) how the players don’t ultimately get screwed in this situation. The owners are people of free will and can spend (or not spend!) their money how they like, from player salaries to new arenas to practice facilities and so on. There is more money coming into the NBA than ever before, and any owner who is losing significant revenue could only be doing so because of extreme incompetence and a total ignorance of Accounting 101.
Above all, with everyone already making so much money and basically guaranteed to make more than they ever expected, why would the owners be dumb enough to risk upending that model? I spoke with Michele Roberts, the new head of the Players Association, last fall as she was about to start her four-year term as union chief, and she spoke glowingly of the NBA’s continued global expansion, those mammoth TV deals and how the league was healthier and stronger than ever. But she also sounded wary of what else was to come.
“I’m not a fool,” Roberts said. “This is a game, but it’s also a very popular business, and the NBA, among the things that have to be addressed, is looking at some significant additional dollars that will be probably be coming into the game, especially from new TV contracts. … We’re going to be smart, and I think that with Commissioner Silver, we’ve got an honest partner and we will see what common ground there is and we’ll get there. I would like to think there’ll be no stoppage on my watch, but obviously I can’t make that call.”
And we still don’t really know what will happen, but it’s easy to think we’re already doomed for another work stoppage, a December restart in 2017 and an abbreviated schedule that makes us wonder why the NBA schedule isn’t always 66 games instead of 82. The last time this happened, players’ cut of the money decreased from 57 percent to its now-roughly 50 percent. Don’t expect them to take another cut so drastic, and don’t expect the owners to cave to the union’s demands. It’s going to be ugly, perhaps worse than in 2011.
But we’ve got two more champions to crown until then. And then it’ll be up to the each side to decide the price that’ll keep everyone happy. It’ll be a high cost, but letting the league shutter for any period of time, when it’s on such a booming upswing, could mean an incalculable loss for all parties.
Good luck to Adam Silver on avoiding that outcome. He’ll need all he can get.