Last week I wrote about the various public statements Michele Roberts—the National Basketball Player’s Association (NBPA) new executive director—has made since being hired. I concluded that she was a good hire by the NBPA, and that if/when there is a labor stoppage in 2017 (which I think there will be), she will employ a much better strategy than Billy Hunter/Derek Fisher did in 2011. Today I want to continue this conversation by talking about how.
It is important to get this out of the way first: there is no even remotely credible alternative league for players to join. There were suggestions during the 2011 lockout that players could find wealthy backers or “venture capital” to fund a Bizzaro NBA, but that’s a barely plausible idea. Running a sports league (a multi-billion dollar business) isn’t like putting together an IKEA bedside table, where all you need is an allen wrench. Sure, you can run some high-profile charity games or a short international barnstorming tour, but the players aren’t just going stumble into NBA 2.0 halfway through a labor stoppage.
There are also no already-established challengers. There’s no ABA, or even an XFL. The best player Europe or China has ever been able to poach is Josh Childress. The NCAA not only doesn’t pay players, it actively bars them from profiting off of their own likeness. Any discussion of the NBPA’s strategy has to start with the understanding that the NBA is the only game in town.
Michele Roberts has come out and said that the individual owners don’t really matter: “Let’s call it what it is. There. Would. Be. No. Money … Thirty more owners can come in, and nothing will change. These guys [the players] go? The game will change. So let’s stop pretending.” She isn’t advocating for an NBA alternative, but making the common sense argument that players provide more value to the NBA than owners. If you’re not from Milwaukee, you probably can’t even name the guy that owned the Bucks for almost 30 years. The players tried to make a version of this argument during the last lockout, but failed miserably at articulating it. With how easily the Kings, Clippers, and Bucks recently found owners—and how mind-boggling much their previous owners were paid—this argument should be more credible next time.
But all this overstates the importance of there being a ready replacement for the NBA. Yes, the players would be in a stronger position if there were, but that doesn’t mean without it they can’t have a strong position. It is a shallow view of leverage that the NBPA can only win by walking away completely.
In the event of a labor stoppage in 2017, the NBPA’s messaging should hammer home the (not entirely true) message that NBA players are worse off than the athletes in other major professional sports. They should point to MLB players like Giancarlo Stanton signing uncapped, fully guaranteed contracts for $325 million, while the biggest contract LeBron Freaking James ever signed was for $110 million. They should point to NHL players getting 57% of all hockey-related revenue, while NBA players only get 50% of basketball-related income (BRI). They should point to stagnant national television viewership, while ratings are rising for most other sports.
The biggest alternative to the NBA isn’t a basketball league, but the highest level of other professional sports. The NBPA can put together a reasonable-sounding argument to the public that they’re getting screwed relative to other professional athletes, and can put together a reasonable-sounding argument to the owners that in a prolonged labor stoppage fans will just tune into football or hockey, and forget they ever cared about basketball in the first place. That cannibalization of the NBA’s long-term profits will come from an increasingly crowded sports marketplace, not a basketball league upstart.
The NBA has also lost what was probably its biggest weapon in the last lockout: the ability to claim that numerous teams are losing vast sums of money. The NBA never even reasonably demonstrated this, with the NBPA disputing their figures and the league never making public any sort of documented evidence. The NBA asked the public to trust them, and the public did.
But now we have some actual figures, namely some of the information from a memo that Zach Lowe obtained, one the NBPA can surely get its hands on in full. The headline that the Brooklyn Nets lost $144 million in 2013-14—and that nine teams overall lost money—seems pretty bad. But the Nets are funded by a cartoon-villain multi-billionaire who is almost purposefully throwing good money after bad, and are in no way representative of league finances. The second most money-losingest team was the Wizards, who only lost $13 million. Then there are the teams making $100 million (Lakers), $61 million (Bulls), $41 million (Rockets), $33 million (Celtics), and $29 million (Thunder). It is undeniable that the league, on the whole, is profitable. And about to get even more profitable.
Currently, the league gets $930 million annually as part of its national television deal, meaning $31 million per team. After spending the required 50% on player salaries, that leaves each team to pocket about $15 million. Well, under the new TV deal that just so happens to kick-in for the 2016 season—which starts six weeks before the deadline for either the league or players to opt-out of the CBA—the NBA is paid about $2.66 billion annually. Each team will get about $88 million, $44 million to put towards player salaries and $44 million to pocket. If that were the revenue structure this year, the Wizards $13 million loss would actually be a $16 million gain. Every single team in the league would be profitable, bar the ridiculous Nets.
Furthermore, the NBPA can make the argument it head-scratchingly declined to in the last lockout, that the real value for owners is upon sale of their franchise. Donald Sterling bought the Clippers in 1981 for $12.5 million. If you use the generally accepted long-term rate of return for stock market investments (and I realize there is some debate about this) of 10% annually, $12.5 million that was invested in 1981 would have ballooned to $290 million. Well, Donald Sterling sold the Clippers for almost seven times that, for $2 billion. He got a 16.6% annual rate of return on his investment. Herb Kohl bought the Bucks for $18 million in 1985 and sold it for $550 in 2014, an annual rate of return of 12.5%.
The point being, EVEN IF we accept that owners are losing money every year—and to be clear, we do not—they will still recoup their investment on the back end. Steve Ballmer was asked about this on Reddit recently, and he gave a succinct (if awkwardly phrased) and accurate answer about buying the Clippers: “It will be a good investment financially but not awesome and not bad.” Not every owner can cash out like Donald Sterling, but they can all cash out. Unless an owner runs an abjectly terribly managed franchise, they will always profit in the long run. You can’t say this about any other business. Sports franchises are the bonds of the business world: not sexy or the maximum-possible profit, but a near-guaranteed one at least.
This is what I mean when I write that the NBPA should attack the foundation of the NBA. During the 2011 lockout, the league was able to anchor the discussions around a series of “truths”: numerous franchises are losing money, there is no credible alternative to the NBA, players should be penalized with reduced contract length because franchises hand out so many dumb contracts, both a salary cap and maximum-contract cap are good for the league, etc. Except for occasional jabs, the NBPA let these assumptions stand. They fought around the margins of how much BRI the players should give up, what percentage of the salary cap maximum contracts should be capped at, the rare exceptions to maximum-contract lengths, etc. After that, it was just a matter of how badly they got routed by the NBA.
Judging by her rhetoric, Michele Roberts won’t be content to fight the NBA for the scraps the league deigns to leave on the table. If she can make some of the above arguments resonate, she won’t have to.