Dubsism

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Condensing Bill Simmons To A Comprehensible Level To Understand the NBA Lockout

If you are my age, you remember those Reader’s Digest Condensed Books. Essentially, they were literary classics for the short American attention span. Why wade through 600 pages of a classic when you can get the jist in 50?

I read a good article on the NBA lockout the other day, but it was by Bill Simmons; a writer for whom the condensing idea was made. That’s why I decided to take that article and strain it down to the essence of this labor stoppage which he does actually capture once you figure out where he actually says it.

Issue No. 1: The owners lost $340 million last season.

Or so they claim. In retrospect, making a huge deal about opening their books was the league’s smartest move of 2011, narrowly edging Stern’s forcing LeBron to throw the Finals so that Miami’s next season would be more compelling. I know it threw me off the scent. They opened their books? That’s enough for me! The Players Association examined all 30 teams and flagged some creative accounting, with Billy Hunter even telling ESPN.com’s Henry Abbott, “If you don’t count interest and depreciation, you already lop off $250 [million] of the 370 million dollars.”

I have no idea what this means, and frankly, I’m not sure Hunter does, either. But once the sports blogs started stirring things up, that led to (ESPN.com’s cap consigliore) Larry Coon’s concluding the NBA’s number was flimsy at best; Nate Silver’s writing a New York Times blog titled “Calling Foul on the NBA’s Claim of Financial Distress”; the NBA’s putting out a press release disputing Silver’s piece;and my spending 10 minutes trying to figure out what “amortization” meant (and failing). This was not how I wanted to spend my summer.

What it really means: Rule number one when discussing money: Never start with a number. All you are doing is setting the starting point. Once you state a number, you’ve simply pounded a stake into the ground; a stake around which the entire discussion is going to revolve.  Every bit of the discussion after this point will simply be about volleying the number you want back and forth with the number the other guy wants. Can we please stop claiming that we lost $340 million?

Problem number two is people don’t grasp numbers like $340 million. When you say “$340  million” to the average sports fan, all they hear is “really, really big.” It doesn’t mean anything. Here’s the rule of thumb: only use numbers that don’t need other big numbers to explain them relative to the value of the average guy’s mortgage. If something is five times Joe SixPack’s mortgage, use it. But when the number is 1,700 times that mortgage, find another way to make your point. That number can be picked apart too easily.

In this case, go with the fact the NBA as an enterprise is no longer profitable. It’s true, it’s concise, and it doesn’t lead you as quickly into the minefield of being a rich guy crying about losing money.

Issue No. 2: The players are currently getting too big of a revenue share.

The last labor deal guaranteed players 57 percent of basketball-related revenue (better known as “BRI”). If the league makes X.X billion dollars in a season, the owners HAVE to spend exactly 57 percent of that X.X billion on salaries.6 The owners believe that number is too high. And actually, they’re right. By including a luxury tax in the previous two labor deals, they assumed it would frighten teams from overpaying players. Nope. If anything, it’s turned into something of a Jedi mind trick. You can’t win unless you’re overpaying players. Open your wallets. Open them. Our past four champions were luxury tax teams. Not a coincidence. As deputy commissioner Adam Silver told the New York Times, “We had predicted the tax would be more of a drag on salaries than it’s turned out to be. It became business as usual to pay the tax, and therefore it created a league of haves and have-nots, where you have the Lakers at $110 million and Sacramento at $45 million.”

What it really means: This may not be as touchy-feely as some of you would like, but the idea that you can plan your success is ludircrous. Notice in the above paragraph everything is based on an “if.” If you are going to marry payroll to profit, you can’t just do it one way. When profits rise, so does payroll. But when profits go south, payroll never seems to follow suit. This is a fatal problem.

Forget for a moment that the NBA is a league owned by a bunch of dilcues. I will address that later. It doesn’t matter how good the ownership and management in any business are, if the workers (players in this case) don’t have a vested interest in the profitability of the venture, it will eventually bleed to death and the majority of the hemorraghing will be as payroll.

Moreover, of course it is a league of haves and have-nots. All successful leagues are, even the supposed paragon of parity, the NFL. Even there, you have the haves (New England, Pittsburgh, Philadelphia, and Dallas) and the have-nots (Jacksonville, Buffalo, Carolina, and Cincinnati). The NFL makes sure every slice of toast gets the same spread of butter, so if there are team that succeed and team that fail, then money must not be the only piece of the puzzle when it comes to “parity.”

The bottom line is that to really succeed the NBA needs to do two things. First, it has to realize what it really is and manage itself accordingly. The NFL gets away with some of the stupid things it does because it is the most popular league in the country and multiple networks line up to pump oceans of cash into it. The NBA can’t say the same thing, so it needs to be smart about what it does.

The NBA can’t afford to keep franchises in markets that can’t support them. The hard reality is for a franchise to succeed in any market, that market needs three things: Fan interest, a sufficient population with adequate disposable income, and ownership that doesn’t have its head up their ass.  Granted, the last issue is pandemic in the league, and commissioner David Stern needs to stop perpetuating that problem, but all three need an honest assessment.

The problem in Sacramento would likely be solved by an ownership change.  The Kings should not be allowed to move until the Mario Bros. Maloof Brothers are forced to sell. But there are some franchise that are just in the wrong place. It is time to understand that the NBA is present in too many markets that just don’t meet the measure.

While the Kings shouldn’t be allowed to move, I have no problem with three NBA franchises in Southern California. Hell, put five of them there. The area has the population, and those people have the money. Two teams in downtown Los Angeles, one in Orange County, one in San Bernardino/Riverside County and one in San Diego.

For that matter, let’s talk about the other major markets which are under-capitalized (again, assuming we solve the ownership problem). The New York market is even more basketball-rich than Los  Angeles; it could easily support five franchises; two in Madison Square Garden, two in New Jersey (pending replacement of the truly terrible arena at the Meadowlands), and one on Long Island.

The Bay Area could easily support another franchise, either in San Jose or San Francisco. The same thing can be said for Chicago; the Northwest Suburbs have the people, the money, and an NBA-ready arena just waiting for a tenant.

Let’s be honest. New Orleans is just not a major-league city. The Saints are only still there because the state of Louisiana is paying them to stay. Yet this is not to say there aren’t tons of smaller markets out there where the NBA could do just fine with the right ownership. Basketball is terribly popular in the Midwest, and Kansas City, St. Louis, Louisville, Cincinnati, and Pittsburgh all have potential.

Issue No. 3: Guaranteed contracts are too long
Even the Players Association seems to agree on this one.7 Long-term deals allow players to coast for years on end (how’s it going, Rashard Lewis?), mail in entire seasons (what’s happening, Charlie Villanueva?), or eat themselves out of the league (would you like another slice, Eddy Curry?). Any of those paths make the players look terrible as a whole. From the league’s perspective, you can’t have five- or six-year deals AND a salary cap, not when the wrong contract can singlehandedly submarine a team. Players also play their greedy butts off during contract years … so by having more contract years and fewer Long-Term Deals Gone Wrong, the league’s quality of play would improve. At least that’s the hope.

What it really means: Duh. This is a problem common to all pro sports, not just the ones that aren’t making any money. Would you go to a sports book that only let you bet on games that won’t be played until next year? Betting that far into the future in sports is a sucker bet. NBA owners must stop doing it.

Issue No. 4 (in 3 parts): NBA superstars should make more money than they do; it should be easier for NBA teams to keep those superstars; and too many non-superstars make too much money.

Tackling the superstar issue first: Ten baseball players will earn $20 million or more in 2011 (with Alex Rodriguez leading the way at $32 million); only four NBA players could potentially make $20 million or more in 2011-12. Twenty-nine baseball players earn $15 million or more; only 22 NBA players can say the same. That would make sense if baseball players were more marketable, but actually, it’s the opposite: The NBA has three times as many marketable stars (LeBron, Kobe, Howard, Durant, Wade, Amar’e, Carmelo, Duncan, Pierce, Griffin, Nash, Dirk, Garnett, Yao, Paul, Rose and at least one star I’m probably forgetting) as baseball (A-Rod, Jeter, Pujols, Howard andmaybe Lincecum). Hell, you could argue Chris Bosh, Manu Ginobili, Tony Parker and Pau Gasol are more famous worldwide than any baseball players except Jeter, A-Rod and Ichiro.

Baseball stars make more money only because there’s no salary cap in baseball. I get it. But given the NBA is such a star-driven league, why wouldn’t it reward its best players a little more smartly? Why not redistribute NBA salaries so they resemble more of a Hollywood star system? For instance, look at Mission Impossible — Ghost Protocol: Cruise is the “superstar,” Jeremy Renner is the secondary star, and Paula Patton, Simon Pegg, Ving Rhames and Josh Holloway were the supporting stars. If the NBA was funding that movie, Cruise would make $25 million, Renner would make $15 million (even though he would have done it for one-third that), Holloway would inexplicably make $9 million, then the other three would probably be overpaid something like $20 million combined. And that makes sense … how?

Try to follow me here …

a. Twenty-two players are scheduled to make more than $15 million for the 2011-12 season: Kobe Bryant ($25.5m), Tim Duncan ($21.4m), Rashard Lewis ($21.4m), Kevin Garnett ($21.2m), Gilbert Arenas ($19.1m), Dirk Nowitzki ($19.1m), Pau Gasol ($18.7m), Dwight Howard ($18.1m), Carmelo Anthony ($18.4m), Amar’e Stoudemire ($18.2m), Joe Johnson ($18m), Elton Brand ($17.1m), Chris Paul ($16.4m), Deron Williams ($16.3m), LeBron James ($16.0m), Chris Bosh ($16.0m), Dwyane Wade (15.7m), Paul Pierce ($15.3m), Zach Randolph ($15.2m), Antawn Jamison ($15.1m), Brandon Roy ($15m), Rudy Gay ($15m). Only Lewis, Arenas, Brand, Jamison and Roy don’t belong on that list … and if our “four-year max” rule was in place, Lewis’ deal would be done; Arenas, Brand and Jamison would be in their final year, and Roy would have two years left. Either way, we’re batting 78 percent on big-ass deals. Not bad.

b. Forty-six NBA players are scheduled to make between $8 million and $14.9 million for the 2011-12 season (not counting free agents or restricted free agents). We’ll separate them into four groups and throw them into a massive footnote to save space: “Comically overpaid,” “Overpaid,” “Fairly Paid” and “Underpaid.”9 You’ll see in the footnote — 27 of the 46 players were “overpaid” or “comically overpaid,” which means we went from batting 78 percent to 38 percent … and that’s not counting another $75 million worth of dumb deals from the $6.5 million to $7.9 million group, or whichever team stupidly overpays Marc Gasol, Jamal Crawford, J.R. Smith, Kris Humphries, Caron Butler and (gulp) Greg Oden.

See, that’s what is really killing the NBA: overpaying the Jeremy Renners and TOTALLY overpaying the Josh Holloways. But how do you fix it?

What it really means: Owners created the salary problem by not realizing while they are separate franchises, they are all in the same business. There’s a reason why indvidual McBurgerQueen franchises don’t bid up each other’s employees, and the NBA needs to take note of that.

Simmons has a rather unwieldy plan to control NBA payrolls, but he still misses this crucial point.

1) We settle on a $52 million hard cap but promise players we’ll spend 52 percent of the BRI on salaries, which should average out to $56 million to $58 million per season, depending on how we’re doing. All extra wiggle room from $52 million to that $56 million to $58 million that we DON’T spend goes into an escrow fund. If we’re over, we get the extra money. If we’re under, the players get it. But we’re going to spend that money. Watch.

2) Going forward, we define an ‘All-Star’ as someone who’s played four consecutive years with one team and made two All-Star teams OR an All-NBA team during that time. Any ‘All-Star’ automatically gets a $12 million cap figure, but his original team can pay him up to 25 percent more than the cap figure (max: $60 million for four years). A new team can only pay him that cap figure (max: $48 million for four years).

3) We define a ‘Franchise Player’ as someone who’s played at least four consecutive years with one team and made three All-Star teams OR two first or second All-NBA teams during that time. Any ‘Franchise Player’ automatically gets a $17 million cap figure, but can be paid $500,000 per years of service beyond that number without it counting on the cap. For instance, if Dwight Howard wants to sign with the Lakers next summer, they could offer only his franchise cap number ($68 million over four years). Orlando gets the benefit of that $500k bump — eight Howard/Orlando seasons multiplied by $500,000 — so they can offer him a four-year deal worth $87 million.  The longer he stays in Orlando and keeps playing at a ‘Franchise’ level, the more money Howard can earn.

4) Anyone who graduates from ‘All-Star’ to ‘Franchise Player’ during his four-year deal gets an automatic salary bump to ‘Franchise’ status. For instance, Russell Westbrook’s second-team All-NBA would make him eligible for an “All-Star” extension right now ($15 million per year for four years, but with a $12 million per year cap figure). Let’s say he makes second-team All-NBA again this season. Boom! He jumps to “Franchise” status; his cap figure bumps to $17 million, along with the corresponding $500k bumps for each year in Oklahoma City.  In other words, he’s incentivized to keep kicking ass even after he gets paid. 

5) If you can’t maintain ‘All-Star’ or ‘Franchise’ status during your deal, you lose those privileges for the next deal.

6) Any All-Star who gets traded keeps his salary/cap figure disparity for his new team. Franchise players can veto any trade — if they accept the deal, they lose their accumulated $500k bumps and revert back to the $17 million cap figure.

7) Nobody else can sign for more than $10 million per year unless he made an All-NBA team OR two All-Star teams within the past three years, giving him a 33 percent bump (and enabling him a deal or extension for $13.3 million per year, with the salary doubling as the cap number). Yes, we’re calling this the Zach Randolph Exception.

“Did you follow that? All we did was redistribute our salary output a little: we pulled money from the middle class (where most salary mistakes are made, anyway) and gave it to the upper class; we made it harder for franchises to kill themselves with long-term deals; we made it easier for franchises to keep signature players; and we rewarded stars for sticking with their original teams. That doesn’t make sense … why?”

Here’s why, Bill: Like I said before, you’re missing the key point. It is time to take the concept of a salary cap to a new level by putting it on an individual level. No more of this $50 million per team sort of crap; it simply hasn’t worked. Once you create a system which at inception is out of balance, it’s only going to become more imbalanced. The bottom line is that there needs to be a system which controls what owner’s spend on payroll because the owner’s clearly can’t control themselves.  Here’s the Dubsism Plan:

1) Individual Salary Limits: We can work out what the exact numbers would be later, but they start on a flat base salary and contain extensive performance incentives.  Rookies make $X plus incentives, that’s it.

2) Contract Limits: There is no such thing as contract longer than three years. Either party can buy out of a contract for 60% of the remaining value.

3) Annual Salary Review: Performance incentives are factored in, base salaries are adjusted, and new incentives are added for the next year.  Performance incentives earned in one season can become part of base salary for the next year.

4) Graduated Pay Scales with Senority Clause: Base salaries are eligible to be adjusted with every three years of service time based on objective criteria. Added bonuses are included for players who remain with their teams.

5) Absolute Revenue Sharing: The revenue pie gets split equally amongst all franchises; owners and the league are incentivized to maximize franchise value.

6) Hold Owners Accountable: Franchises that lose money are forced into sale or folded.

Issue No. 5: Nobody is putting a gun to the owners’ heads and telling them to overpay players.

This is the no. 1 argument from every agent and Players Association head, none of whom seem to care that they sound like the parent of an obese child saying, “It’s not my fault the boy is fat, I’m not forcing him to eat.” Let’s skip this one because the lack of accountability is disgusting.


Issue No. 6: The NBA owners need to figure out revenue sharing before they can figure out a labor deal.

The Players Association keeps pointing out the 22 of 30 NBA teams are losing money because the eight teams that make money aren’t sharing it. The owners’ response (pretty weak): It doesn’t matter how we lose $340 million, just that we’re losing $340 million. The players’ response to the response (just as weak): It’s not $340 million, that’s creative accounting! It’s really like $90 million! The owners’ response to the response to the response: No it’s not! My response to the response to the response to the response: Can someone turn on an oven? I want to stick my head inside it.

What it really means: This one is also obvious and we’ve already covered it. Franchises are all part of the same business; without the Indiana Pacers, the Los Angeles Lakers simply become the Harlem Globetrotters.

Issue No. 7: The NBA owners need to get their house in order before they can figure out a labor deal.

Bill gets really long-winded here, but the jist of what he is saying is rather simple. The NBA, owners and players alike, are afraid to think “outside of the box.”

Why does the NBA’s brain trust steadfastly refuse to brainstorm radical ideas on par with the ones I just mentioned, or consider contraction, or really, do anything beyond whining about the $340 million? Because that’s what this lockout is about: stubbornness in its rawest form. The league is too proud to change. The players are too proud to admit that they’re a huge part of the problem, and that we wouldn’t be in this mess if more of them took pride in the deals they signed. Both sides would rather point fingers instead of figuring out how to improve their product going forward.

Simmons offers some other ideas in the full length of his piece; the best of which are getting rid of the WNBA and re-configuring the playoff tournament. The others, and several crucial points he missed have been addressed here.

Moreover, I agree with Simmons in both his praise of NBA commissioner David Stern for what he did in the past and his criticism of what he’s doing now. Stern has really lost the touch which once made him the best commissioner on all of sports. That means those of you who believe the NBA would never tank a season over a labor dispute might want to reconsider.

About J-Dub

What your view of sports would be if you had too many concussions

9 comments on “Condensing Bill Simmons To A Comprehensible Level To Understand the NBA Lockout

  1. chappy81
    September 12, 2011

    I remember reading this article awhile back. I always like what he has to say especially on NBA issues. I think what I took out of everything is, there are no simple answers. I do think they need to move some teams around, and agree that some of the bigger markets should have more teams. It’s better than having a team in Canada!

    So, the real question is for us fans, when does the season start? Or does it at all this year?

    Like

    • JW
      September 12, 2011

      This is the central theme that gets lost in the length here: there is not going to be a season. In order to do either the things Simmons says, or the things I’ve said, the owners have to break the union. There’s no other way around it.

      I disagree that there aren’t any easy answers. I think there’s a ton of answers that are completely obvious, but nobody has either the guts or the brains to do them.

      Like

  2. tophatal
    September 12, 2011

    JW

    What do you expect when it has been the lawyers , the idiotic team owners and league hierarchy who drew up the original framework of this agreement ? The union knew that they had the NBA league hierarchy behind the ” 8 ball” . What Simmons has omitted is the very fact that in 2009 22 teams were in the receipt of $350 million by of Stern’s own bailout for those teams who were allegedly facing financial problems .

    The league itself has borrowed in excess of $1.6 billion over the last decade for various business activities that they’ve never fully revealed in their financials .

    tophatal ……….

    Like

  3. tophatal
    September 13, 2011

    JW

    Is this David Stern trying to be novel when it comes to MJ ?

    Merely click on link to view article in full .

    NBA fines Jordan $100K for labor comments

    Like

  4. ChrisHumpherys (@SportsChump)
    September 13, 2011

    Yeesh…

    Speaking of condensing.

    It’ll be interesting to see who blinks first in this ‘labor disagreement.’ Most think it’ll be the players and I guess I tend to agree with that, particularly if so many owners are already operating at a loss.

    Either way, I’ll condense the whole potential for lost NBA games down to two words….. it sucks.

    Like

  5. toosoxy
    September 16, 2011

    Lock outs. Sigh. I guess baseball is next.

    Like

    • JW
      September 16, 2011

      If that happens, I will hire Seal Team 6 to take out Osama Bud Selig.

      Like

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