Today at a Thanksgiving-themed charity event in New York, Billy Hunter, the executive director of the NBA players' union, told reporters he's "99 percent sure" the league will have a work stoppage next summer. The NBA's collective bargaining agreement with its players expires in June, and league commissioner David Stern recently said owners are losing nearly $400 million a year, and are seeking dramatic salary and contract-length reductions in the league's next labor deal.
The NBA has enjoyed peaceful relations with its players after a lengthy labor fight nearly canceled the 1998-99 season. In that battle, Stern and the owners were intent on reducing the power of player agents and establishing a hard cap on maximum salaries. Now, the owners are asking for more concessions from players -- namely shorter guaranteed contracts and a smaller share of "basketball-related income," or BRI.
Currently, players receive 57 percent of BRI, which includes revenue from ticket sales, national media deals, league sponsorships, and merchandise. It does not include, however, money from arena naming rights, local media deals, or 60 percent of proceeds from luxury suite and "premium" seats.
"It could get pretty grim. The players aren't just going to cave and I think (David Stern) needs to make meaningful changes to their system -- and that spells trouble."
-- Rob Tilliss, founder of Inner Circle Sports Both Stern and Hunter have said in the past that they will have a better gauge on the likelihood of a lockout by the league's All-Star Weekend, which will be held in Los Angeles in February. Hunter and Los Angleles Lakers guard Derek Fisher, the president of the players' association, had a conference call last week with Stern, NBA deputy commissioner Adam Silver and San Antonio Spurs owner Peter Holt. Fisher said the group plans to have another conversation next month.
Hunter said Monday that he has advised players to begin saving money in preparation for an extended labor fight. By next June, the player's union said it is aiming to have a $130 million "lockout fund" available to pay players in the event of work stoppage, according to the Sports Business Journal.
For all of Stern's dire proclamations about the league's financial health, the market for NBA franchises appears healthy. The Golden State Warriors, one of the league's perennial doormats, recently sold for $450 million, a new record for a pro basketball franchise, and the Washington Wizards were purchased earlier this year in a deal that valued the club at "one of the highest prices ever paid for an NBA team," according to a blog post published by Ted Leonsis, the former AOL executive who now owns the Wizards and the NHL's Washington Capitals.
Nonetheless, sports-business insiders are expecting a protracted fight over the NBA's next CBA. Rob Tilliss, the founder of Inner Circle Sports, an investment banking firm that specializes in sports transactions, told FanHouse he wouldn't be surprised if labor negotiations force the league to cancel a large chunk of next season.
"It could get pretty grim," says Tilliss, who worked on the 2003 sale of the Boston Celtics, among many other deals. "The players aren't just going to cave and I think (David Stern) needs to make meaningful changes to their system -- and that spells trouble."
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