THE BUSINESS AND POLITICS OF SPORTS
SAMANA, DOMINICAN REPUBLIC — One of the more intriguing aspects of giving lectures on cruise ships centers round the people who come to the talks. Over the past four years, a former Congressman, a New Jersey judge, a person who helped design the financing for the Oakland-Alameda Coliseum (he got free tickets to the Oakland Raiders first home game at the facility in 1966), an investigator in Marilyn Monroe's death in 1962, a member of the cast of the Broadway play Momma Mia and others have wandered in and listened to talks about the business and politics of sports.
Last week, during a business of sports talk, a massage therapist for an NBA was in the audience. She was on her vacation while her team played at home — she was not needed that week although she will be spending New Year's Eve on the road with her team. She also said after the speech was done something that everyone connected with the National Basketball Association knows, she will be temporarily or possibly permanent out of a job starting July 1, 2011.The National Basketball Association owners are locking out their main employees — the players, unless the owners and players come to a new collective bargaining agreement and that seems highly unlikely by July 1 — and there will be collateral damage to non-playing personnel. Some will be furloughed and some will be fired. There will be no need for them until a new agreement is negotiated.
The NBA owners, like their National Football League peers, want to change the fiscal picture of the league. NBA Commissioner David Stern claims that his league owners are losing hundreds of millions of dollars annually and wants to reallocate revenues given to the players. The present formula gives 57 percent of NBA revenues but owners want to significantly cut players funding by a third from $2.1 billion in salaries and benefits by $700 million or so. Stern would like to see all of his 30 owners turn a profit and moving funds from the players to the owners pocket is his goal.
Carmelo Anthony may be the most impacted by the NBA's want to cut salaries. The Denver Nuggets star player is an unrestricted free agent after the season and could be the biggest loser in the CBA talks. If there is a hard salary cap in place after the owners and players reach a new deal, Carmelo Anthony could lose more than $25 or 30 million on his next contract if he does not resign with Stan Kroenke's Nuggets. Anthony could be traded and the New Jersey Nets are extremely interested in the Denver player but Anthony's best options are to either resign with Kroenke's team or force a trade and sign a contract extension with his new team.
The money that is presently available under the present CBA will not be there in 2011 and beyond. The owners want to shorten contracts and want cost certainty and that is a problem for Anthony and for others down the road like Chris Paul and Dwight Howard.
Anthony seems to be most interested in playing for the New York Knicks, if media reports are to be believed. Just how the Knicks (a franchise that has to be making huge profits: Madison Square Garden-Knicks-Rangers owners, the Dolan family, pay no New York City property taxes on top of the revenues generated by sell out crowds and the MSG cable TV network) will pay for Anthony if there is a hard salary cap and a new financial order is unknown.
The NBA will be the third major sports league in North America in the queue in the CBA derby. Major League Soccer, which is a much smaller entity, was first up in contract negotiations earlier this year. MLS players got more money and many now have guaranteed contracts but there is no free agency for the players. MLS players have global options though if they are good enough. MLS Commissioner Don Garber claimed that just two MLS teams were profitable in 2009, Seattle and Toronto. A good number of MLS owners have properties in the NFL, NBA and NHL. But the MLS talks should not be considered the bellwether indicator of what will happen in 2011 because it is not in the same category of the NFL, NBA, Major League Baseball and the National Hockey League.
In 2004, the NHL was the first up in the CBA talks. NHL Commissioner Gary Bettman and his 30 owners decided to pursue a hard line stance and locked out the players until the owners got some sort of cost certainty. Bettman, who was the "father" of the NBA salary cap (a major component of the 1983 collective bargaining agreement), ended up getting a salary cap in the NHL. Bettman also gave his former boss Stern and Major League Baseball Commissioner Bud Selig and his owners leverage in their talks with the players association in 2005. NBA players watched the NHL lockout unfolded and found out that the owners were determined to get what they wanted even if it meant shutting down the industry for an undetermined amount of time.
The NBA and Major League Baseball got new collective bargaining agreements following the NHL lockout with minimal problems. The NBA players didn't want to risk losing millions of dollars in 2005 and decided not to go to the mat with the owners.
The National Football League collective bargaining agreement is done in March. NFL owners want to cut players salaries by 18 percent and reduce the players' take of the revenue from 59 to 48 percent. The lockout won't have any impact on games until August, which means that the NBA owners and players will probably go into a lockout on July 1 and not much will happen in the NBA talks until "crunch" time in the NFL which is when training camp opens in late July and game action in August. So the NBA players will not have the NHL example like they did in 2005 and will not be able to see how far the NFL owners will dig in until regular season games are impacted and that happens in September. The NFL free agent season, possibly the NFL Draft, organized training activities and mini camps will be gone but the league will not miss any games until pre-season.
The NFL has hired Bob Batterman as an attorney in the talks with the players. Batterman represented the NHL in the 2004 collective bargaining talks and help lead the league through the lockout as a legal representative.
People around the leagues will deny the chain reaction theory but there are too many overlaps and sharing of information. Kroenke owns the NFL's ST. Louis Rams, the NBA Nuggets, the NHL's Colorado Avalanche, the MLS Colorado Rapids and the Denver based Altitude regional cable TV sports network. There are significant partnerships in arenas and regional cable TV networks. All players associations also share information.
Sports Illustrated reported last summer that the Walt Disney Company's ESPN and Time Warner's Turner Sports will continue paying rights fees (which is roughly $900 million in 2011-2012) to NBA owners whether the league plays or not. The Walt Disney Company's ESPN will also pay NFL owners a rights fee even if there are no games played in 2011.
Congress needs to step in and ask why consumers (all basic expanded tier subscribers which is about 95 million people who pay the cable bills) are underwriting an NFL and NBA owners lockout and if new House Speaker John Boehner and his Republican majority are going to have an open door and listen to the American people, they should schedule hearings immediately on the issue. Senate Majority Leader Harry Reid should be the same. The NFL lockout will be funded by News Corp's Rupert Murdoch (FOX), GE's Jeffrey Immelt (NBC), CBS' Sumner Redstone, Disney's Robert Iger and DirecTV. Regional sports cable TV network operators who in some instances are team owners as well (MSG's Dolan, Comcast's Brian Roberts-Philadelphia 76ers and Flyers as well as a partner in regional set ups in Washington, Sacramento, Chicago and Boston to name a few cities) will still collect subscribers fees and not show a product because of the lockout.