NBA Lockout: Funky numbers and the Turkey turkey
Week 3 of the NBA lockout begins just as the last, with mudslinging back and forth while zero negotiations actually take place. David Stern is a lawyer by trade, and this is important information to remember as the proceedings of this lockout are played out slowly, methodically and painfully.
While the NBA squabbled with a New York Times report that doubted the NBA’s claim of financial hardship, players such as Raptors forward Sonny Weems and Nets point guard Deron Williams looked and signed deals with international clubs in Lithuania and Turkey. Too early to speculate now, looking back this could be a week when Stern and Co. lost a lot of leverage.
Fresh from the hotdogs and fireworks of the Fourth of July, New York Times journalist Nate Silver – who has been devoting most of his time to politics, not sports, for these last few years – called foul on the NBA’s claims that 17 of 30 teams lost money in 2009-10, among other financial disclosures the Association insists is accurate.
In his piece, Silver does not dispute that the NBA’s finances are out of sorts, but instead insists that the issue at hand is the fundamental disparity between teams because of an unequal distribution of revenue. Agreed upon by both sides is that the large-market Lakers, Knicks and Bulls can collectively turn a tidy $150 million profit, whereas the league claims a total loss of $340 million when factoring what seem to be the abysmal finances of the leagues other 27 teams (who represent a sum loss of around $600 million, in all, for the 2009-10 season).
Silver sees this as highly improbable, yet also indicative of severe issues between the haves and the have-nots. The real solution to the lockout is not primarily in addressing the issue of player’s salaries, but will be achieved by enacting a similar revenue model to that of Major League Baseball.
Silver’s reported number, based on data reported by Forbes and Financial World magazines, suggest that the NBA operates on a very realistic profitability of between 5-7%, which translates to a profit $183 million annually based on the current CBA.
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The crux of the problem is unreliable figures, as this half-billion dollar discrepancy illustrates. As Maury Brown weighs in on Forbes.com, he states of Forbes‘ figures they “are the best journalists can work from, and for the intent of showing trends, can be used to paint a sound picture.”
Silver claims these figures do not add up, and that the NBA must be profitable, yet without the real figures it is impossible to determine just how creative the NBA accountants are. Profits and losses could be shifted to other NBA-owned assets, such as cable networks, or similarly be accounted for as investment non-player expenses, such as growth in digital media.
Obviously, the NBA disputes these figures as vigorously as they seem to remain opposed to changing anything to the way teams share revenue. They remain steadfast about the fact that 11 teams lost more than $20 million in the 2009-10 season, citing a staggering $340 million loss overall.
Citing “factual inaccuracies,” the NBA seems unwilling to release their figures publicly (they have released them to the NBAPA because they were legally obliged, but not to the general public) and correct these inaccuracies. Until the NBA fully releases its numbers, no one will know for sure and the NBA’s accounting processes lack credibility towards negotiating a fair deal for players and fans.
While the accountants did math and the lawyers helped sling mud, NBA players began looking to international horizons.
New Jersey Nets star point guard Deron Williams announced on Thursday that he intends to sign a deal worth up to $5 million with the Turkish club Besiktas. Similarly, the Raptors Sonny Weems signed to a Lithuanian team, 76ers sparingly-used forward Darius Songalia is joining Turkish power Galatasaray, and Atlanta’s Zaza Pachulia could be joining Williams in Turkey at Besiktas.
Unlike locked out members of the NFL and MLB who did not have the international options that their NBA cousins do, this migration of NBA talent into international leagues is an opportunity to demonstrate some leverage over the NBA owners. No longer is the NBA the only saloon in town, and with the growing globalization of the game, it is not good for the bottom line of the NBA for the Bismack Biyombos and Jan Vesleys to consider international teams a long-term professional option.
If Williams or any other NBA player is to take the court for an international team, they won’t be doing so until September, which is weeks after NBA players would be with their teams to gear up for the 2011-12 season should the lockout end. Williams’ contract also reportedly contains a clause to allow him to leave the moment the NBA is no longer locked out, which hardly seems the act of a serious commitment. Plus, even if Williams’ contract tops out at the highest reported amount (~$5 million), this pails in comparison to his four-year $70 million extension he just recently signed with the Nets.
Luckily for fans of pro basketball in North America, there is only a limited number of roster spots available to foreign-born players. Combined with the inability of these international teams to pay anything close to NBA salaries, it is very unlikely we’ll see the NBA’s talent pool drain into international leagues. So, take those reports of Kobe eyeing Turkish or Italians teams with a hefty bag of rock salt.
Is there a better way to frighten Jerry Buss, owner of the Lakers and one of the most powerful men in the NBA, than by telling him that his prized asset will be dodging coins heated up with a propane torch during games on an uneven Greek gym floor? Soon Derrick Rose could hypothetically be imagining a Starbury-like stint in China – if only as another idle threat to push negotiations forward.
Some will argue that some players may want to keep fit and just play for the love of the game during the lockout, or simply to keep a public profile, which explains Joakim Noah finally deciding to play for the French national team, for example. But in joining these teams, the players are actually doing their owners a favor by building the NBA brand globally.
Trying to build leverage over the owners could come back to bite them – especially if a few of those stars come back with injuries, tales of bounced cheques or some kind of communicable disease. Perhaps it may take one of the hundred or so Turkish spectators to toss a firecracker onto the court during a Kobe free throw to make players realize this – the private jets with be landing at LAX within hours.
Whether or not these NBA players can make the international migration is still in debate itself. FIBA may even put the kibosh on these transactions altogether or throw some other wrench into the system. Undoubtedly, however it plays out, David Stern will be paying attention, because it is Stern who is acting on behalf of the owners, deciding how far the owners are willing to share revenue amongst themselves and what concessions they will make to the players.
As I said before, in the wake of this financial uncertainty and sudden realization that the NBA is not the sole place for quality professional basketball, it is important to understand that Stern is an excellent lawyer, and also a world class negotiator with the public relations skills to boot.
David Stern is the Michael Jordan of sports lawyers. If we do not believe Nate Silver’s very believable common sense that the NBA is profitable and that the figures the NBA released are very creatively accounted, then it is a belief that Stern negotiated a deal in 2005 that brought the NBA to the point where 27 teams lost more than half a billion dollars in 2009-10. If Stern really negotiated a CBA that lost NBA owners $1.845 billion over six years, is it naive to think he would still have a job?
I, for one, believe Stern to be a genius; which is to say I believe Nate Silver and the accusation that the NBA has something to hide.
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