More signs of labor peace?

[GreenEnvy]

I dunno man. If you offer Joe Johnson 20 million dollars a year and Joe Johnson says yes and then you look at how much money your team makes and get angry that you spent 20 million dollars on Joe Johnson, is that really Joe Johnson's fault?

You guys really don't understand how the system works.  The owners have to pay 57% of all revenue to players.  They can either pay all of that 57% as salary to the players, or if they fall short they have to pay a lump sum bonus at the end of the year.  For simplicity let's say the league revenues are $100m so $57m goes to players.  Let's also assume the league spends a total of only $45m on player salary/contracts.  What happens is at the end of the year the owners have to fork over that $12m to the players to meet the 57% requirement.  If you're an owner and you want to stay competitive you're going to want to spend the money on players for your team, and not let them go to other teams.  You might as well do this since you have to pay the money in the end regardless.

The league actually had a shortfall in salary this past season.  I don't recall the exact number but the owners have to pay the players somewhere in the neighborhood of $150m or so because that's how much they fell short of 57%.  See the owners can't even try to reduce salary; it's not an option when 57% of revenue is guaranteed to the players.  When you fault the owners for overspending, you are just ignorant of how the system works.

You're right about the  57% GP, but I don't see how that takes away from KC's fundamental point.

Yes it does.


The owners are not complaining that Joe Johnson is making to much money. 


They are complaining the the players as a whole are making to much money.



Fans complain about single players making to much money.

Owners understand either they overspend on some players or they give the money to all the players at the end of the season. 

Overpaying good players helps sell tickets.  Giving lump sums to at the end of the season does not. 

But because the players have to get paid, does that mean a team has to go deeper into the red by blatantly overspending on a good player?

If team A has a $100M payroll, and team B has a $50M payroll, at the end of the year, team A will pay twice as much of that $150M towards the 57% of BRI as team B would.

So by paying JJ way more than he is worth, not only are you messing up your cap and bottom line at the end of the year, you are committed to a bigger payout (if BRI is higher than anticipated) than had you let him walk. Some of you are acting like this giant payout is guaranteed at the end of each year. Some years the players may owe the owners. Maybe the NBA just had a really good year in 2010-11, coming off a brutally intense Finals and the whole Miami off-season saga.

The owners and GM's are the ones to blame for this mess, not the players. Like the article on ESPN today, Rashard Lewis isn't to blame for getting offered a boatload of money. Even if he knows its more than he's worth, why on Earth would anyone turn it down?

Got a problem with Eddy Curry making tens of millions of dollars for riding pine all these years? Maybe no front office should have offered a fully guaranteed contract to him, but of course one did (and a huge market no less).

The league is in about as good a state as its been post-Jordan. They have the Celtics and Lakers championship rivalry renewed, New York and Chicago relevant and on the rise, the team everyone loves to hate in Miami, a future MVP (Durant) in a small market (OKC), and an ever-expanding international appeal.

If the League is really in as bad a shape as they claim it to be (which I highly doubt), it's their own fault.

[cman88]

What other job in the world is there where you dont have to perform up to your level and can still make all your $$ not to mention millions of $$?? none..theres a reason why the players dont want a hard cap.. players are paid what the market will bear. and if atlanta doesnt pay JJ then someone else will

personally, what I think needs to happen is something similar to the NFL...where contracts can be restructured.theres no reason why a team should suffer for years because they overvalued a player. If you dont perform to your level in a regular job, you are fired. Guaranteed contracts need to be shortened where you still should bear the burden of your mistake, but not to cripple the franchise for years.

On the other hand, ownership/GM's really have a large part in the success of a franchise...when you look at the Knicks/Celtics over the past few years...big markets who were mired in mediocrity...mainly due to poor management..

once dolan/ainge took over their franchises they were turned around in little over 3 years, ridding contracts, not making rash decisions...in a new system, management is going to be even MORE important to building a successful franchise...so there still will be bottom feeders.

[greenpride32]

I guess there are no math or accounting majors on this forum.

If 57% BRI is $100m then it makes no differnce if owners pay player contracts of $30m, or $40m, or $70m, or $90m, or $100m.  They still have to pay the players $100m in total.  Is it really that difficult to understand? 

If owners became real sticklers and offerred lowball contracts to the tune of $20m total, they still have to pay $80m back to the players at the end of the season for a grand total of $100m.  By this logic, you would rather use the $80m to entice players to come to your team. 

[Roy H.]

I guess there are no math or accounting majors on this forum.

If 57% BRI is $100m then it makes no differnce if owners pay player contracts of $30m, or $40m, or $70m, or $90m, or $100m.  They still have to pay the players $100m in total.  Is it really that difficult to understand? 

If owners became real sticklers and offerred lowball contracts to the tune of $20m total, they still have to pay $80m back to the players at the end of the season for a grand total of $100m.  By this logic, you would rather use the $80m to entice players to come to your team. 

Maybe I'm confused here, so if I am, I apologize.

However, let's say that the owners have to pay $100 million to the players, no matter what.

If the Hawks owner "overpays" Joe Johnson $20 million, that leaves a $80 million deficit.  Of that, the Hawks are responsible for 1/30th, or $2.67 million.

If the Hawks owner lets somebody else pay Joe Johnson $20 million, the Hawks are responsible for $2.67 million.  However, they don't have Joe Johnson's deal as an albatross around their necks, and they wouldn't have paid luxury tax last season (and would have in fact received a luxury tax disbursement).

In other words, paying Joe Johnson actually did hurt the Hawks.  Rather than owing $2.67 million, they ended up losing the amount of his salary, plus what they lost in luxury tax.

You're correct that the owners as a whole have a hard cap, but you can't really look at the owners as a whole body.  Rather, they're 30 individual franchises.

So, where did we lose each other?  The players, collectively, end up in the same place, and the owners, collectively, end up in the same place.  However, there are wild deviations among individual players and owners, and there is still plenty of room for individual owners to give out bad contracts that can cripple their franchise.

[greenpride32]

Maybe I'm confused here, so if I am, I apologize.

However, let's say that the owners have to pay $100 million to the players, no matter what.

If the Hawks owner "overpays" Joe Johnson $20 million, that leaves a $80 million deficit.  Of that, the Hawks are responsible for 1/30th, or $2.67 million.

If the Hawks owner lets somebody else pay Joe Johnson $20 million, the Hawks are responsible for $2.67 million. 

Roy - For simplicity I am lumping all the owners into one big group and stating what they have to pay collectively.  If ATL overpays JJ $3m more then technically they would "save" more by not signing him.  But you also have to consider lost fanbase, jersey sales, market etc.

Now you said "lets somebody else pay"; that's my main point, no matter what the owners collectively have to shell out the money.  Even if I'm a cheap owner and other owners follow suit, I still end up having to pay because of a BRI shortfall.  If you know that, you might as well spend the money on player salaries, and hope to field a competitive product.

You know how they don't know the exact cap figure until the season ends?  It's because they base it on the BRI of the prior year; the two are linked.  Because teams have differnt means to pay, the soft cap exists such that larger market teams will essentially make up for the salary shortfall of the smaller market teams.  That's why the players are so insisent on the soft cap.  To maximize their potential pay they have to get every cent out of the large market teams because the money simply isn't there in the smaller ones.  You're going to have LAL and DAL spending $40-50m less than they do now, and smaller market teams are not going to spend more to make up for that 40-50m.

[StartOrien]

Roy - For simplicity I am lumping all the owners into one big group and stating what they have to pay collectively.  If ATL overpays JJ $3m more then technically they would "save" more by not signing him. But you also have to consider lost fanbase, jersey sales, market etc.  

But it's not fair to 'lump everything together.' A huge problem is that these mid-market teams are paying out money they can't bring back in. The Hawks signing of Joe Johnson is unjustifiable: In Atlanta, he simply can't bring in enough revenue to offset his contract.

[greenpride32]

Roy - For simplicity I am lumping all the owners into one big group and stating what they have to pay collectively.  If ATL overpays JJ $3m more then technically they would "save" more by not signing him. But you also have to consider lost fanbase, jersey sales, market etc.  

But it's not fair to 'lump everything together.' A huge problem is that these mid-market teams are paying out money they can't bring back in. The Hawks signing of Joe Johnson is unjustifiable: In Atlanta, he simply can't bring in enough revenue to offset his contract.

Your comments just mean you favor big market teams.  There are more small market teams in the league than big market and that is the problem.  You have to look at the issue as a whole, because we're dealing with all 30 teams.  If it was just the Lakers' choice, we'd be preparing to start camp now.  The Lakers are going to lose potential profits if the season doesn't start on time.  But teams like WAS SAC MIL MIN GS are more than happy to not start it and lose more money.  Even the Celtics, despite their on court success, are not a profitable team. 

[The Walker Wiggle]

What other job in the world is there where you dont have to perform up to your level and can still make all your $$ not to mention millions of $$?? none..

CEOs bonuses jumped 30% last year.

(Sorry you left that one over the plate.)

[StartOrien]

Roy - For simplicity I am lumping all the owners into one big group and stating what they have to pay collectively.  If ATL overpays JJ $3m more then technically they would "save" more by not signing him. But you also have to consider lost fanbase, jersey sales, market etc.  

But it's not fair to 'lump everything together.' A huge problem is that these mid-market teams are paying out money they can't bring back in. The Hawks signing of Joe Johnson is unjustifiable: In Atlanta, he simply can't bring in enough revenue to offset his contract.

Your comments just mean you favor big market teams.  There are more small market teams in the league than big market and that is the problem.  You have to look at the issue as a whole, because we're dealing with all 30 teams.  If it was just the Lakers' choice, we'd be preparing to start camp now.  The Lakers are going to lose potential profits if the season doesn't start on time.  But teams like WAS SAC MIL MIN GS are more than happy to not start it and lose more money.  Even the Celtics, despite their on court success, are not a profitable team. 

No, they're not. I haven't stated my personal opinion on what I think should change.

Earlier, you seemed to state that the sole problem with the system is that BRI forces teams into the teams playing players. I, and a few others, have pointed out that this isn't true and you're looking at this too broadly. You've now countered with a statement that implies that you're also in favor of the hard-cap. Which isn't something I disagree with, but seems to counter your earlier statement about it just being a BRI issue.

[StartOrien]

Let's say you are a team that has limited revenue streams and can only afford a payroll of $65 million per year. If you know that at the end of the year there is a chance that every owner is going to have to pay $5 million to a pool of money to make up for the $150 million deficit there existed because the 57% payoff to the players wasn't achieved then you budget that into your figuring of your payroll.

If all of the above is true then that means you are limited to paying only $60 million that year for player salaries because you may have to pay that extra $5 million at the end of the year. Spending extra money to retain players that are not worth the extra money doesn't mean that you aren't going to have to pay that $5 million at the end of the season.

It only drives your total costs up and means you enter into yearly losses. If you stick to the budget and overspend on a player then that means you are sacrificing the quality of the bench players and other starters because you have less to spend to get quality players.

I don't think people are ignorant of the system. I just think people understand the running of a business and what it means to overspend on players. Overspending on Joe Johnson means possibly losing a different quality starter or just sending your team into the land of massive losses because you don't have the revenue streams to pay for Joe Johnson and give all the other players what they deserve to be paid as well in order for you to be competitive.

And you do not have to overspend to be competitive. The Thunder and Bulls had salaries of $60 million or less last year. meanwhile a team like Philly is always spending in the $75-85 million range and are never competitive. Philly also has horrible attendance figures so you might figure they would want to limit that payroll, but they don't. At some point poor management has to be held accountable and if that means no profits, then that's what they deserve.

You don't have to overspend to keep people in the seats and to be competitive. I just don't buy that at all. If you are a businessman and know what your revenues will be and your non-basketball player salary costs will be then figuring out what you cab spend on payroll isn't to difficult.

I'd suggest rereading this, Nick summed things up very well here.

[bdm860]

This is basically in response to greenpride32’s arguments.


It seems like a big part of the argument here is that the part the owners have to pay is equally divided out.  This is false, it would be in accordance with the teams overall payroll.

Using the payrolls from this link (not saying it’s accurate, just using it for demonstrative purposes), 2011 salaries were 1.9b.  Lakers have the highest payroll at 95.3m, T-Wolves have the lowest at 37.6m.  Do you think the Lakers and the T-Wolves pay the same amount back to players because salaries (and benefits) were below 57%?  That would be ridiculous.

To make up the $26m that was under the 57%, the Lakers are going to have to payout an additional $1.3m (because their payroll was 5% of the league’s overall payroll, so 5% * 26m) while the T-Wolves will only have to pay 520k (because their payroll was only 2% of total payroll).  *This assumes benefits are consistent with salaries across the league.

If the Hawks let Joe Johnson walk (and don’t replace him), their payroll would be $20m less (for simplicity we’re saying JJ makes a flat $20m a year).  If he signed with the Knicks for the same amount (sign & trade), the Knicks payroll is $20m more.

Hawks go from 69.1m to 49.1 in payroll, and Hawks salaries go from 3.6% of total salaries to 2.6% of the total, lowering their end-of-year payout from 936k to 676k.

Knicks go from 47.2m to 67.2 in payroll, Knicks salaries go from 2.5% of total salaries to 3.5% of the total, raising their end-of-year payout from 650k to 910k.

Not signing Joe Johnson saves the Hawks 20.26m this year ($20m in salary and 260k savings bringing the players up to 57%).  As long as Hawks ticket sales, merchandise sales, and ad sales don’t decrease by 20.26m or more due to Joe Johnson leaving, the Hawks save money.

In no way, shape, or form do the Hawks (or any other team) spend the same amount of money in the end whether or not they overspend on players.

[Celtics4ever]

Wishful thinking didn't talks break down again today?   I thought I read that but I could be wrong.

[greenpride32]

This is basically in response to greenpride32’s arguments.


It seems like a big part of the argument here is that the part the owners have to pay is equally divided out.  This is false, it would be in accordance with the teams overall payroll.

I'm not saying the owners all pay out an equal share.  I'm only pointing out collectively the owners MUST/ARE REQUIRED to pay a total amount of dollars that is equal to 57% of BRI to the players regardless of how big or small the contracts are that they issue.

By the way those aren't my arguments; those are FACTS of how the system works.  

The main point I'm trying to convey, and one I feel many pepole are missing, is the owners have very little control over player costs.  You can argue all day long about JJ being overpaid.  But in the end all those dollars come out of the owners' collective pockets if JJ makes $20m/year or $10m/year. 

[StartOrien]

This is basically in response to greenpride32’s arguments.


It seems like a big part of the argument here is that the part the owners have to pay is equally divided out.  This is false, it would be in accordance with the teams overall payroll.

I'm not saying the owners all pay out an equal share.  I'm only pointing out collectively the owners MUST/ARE REQUIRED to pay a total amount of dollars that is equal to 57% of BRI to the players regardless of how big or small the contracts are that they issue.

By the way those aren't my arguments; those are FACTS of how the system works.  

The main point I'm trying to convey, and one I feel many pepole are missing, is the owners have very little control over player costs.  You can argue all day long about JJ being overpaid.  But in the end all those dollars come out of the owners' collective pockets if JJ makes $20m/year or $10m/year. 

I don't think anyone's missing your overall point.

[nickagneta]

I guess there are no math or accounting majors on this forum.

If 57% BRI is $100m then it makes no differnce if owners pay player contracts of $30m, or $40m, or $70m, or $90m, or $100m.  They still have to pay the players $100m in total.  Is it really that difficult to understand? 

If owners became real sticklers and offerred lowball contracts to the tune of $20m total, they still have to pay $80m back to the players at the end of the season for a grand total of $100m.  By this logic, you would rather use the $80m to entice players to come to your team. 

Having an engineering degree, owning a business, and heading back to school as a mathematics major, I just want to say that your entire point would make very little sense to an individual owner of an NBA team who would be attempting to actually make a profit as an NBA franchise.

The numbers don't add up properly for any person actually attempting to maximize their chances of making a profit AND attempting to win a championship.

And therein lies the problem of the current situation in the NBA. The owners want for each team to have an equal chance at winning a championship while at the same time making a profit without actually acting as a cooperative business association and pooling their revenues and dividing them equally.

Until the owners can come to the table and say, we will be sharing revenues so that we all make money, the players are not going to agree to a hard cap because the hard cap will be set a a place that is most likely to make the currently least profitable teams profitable than make the currently most profitable teams less profitable.

So, back to your original point which seems to have moved considerably, it makes zero fiduciary sense to massively overspend for one player, if you can't afford said player at that price, simply because IF the owners as a collective haven't met their obligation of a certain percentage of the BRI, you MIGHT have to pay a small percentage of your current overall payroll at the end of the year because the money you CAN afford to spend on that player can be kept as profits or reinvested in other talent that might in the end be overall better for your team.