While most of the sports world was focused on football and the fallout of the Penn State scandal, National Basketball Association commissioner David Stern and Players Association Executive Director Billy Hunter were secretly hashing out an agreement to end the 150-day NBA lockout. Then, last Saturday, the Commissioner’s Office announced that an agreement was in place, and that the season would tentatively begin on Christmas day. Basketball on Christmas is certainly a great gift, but the sports fans must not ignore that this was fundamentally a raw deal for them and for the game overall.
Facing declining league income, owners and players had been deadlocked over the issue of revenue sharing between teams. To reach an agreement, the players ostensibly made significant concessions to the owners (about $3 billion in total salary) to get back on the court this season. However, this type of flash settlement is rarely the best course of option in sports negotiations.
The National Hockey League missed an entire season in 2004, but came out of the experience with new economics and a revived league. They implemented a hard salary cap to control salary growth and aggressive revenue sharing. Today, hockey-related revenues are at an all-time high. The reason why the NHL is back on track is careful negotiation and the fixing of structural problems, not putting band-aids on systemic problems.
In the NBA’s case, simply shifting money around does not change the fundamental economics of the league. Without a hard salary cap, teams will continue to spend whatever they can, and the big spenders will always come out ahead. The Los Angeles Lakers recently signed a mammoth $3 billion local television deal. It is wishful thinking that a “luxury tax” will deter the Lakers and other such teams from paying players whatever they wish and buying championships.
Moreover, the NBA got into this mess in large part because its product is not lucrative enough under the current cost structure. This deal does little to correct this, as it does not target new revenue sources. The complicated fiscal recalculations between two already rich groups will do little to re-attract the average fan, who remains the real loser in the whole ordeal. He works for a real union—the kind that makes sure he can feed his family—and not some conglomeration of rich athletes. Shuffling money around will likely not affect whether he can afford to buy his kids tickets for the Christmas tip-off game. This hurried negotiation carries no real changes that will bring the NBA back to its former glory and riches. It’s one gift not worth putting in Santa’s sleigh this year.
