Each NBA Team’s Salary Position Going Into Free Agency

As reported earlier this morning, it looks as though a tentative deal has been reached to end the lockout.   Under the handshake agreement, free agency would begin on December 9th.   In anticipation of a fast and furious period of free agent signings before the season starts on Christmas Day, I’ve put together a summary of where each team stands in regards to team salary.  This is not a complete picture of the exact cap position of each team, so the number next to each team name is not their true cap number (as it does not include cap holds for free agents).  Instead, I am looking at the how much money is currently committed to player contracts in order to try to make some educated guesses as to what options are available for each franchise as we (finally) move into a period of signing rookies and free agents.

When negotiations for a new CBA broke down nearly two weeks ago, it was rumored that the new salary cap figure for 2011-12 would be $58.044 million and the tax threshold would be $70.307 million, identical to the figures of 2010-11.  I think it safe to assume that the new agreement will adopt these numbers (or very similar numbers) for the coming season, so keep that in mind as you look at each team’s salary commitments.

Also note that an amnesty program that could provide true cap space is rumored to be part of the new agreement.  The numbers below paint a picture for each team before any use of this amnesty provision, so as players are waived under amnesty, these figures will, of course, change – perhaps dramatically.   For now, though, I want to simply provide a salary snapshot for each team and leave any amnesty discussion for either the comments section or for another thread.   In other words, this post is designed to be a beginning point for discussion, not a comprehensive summation of each team’s options – that will follow, I am sure, in the weeks to come as more details about the new agreement are made public.  However, with the assumption that the new agreement will not reduce or ‘rollback’ any current contract amounts, you can see where I show each team stands after the jump:

ATLANTA HAWKS – $66,396,237 for 9 players

They are committed to $64,818,493 for 7 guaranteed players (Johnson, Smith, Horford, Williams, Hinrich, Pachulia and Teague) and have an additional $1,577,744 on the books for 2 non-guaranteed players (Rolle and Sy).

To fill out their roster, they probably need to either re-sign Jamal Crawford or a player able to replace his production off the bench.  However, from a practical standpoint, they will probably not be able to spend $10 million towards this purpose, like they did last year with Crawford.  That doesn’t make things any easier for them.  Atlanta’s 2nd round pick, Keith Benson, might provide some help inside if he is signed.  After that, you’re probably looking at minimum salary contracts to complete the roster.

BOSTON CELTICS – $64,867,622 for 6 players

They are committed to $64,376,513 for 6 guaranteed players (Garnett, Pierce, Rondo, Allen, O’Neal and Bradley), plus have $491,109 on the books for Rasheed Wallace’s buyout.

Boston has the core of their starting lineup under contract….and little else beyond that.   With no cap space, the Celtics must use exceptions to complete their roster, which limits their choices.  First of all are decisions regarding how to proceed with restricted free agent Jeff Green and unrestricted free agent Glen Davis.  After that, the Celtics might use their MLE to sign a couple of bench players and wrap things up with a handful of minimum salary players.

CHARLOTTE BOBCATS – $47,631,491 for 9 players

They are committed to $47,631,491 for 9 guaranteed players (Maggette, Diaw, Thomas, Diop, Carroll, Augustin, Najera, Henderson and White).

Once they sign their 2 first round picks of Biyombo (assuming his overseas contract situation can be resolved) and Walker, the Bobcats need to make a decision on whether they want to keep restricted free agent Dante Cunningham.  After that, they will have only a few roster spots open, but almost certainly need to sign someone to help them at the center position.  I would expect them to use their MLE for that purpose.

CHICAGO BULLS – $64,923,771 for 12 players

They are committed to $63,975,864 for 11 guaranteed players (Boozer, Deng, Noah, Rose, Korver, Brewer, Watson, Asik, Bogans, Pargo and Gibson) and have an additional $947,907 on the books for one non-guaranteed player (Lucas).

The Bulls’ roster is basically set.  After they sign Butler to a 1st round rookie scale contract, they will have only two roster spots available.  Mirotic is not expected to be available for NBA play this year, so I would expect them to either re-sign Kurt Thomas or go after a free agent to replace his role.   But I wouldn’t expect much, if anything, beyond that.

CLEVELAND CAVALIERS – $55,408,057 for 14 players

They are committed to $53,830,313 for 12 guaranteed players (Jamison, Davis, Varejao, Gibson, Sessions, Hollins, Casspi, Graham, Eyenga, Gee, Erden and Harandgody) and have an additional $1,577,744 on the books for 2 non-guaranteed players (Harris and Samuels).

Free agents?  Sorry, no room at the inn.  Unless they decide to use the amnesty provision, all the Cavs need to do is to figure out which of their unguaranteed players to waive in order to create roster space to be able to sign both of their 1st round picks – Irving and Thompson.

DALLAS MAVERICKS – $63,839,655 for 10 players

They are committed to $63,839,655 for 10 guaranteed players (Nowitzki, Terry, Kidd, Marion, Haywood, Brewer, Fernandez, Beaubois, Jones and Mahinmi).

The defending champs have some decisions to make on unrestricted free agents Tyson Chandler, Caron Butler, DeShawn Stevenson and Jose Barea.   They have no cap room, so they must use exceptions to re-sign any of these players, as well as to sign any other free agents to fill out the roster.

DENVER NUGGETS – $29,704,038 for 7 players

They are committed to $29,704,038 for 7 guaranteed players (Miller, Harrington, Andersen, Gallinari, Mozgov, Koufos, Lawson).

At first glance, Denver looks to be in a great spot.  After signing their two 1st round picks (Faried and Hamilton) to their rookie scale contracts, the Nuggets would appear to have lots of cap room to go after a big name free agent.   However, if they want to re-sign unrestricted free agent Nene and restricted free agents Afflalo and Forbes (and every indication is that they want all three back), nearly all the cap room is gone.  There might still be a little left over to get Nene some help in the frontcourt from a free agent, but that might be about it.  Additionally, Chandler and Smith signed contracts with Chinese teams without any opt-out clauses, so it would appear that they are both unavailable this year.

DETROIT PISTONS – $47,862,792 for 9 players

They are committed to $47,862,769 for 9 guaranteed players (Hamilton, Gordon, Villaneuva, Maxiell, Bynum, Monroe, Wallace, Daye and White).

After accounting for the rookie scale contract of Brandon Knight and the probable re-signing of restricted free agents Rodney Stuckey and Jonas Jerebko, the Pistons will have a couple of roster spots open to fill but no cap room to do so.  I would expect them to make two or three minor free agent signings using exceptions (MLE or minimum contracts).

GOLDEN STATE WARRIORS – $49,186,872 for 9 players

They are committed to $48,348,000 for 8 guaranteed players (Lee, Ellis, Biedrins, Bell, Wright, Udoh, Curry and Amundson) and have an additional $788,872 on the books for one non-guaranteed player (Lin).  Also, Jeff Adrien continues to count as $50,000 against their cap, even though he is no longer on the roster.

The Warriors could have a little cap room to play with in free agency after signing Klay Thompson to his rookie scale contract, but part of that could be used up in re-signing restricted free agent Reggie Williams.   The assumption seems to be that they could be looking at signing at least one other big man free agent.

HOUSTON ROCKETS – $48,383,963 for 13 players

They are committed to $46,806,219 for 11 guaranteed players (Martin, Scola, Lowry, Thabeet, Flynn, Hill, Williams, Lee, Dragic, Patterson and Budinger) and have an additional $1,577,744 on the books for 2 non-guaranteed players (Cousin and Blakely).

The Rockets could simply sign 1st round pick Marcus Morris to a rookie scale contract and call it a day with a 14 player roster.  (Donatas Motiejunas is not expected to play in the NBA this season)  They could try to re-sign unrestricted free agent Chuck Hayes.  Or they could choose to also sign a free agent using an exception to fill their last roster spot.  Waiving one or both of the non-guaranteed players to open up yet another roster spot is an option, but whatever road they choose to take, the Rockets would have to waive the rights to all of their own free agent players to have more than MLE-level money to spend.

INDIANA PACERS – $36,942,191 for 11 players

They are committed to $36,057,898 for 10 guaranteed players (Granger, Posey, Rush, Jones, Hibbert, George, Hansbrough, Collison, Hill and Stephenson) and have an additional $884,293 on the books for one partially guaranteed player (Price is guaranteed to make at least $200,000).

The Pacers not only have true cap space, they are not expected to re-sign any of their own free agents to a significant contract (if at all).  They only have a couple of roster spots open, but I would expect to see them go after at least one big money free agent.  I would not be surprised at all if they offered a large contract to a big man who could give Hibbert some help up front – someone like David West or Nene.  The reported reduction of the matching period for restricted free agents from 7 days to 3 days might even give them the option of offering money to someone like Greg Oden or Marc Gasol.

LOS ANGELES CLIPPERS – $44,919,032 for 10 players

They are committed to $44,130,160 for 9 guaranteed players (Kaman, Williams, Griffin, Foye, Gomes, Gordon, Aminu, Bledsoe and Cook) and have an additional $788,872 on the books for one non-guaranteed player (Warren).

The Clippers are fortunate that the cap hold for DeAndre Jordan is so small (just over $1 million).  They could theoretically offer a nice big contract to a free agent and then use Bird rights to re-sign Jordan.  Might they go after a SF in free agency?  Conventional wisdom would say yes, but this is Donald Sterling’s team we’re talking about…..

LOS ANGELES LAKERS – $91,113,227 for 11 players

They are committed to $89,535,483 for 9 guaranteed players (Bryant, Gasol, Bynum, Odom, World Peace, Walton, Blake, Fisher and Barnes) and have an additional $1,577,744 on the books for 2 non-guaranteed players (Caracter and Ebanks).

Well, with all of their cap space, the Lakers should…..OK, who am I trying to kid?  The Lakers could waive both World Peace and Walton for cap relief under amnesty and still be nowhere near having cap space.  Expect a couple of small free agent signings.

MEMPHIS GRIZZLIES – $52,675,383 for 10 players

They are committed to $51,886,511 for 9 guaranteed players (Gay, Randolph, Conley, Mayo, Allen, Henry, Arthur, Vasquez and Young) and have an additional $788,872 on the books for one non-guaranteed player (Smith).

The major question for Memphis is not “Who should they pursue in free agency?”, but rather “Can they afford to bring back their own free agents?”  The Grizzlies have major decisions to make regarding unrestricted free agent Shane Battier and restricted free agents Marc Gasol and Hamed Haddadi.

MIAMI HEAT – $65,143,918 for 8 players

They are committed to $61,915,507 for 7 guaranteed players (Bosh, James, Wade, Miller, Haslem, Anthony and House) and have an additional $788,872 on the books for one partially guaranteed player (Pittman’s deal guarantees him at least $631,098).  Also, James Jones and Patrick Beverly continue to count as $2,439,539 against the cap even though they are no longer on the roster.

Last year, after signing James, Wade and Bosh, the primary way that Miami filled out their roster was by signing players to minimum contract amounts.   This year, after signing their 1st round pick, Norris Cole, and perhaps re-signing Mario Chalmers, look for Miami to once again employ the same strategy – although many expect them to also use their full MLE on a single free agent (especially if someone like Miller is waived under amnesty).

MILWAUKEE BUCKS – $51,551,140 for 11 players

They are committed to $51,551,140 for 11 guaranteed players (Bogut, Jackson, Udrih, Gooden, Delfino, Livingston, Ilyasova, Jennings, Dooling, Sanders and Brockman).

Milwaukee doesn’t have tons of cap space, but they don’t have many open roster spots, either.   Once they sign their 1st round pick, Tobias Harris, and perhaps bring back restricted free agent Mbah a Moute, they’ll have 13 on the roster.   Perhaps a minor free agent signing or two might be in the cards at that point, but Bucks fans probably shouldn’t expect much more than that.

MINNESOTA TIMBERWOLVES – $48,630,539 for 13 players

They are committed to $48,630,539 for 13 guaranteed players (Beasley, Webster, Milicic, Miller, Love, Pekovic, Johnson, Ridnour, Rubio, Randolph, Tolliver, Ellington and Hayward).

Once they sign 1st round pick Derrick Williams to a rookie scale contract, the Timberwolves will have 14 players on their roster.  Theoretically they could sign one more player and I wouldn’t be surprised if they did so.  However, I also wouldn’t be surprised if they stood pat either.  Minnesota’s focus would seem to be on the future – giving extensions to players like Love and Randolph (and perhaps even Beasley and Tolliver).  As such, I wouldn’t expect them to spend lots of money before the season starts on a free agent.

NEW JERSEY NETS – $40,921,102 for 9 players

They are committed to $38,929,868 for 7 guaranteed players (Williams, Outlaw, Morrow, Farmar, Petro, Lopez and James) and have an additional $1,991,234 on the books for one partially guaranteed player (Graham’s deal guarantees him at least $100,000) and one non-guaranteed player (Gaines).

The Nets have choices in free agency.  After signing 1st round pick Marshon Brooks to his rookie scale contract, they still look to have significant cap space and several roster spots to fill.  They could try to use that money to get one big money player and then fill the roster with minimum salary players.  They could re-sign unrestricted free agent Kris Humphries and/or get one or two other medium contract players.  Or they could ‘save’ their cap space for next summer in an attempt to go after Dwight Howard in free agency and only offer one year contracts to a few free agents.   It will be interesting to see which direction they go.

NEW ORLEANS HORNETS – $45,516,223 for 7 players

They are committed to $44,631,930 for 6 guaranteed players (Paul, Okafor, Ariza, Jack, Pondexter and Andersen) and have an additional $884,293 on the books for one non-guaranteed player (Ewing).

The Hornets are another team with major questions to address.  Yes, they could theoretically have a significant amount of cap room.  But what about bringing back unrestricted free agent David West?  What will they do regarding restricted free agent Marco Belinelli and unrestricted free agents Willie Green and Carl Landry?  Each of those decisions will significantly impact what other free agents they try to pursue – which they will have to do, as their roster is currently only half filled.

NEW YORK KNICKS – $60,610,764 for 9 players

They are committed to $60,610,764 for 9 guaranteed players (Anthony, Stoudemire, Billups, Turiaf, Balkman, Douglas, Walker, Rautins and Fields).

The Knicks are over the cap with their current obligations, so after signing 1st round pick Iman Shumpert to a rookie scale contract and deciding what they want to do regarding restricted free agent Derrick Brown, look for the Knicks to complete their roster by using exceptions such as the MLE and with minimum contracts.

OKLAHOMA CITY THUNDER – $54,105,501 for 14 players

They are committed to $53,316,629 for 13 guaranteed players (Durant, Perkins, Westbrook, Harden, Robinson, Mohammed, Sefolosha, Collison, Aldrich, Maynor, Mullens, Ibaka and Ivey) and have an additional $788,872 on the books for one un-guaranteed player (Vaden).

Oklahoma City is another team that will probably not make many (if any) major moves during this free agent period simply because their roster is basically set.  After they sign 1st round pick Reggie Jackson (does this mean that the Reggie candy bar will be making a comeback?), the Thunder will be at 15 players.   They could waive Robert Vaden and his non-guaranteed contract to either sign restricted free agent Daequan Cook or another free agent, but I don’t expect any blockbuster signings by the Thunder.

ORLANDO MAGIC – $77,023,289 for 10 players

They are committed to $77,023,289 for 10 guaranteed contracts (Arenas, Howard, Turkoglu, Nelson, Redick, Bass, Duhon, Q. Richardson, Anderson and Orton).

The Magic are way over the cap.  Even if they could get Arenas’ $19 million off of the books through an amnesty program, they’d be right at the assumed cap level with their committed salaries.  And that’s before accounting for the possibility of them bringing back unrestricted free agent Jason Richardson.  As such, Orlando will have to use exceptions (MLE, minimum contracts, etc.) to fill out the remainder of their roster.

PHILADELPHIA 76ERS – $54,117,266 for 9 players

They are committed to $54,117,266 for 9 guaranteed contracts (Brand, Iguodala, Nocioni, Williams, Turner, Speights, Holiday, Brackins and Meeks).

Without a significant amount of cap space, the Sixers will probably sign their 1st round pick, Nikola Vucevic, to his rookie scale contract, then make decisions on restricted free agents Thaddeus Young and Spencer Hawes.  Beyond that, they will need to use exceptions like the MLE and minimum salary contracts to complete their roster.

PHOENIX SUNS – $67,158,920 for 12 players

They are committed to $46,492,304 for 8 guaranteed players (Nash, Gortat, Childress, Frye, Pietrus, Dudley, Warrick and Lopez) and have an additional $20,666,616 on the books for two partially guaranteed players (Carter is guaranteed at least $4,000,000 and Siler is guaranteed at least $75,000) and for two non-guaranteed players (Lawal and Dowdell).

If the Suns do as most expect them to do – waive Vince Carter and his partially guaranteed contract, sign 1st round draft pick Markieff Morris to his rookie scale contract and perhaps to after a free agent point guard to replace Aaron Brooks (whose contract with a Chinese team does not include an opt-out clause), that would essentially complete their roster.  Any major deviation from that 3 step plan would be very surprising to me.  I could also easily see them re-sign unrestricted free agent Grant Hill.

PORTLAND TRAIL BLAZERS – $70,034,204 for 12 players

They are committed to $68,138,391 for 10 guaranteed players (Roy, Aldridge, Camby, Wallace, Felton, Matthews, Batum, Babbitt, Williams and A. Johnson) and have an additional $1,895,813 on the books for two non-guaranteed players (Barron and C. Johnson).

Portland is another team with no cap room but whose roster is almost completely full.  After signing their 1st round draft pick, Nolan Smith, their major focus during this free agent period will probably be on whether or not to bring back restricted free agent Greg Oden.  The contract that Patty Mills signed with a Chinese team does not include an opt-out for this season, so it would appear that re-signing him is not an option.

SACRAMENTO KINGS – $29,903,967 for 8 players

They are committed to $29,903,967 for 8 guaranteed players (Salmons, Garcia, Evans, Cousins, Thompson, Hickson, Greene and Whiteside).

The Kings have the luxury of choosing from a variety of avenues in this free agent period.   After accounting for their 1st round pick, Jimmer Fredette, they still will have a large amount of cap space.   Will they use some of it to re-sign restricted free agent Marcus Thornton?  Will they use some of it to re-sign unrestricted free agent Samuel Dalembert?  Will they try to make a big splash by signing a big name free agent?  Or perhaps bring in several moderately priced free agents?   Only time will tell.   But having cap space gives them options.

SAN ANTONIO SPURS – $72,985,233 for 12 players

They are committed to $64,317,196 for 7 guaranteed players (Duncan, Ginobili, Parker, Jefferson, Splitter, Bonner and Anderson) and have an additional $8,668,037 on the books for 2 partially guaranteed players (McDyess who is guaranteed at least $2,640,000 and Blair who is guaranteed at least $500,000) and 3 non-guaranteed players (Green, Butler and Neal).

The Spurs have two 1st round picks to sign in Kawhi Leonard and Cory Joseph.   After that, San Antonio could waive one or more of the partially guaranteed or non-guaranteed players and sign a replacement free agent.  However, they won’t be under the cap, so they’d have to use the MLE or another exception to do so.  As such, there isn’t a huge expectation of them signing a big name free agent before the season begins.

TORONTO RAPTORS – $47.179,431 for 10 players

They are committed to $47,179,431 for 10 guaranteed players (Calderon, Bargnani, Barbosa, A. Johnson, Kleiza, Bayless, DeRozan, Davis, J. Johnson and Alabi).

Toronto could have some cap space if they renounce all rights to their free agents.   But they also have questions to answer that will impact that possible cap space.  Will they really allow Reggie Evans and Julian Wright to walk as unrestricted free agents?  Since it looks like 1st round pick Jonas Valanciunas won’t play for Toronto this season, who else can they get to give Bargnani help up front?   It will be interesting to see what the Raptors do in the next few weeks.

UTAH JAZZ – $57,017,627 for 9 players

They are committed to $56,228,755 for 8 guaranteed players (Jefferson, Okur, Harris, Millsap, Favors, Miles, Bell and Hayward) and have an additional $788,872 on the books for one partially guaranteed player (Evans is guaranteed at least $100,000).

The Jazz don’t have cap space to assist them with their rebuilding project, but they do have the rights to their two 1st round picks, Enes Kanter and Alec Burks, who should have their rookie scale contracts signed soon.  Beyond that, the Jazz need to decide whether to bring back any of their unrestricted free agents – Kirilenko, Price or Fesenko.   If one or more are re-signed, I wouldn’t be surprised to see the Utah then simply round out their roster using minimum salary contracts.

WASHINGTON WIZARDS – $40,792,788 for 7 players

They are committed to $39,666,914 for 7 guaranteed players (Lewis, Blatche, Wall, McGee, Seraphin, Booker and Crawford).   Additionally, Mike Bibby still counts against their cap as $1,125,874 even though he is no longer on the roster.

The Wizards are another team with some cap room available and with plenty of roster spots to fill.  After accounting for 1st round draft picks Jan Vesely and Chris Singleton, Washington needs to decide whether to bring back any of their 4 restricted free agents – Young, Jeffers, Ndiaye and Owens.  Also there are the fates of unrestricted free agents Jianlian, Evans and Howard.   What decisions are made regarding those players will not only affect the amount of cap space the team has to spend in free agency but also how many roster spots need to be filled.

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Billy Hunter and David Stern: Fact Check

Mike Francesa of WFAN radio in New York interviewed Billy Hunter this past Wednesday, then interviewed David Stern on Thursday.  Each interview is about a half hour long and are available to be heard via podcast.

I listened to both interviews last night with a critical ear, wondering if either man could be accused of ‘bending’ or ‘skewing’ the facts in an attempt to promote his point of view.   Zach Lowe of Sports Illustrated and others have written about some of the questionable ‘facts’ presented by Commissioner Stern and I don’t want (or need) to duplicate their efforts.  At the same time, I thought it would be appropriate to evaluate the numerical claims made by both men.

I don’t want to imply that most of what both Hunter and Stern isn’t true – I do believe that most of what they said during these interviews is indeed factual.  That being said, though, I found that each of them said things that don’t seem to jive with what has been reported elsewhere.   Here’s what I mean:

BILLY HUNTER’S STATEMENTS

We’ll take these in chronological order, so since Hunter’s interview was first…In his interview with Mike Francesa on Wednesday, the head of the NBPA said the following:

Claim: Basketball Related Income (BRI) was about $4.6 billion last season.   The league subtracted about $600 million of this amount and then gave 57% of the remainder to the players.

My reply: Basketball Related Income was $3.817 billion last season.   This seems to be indisputable.   The players did get 57% of this amount ($2.176 billion) in salaries and benefits.  Some ‘revenue’ is indeed subtracted to get to this figure and whether it was $600 million as stated by Hunter or $400 million as reported elsewhere, there is good reason why it doesn’t ‘count’ as BRI.   Take, for example, an automobile dealer who puts up a sign for advertising at the Rose Garden.   Let’s say that they pay $1,000 for this ad.   The previous CBA said that $400 of that amount counted as BRI, which makes sense because the dealer pays the full amount to advertise not only at Blazer games, but also at other RG events.   So, that other $600 is part of the amount subtracted from ‘total revenue’ to reach the actual amount of Basketball Related Income.  Other sources of revenue, such as money coming from luxury suites and proceeds from naming rights, also included a designated percentage to be included as part of BRI because only a certain percentage of that money is actually linked to NBA basketball.

Claim: Luxury tax is paid by teams that are over the cap.   There were 7 teams over the cap last year and paid luxury tax.

My reply: Mike Francesa is probably guilty of starting this misperception in the interview, but Hunter certainly didn’t clear things up.   The truth is that, under the previous agreement, two different lines were created.   The first line was the salary cap itself and the second line – about 21% higher – was the tax threshold.   By my count, 26 teams ended the season over the cap, while 7 were over the tax threshold.   This comes into play in the debate over proposals about more punitive luxury tax rules.   If those punitive measures are perceived by the general public (or even the players themselves) to be imposed on any team over the cap, they will be interpreted differently than if they are perceived to be imposed on any team over the higher tax threshold.

Claim: 7-8 teams lost money last year, not 23 like the league says.   All teams combined lost about $160-170 million last year, not $300 million like the league says.

My reply:  Really?   The profits of 22 or 23 teams were not enough to compensate for the losses of 7 or 8 teams?   I could understand Hunter holding to one of those two statements, but trying to promote both as the truth?   They just aren’t compatible.   After all, even the highly debated figures on Operating Income from Forbes say that in 2009-10, 17 teams were in the red but that the league as a whole was $182.6 million in the black.  In other words, lots of teams lost a little money but overall the league had a positive operating income. [I’m not saying these numbers are entirely correct – Forbes themselves admits that the figures don’t include interest, depreciation, taxes and amortization - just using them as a point of reference]  Hunter wants us to believe that actual profits were $350 million less in 2010-11 than Forbes’ figure for 2009-10, but that only 7 or 8 teams actually operated in the red?   C’mon, Billy…..

DAVID STERN’S STATEMENTS

Claim: The owners project that, under their proposal, the average player salary would go from the current $5.5 million to over $7 million by the end of the next CBA.

My reply:  Stern uses the phrase ‘average player salary’ to his advantage.  When he says ‘average player salary’, he is referring to a number whose calculation was established in the previous CBA.   This number is not the mean salary, nor the median salary.   By my numbers, the mean salary (which is calculated by taking the total amount of player salary and dividing by the number of players who were paid) for 2010-11 was $4.216 million ($2.045 billion divided by 485).   I also show the median salary was the $2.331 million earned by Brandon Jennings.   However, the ‘average player salary’ was calculated under the previous CBA by taking the total amount of player salary ($2.045 billion in 2010-11, including the payment of $26 million by the owners after the completion of the season) and dividing by 30 (the number of teams in the league) and then dividing further by 13.2 (an estimate of roster size) and then multiplying by 1.08 (to account for yearly increases in the next year’s player salaries).   So, the calculated ‘average player salary’ was $5.576 million by my numbers for 2010-11.  This would have been the amount of this coming season’s MLE under the previous rules and would have come into play in other significant ways as well.

Claim: The players’ propose that a team that is $10 million over the tax threshold should only have to pay about $11 million in luxury tax.

My reply:  Both sides have reportedly suggested a tax system that would become more punitive the higher that a franchise is above the tax threshold.  The players have offered a system that would charge $1.25 in tax for each of the first $5 million over the threshold, $1.50 for each of the next $5 million over the threshold, $1.75 for each of the next $5 million and so on.   The owners have suggested a system that would charge $1.75 in tax for each of the first $5 million over the threshold, $2.25 for each of the next $5 million over the threshold, $2.75 for each of the next $5 million, and so on.   In other words, a team that was $10 million over the threshold would pay $13.75 million in tax under the players’ proposal and $20.00 million in tax under the owners’ proposal.   Not quite how the Commissioner painted it.

Claim: The NBA had $72 million in revenue sharing in 2010-11.

My Reply:  This is another issue brought up originally by Francesa but this time it was Stern who made no dispute or correction (thus he appears to agree with it).   This $72 million is the amount of money distributed through the luxury tax system.   I would argue strongly that, although it could be called many things, the luxury tax system should not be called ‘revenue sharing’.   Commissioner Stern refers to revenue sharing as a system necessary because of a need to re-distribute money from the franchises that are making the most revenue to franchises who are making less in revenue.   Is this what happened through the $72 million last year?  Is this what happened in any year under the previous CBA?   Consider that Chicago – the franchise with the 3rd highest revenue stream – never paid a dime under this so-called ‘revenue sharing plan’, but did receive well over $15 million in checks during the last 6 years.   Consider that Detroit – the franchise with the 4th highest revenue stream – also paid out zero and also received over $15 million through this ‘revenue sharing’.  Consider that teams like Orlando, Denver and Portland had significantly lower revenue streams during the last 6 years, but their money sometimes went to franchises like the Bulls and the Pistons in the name of ‘revenue sharing’?  I could bring up more examples, but you get the point (and are probably getting bored).  Yes, some high revenue teams like the Knicks and Lakers were often taxpayers, but not because of how much revenue they brought in – they only paid out because of how much they spent in salary.  Like I said, a system that tries to discourage teams from paying too much in salary through punitive means can be called a lot of things, but ‘revenue sharing’?   Please……

FINAL VERDICT

Both Billy Hunter and David Stern were a bit loose in their use of numbers this week.

Please let me know if you disagree with me.

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What Might The Owners Want? (A Look At The Numbers) Part II

Continuing some thoughts on the lockout and what the owners might want in an agreement with the NBA players, I want to take a closer look at how Basketball-Related Income (BRI) is shared by the owners and the players.  I’m continuing with the same assumptions that I made in Part I of this series, including the heavily-debated assumption that the NBA has lost over $1.8 billion during the last 6 years.

The previous Collective Bargaining Agreement guaranteed the players a 57% share of BRI.  Most experts seem to be predicting that the next CBA will guarantee the players a smaller share of BRI, but how much smaller?   I thought I’d run a few numbers to try to see what the owners might want, to try and ensure that the league itself is profitable.  Here some further assumptions are necessary:

  • BRI grew from $3.037 billion in 2004-05 to $3.817 billion in 2010-11, a annual increase of 3.8834%.   I’m assuming that BRI will increase by this exact amount in the years to come.
  • As I outlined in Part I, my best guess is that BRI represents 90.5146% of actual league-wide revenues each year.  I’m continuing with that assumption.
  • As I outlined in Part I, my best guess is that team expenses (other than salaries/benefits) grew from $1.917 billion in 2005-06 to $2.341 billion in 2010-11, an annual increase of 4.0753%.  I’m assuming that these expenses will continue to increase at the same rate in years to come.

Given those assumptions, here is my best guess as to what league-wide finances would look like in 2011-12 and beyond if the players continue to receive 57% of BRI:

In other words, if these assumptions are correct, a 57% guaranteed of BRI would seem to ensure that the NBA, as a single entity, would continue to lose money over the next 10 years, to the tune of more than $4.035 billion over that period.  Add this to the $1.8 billion in losses claimed by the owners over the last 6 years and you’re at $5.880 billion…..

54.3% of BRI

Now, it has been reported that the players offered earlier this summer to lower their guaranteed percentage of BRI to 54.3%.   Let’s say that this comes to be.   What would this look like over the next 10 years?

This would look better for the owners, but would still result in huge league-wide losses, to the tune of $2.757 billion over 10 years.  Taking the total loss figure to $4.602 billion for 16 years when you add in the claimed losses from the period under the previous CBA.

50% of BRI

Some members of the media have proposed that BRI should be shared 50/50 by the owners and players.  Let’s take a look at the numbers should this come to pass under the assumptions listed above:

This scenario looks much better for the owner’s bottom line, but still represents overall losses.   Over the 10 year period, the league would lose $0.721 billion.  Adding this to the last 6 years of claimed losses and you have a combined $2.566 billion loss during 16 years.

45% of BRI

So, what if the owners were able to convince the players to take 45% of BRI?  What would that look like?

Such a proposal would appear to put the entire league in the black, to the tune of $1.647 billion profit over 10 years.  This would almost entirely erase the claimed losses of the past 6 years.

A flat $2 billion in salaries/benefits

Finally, I wanted to take a look at the numbers based on the owners’ proposal to guarantee the players a flat $2.0 billion in salaries/benefits over the next 10 years:

Were the owners able to convince the players to agree to this proposal, it would appear that the league could become quite profitable during that 10 year period.  These numbers would indicate a $2.955 billion profit, which would enable the league to not only fully compensate for the claimed losses of the last 6 years, but still show profits of over a billion dollars for the combined 16 year period.

A Visual Look

Comparing all of these proposals visually gives us the following:

My thoughts

I have a few thoughts about all of this:

  1. If the claims about massive losses by teams over the last 6 years are true, and if the owners are serious about the league becoming profitable over the next 10 years, then they need to insist that the players take 48% of BRI or less.   Either that or figure out a way to reduce the other, non-salary-related expenses dramatically.
  2. If the league is actually losing less money than has been reported (as the NBPA is arguing), then a 50/50 split of BRI might indeed allow the league to be profitable.   It could even be possible that the players could receive 51% or 52% of BRI and that the NBA could be truly profitable.  However, it would appear that continuing to guarantee the players 57% of BRI will keep the league deep in the red for years to come.
  3. Revenues could increase at a greater rate than the assumed figure of 3.8834% in years to come.   If so, this could paint a better picture for both the owners and the players.  However, it appears to me, based on the numbers from Part I and here in Part II, that the owners might no longer be willing to ‘hope’ for great revenue increases, but are trying to formulate terms of the next CBA that will give them a better opportunity to have a league that, as a whole, operates in the black, even if revenues do not increase by more than 4% annually.
  4. Finally, even if the league could agree to CBA terms that would allow the NBA as a whole to operate profitably, this does not guarantee that every team will operate in the black.  I plan to address this aspect of the negotiations in Part III  of this series, as I look closer at the need for significant revenue sharing.   Look for that piece to come soon.

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What Might The Owners Want? (A Look At The Numbers) Part I

In light of the recent breakdown in talks between the NBA and the Player’s Union, I thought I would try to look a little more closely at the available numbers in an attempt to discover exactly what the owners hope to achieve in the CBA negotiations.   I don’t pretend that this analysis is exhaustive in any way, but I do hope that it might help to illustrate why the two sides seem so far apart in their proposals.   I’m also choosing to break up the analysis into two pieces – thus the ‘Part I’ in the title.

Before looking at the numbers themselves, let me provide due credit to the sources of the raw data.  The BRI numbers come from Larry Coon’s 2005 FAQ and his 1999 FAQ, while the numbers on league-wide losses come from Maury Brown’s piece at Forbes back in July.

What I do not have access to is the actual numbers of league revenue.  So, for purposes of this analysis, I have to estimate this number.  To do this, I’ve taken the publicized report that actual NBA revenue was $4.2 billion in 2010-11 (as opposed to the $3.8 billion that makes up BRI) and made the assumption that the amount of non-BRI revenue was exactly $400 million in 2010-11 (we all know this is not the exact number, but a choice had to be made).  This would make the BRI figure 90.5146% of total revenue in 2010-11.  The other years of this analysis, then, are also presented with the assumption that in each year, BRI was 90.5146% of the total amount of league revenue.  Not precise, I grant you, but hopefully good enough to make some broad analysis.

What I also do not have is the yearly amount of expenses that do not include player salaries and benefits.  However, simple math can get us close.  We have a good guess about total league revenues and the NBA has given us the figures of league-wide losses each year.  We also know that, thanks to the escrow system, player salaries and benefits were adjusted in each year of the previous CBA to represent 57% of the yearly BRI figure (Note: I know that in 2008-09, the escrow system was not enough to bring the salary/benefits figure down to 57% and an additional adjustment was necessary the next season to do so.  However, for purposes of simplicity, the numbers in this analysis are presented as if 2008-09 actually reached that 57% goal and as if extra money was not needed to be withheld in 2009-10).  So, I’ve simply subtracted the player salaries/benefits from the assumed revenue figure and plugged in expenses accordingly to arrive at the published loss figures.

Let me also acknowledge that I know there is much debate over the validity of the figures of league-wide losses that are being used here.  I would rather not re-hash that debate in this analysis.  Rather, I am taking the perspective of the “worst scenario” – if these loss amounts are indeed true, then what would need to change in the next CBA to satisfy the owners and turn these losses into profits.   If the losses are indeed exaggerated, then it would follow that the changes might not have to be as dramatic.

BRI – Actual vs. “What Could Have Been”

With the specifics of my assumptions out of the way, let’s proceed.  First of all, I want to take a look at what BRI actually was over the last 6 years (ie, during the course of the previous CBA) vs. what it might have been projected to be at the time that the CBA was signed in 2005.  I say this because there have been numerous reports (this one by Ken Berger, for example) over the last several years that suggest that revenue growth in the NBA has not been as large as was possibly expected back in 2005, at least in part due to the state of the US economy over the last few years.

During the course of the previous CBA, BRI grew from $3.037 billion in 2004-05 (the last season of the 1999 CBA) to $3.817 billion in 2010-11.  This represents a healthy 25.68% increase over the course of those 6 years.  As a visual, take a look at these two graphs, showing the actual BRI amounts each year on one line as compared to 3 other lines that I am calling “What Could Have Been”: (click on the charts to enlarge)


I call these other three lines “What Could Have Been” for the following reasons:

  • The 2005 CBA itself seems to assume at least a 4.500% increase in non-national-television revenue annually, as this was the figure used to determine the annual “Projected BRI” figure.  It seems reasonable to me, then, to compare actual BRI with an annual increase of revenue in this amount.
  • During the final four years of the 1999 CBA, BRI grew by a cumulative average of 5.516%, so it is reasonable to wonder what would have happened to BRI if this trend had continued throughout the six years of the 2005 CBA.
  • Finally, I used a figure of 6.300% as my final comparison, as this annual increase, according to my analysis, would have taken the NBA into the black in 2010-11.

The real question in my mind is this – what was the expected level of revenue growth when the CBA was signed in 2005?   One could argue that the minimal expectation was a 4.500% annual growth, with a healthy expectation of something nearer to the 5.516% annual increase that I’ve charted.  Perhaps even a hope for something close to the 6.300% that is pictured above.  Honestly, I don’t have an answer.  If pressed, I would probably say that the owners expected something near to the 5.516% growth that history had shown (over the course of the last few years covered by the 1999 CBA) was possible.  How else to explain that the owners agreed to increase the designated percentage of BRI guaranteed to the players from 55% (the level during all but the last year of the 1999 CBA) to a permanent 57% in the 2005 CBA?  Looking back now, such optimism might seem misguided.  But we have to remember that in the summer of 2005, the league had just experienced a 10.2% annual increase in revenue.  Perhaps, at the time, optimism seemed appropriate.  Perhaps, in the minds of the owners, increased revenue streams could provide the league with the overall profitability that it desired.

The charts do demonstrate that for the first few years of the previous CBA, revenue increased at a level equal or nearly equal to these possible expectation levels.  BRI increased by 4.51% in 2005-06 and by a robust 6.62% in 2006-07.  However, this trend did not continue, as over the next three years, BRI only increased by 3.99% in 2007-08, by 2.53% in 2008-09 and by 0.97% in 2009-10.  Even a healthy 4.78% increase in BRI in 2010-11 could not overcome the limited revenue increase during those three years.  All of this would manifest itself in the bottom line – a poorer financial showing than what owners seemingly had expected.

Profit/Loss – Actual vs. “What Could Have Been”

Again, my purpose in all of the analysis is to try to get to the heart of what the owners want to see happen in the next CBA to alleviate what they claim to be major losses.  It’s helped me to get a better picture of this by taking the actual numbers (at least my best guess at the actual numbers) for these six years under the previous CBA and looking at how they match up with how they would have changed if revenue levels had actually increased by those “What Could Have Been” levels.

Here is, to the best of my ability, my representation of what actually happened under the previous CBA, using the assumptions listed at the beginning of this piece (click on the charts to enlarge):

And here are the numbers if revenue would have increased at 4.500%, 5.516% and 6.300% annually:

Here’s a composite chart of the bottom line profit/loss (in this case, nearly all losses):

As I mentioned above, according to these figures, if revenues would have increased by 6.3% each of the last six seasons, the NBA would have been profitable during the 2010-11 season, even by these most pessimistic figures available.  Even so, although it would have cut the claimed cumulative loss league-wide nearly in half, the owners would still have claimed to have lost over $1 billion over the course of the previous CBA even if revenues had increased every year by that amount.

Some Thoughts On All This

Looking at the data in this way helped me to see the position of the owners in a new light.  For example, it gave me a basis for being to come up with possible answers to the excellent questions asked recently by David Berri, who queried the following:

But the NBA claims it is not just the recession. The NBA claims the league has lost money in every year of the just expired CBA.

One should note why this claim is necessary. If the NBA only lost money in the past few seasons then the players could argue that these losses were due to a temporary economic condition (the recession — despite what some people in the media seems to suggest — is not permanent). And therefore, the league does not need a permanent change to the percentage of revenues going to the players.

By claiming the losses have existed since 2005, though, the NBA runs into another problem. Are we to believe that the NBA signed an agreement that immediately led to losses? Certainly it is possible that in 2005 the NBA did not know revenues and costs in 2010-11. But shouldn’t the NBA have known what revenues and costs were likely to be in 2005-06 and 2006-07?

Looking at the numbers, perhaps the owners were interested not in making the league profitable by the beginning of the previous CBA but were very interested in having the league be profitable by the time that it expired.  Perhaps they were banking on revenue streams being high enough to make this possible.  And perhaps as Berri suggests, they were able to predict the financial picture in the first two years under the previous CBA but were not able to see beyond that (after all, revenues did increase by 11.4% in those first two years).  Such an approach by the owners six years ago - a willingness to suffer short term losses if long term profitability was eventually achieved – would be consistent with their current approach, at least in the words of deputy commissioner Adam Silver, who earlier this summer suggested that the owners are “prepared to take less in the early years of a 10-year deal because we would come out in the latter years with something we are satisfied with”

Overall, though, after looking at the data in this way, I don’t think that the owners believe now that the answer to their claimed economic woes is simply in hoping for generous increases in revenue streams.  I believe that they are committed to instituting changes in the CBA that will eventually move their books from the red to the black.

What might those changes be?  And will they be effective?  I have some thoughts on that, but will leave that for Part II of this analysis – look for it soon.

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Does this story reflect what’s happening in the NBA?

Once upon a time in a town not so far away, Mr. Jones owned a house that he rented to the Franklin family.  The Franklins, as excellent tenants,  signed a long term lease to pay $1,000 a month in rent.  Mr. Jones was happy with the arrangement, as his mortgage payment was $600 a month, which allowed him to pay for all repairs/expenses and still be able to put a small amount of money into savings each month out of the rent payment that he received from the Franklins.

Eight months before the end of the lease, Mr. Jones sold the house to Mrs. Smith.  Mrs. Smith was happy to keep renting the house to the Franklin family, but was concerned about the finances of the situation as her mortgage was $800 a month.  So, two months before the lease was to expire, she informed the Franklins that their rent would be increased to $1,200 a month if they wanted to stay in the house when the old lease expired.

The Franklins were, understandably, not pleased with the prospect of having to pay more in rent for the house.  They made a counter-proposal to pay $850 a month instead.  Mrs. Smith responded that $850 was not enough to cover her mortgage payment, insurance, repairs and upkeep.

As of today, there has been no resolution in the situation.  The Franklins argue that they are not responsible for the difference between Mrs. Smith’s mortgage payment and what Mr. Jones’ mortgage payment was.  They contend that their rent should not be dependent on Mrs. Smith’s decision to finance the house instead of paying cash.  Plus, they argue that the value of the house will increase over time, which should compensate Mrs. Smith for any short term losses she sustains in renting the house to them.

Mrs. Smith remains adamant that she will not sign a new lease for anything less than $1,2000 a month.  With the old lease due to expire in a few days, the Franklins are now faced with the prospect of not having a place to live if they are ‘locked out’ of Mrs. Smith’s house.  It is unclear how this situation will resolve itself…..

—————

Before you completely discount the viability of this analogy, consider this:

Between 1998 and 2005, 8 NBA franchises (Hawks, Celtics, Mavericks, Nuggets, Grizzlies, Suns, Kings and Raptors) were sold.  Between 2005 and the present, 8 additional franchises were purchased by new owners (Bobcats, Cavaliers, Pistons, Warriors, Nets, Thunder, Sixers and Wizards).  Additionally, the Hornets were purchased by the rest of the NBA.  In other words, since the last time that a lockout was an issue in the league, over half of the teams have been sold.  My assumption (and it is an assumption, so please correct me if I am wrong) is that most, if not all, of these new owners are paying more to finance the purchase of these teams than their previous owners did.

——————

Malcolm Gladwell recently compared purchasing an NBA franchise to purchasing a valuable piece of art.  I wonder if a better comparison might be to someone purchasing a rental property.  After all, do we really want NBA owners to take their purchases out of circulation and simply enjoy the ‘psychic benefits’ of ownership in complete privacy?

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Good News Regarding the NBA Lockout?

In his inaugural piece on sheridanhoops.com, Chris Sheridan today wrote that he believes the owners and players are closer to negotiating a end to the lockout than many might guess.  Sheridan is far better connected to NBA sources than I am (duh!) and I read his piece today with a sincere desire to believe that what he says is true.  I hope that the lockout is lifted before any regular season games are lost.  However, even after reading Sheridan’s piece, I remain skeptical about the lockout ending anytime soon.  Here’s why:

Sheridan does a great job of demonstrating that the two sides are relatively close in what they proposing in terms of aggregate salaries/benefits for players during the next three seasons.   His argument seems to be that if the two sides are that close in the short term (a 3 year period), then an agreement for a longer period of time (6-10 years) is obtainable.   However, Sheridan seems to have forgotten why the two sides are close in the short term to begin with.

Think back to the owners’ original proposal to the Player’s Union.  It called for a dramatic decrease in player salaries/benefits  for the coming season and then allowed for that aggregate number to increase over the course of the CBA period in proportion to increases in league revenues.  This proposal was quickly rejected by the NBPA.  The owners’ next proposal, described by Sheridan in today’s article, replaces that huge drop in intial salary guarantees to the players with a small decrease, but keeps the guaranteed figure locked at the same amount for years to come.

The difference in these two proposals was demonstrated visually in an excellent chart that a TrueHoop reader named David put together several weeks ago.  I would direct your attention especially to the difference in the yellow line, which represents the owners’ original proposal, and the aqua line, which represents what the owners apparently are currently offering.  Both lines represent nearly the same amount of money over a ten year period.   In other words, the two proposals are not different in amount so much as in execution.  The former proposed that the players make “less now and more later” than they would under the latter.

Here’s my point – the reason that the current proposals between the two sides are close is only because the owners expect a long term agreeement at a fixed number.  Sheridan himself quoted NBA deputy commissioner Adam Silver on this issue back in June, when Silver said, “We’re prepared to take less in the early years of a 10-year deal because we would come out in the latter years with something we are satisfied with,”

I have been saying for over a year that it is my belief that NBA owners are willing to take short term losses to ensure long term gains.  Why else would owners be willing to lose an entire season of NBA play?   I would argue that they would only be willing to do so if they believed that doing so would be in a position to then sign a CBA that would put the entire league in a better financial position.  Look at the example of the NHL.  Their lockout meant the loss of the entire 2004-05 season (short term loss) yet resulted in a Collective Bargaining Agreement that seems to have improved the financial position of the NHL owners league wide (long term gain).

The current owners’ proposal seems to follow the same sort of thinking.  “We’ll pay you more now than we offered previously only if there’s a guarantee that you’ll later make less than our original proposal had you receiving.”  Again, short term loss to achieve a long term gain.

For this reason, I remain skeptical that the owners will put together a long-term CBA agreement that guarantees the players $2 billion in salaries/benefits for the 2011-12 season (give or take a few million or ten) and then guarantees them significant increases in that guaranteed amount over the life of the CBA.  That would seem to indicate a position by the owners of “we will take a short term loss for a small (or perhaps even no) long-term gain.”   And I have no reason to believe that they are willing to adopt that sort of position.

I do agree with Sheridan that the owners will end up coming up in their offer to the players, just as I believe that the players will end up coming down in their demands.  However, I cannot follow a course of logic that says, “Because the two sides are close in the short term, a long term deal is close in coming.”   What Sheridan seems to dismiss quickly (that, in his words, the “gap in what each side is seeking financially in Years 4, 5 and 6 is more significant”) is, in my opinion, what is preventing a deal from happening today.  The two sides are only close in the first three years of their respective proposals because they are far apart in the years that follow.  Additionally, I would contend that Sheridan’s argument that “what the owners are asking for in Years 7, 8, 9 and 10 is not completely germane to the equation right now because the players have not indicated they would be willing to do a deal for longer than six years” misses that point that, to the owners, those four years are absolutely germaine since they provide the means by which they make the $2 billion offer of aggregate salary/benefits for the first three years.

I also agree with Sheridan when he writes, “But here is the key thing, the two most important words to keep in mind as this lockout plays itself out: Aggregate dollars.”  Absolutely correct.  In fact, it is because of aggregate dollars in the two proposals that I still see the two sides as being wide apart in their negotiations.

I have nothing but respect for Sheridan as a journalist.  His experience and body of work demand nothing less.  But today’s piece does nothing to convince me that a resolution to the lockout is any closer.  As Ken Berger wrote today, “Nothing has changed, per se, on either side.”

I am glad that Sheridan seems optimistic on the resolution of the lockout.  I wish I shared his optimism.  But when Sheridan was optimistic in April that a lockout might be averted altogether, I did not share in those feelings.  Unfortunately, I find myself similarly unconvinced by his arguments today.

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Hello, A-1 Locksmith? Please help me. I’m an NBA player and I’ve been locked out!

If you’re a fan of the NBA or basketball in general and you haven’t spent the last several months under a rock, you’re probably aware that as of 9 PM PST tonight, the Collective Bargaining Agreement between the league and the NBPA (Player’s Union) will expire.   Although there have been bargaining sessions between the two sides in an attempt to formulate a new CBA, those negotiations have failed to bring about any agreement.  As a result, the NBA sent out both a tweet and an official statement today announcing what so many of us have feared would happen – the owners will institute a lockout of the players.  The text of the official announcement says it all:

The National Basketball Association announced that it will commence a lockout of its players, effective at 12:01 am ET on July 1, until a new collective bargaining agreement is reached with the National Basketball Players Association…During the lockout, players will not receive their salaries; teams will not negotiate, sign or trade player contracts; players will not be able to use team facilities for any purpose; and teams will not conduct or facilitate any summer camps, exhibitions, practices, workouts, coaching sessions, or team meetings.

Knowing that the lockout will be a topic of great discussion, allow me to attempt to briefly answer what I consider to be the 3 major questions people seem to have about the lockout:

1) What is a lockout?

A lockout is not a strike.  NBA players will not be forming any picket lines.  But the league owners have decided that, as long as there is no labor agreement between the NBA and its players, they will lock players out of team-owned facilities.   As long as this lockout is in place, there will be no team-sponsored practices or scrimmages, no use of team-owned training equipment or facilities by the players and no rehabilitation efforts by teams with injured players.  Teams will make no trades during the lockout, nor will they sign any players to new contracts.  The players will earn no salary during this period and will not be allowed to have contact with any member of the coaching staff, training staff or front office.  In fact, if the league discovers that a member of a team is interacting with a player, that team will be subject to a $1 million fine.

During the lockout, the owners and the player’s union will continue their negotiations to try and come to terms for a new collective bargaining agreement.  Once a new CBA is agreed upon, the owners will lift the lockout and allow things to get back to normal.

2) Why are the owners locking the players out?

Many things are being written about and said to try and describe why the owners and the players have not been able to reach an agreement on a new CBA.  Terms like ‘hard cap’, ‘soft cap’, ‘flex cap’, ‘luxury tax’, ‘revenue sharing’, ‘guaranteed contracts’ and many others are being written about and examined in a myriad of different ways.  But essentially, it all comes down to one thing – the owners contend that the NBA is losing money because the players are currently receiving too big a share of the revenue pie and they want to reduce the size of their slice.  The players have responded by saying that the owners are overstating the problem and will not agree to the dramatic salary cuts being proposed by ownership, and thus the two sides are at odds.

3) How long will the lockout last?

Nobody knows the answer to this important question.  Many people (myself included) believe that the gap between the two sides is so large that it will take many months before they agree on a new CBA.  Those sharing this admittedly pessimistic view are even speculating that resolution might not come in time to prevent the 2011-12 regular season from being shortened (like what happened during the 1998-99 season) or even being canceled altogether (as was the case in the NHL when the owners locked out the players in 2004-05)

This is, of course, only an introduction to the topic of the NBA lockout.  If you want to learn more about the lockout and the ongoing labor negotiations between the owners and the players, a quick scouring of the web will reveal dozens of articles, opinion pieces and interviews on the topic of the lockout – many of them made by people far more qualified than I am to speak with authority on these matters.   If you want to conduct an exhaustive perusal of the internet on this subject, you can easily find reading material for weeks.  However, if time will not allow you such an intensive project, I would suggest these four recent pieces:

Those four should hopefully give you some further insight as to why there is a lockout and what are its implications.

I’ve been predicting a lockout for over a year.  That being said, it’s certainly not what I want to be happening and it’s not what we as fans want.  Let us hope and pray that the owners and players have enough sense to resolve their differences quickly and allow the NBA get back to both doing business and playing basketball.

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