Blog Entry

The players may have enough loopholes to survive

Posted on: July 22, 2011 8:59 am
Edited on: July 22, 2011 9:38 am
By Matt Moore

When this lockout started to be discussed in real terms, there were more than enough questions about whether the players could handle it. There continue to be those questions.

NBA players are known to live extravagantly. A large portion of the league fit the same profile: men who come from low-income situations suddenly thrust not only into a situation where they are paid millions of dollars (and a million is still quite a bit of money today), but operate in a luxury atmosphere. The stark plummet off that cliff could crush the union, as could players complaining about it and then getting bombarded by the media for sounding wholly disconnected from the general public (which they are).

How would the players react if those paychecks stopped?

That's the whole argument for why the owners will win. Eventually, the players will cave because they'll need the money. 

Except, what if they don't?

There have been enough reports now to indicate that the union is as well prepared for this thing to go the distance as it can be. You've no doubt tired of a new report each day on a different player discussing going abroad. If you haven't, let me clue you in. Here's the formula.

"(Player X) is 'very interested' in playing overseas and plans to pursue opportunities there, though nothing is formal yet. The player is widely reported to be looking at (insert team who likely literally cannot afford to pay him)."

You've read about those other opportunities, like the Manila exhibition being planned this week.  There are endorsement and media opportunities, every manner of one-off chance for the players to pad their wallets while the lockout tries to starve them.

But what about a simpler approach? What about good old fashioned money management? 

The NBPA has been active in preparing its players for this lockout, much more so than 1999. The union distributed a handbook (which I keep imagining looks like the one in "Beetlejuice") that has information on everything from handling the media with their message, to how to conduct themselves around the owners. Most importantly, it talks about saving money. 

Now, that's not exactly penetrating advice. When you were 21 or 22, and your mother kept harping on you to open a savings account, did you do that, or did you go to that bar or buy that video game? If you did listen, congratulations, you're a momma's boy/girl. If you didn't, you're a normal person. But in the NBA, there are enough veterans that were around 12 years ago, and the NBPA has been proactive enough that it's likely made a difference. Players have been stashing cash away for this oh-so-rainy day. They have reserves to rely on if the lockout isn't resolved, some all the way through the season. 

But what about going farther than that? What about simply managing your paychecks for last season to last through the current one? It turns out, from a report from USA Today, that's exactly what some players have done.
Players normally receive bi-weekly paychecks from Nov. 15 to May 1, although some opt for a November to November schedule. But Aminu will receive payments from last season until Nov. 1, 2012. Randolph will be paid through May 1, 2012.
via Some NBA players planned ahead for lengthy lockout -

The owners can't lock the players out of money owed before the last CBA expires. Players that set up their paychecks this way will still be receiving paychecks, albeit smaller ones, throughout the course of the year. In short, they're fine. More than fine.

So let's just review here.

The owners have installed a lockout based on their debated losses stemming from an economic model they agreed to and the poor decisions they elected to enact as well as a flawed revenue system. Their entire plan is to starve the players into submission, but not only did they leave the door open for a possible mass exodus to Europe and other potential revenue sources, but they actually agreed to pay some players throughout the terms of their lockout. 

How could this plan possibly go wrong?

So the question has to be asked. Is a two-year lockout what it's going to take for the owners to get their petulant little way? What's next in the never-ending stream of ways that the owners threw this situation together, and at what point is someone with a little reason going to grab the reins? Until people start to understand that the players aren't asking for more, just not that much less, and that they are more than prepared to go the distance here, it's hard to see that day in sight. 

This is a Cold War, and both sides are waving their flags strongly. The only question is whose wall will collapse first.

Since: Mar 6, 2009
Posted on: July 25, 2011 2:23 am

The players may have enough loopholes to survive

Every industry in america. Have you seen what US Ceo makes. These players make peanuts compared to what these ceo's take home. what 50 60 milll some of them in one year. ha

Since: Jul 23, 2011
Posted on: July 23, 2011 5:15 pm

My bad

Sorry for the repost, I thought the first one didn't go through

Since: Jul 23, 2011
Posted on: July 23, 2011 5:13 pm

Stick to What You Know

I thought you had some good information, but I was distracted by your lack of objectivity.  Characterizing the owners' reasons for the lockout as "their petulant little way" is just you expressing your personal views.  Don't get me wrong, I think a writer's opinion can be extremely valuable, but only when it is an educated one.  Just because it has to do with the NBA, doesn't mean that the lockout is a sports issue.  The lockout is primarily a bussiness matter, and a complicated one at that.  Matt, do you have a background in bussiness or at least covering bussiness?  I'm all for sportswriters talking about how the lockout will impact players and teams, but leave the "Who's to blame?" debate to people who know what they are talking about.

Since: Jul 23, 2011
Posted on: July 23, 2011 4:45 pm

The players may have enough loopholes to survive


A lot of good information, but I found myself distracted by your lack of objectivity.  I understand that this is a blog, but characterizing the owners' reasons for the lockout as "their petulant little way," is just outright unprofessional.  Don't get me wrong, I think that a writer's personal view can be very valuable, but only when it is an educated one.  I'm not trying to be rude, but do you have any background in business or at least covering business? 

Since: Oct 5, 2006
Posted on: July 23, 2011 1:01 am

The players may have enough loopholes to survive

The players get 50% of the revenue and that is fair.  When you think all the owners wouldn't make up one ball team and they get 50% of the other 30 teams; I'd say that was pretty fair indeed.  Owners want to overpay players and then get outta their mistakes by locking out the NBA.  Well I for one hope they fail.  50% is fair.  If you make your own bed; learn to lie in it. 

I like how the writer of this article only talks about players living large.  Do you really think the owners are poor?  Do you think they live in a reality different from the players.

Players should not have to pay for owners mistakes.  And it is about time owners figured that out.

Same in NFL.  I'm tired of owners crying.  Don't want your team; give it to me.  I'm thinking I might be able to find a way to make some cash.  Thanks in advance for your generosity.

Since: Mar 18, 2009
Posted on: July 22, 2011 5:33 pm

The players may have enough loopholes to survive

I wonder what other Industries there are, where employees get to demand 60% of the revenue (or whatever it is)?

Since: May 1, 2009
Posted on: July 22, 2011 4:01 pm

The players may have enough loopholes to survive

If a player has a contract with an NBA team and gets hurt during the lockout with a team overseas can the owners void the contract from the NBA? I would think the players that have contracts wouldn't be able to play overseas. Not sure but just a thought about it.

Since: May 14, 2007
Posted on: July 22, 2011 3:52 pm

The players may have enough loopholes to survive

It's a battle of attrition. The deal that the NBA owners want does not sit well with players' union. There are obvious points of contention and there are issues that can help start the ball rolling towards an agreement. Overpaying for players is not the fault of the agents or the players themselves.

I think everyone can agree that forward Rashard Lewis is not worth his $21 million pricetag. He's only a shell of the player he  was when he played for Seattle. Gilbert Arenas makes an improbable $18 million a year and comes off the bench at Orlando? When you consider that Kobe Bryant makes $25 million, you know that a lot of NBA general managers overpayed fringe players over the last several years. When the Maverick's Peja Stojakovic can make almost as much as the Hawk's Joe Johnson ($16 million) there needs to be a major adjustment in valuing NBA players.

The league proposes a hard cap set at $45 million instead of the existing soft cap with many loopholes and exceptions (most likely will be at around $62 million). That said, it would hurt big-ticket franchises like the Celtics, Heat, and Lakers if that happened. Just the big 3 in Miami would approach that vicinity. The players obviously don't want a hard cap for obvious reasons. For example, the existing presently is $57 million. The Lakers have contracts totalling almost $90 million. They pay a luxury tax on the overage, but you can see that a hard cap would devastate some teams' ambition to build a powerhouse squad. Look at all the championship teams in the last decade. They all had teams with at least two legitimate superstars, save for the Maverick this year.

The next thing is splitting the revenue. The players currently receive 57% of all revenue. That, in essense, is at the crux of the lockout. The owners want a 50/50 split. Small market teams like a Milwakee, don't have the luxury of overspending and their revenues are narrower than big market teams. The league maintains that 22 of 30 franchises lost money last season. The players have already offered to give back about $100 million in the next five years to offset this loss. The bargaining will continue. One thing is for sure, the NBA's financial model will be changed. They want a system that allows for more parity. I'm not so sure I want to see the Kings versus the Warriors in the conference championship series.

Nevertheless, the contention is high and that can mean no NBA season in 2011. I love the NBA and last seasons' playoffs were very compelling. I'd hate to see the league take 2 steps back to move one step forward by sacrificing an entire NBA season.

Since: Mar 18, 2009
Posted on: July 22, 2011 3:40 pm

The players may have enough loopholes to survive

Great post Harry!

Since: Feb 28, 2007
Posted on: July 22, 2011 2:03 pm

The players may have enough loopholes to survive

great post Harry.. just my thoughts.. and too bad so sad Apple..  it is the players' fault on this one.. they are making gigantic salaries and even if the owners were stupid and signed a bad CBA last time out or over paid for players before.. it is there option to change things around for the better..  i do blame the owners but in this case..  it is there team and they can and should be able to do what they want..  the players are in the wrong on this one

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