Tuesday is November 1, meaning the NBA lockout will officially enter its fifth month. We've now officially reached the stage where we find out how much "principle" is worth to the NBA's players.
Why? Because paychecks will finally be missed. Because each wave of cancellations brings with it a known cost. Because the National Basketball Players Association will soon reach the break even point where it will be more beneficial -- purely in their financial best interest -- to cave to the NBA's revenue demands rather than to hold a hard line.
Put simply, the money lost in salary will soon surpass the potential money to be saved in continuing negotiations. Once that happens, this whole thing becomes about principle.
Two economists writing on Grantland.com assert that the nuclear option -- a completely lost 2011-2012 season -- would be a financially "insane" eventuality for the players, even given the penny-pinching offer currently offered by the league's owners.
The split on BRI (Basketball Related Income) is supposedly the biggest point of contention. Players want 52.5 percent (down from 57 in the previous contract). Owners are “adamant” on 50 percent and started with an initial lowball offer of 37. Take the NBA’s 2009-10 BRI estimate of $3.6 billion; 2.5 percent of that is $90 million. Let’s say the life of the contract is 6 years. The total value of that over six years, with reinvestment, is around $500 million.The NBPA is being advised by a leading economist, so the union is not blind to this reality. In fact, despite all of their rhetoric about being willing to lose multiple seasons to preserve their achievements in previous negotiations, the example set by the financial overhaul of the NHL surely is fresh in their minds. The players will come down off of their current position. It's only a matter of when, and, also, how painful.
Is it economically worthwhile for the players to hold out for $500 million?
No. Total NBA salaries last year were over $1.5 billion, about three times the amount they are fighting over. Canceling a third of the current season would wipe out the gain of winning the extra 2.5 percent of BRI over the life of the new collective bargaining agreement. Canceling the whole season over 2.5 percent of BRI is insane for the players.
Can the players stop the owners from getting a deal that is much worse for them than the previous Collective Bargaining Agreement? No. What the players are willing to agree to is already materially worse than before. The only question that remains is how bad it will get. Does the players’ line in the sand over 2.5 percent of BRI make economic sense? No, not if they miss many games to achieve it.
If the NBA makes anything more than a modest concession on the revenue split in the next two weeks or so, there's a solid chance this thing gets done. If not, things could get even uglier. The important takeaway point here though is that the NBPA's decision-making is still, after all these months, being guided by rational thought and not emotion. If we're still having this same conversation on Dec. 15, with no substantial movement from either said, then emotion will have won out. That would be terrible, horribly frustrating news for all involved.