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With the NBA lockout officially looming, owners and players are nowhere close to an agreement. If there is a lockout, the cause may be all the recent superstars who have left small market teams in order to join forces with other superstars on big market teams.
Charles Barkley, who is known for his big mouth and sometimes-offensive comments, recently spoke on the situation in regards to the NBA lockout. It is hard to agree with him usually, but this time Barkley is completely right in his assertion that the biggest problem leading to a lockout is the balance of power. Currently structured, the NBA’s talent is top-heavy. You can count how many good NBA teams there are on your fingers; unsurprisingly, these good teams are in bigger markets.
While on Mike Lupica’s ESPN radio show on Monday June 27th, Barkley shared his belief that there will be an NBA lockout. His reasoning was the following: currently, small market owners feel they are being neglected and feel the superstars are superseding their power. The fact is, this should surprise no one; the past three prominent superstars have left small market teams to team up with superstars on big market teams.
In reference to small-market owners during the interview, Barkley stated “I think there’s going to be a lockout, I think the owners are dug in, I think they want to send a message to these players. I think they’re really upset by this LeBron James/ Chris Bosh situation, because their teams don’t have to be really good, but I feel like if they have a star in their market they can make some money. And if all the stars want to play together…we’re almost becoming like baseball where you’ve got a few good teams and the rest of them stink.”
James and Bosh have not been the only prominent players in the past 11 months to flee a smaller market for the greener pasture of coexisting with other superstar talent in a bigger market. Carmelo Anthony also did this.
Despite the fact that Anthony was not a free agent at the time, he was able to force his way out of Denver, in turn, joining Amar’e Stoudemire and the New York Knicks. Denver traded Anthony because of the way they saw the free agent scenario with James and Bosh materialize. Denver realized they didn’t want to watch Anthony leave on the free agent market and thus get no players in return.
There is no doubt a problem is created when players hold the power to take less money and collude to join forces like James and Bosh did when they decided to team up with Dwayne Wade in Miami. Owners cannot prevent this unless there is more incentive or rules that prevent collusion from happening.
The NBA’s deputy commissioner, Adam Silver, says the goal is “to create a system in which all 30 teams can compete for a championship. And if well-managed, have the opportunity to make a profit.” Clearly there are current loopholes in the NBA with regards to competitiveness between small-market teams and big market teams. The discrepancy of competitiveness between both parties, which happens both on the court and in the front office, makes the leagues goal far from reality.
What are the disagreements between owners and players, and small market and big market owners?
Senior editor of theatlantic.com, Derek Thompson, sums up the disagreements between NBA owners and players in crystal clear fashion. In reference to what the players want and the owners want, Thompson’s says, “The players want the NBA to be more like Major League Baseball. They want huge player salaries that are guaranteed to pay out, even if the player under-performs. The owners want the NBA to be more like the NFL. They want smaller player salaries, more “revenue sharing,” and the ability to let players go if they don’t perform.”
To understand Thompson’s summary of what may lead to the lockout, it is important to understand some background context. The league claims, “ 22 out of 30 teams lost money this past season”. The league also claims to be losing $300 million this past season after losing $370 million and $340 million the past two season. The owners who have been suffering these losses the most have been small market NBA owners.
Basically the owners, especially the ones in smaller markets, want to prevent these losses by limiting the amount they have to pay players who might turn out to be bad signing down the road; this sentiment is articulated by Mitch Lawrence of foxsports.com who writes, “owners are demanding more cost certainty and the end to their practice of overpaying non-productive players with long, expensive deals.”
Under the current structure, one hindrance to profit is that owners have to split revenues with players. Currently, the players enjoy a 57-43 split of NBA revenues; however the owners want to see a split of at least 50-50 if not more towards the owners. Thompson elaborates on this split in which the players enjoy a bigger piece of the pie saying, “If they paid closer to 50 percent of the pie, they might be in the black. That’s what this fight is about: Designing a system that allows teams to offer players competitive salaries without bankrupting smaller teams.”
Guaranteed raises also fall disproportionately hard on small market teams. Players resigning get an automatic 10.5% raise, while a player going to a new team gets an 8% raise. Under the current system these raises are automatic and not based on performance.
The economics have to improve for small market teams as the current structure is unsustainable. It is a cost problem but more importantly a revenue problem. A more generous revenue sharing formula is clearly needed. However, if Players Union Chief Billy Hunter is right an agreement might not be so easy to come by.
Hunter, in reference to owners of big market teams, recently stated, “Some of the major markets are not interested in sharing revenues to the tune it’s being shared in the NFL. The NBA has the weakest revenue-sharing plan of any of the professional sports, and we’ve heard people like Jerry Buss and others on the Lakers indicate they’re not interested in having to share the revenue with some of these other teams.”
All in all, the center point of the looming NBA lockout is due to owners’ of small market teams sharing the sentiment that they are unable to keep their top talent. This feeling of powerlessness has been derived from the decision of Chris Bosh, LeBron James and Carmelo Anthony. As Mitch Lawrence writes, “The small-market teams want a bigger cut of the pie because they believe it will help them keep their top players and allow them to spend more money on their team, thus making them more competitive.”
If the NBA does not figure out how to give small market owners a fighting chance to survive then the avalanche of star players leaving small market teams to join big market teams will continue for the NBA. The next two teams, who have superstars on their rosters set to become free agents, are the Orlando Magic and New Orleans Hornets. The time to act is now. If the NBA does not act, there will be two more teams who might become irrelevant and not be able to compete. If this is the case they will probably loose money as well. The time to act is now before it is too late!