Friday, February 12, 2010

A New CBA That Could Help The Grizzlies

One of the last places where unions and employers still negotiate the terms of employment is professional sports. (It turns out that most employees in America can be replaced more easily than LeBron James for example.) During All Star Weekend those negotiations heated up as the players and owners sat down to discuss a new collective bargaining agreement.

The previous agreement led to $40 million contracts for the likes of Marko Jaric. As you can imagine, when you're busy paying Marko Jaric $40 million, you don't have time to worry about details like whether your costs exceed your revenue. However, owners have decided this isn't such a good idea, and they want to make more teams profitable. Believe it or not, the players, on the other hand, don't want to give up their diamond studded swimming pools just so a few billionaires can make a buck.

Of course, not all franchises are unprofitable. For a number of reasons (poor management, small markets, bad luck), some franchises are more likely to lose money. Large TV markets, savvy basketball people, and/or luck can make a franchise profitable even with enormous expenses. (Or their billionaire owners are willing to subsidize losses in which case, who needs a budget?)

Here are three possible outcomes of the CBA that could help (or not help) more franchises become profitable:

1. Remove the salary cap and let franchises pay whatever they want to players. (For example, baseball) NBA owners have shown they aren't capable of restraining themselves when it comes to giving players excessive contracts so I'm not sure how balance sheets would improve if the current restraints were removed. I imagine Isiah Thomas would have signed Eddie Curry to a $500 million dollar contract if there was no salary cap.

Still, let's imagine the owners are able to spend only what they can afford. That wouldn't be good for the players. On average, they may get a share of revenue equal to what their getting now, but the premium contracts (in theory) would be reserved for a few roster spots in the biggest markets. Welcome to the New York Yankees.

2. Lower the percentage of profits paid to players so that even franchises with small revenue can turn a profit. Basically, force all owners to pay what the least profitable owners can afford to pay in player salaries. This is what the owners are reportedly proposing.

The result would be that more teams would turn a small profit, and a few teams would turn an even bigger profit than they do today. On the other hand, the overall amount of money going to the players would be smaller.

3. What's best for the players and for Memphis is a third scenario: Take profits from the most profitable franchises and distribute them among all the franchises. If some of the Lakers' profits were distributed across the league, then fewer teams would be unprofitable, and players could still get a large percentage of revenue. (Though some reports say that the total amount of player salaries must come down slightly for the league to be profitable as a whole.)

"Ultimately, it seems, the union wants to discuss some form of revenue sharing in which small-market teams would be propped up by larger-market teams which have higher television revenue and gate receipts. That would replicate the NFL's model, which has been largely successful because of enormous television revenue."
I can imagine a number of reasons why owners wouldn't want this to happen. Of course, the large markets don't want to give away their money. Philosophically, the idea of subsidizing someone else's business, maybe even someone else's poorly managed business, is probably disgusting for most of the owners. After all, we know that no one subsidized their billion dollar pocketbooks. Every penny was earned by old fashioned blood, sweat, and tears. I promise. Look it up.

I can also imagine opposition from owners who, like poor Americans who vote for Republicans because they lower taxes, want to preserve the possibility of winning the LeBron lottery. If you all of a sudden find yourself with someone who prints season tickets, like LeBron James, you don't want to pay 70% of your ticket sales to Indiana.

Of course, Grizzlies fans should realize that the chances of winning a LeBron-type prize are slim, and even when you come close, you're likely to trade away the consolation prize for Otis Thorpe. Or draft Hasheem Thabeet. Therefore, I respectfully request that Michael Heisley take a break from squandering away opportunities to improve the team via trade, and convince his fellow owners to increase the amount of revenue that's shared between franchises.

It would be good for the players, good for the league, and good for Memphis.

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