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Young
11-20-2010, 01:45 PM
http://www.nba.com/2010/news/11/17/labor-primer/index.html

Art Garcia, NBA.com


CBA 101: Owners, players brace for negotiations
By Art Garcia, NBA.com
Posted Nov 18 2010 8:38PM

• The Issues
• Glossary

The NBA's collective bargaining agreement -- the blueprint for all business that takes place between the league and its players in this multi-billion dollar industry -- expires on June 30, 2011. If the two sides are not able to hammer out a new agreement by then, the league seems almost certain to stop operations until a new one is signed. That would effectively "lock out" the players and threaten the start of the 2011-2012 season.

Both sides have insisted that reaching an agreement is paramount to maintaining the league's soaring popularity. The NBA has had only one work stoppage in its 64-year history -- the 1998-99 lockout that reduced that season to 50 games -- though negotiations always stir passion and sometimes rancorous debate.

"We know we're going to get an agreement done," NBA commissioner David Stern said on the eve of the season. "And we think that the enthusiasm of the season and the prospective growth that it will ultimately represent will enable us to sit down with the players and negotiate in good faith. And we both seem intent on doing all that we can to reach a deal."

National Basketball Players Association president Derek Fisher, a guard for the Los Angeles Lakers, said earlier this year: "We don't want a lockout. We don't want our fans to not experience our game. We want to play basketball. That's what we love to do and that's what a lot of us have been blessed to do. There's no desire on our part to not play basketball in 2011-2012."

If the two sides agree on one thing, it is that achieving labor peace is going to take time and a lot of painstaking work. The sides continue to talk, somewhat sporadically, yet they reportedly remain apart on several important issues.

Tops among them, as is often the case: money.

The NBA is pushing for a dramatic adjustment to the league's economic system. Stern claims that the NBA has lost more than $1 billion since the current CBA went into effect in 2005-06, including $380 million last season. In October, Stern said that the league is looking to cut $750-800 million annually from player salaries and benefits that total $2.1 billion, though the league reportedly may be willing to phase in those cuts.

The players note that the NBA, by its own accounting, is coming off a season of record revenues, which has led to bigger player payrolls and the highest cap on salaries ever. A LeBron James Summer that helped spur season-ticket sales to their highest levels in years has only added to the league coffers. Sports Business Journal reported in September that the league had received $100 million in new full-season ticket sales.

The league contends that costs -- mainly player salaries -- have skyrocketed out of control. It claims many teams continue to lose vast amounts of money, necessitating the new economic model. The league won't say how many teams lost money last season, but Forbes put the number at 12 for the 2008-2009 season.

"Even though we reported we have record season ticket sales over the summer and otherwise very robust revenue generation, because of the built in cost of the system, it's virtually impossible for us to move the needle in terms of our losses," said deputy commissioner Adam Silver, the league's chief negotiator. So the league has proposed, among other measures, a set restriction on salaries -- a "hard" salary cap -- along with the rollback in player salaries that Stern mentioned in October.

NBPA executive director Billy Hunter has disputed both the league's figures and its accounting methods. He added that the league's insistence of "a hard cap, a 40 percent rollback in player salaries, unlimited expense deductions and the elimination of guaranteed contracts" would "inevitably result in a lockout and the cancellation of part or all of the 2011-2012 season."

The league actually has an option to extend the current CBA for a year, as long as it notifies the players union by December 15. But the league almost certainly won't sign on for another year of what they consider a bad deal. Stern, Silver, key owners and a host of lawyers are ready to work with the union to hammer out something new.

Here's a look at some major issues that face the two sides in what promises to be a complex and -- if history is any indicator -- sometimes contentious negotiation. (For a more detailed glossary of some of the basketball labor terminology used below, click here.)


The Salary Cap
What you need to know: The owners' initial proposal, according to reports, called for a "hard" cap, which sets a fixed figure on team salaries that cannot be exceeded. Players favor a softer cap, which includes several exceptions (see glossary, and below).

Bottom line: An insistence on a hard cap could be the major sticking point in these negotiations. The union flat-out doesn't want one. The league says it has to have one, though some outsiders suggest that owners would be willing to discuss a cap with fewer exceptions than the current one.

Salary Cap Exceptions
What you need to know: Both sides favor the ability to create a system that would help teams to keep their own free agents. A logical way to do that is with exceptions to the cap. A new agreement could bring new exceptions, such as the "franchise" tag that's used in the NFL. An enhancement of Bird rights (see Glossary) is another possibility. "Amnesty" provisions could be reinstated to allow teams tax relief for current contracts, too.

Bottom line: Despite the owners' insistence, an NBA with a "true" hard cap, one without any exceptions, will be hard to come by given the union's stringent resistance to the idea.

Basketbal Related Income
What you need to know: Players get 57 percent of all Basketball Related Income (see Glossary) in the current agreement. That percentage, along with what constitutes BRI, is going to be hotly negotiated.

Bottom line: The league not only wants to scale back the percentage of BRI the players receive -- from 57 percent to about 41 -- it wants to narrow what revenue is considered as part of BRI. The union, predictably, wants to keep the percentage at or near where it is now, and possibly include revenue streams that are currently not considered basketball-related.

Salary Rollbacks
What you need to know: Across-the-board salary rollbacks -- in effect, changing the terms of existing contracts -- are a possibility. The NHL bargained for a 24-percent rollback on all existing salaries after its 2005 lockout. Such a move in the NBA could impact all current contracts.

Bottom line: The union and its rank-and-file would fight against restructuring existing contracts.

Revenue Sharing
What you need to know: Owners are in agreement on the need for increased revenue sharing among teams. Currently, about $54 million is divvied up. The league's position is that better revenue sharing will help teams compete and give them a reasonable expectation of being profitable.

Bottom line: This would seem to be a mostly owner-controlled issue, but players must agree to any revenue-sharing plan and will have a say on what monies are to be considered for the revenue-sharing pot. The union wants healthy teams, too -- financially and on-the-court competitively -- because that means more job security for players and, theoretically, better wages.

Guaranteed Contracts
What you need to know: Owners reportedly favor a system that would allow them to cut their losses on so-called "bad" contracts for underperforming players. That could mean shorter-term contracts and less guaranteed money.

Bottom line: Guaranteed contracts have been a staple in the NBA for years. The union isn't going to give up what they have without a fight.

Contraction
What you need to know: Stern has said that the idea of eliminating at least a couple of teams in order to enhance the league's bottom line -- and its on-court product -- is on the table.

Bottom line: Contraction remains a longshot for a few reasons. One, there's a question as to whether any teams, even those losing money, would be willing to sell. Two, other cities may be willing to take on a struggling NBA franchise, so many argue that relocation should be considered before contraction. And, of course, cutting teams would mean fewer jobs for players. That's something the union would fight.

Other Issues
Rookie salary scale

Drug policy

NBA Development League

Conduct and discipline rules

Pensions

NBA.com staff writer Art Garcia has covered the NBA since 1999.


BASKETBALL RELATED INCOME

Generally, income received as a result of basketball operations. The sources include broadcast rights, gate receipts, sponsorships, proceeds from NBA properties, percentage of arena naming rights, suite proceeds, concessions, merchandise sales, etc.

Players are guaranteed 57 percent of BRI in the current agreement. The BRI figure for last season was approximately $3.6 billion, with players guaranteed nearly $2.1 billion in salary and benefits.

LUXURY TAX

An amount levied on teams that exceed the salary cap. The luxury tax level for this season is $70.307 million. Teams whose player payroll exceeds that figure will pay a dollar-for-dollar tax. For example: A team with a payroll of $75.307 million pays $5 million in luxury tax.

The luxury tax is split evenly among the teams that do not pay the tax. Each gets 1/30th of the pot. The remaining money is controlled and used at the NBA's discretion.

SALARY CAP

The limit teams can spend on salaries. The salary cap for 2010-11 is $58.044 million, an increase from $57.7 million last season. It's calculated by multiplying projected Basketball Related Income (see above) by 51 percent, subtracting player benefits and then dividing the result by 30 (the number of teams in the league). The minimum team salary, by the way, is set at 75 percent of the salary cap. This season, that equals $43.533 million.

The league wants a "hard" cap, which would strictly disallow teams from exceeding a calculated payroll limit. The league's current salary cap can only be described as "soft," because it includes several methods that teams can go over the cap (see Salary Cap Exceptions).

SALARY CAP EXCEPTIONS

Rules that allow teams to exceed the cap if the player meets certain criteria. Here are some of the current exceptions:

Qualifying Veteran Free Agent (Bird Exception): Used for a free agent, eligible for up to the maximum salary, if he played for that team for some or the entire prior three seasons, or if he changed teams by trade.

Early Qualifying Veteran Free Agent (Early Bird): Used for a free agent eligible for a salary of up to the greater of (a) 175 percent of the player's salary in the last season of his prior contract or (b) 108 percent of the average player salary for the prior season. The player had to play for the team for some or the entire prior two seasons, or changed teams by trade.

Non-Qualifying Veteran Free Agent (Non-Bird): Used for a free agent who is neither a "Bird" nor an "Early Bird" player. He can sign up to (a) 120 percent of the player's salary in the last season of his prior contract, (b) 120 percent of the player's applicable minimum salary for the current season or, (c) if the player is a Restricted Free Agent, his Qualifying Offer amount.

Bi-Annual: Can be used to sign one or more players to contracts with first-year salaries totalling up to $2.08 million for 2010-11. Can be used only every other year.

Mid-Level Salary: Can be used to sign one or more players to contracts with first-year salaries that provide for a total of up to 108 percent of the average player salary for the prior season. Set at $5.765 million for 2010-11. Can be used every year.

Rookie: Teams may sign their first-round Draft picks for up to 120 percent of the Rookie Salary Scale amount, as negotiated in the CBA.

Minimum Salary: Teams may sign a player to a one-year or two-year contract at the applicable minimum salary determined by years of service.

Disabled Player: Teams may replace a player who suffers a season-ending injury with one player making up to 50 percent of the injured player's current salary.

Traded Player: If a team trades a player's contract to another team, that team can replace the traded player with one or more players acquired by trade. Teams have up to one year to complete transaction to comply to the Salary Cap rules.

OTHER POINTS OF INTEREST

In the current CBA, the maximum length on contracts between a team and its Bird free agents, or between a team that is extending rookie contracts, is six years. For the minimum salary exception or bi-annual exception, it's two years. Rookie contracts are two years, plus two one-year team options. All other contracts, including extensions, can be as long as five years.

The maximum player salary, per year, is based on a player's years of service and a percentage of the salary cap. For players with fewer than seven years of experience, the maximum salary is now $13,603,750. Between 7-10 years, $16,324,500. Ten or more years, $19,045,250.

The current agreement has an allowance for a player's annual salary to either increase or decrease, as negotiated on the contract's signing. Contracts with Bird or Early Bird players can be negotiated to be increased or decreased after the first year by up to 10.5 percent of first-year salary. For all other contracts, it's 8 percent in both directions.

I didn't see this posted anywhere and I thought they had some good info although nothing that is new.

I would hate to see a lockout but I really hope the owners get most of what they want.

Eleazar
11-20-2010, 04:35 PM
This has got me thinking. I decided to take a different look at things. Instead of just saying what my ideals would be I tried to look at it as how I would try to meet the players in the middle.


Salary cap: My ideal would be a hard cap.

If I couldn't get a hard cap I would try to change the exceptions.

Draft/Trade exception: Gives the team the ability to re-sign a player they drafted or traded for for more than their previous contract.

Free Agent exception: This allows teams to re-sign a player they sign off of free agency for an equal or lesser percentage of the salary cap that their previous contract.

Fill the Roster 1 exception: This allows the team to sign a player to a salary equal or less to the average salary of the previous year. Can only be used for 1 player.

Fill the Roster 2 exception: Allows teams to sign a Free Agent to the minimum salary for a year.


Contract length:

Non-rookie contracts can be a maximum of 6 years. The first 2 seasons are guaranteed. The third season is a player option. The fourth can be either a player or team option. The fifth and sixth seasons are team options.


Current Contracts:

If the salary cap decreases the worth of a current contract counts a proportional amount of money against the cap, but the teams must still pay the contract in full.


Revenue Sharing:

All teams share basketball related revenue.


NBDL:

Every team can have the rights to 5 NBDL players not count against the teams roster or salary. After the NBA draft any rookie who was not drafted can declare for the NBDL draft which is 1 round and every NBA team gets 1 pick that cannot be traded. Teams have the rights to a NBDL player for a maximum 2 seasons.

Larry Staverman
11-20-2010, 05:58 PM
I would like to see the mid level exception eliminated.

If it is not eliminated I would like to see the team that signs a player to a mid level deal be prohibited from signing another mid level deal until the first contract is no longer on the books of any team.

Even if the player is traded the mid level limitation stays with the original team that signed it.

That would help to limit the amount of salary the luxury tax teams could add to there cap space.

Smoothdave1
11-20-2010, 06:50 PM
I like some of the ideas proposed and here's what I would like to see:

1. Contracts -- Continue forward with the rookie slots where if player x is selected 1st, they receive x amount over their first few seasons in the league

As for new contracts, I like the idea that was proposed where a player can sign a 6 year deal with the first 2 guaranteed, the 3rd and/or 4th year being a player option and maybe 4th-6th year being a team option. Too many teams get saddled with terrible contracts and this may add more parity to the league. This could also be done for say a 4 year deal with the first 2 years guaranteed, the 3rd year being a player option and the 4th year being a team option

I'm okay with the mid-level, but it would have to be adjusted.

If a player has an injury, the team has the ability to waive the player and only pay a percentage of their salary. For example, the Blazers could waive Oden and only be forced to pay say 50% of his salary this season and could go out and sign a new player.

Include good character language where if a player gets arrested or fails a drug test, a team may have the right to waive the player and only have to pay a portion of their contract for that season. Private business has this, why can't the NBA?

2. Revenue

Continue with revenue sharing to help the Pacers, Bucks, T-Wolves, Grizz, Kings, Thunder, Blazers, Cavs, Spurs, Magic, Hornets, etc. of the world as these teams are all in smaller media markets.

Have a specified percentage of BRI for players and owners with incentives for players if BRI exceeds a specific percentage that they get so much. For example, if the formula were 50/50 and let's say the Pacers revenues were 10 million more than expected, maybe 3-4 of that could go back to players in the form of bonuses?

Continue with the luxury tax, but it may be harder to do with the new CBA in place.

3. Players

I love the idea where each NBA team gets so many players in the NBDL that they're responsible for. This would definitely increase excitement in the NBDL, especially as they look to expand. Furthermore, NBA teams would have the right to move players back and forth much more easily as the players would get something similar to MLB where they get so many days or games in the NBA.

For example, if we retained the rights for Magnum Rolle and he's playing in Ft. Wayne and say the Pacers are paying part of his salary. However, if we want to send Lance up I-69 for 2 weeks to get some PT and bring Magnum down to Indy we could. Furthermore, if a player were injured temporarily, we could bring one of our NBDL guys to the team.

I like the limits of 15 players and would change the ability to have all players available and not any of these phantom injuries.

Teams would be aware if a player fails a drug test ala Brandon Rush rather than having to wait until they're suspended.

cordobes
11-20-2010, 09:46 PM
The Salary Cap
What you need to know: The owners' initial proposal, according to reports, called for a "hard" cap, which sets a fixed figure on team salaries that cannot be exceeded



Salary Cap Exceptions
What you need to know: Both sides favor the ability to create a system that would help teams to keep their own free agents.

This doesn't make sense.

---------------




The league contends that costs -- mainly player salaries -- have skyrocketed out of control.

This is not true. Players salaries per year:

05/06 $1.809 billion
06/07 $1.929 billion
07/08 $2.006 billion
08/09 $2.057 billion
09/10 $2.077 billion

In the meanwhile:


• The NBA projected a 2.5 percent to 5 percent drop in revenues last season, and it never materialized. In fact, revenues went up to the highest level in league history. Now, sources tell CBSSports.com that the league’s number-crunches are projecting a significantly rosier 2010-11, with current projections calling for a 3 to 3.5 percent rise in basketball-related income (BRI). That would amount to a second consecutive season of record revenues

http://ken-berger.blogs.cbssports.com/mcc/blogs/entry/11838893/25772987

Costs have sky-rocketed out of control because owners do a very poor job keeping them under control - except when it comes to players salaries because of the cap + escrow system which limits the % of the revenue that can be used to pay the players' salaries.

wintermute
11-21-2010, 05:05 AM
This doesn't make sense.


I quite agree. A hard cap would mean that a team can't keep its free agent if they're near or past the hard cap limit. The only way around it is to have an exception mechanism (perhaps the "franchise tag", perhaps something close to the current system), which means it's not really a hard cap.

This might be a bit counterintuitive, but I think a hard cap hurts small market teams more than big market ones. The conventional wisdom seems to be that in the current system, big market teams tend to outspend the little guys (which does happen), but what is missed is that small market teams do overspend too when there's a need (see Minnesota during KG years, or Cleveland during LeBron years). Take away the option of overspending, and I think the best players will leave small market teams in droves to sign with the likes of LA or Miami or New York. Obviously it's happened before - LeBron and Bosh leaving their teams to sign with Miami - but they had to take a financial penalty in order to do it. Take away that financial advantage for small market teams, and I think we'll see more Heat-style super teams in big cities.



I would hate to see a lockout but I really hope the owners get most of what they want.

I don't see the sense myself in taking sides. It's really millionaires vs billionaires here. The owners plead hardship all the time but have no qualms at all about jacking up ticket or merchandise prices. If there's a 30% reduction in player salaries, would there be a corresponding reduction in ticket prices? I don't think so.

If there's one single thing that I would change as a fan, it's the length of contracts. Shorter contracts IMO would give players more incentive to keep performing. It works both ways of course - teams would also need to continuously improve their rosters to keep their star players from walking away. All in all, I think a better free market would improve the overall product.

Eleazar
11-21-2010, 05:24 PM
I quite agree. A hard cap would mean that a team can't keep its free agent if they're near or past the hard cap limit. The only way around it is to have an exception mechanism (perhaps the "franchise tag", perhaps something close to the current system), which means it's not really a hard cap.

This might be a bit counterintuitive, but I think a hard cap hurts small market teams more than big market ones. The conventional wisdom seems to be that in the current system, big market teams tend to outspend the little guys (which does happen), but what is missed is that small market teams do overspend too when there's a need (see Minnesota during KG years, or Cleveland during LeBron years). Take away the option of overspending, and I think the best players will leave small market teams in droves to sign with the likes of LA or Miami or New York. Obviously it's happened before - LeBron and Bosh leaving their teams to sign with Miami - but they had to take a financial penalty in order to do it. Take away that financial advantage for small market teams, and I think we'll see more Heat-style super teams in big cities.



If that was true why don't we see it in the NFL? The only leagues that a bunch of all-stars congregate in big markets are the MLB and NBA, the two big leagues that don't have a hard cap. While in the NFL teams aren't able to do that, and the best teams tend to be the ones who draft the best.

ksuttonjr76
11-22-2010, 11:39 AM
I'm still trying to figure out which Owners signed to the original deal. The Players get:

57% of BRI
100% of their endorsement
On top of their NBA contracts

That's a lot of money.

cordobes
11-22-2010, 08:54 PM
I quite agree. A hard cap would mean that a team can't keep its free agent if they're near or past the hard cap limit. The only way around it is to have an exception mechanism (perhaps the "franchise tag", perhaps something close to the current system), which means it's not really a hard cap.

This might be a bit counterintuitive, but I think a hard cap hurts small market teams more than big market ones. The conventional wisdom seems to be that in the current system, big market teams tend to outspend the little guys (which does happen), but what is missed is that small market teams do overspend too when there's a need (see Minnesota during KG years, or Cleveland during LeBron years). Take away the option of overspending, and I think the best players will leave small market teams in droves to sign with the likes of LA or Miami or New York. Obviously it's happened before - LeBron and Bosh leaving their teams to sign with Miami - but they had to take a financial penalty in order to do it. Take away that financial advantage for small market teams, and I think we'll see more Heat-style super teams in big cities.

Yeps, absolutely. Especially if it's a hard cap + smaller salaries and shorter contracts. The smaller is the salary of a player, the more important it'll be to play for a big market team.

Small market teams depend more on the draft. A hard cap is very bad news for them.



I don't see the sense myself in taking sides. It's really millionaires vs billionaires here.

I'm a fan, a consummer. They aren't an active part in these conversations, but they're an interested side.


--------


I'm still trying to figure out which Owners signed to the original deal. The Players get:

57% of BRI
100% of their endorsement
On top of their NBA contracts

That's a lot of money.

Nope, it doesn't work like that.

The 57% of the BRI are the salaries. The salaries are limited to 57% of the BRI; they don't get the salaries and the BRI %.

That's why the "salaries are out of control" is a myth. The players union have done a very poor job of selling their side to the public.

Taterhead
11-23-2010, 12:55 AM
How is it a myth? The average player makes more than the owner on most NBA teams given the fact that most teams are losing money. That means the salaries are out of control. You can't ignore simple math. They have been out of control for a long time. Either the system is majorly flawed and teams profits are dissapearing due to something else. Or the players are making too much money. I believe the larger market teams drive up the salaries of mid level players due to the luxury tax loop hole, forcing smaller market teams to overspend to compete.

And a hard cap in no way affects small market teams negatively. Small market teams already have a hard cap, called the luxury tax. The larger market teams are the only ones able to afford exceeding that mark, which is a major loop hole in that flawed idea. How in the world does decreasing the resources of a larger market team to bring in players increase their chances to bring in better players?

I guess I am just a fan of simple logic.

ksuttonjr76
11-23-2010, 09:27 AM
Yeps, absolutely. Especially if it's a hard cap + smaller salaries and shorter contracts. The smaller is the salary of a player, the more important it'll be to play for a big market team.

Small market teams depend more on the draft. A hard cap is very bad news for them.




I'm a fan, a consummer. They aren't an active part in these conversations, but they're an interested side.


--------



Nope, it doesn't work like that.

The 57% of the BRI are the salaries. The salaries are limited to 57% of the BRI; they don't get the salaries and the BRI %.

That's why the "salaries are out of control" is a myth. The players union have done a very poor job of selling their side to the public.

Thanks for clearing that up. I was ready to side with the Owners. Actually, I already do. I don't know too many jobs where Employees can get 57% of the revenue. Granted, I'm comparing apples to oranges, but 57% seems way too much when it's the Owners who puts in the money for the said items. It's not like Kobe's accountants are working with the Staples Center to order new supplies for the concession stands, or to have new tickets printed out.

BillS
11-23-2010, 10:43 AM
This is not true. Players salaries per year:

05/06 $1.809 billion
06/07 $1.929 billion
07/08 $2.006 billion
08/09 $2.057 billion
09/10 $2.077 billion



Well, you're saying salaries went up 1% in 09/10 and comparing it to this year's 3% revenue rise (projected). What was the actual rise (since a drop didn't happen) 09/10? Otherwise the comparison isn't really valid - and, since the salary rise should be lagging the revenue rise, the more important figure would be the rise in revenue in 08/09.

cordobes
11-23-2010, 03:01 PM
Well, you're saying salaries went up 1% in 09/10 and comparing it to this year's 3% revenue rise (projected). What was the actual rise (since a drop didn't happen) 09/10? Otherwise the comparison isn't really valid - and, since the salary rise should be lagging the revenue rise, the more important figure would be the rise in revenue in 08/09.

BRI

05/06 $3.174 billion
06/07 $3.384 billion
07/08 $3.519 billion
08/09 $3.608 billion
09/10 $3.643 billion

Mind you, this is just the BRI - the part of the revenue that owners must share with players. There are the other sources of revenue whose product is not included here.

I still remember those projections from Stern that the salary cap could drop to $50 million this season and that the luxury tax threshold would be below $65 million - that the BRI would be at 2005 levels. I was always extremely sceptical of those projections, they seemed nonsensical considering the revenue structure of the NBA these days. Turns out it was all crap. However, the meme persisted.


Thanks for clearing that up. I was ready to side with the Owners. Actually, I already do. I don't know too many jobs where Employees can get 57% of the revenue. Granted, I'm comparing apples to oranges, but 57% seems way too much when it's the Owners who puts in the money for the said items. It's not like Kobe's accountants are working with the Staples Center to order new supplies for the concession stands, or to have new tickets printed out.

Really? Generally in most developed countries - countries with service oriented economies - wages account for 60% to 70% of the total revenue, measured by the labor's share of the GFP (and it used to be higher). I suspect that % is lower in the US but not by much. It then depends on how labor intensive is each individual industry.

For example, if we're talking about a logistics/transportation company, which is kind of capital intensive, the % of the revenue that goes to wages is circa 50%. In a law firm (or in a logistics/supply chain company focused solely on consulting services), that number is much higher, 80 or 90%.

Pro-sports are relatively labour intensive. Nobody pays tickets or tv fees to see accountants ordering supplies. In soccer teams in Europe the % of revenues that goes to salaries is much higher than 57% - but sports clubs in Europe are structured differently, it's not a good comparison.

And again, players are guaranteed 57% of part of the revenue. I don't know how much the non-BRI revenue is, but it means that the wages/revenue ratio is probably lower than 55%.


How is it a myth? The average player makes more than the owner on most NBA teams given the fact that most teams are losing money. That means the salaries are out of control. You can't ignore simple math. They have been out of control for a long time. Either the system is majorly flawed and teams profits are dissapearing due to something else. Or the players are making too much money. I believe the larger market teams drive up the salaries of mid level players due to the luxury tax loop hole, forcing smaller market teams to overspend to compete.

And a hard cap in no way affects small market teams negatively. Small market teams already have a hard cap, called the luxury tax. The larger market teams are the only ones able to afford exceeding that mark, which is a major loop hole in that flawed idea. How in the world does decreasing the resources of a larger market team to bring in players increase their chances to bring in better players?

I guess I am just a fan of simple logic.

Why? Let's assume that most teams are losing money (a very risky assumption, in my view). How does that mean that players salaries are out of control? If the salaries have stayed a relatively constant % of the revenue, doesn't it mean that it's the other type of expenses that are out of control?

I mean, are we going to assume that for every business losing money it's because the wages component is out of control? That doesn't make any sense.

You look at the salary numbers and the thought that crosses your mind is "wow, this is out of control!". I certainly don't. And when exactly did they become out of control? They're basically the same % of the revenue they were 10 years ago (it was 55% in the last CBA). They weren't out of control 5 years ago and they are now?

BillS
11-23-2010, 03:22 PM
BRI

05/06 $3.174 billion
06/07 $3.384 billion
07/08 $3.519 billion
08/09 $3.608 billion
09/10 $3.643 billion

Mind you, this is just the BRI - the part of the revenue that owners must share with players. There are the other sources of revenue whose product is not included here.

I still remember those projections from Stern that the salary cap could drop to $50 million this season and that the luxury tax threshold would be below $65 million - that the BRI would be at 2005 levels. I was always extremely sceptical of those projections, they seemed nonsensical considering the revenue structure of the NBA these days. Turns out it was all crap. However, the meme persisted.

So, as expected it looks like the % rise in salary tracked % rise in BRI. OK.

cordobes
11-23-2010, 03:29 PM
Okay, I found some interesting data about the issue of the % of the revenue that goes to players.

Via Uglesias, a study (http://www.kff.org/insurance/snapshot/chcm012808oth.cfm) about the evolution of the compensation in the US:

http://yglesias.thinkprogress.org/wp-content/uploads/2009/07/marketplace0108fig2_2-1.gif


Total compensation as a share of GDP is denoted by the topmost line and is a fairly stable over the period, ranging from about 56 percent to 59 percent.

NBA teams also have to pay the front-office, coaches, physicians, PRs and other personnel. On the other hand, there's the non-BRI share of the revenue. Overall it seems the NBA is pretty average when it comes to the labor's share of the revenue.


--------

Maybe more telling, I found this (http://www.nflplayers.com/articles/cba-news/growth-of-player-salaries-compared-to-growth-of-nfl-total-revenue/) about the NFL:




* The salary cap system that has been in place for the past sixteen years has directly linked the amount of the salary cap to a set percentage of NFL owner revenues. So the current CBA ties the salary cap to revenues – they increase and decrease together.



* Under the current 2006 CBA, the percentage of owner revenues on which the salary cap has been based has been essentially constant – 57% of Total Revenues in 2006 and 2007, and 57.5% of Total Revenues in 2008 and 2009.

* To the extent that the total amount of cash salary paid to players in any year differs from the salary cap, because of accounting rules, the 2006 CBA provides that the owners have a "cap adjustment mechanism" (or "CAM") so that the amount of the salary cap the next year is reduced if cash player salaries ever exceed a cash 'trigger' amount, which is also defined as a set percentage of owner revenues – 59% of Total Revenues in 2006 and 2007, and 59.5% of Total Revenues in 2008 and 2009.



* When you look at the actual cash salaries paid to players on a year-by-year basis since 2006, as a percentage of the Total Revenues of NFL owners, that percentage has gone slightly down, not up, but closely in the range of about 58%:
* 2006 – 58.4%
* 2007– 58.0%
* 2008 – 57.7%


This is very similar to what happens in the NBA, it's the exact same mechanism.

Why is 57% too high for NBA players? I don't know much about the NFL - do NBA teams pay more their non-players personnel than NFL teams? Is it because of the arenas? I'd guess that NFL's arenas are more expensive to build and run.

cordobes
11-23-2010, 03:39 PM
So, as expected it looks like the % rise in salary tracked % rise in BRI. OK.

Sure, that's how the mechanism to keep salaries under control works - via cap and escrow system. That's exactly why arguing that salaries are out of control doesn't make much sense to me.

I wasn't making the point that you thought I was making, trying to compare 3% with 1%. I just presented those numbers to prove that the argument that players salaries "have skyrocketed out of control" was and is bogus.

-----------------------------------

On another note, the argument about being the owners the ones taking the risk. That's correct... but it works both ways.

I mean, it's because the owners are the ones taking the risk that the argument that the players salaries must drop because there are owners losing money doesn't make sense.

I know this concept is somewhat daté these days, but businesses are supposed to lose money here and there. When a franchise loses money, the owner isn't subsidizing anything, he's being the owner.

A franchise in the context of a negative overall economic climate + small market + badly run + bad W/L performances should be losing money. If a franchise doesn't lose money in this situation, it'd never lose. And a league where it's impossible for a franchise to lose money isn't viable in the long term, especially if the revenue sharing mechanisms are fairly weak, like the NBA ones.

I don't care much for what % of the revenue players get, it's not my money. As a fan, what I want is that a lockout is avoided + the league remains viable to outside competitors (because true competition to the NBA would make the product less interesting). If the owners are going to propose a drop to 41% that means a lockout + that they aren't thinking clearly about their (and mine) long-term interests.

If the NBA overall was losing money for consecutive season or if the value of most NBA teams was underwater I could see a case for saying that the players share of the revenue was too much. But as it is, it's mostly a problem of 1) bad management (or management not focused on the P/L line) 2) imbalances between the economic power of each franchise.

BillS
11-23-2010, 04:26 PM
Understood about the numbers.

On the NBA losing money vs. franchises losing money, I have very specific concerns. The NBA can make money hand over fist with 4-6 very profitable franchises that sell out every night and sell thousands (if not millions) of jerseys while the rest serve as cannon fodder or fold. To keep the spirit of the sport (competition between multiple teams) rather than an entertainment complex (WWE) requires that franchises be viable other than just the Big Few.

The discussion has happened before that the best the NBA ever did was when the Big Rivalry between Boston and LA was at its height. What I question is why the NBA allowed itself to stagnate into Superstar v. Superstar when Michael J. came along rather than taking the interest those years generated and locking it into support for local franchises. Wouldn't you rather have 20 teams selling out every night no matter who they play instead of 4 teams selling out wherever they play while the rest of the games have little or no attendance? I'd think the profit from that model would HAVE to be higher.

cordobes
11-23-2010, 05:24 PM
Understood about the numbers.

On the NBA losing money vs. franchises losing money, I have very specific concerns. The NBA can make money hand over fist with 4-6 very profitable franchises that sell out every night and sell thousands (if not millions) of jerseys while the rest serve as cannon fodder or fold. To keep the spirit of the sport (competition between multiple teams) rather than an entertainment complex (WWE) requires that franchises be viable other than just the Big Few.

The discussion has happened before that the best the NBA ever did was when the Big Rivalry between Boston and LA was at its height. What I question is why the NBA allowed itself to stagnate into Superstar v. Superstar when Michael J. came along rather than taking the interest those years generated and locking it into support for local franchises. Wouldn't you rather have 20 teams selling out every night no matter who they play instead of 4 teams selling out wherever they play while the rest of the games have little or no attendance? I'd think the profit from that model would HAVE to be higher.

I fully agree, but players will argue that the right way to prevent that is to establish more robust revenue sharing systems, not to drop players salaries to the point that every franchise in the NBA makes money even when they are in a small market, can't win more 10 games, alienated their fanbase and half of the tickets revenue is used to pay salaries to a dozen of the owners' family members.

In regards to the part in green, I don't know if that is a good picture of what's going on. But I don't think that the % of the revenue that goes to players impacts that one way or the other.

The fact that in the NBA there are only a few contenders every year has very little to do with the way the CBA is structured, unless you propose really radical changes - for example, having a draft including all players every year, like a fantasy league. It has to the scarcity of top level talent and how important it is to win basketball games.

Eleazar
11-23-2010, 08:22 PM
Yeps, absolutely. Especially if it's a hard cap + smaller salaries and shorter contracts. The smaller is the salary of a player, the more important it'll be to play for a big market team.

Small market teams depend more on the draft. A hard cap is very bad news for them.


Why do you people think this when we have a perfect example of how a hard cap helps small market teams in the Colts?

cordobes
11-23-2010, 08:34 PM
Why do you people think this when we have a perfect example of how a hard cap helps small market teams in the Colts?

Isn't that a NFL team? Isn't the overall structure completely different? I don't know much about that league. Each sport has its own specificities, there isn't a one fit all solution.

A hard cap in the NBA would kill team-player continuity and that's a big no-no for owners too. Team-player continuity is great for business. That's why the article is contradictory. They say that "both sides favor the ability to create a system that would help teams to keep their own free agents". But that's not possible with a hard cap. In fact, the reason there isn't a hard cap today is basically because there's "a system that would help teams to keep their own free agents". The other type of exceptions are of relative small importance.

Eleazar
11-23-2010, 08:54 PM
Isn't that a NFL team? Isn't the overall structure completely different? I don't know much about that league. Each sport has its own specificities, there isn't a one fit all solution.


There isn't a one fit all solution, but there are general solutions that general work everywhere with minor tweaks.

This is what works. When everyone is on an even playing field the small market teams are just as likely to be able to outbid a large market as the large market is able to outbid the small market. It then becomes about who is best at building a complete team instead of who can pay more for the best talent. That is true no matter which league or sport it is. Yes the exact details may not directly translate, but the overall concept does.

We have multiple leagues over 100 year period that proves that no cap or a soft cap give large markets an advantage, it has been proven in every league. The only league that has had a decade or more of time with a hard cap has had success at creating parity over the whole league both small and large market. History and statistics are on my side here.

cordobes
11-24-2010, 09:48 AM
There isn't a one fit all solution, but there are general solutions that general work everywhere with minor tweaks.

This is what works. When everyone is on an even playing field the small market teams are just as likely to be able to outbid a large market as the large market is able to outbid the small market. It then becomes about who is best at building a complete team instead of who can pay more for the best talent. That is true no matter which league or sport it is. Yes the exact details may not directly translate, but the overall concept does.

We all agree with the general concept. I'm arguing that in the NBA a hard-cap is not the best tool to achieve that.


We have multiple leagues over 100 year period that proves that no cap or a soft cap give large markets an advantage, it has been proven in every league. The only league that has had a decade or more of time with a hard cap has had success at creating parity over the whole league both small and large market. History and statistics are on my side here.

Do you have a link to those statistics? The numbers I know show that the correlation between payroll and wins in the NBA is fairly small, about 10%. And the correlation between large markets and high payroll is far from perfect too. And I could see a hard cap creating parity in a soccer league - heck, even some modest degree of revenue sharing like the German league has creates some sort of parity - but in the NBA? Would a hard-cap create more high-level players? In which leagues have a hard-cap impacted parity?

Here's a text by CBA expert Larry Coon about Bird rights and the hard-cap:



CBA 101: Breaking Down "Bird" Rights
By: Larry Coon Last Updated: 3/26/10 11:13 AM ET

"Bird Rights" are one of the most recognized components of the Collective Bargaining Agreement. Even casual fans who wouldn't know base year compensation from a hole in the ground understand a few basic concepts of the NBA's labor system: there's a salary cap, and teams can exceed it to re-sign players. "Bird Rights" are the most fundamental of the myriad salary cap exceptions. In this article we'll look at them in detail.

Let's imagine for a moment a system with a hard cap (and if the league has its way, it may not be so hard to imagine starting in 2011). A hard cap imposes a payroll limit which teams can't exceed under any circumstance. Let's suppose the hard cap is $50 million, and there is a team with a payroll that's pushing right up against it – say, at $49 million.

Let's give this team an up-and-coming superstar, who's finishing up his rookie contract – like maybe Portland with Brandon Roy. Since first round draft picks play under a scale salary for four years, by the end of his rookie contract the player is making far below his market value. So this is his first opportunity at free agency – it's his first opportunity to really get paid.

For four years, this guy has been the face of the franchise. The team is built around him, he's the leader on the floor, and he's the face of the franchise. He's plastered on billboards around town.

With a hard cap, they have to wave goodbye. There's no way to give him enough money to stay.

The league know that's bad for the team, bad for the player, bad for the fans – and bad for business.

(...)

Read more NBA news and insight: http://www.hoopsworld.com/Story.asp?story_id=15752#ixzz16D2tvtHX

He used Brandon Roy and Portland, but imagine it'd be Reggie Miller and Indiana.

Maybe that player-team continuity is not important - I doubt that's the case in the NBA, but, once again, it doesn't matter much in soccer. But even in that case, a hard-cap would make the draft less important and the free-agency more important - as players would hit free-agency and change teams more regularly. I'm not sure that helps small-market teams. I mean, Indiana is a perfect example of how a team's ability to retain their own free-agents helps a small-market team to remain contenders for many years. There are two types of parity - within the season, how many teams are contending, how are W/L distributed. I don't see how a hard-cap helps much in this regard. Then there's the parity of making easier for teams to rebuild... but here I think it'd be the hard type of incentive as it'd make things more random and punish the well-run franchises like the Spurs in the 00s and the Pacers in the 90s/early 00s in favour of teams located in more attractive free-agency destinations.

BillS
11-24-2010, 11:47 AM
I think the reaction to the LeBron situation shows exactly how important fans think player-team continuity is. I'd be in favor of increasing that continuity, in fact.

I think we will continue with the cap-plus-exceptions situation, but I think it may change somewhat. To make a very simplistic example, a franchise player plus hard cap OUTSIDE the franchise player may not technically be a hard cap, but it is harder than the current system. I think the benefits of perpetuating the ability for a franchise to base PR on their "face" far exceed the risks of introducing complexity to the system.

wintermute
11-24-2010, 12:17 PM
I know very little about the NFL (I only follow basketball), but I spent a little time reading up on its salary cap. So apologies if I get things way off base.

First off, I think the NFL's revenue sharing model has a lot more to do with the "level playing field" than the hard cap. Funny enough, some of the NFL's big market owners want to get rid of revenue sharing, so I guess we'll soon see whether a hard cap without revenue sharing still results in parity.

Secondly, in order to make the hard cap work, NFL teams have the option to waive every contract on their books before the start of the season. Thus, NFL teams don't really risk losing a rising star, because they can essentially restructure their salaries every year. This is clearly something the NBA doesn't have. Now, this system is obviously detrimental to players, so the NFL has signing bonuses to make up for it.

Third point, while the NFL's system purports to be a hard cap, those signing bonuses actually represent a significant loophole. Signing bonuses are paid upfront guaranteed, but are pro-rated over the term of the contract for salary cap purposes. Hence a very common practice is to sign NFL players to 6 year contracts with a large signing bonus, a very low yearly salary from years 1-4, and a large salary for year 5-6, with the implicit understanding that the player will be waived at the end of year 4 for the whole rigmarole to start all over again. Clearly, teams that can afford to give out large signing bonuses win out here. I don't see how this is better than the NBA's exceptions system.

Lastly, from where I sit I think the NBA has done pretty well in promoting small market parity. For every Green Bay Packers in the NFL, I could cite a San Antonio Spurs in the NBA. Oh I agree that a system with no cap at all is the worst for small market teams, but in the NBA context I don't see how a hard cap would be better than a soft cap for the little guys.

oxxo
11-24-2010, 11:14 PM
There needs to be some type of hard cap or something closer to a hard cap for there to ever be even close to parity. The current system HEAVILY favors teams like the Lakers, Knicks, etc. There are so many exceptions that the soft cap + luxury tax only affects smaller teams like the Pacers.

Doing a quick Google search... Just have to look at these numbers:
1. Los Angeles Lakers
$95,692,591
2. Orlando Magic
$94,702,018
3. Dallas Mavericks
$89,093,829
4. Boston Celtics
$83,790,759
5. Denver Nuggets
$83,020,059

http://hoopshype.com/salaries.htm#ixzz16GQtQy5W

20. Indiana Pacers
$64,368,421

These numbers might be from a year or two back (I didn't see a date), but the point still stands. The cap is in the high $50 millions. Yet because of the massive number of exceptions some teams with wealthier owners/markets can go WAY over compared to teams like the Pacers.



Third point, while the NFL's system purports to be a hard cap, those signing bonuses actually represent a significant loophole. Signing bonuses are paid upfront guaranteed, but are pro-rated over the term of the contract for salary cap purposes. Hence a very common practice is to sign NFL players to 6 year contracts with a large signing bonus, a very low yearly salary from years 1-4, and a large salary for year 5-6, with the implicit understanding that the player will be waived at the end of year 4 for the whole rigmarole to start all over again. Clearly, teams that can afford to give out large signing bonuses win out here. I don't see how this is better than the NBA's exceptions system.



I have never ever heard of NFL contracts like that. If it did you'd see people like Peyton Manning getting waived instead of extensions. Other teams would also snatch up players off waivers.

cordobes
11-25-2010, 01:40 PM
Denver and Orlando are big markets too? What about Cleveland and Utah, who have been paying luxury tax for some years? What about teams with large markets who refuse to pay luxury tax.

I think most teams follow Boston's ownership principle - if you aren't contenders, luxury tax is verbotten. If you're real contenders, there's no problem in paying it. Ainge was never allowed to enter tax territory till the trade for the big 3. The exception is probably New York.

Anyway, the correlation between money and wins is very small in the NBA. And I suspect that the correlation between wins and market size is even smaller.

I'd like to see more financial balance, but a hard-cap seems to be a horrible tool to achieve that. A tiered luxury tax system and more revenue sharing would do the same thing without the ill effects of a hard-cap.


I think the reaction to the LeBron situation shows exactly how important fans think player-team continuity is. I'd be in favor of increasing that continuity, in fact.

I think we will continue with the cap-plus-exceptions situation, but I think it may change somewhat. To make a very simplistic example, a franchise player plus hard cap OUTSIDE the franchise player may not technically be a hard cap, but it is harder than the current system. I think the benefits of perpetuating the ability for a franchise to base PR on their "face" far exceed the risks of introducing complexity to the system.

That would mean the elimination of the MLE, the LLE and little more. The other exceptions are irrelevant. But the impact of those acquisitions is not that large.

I doubt it will happen though. That's the kind of contract the large majority of the union members get.

----

In regards to the NFL, is the hard-cap the reason there's more parity (assuming there's indeed more parity)? I'm just starting to read the wikipedia article, but there's 16 games in the reg. season and 4 more in the playoffs. That alone introduces a lot of randomness. If there were 20 games in a NBA season, the parity would a lot higher, pretty much every team would have a chance of winning it. Plus, how much impact have the top players in the NFL? The impact of having a top-5 player is a lot smaller in soccer than in basketball. The difference between a top-10 and a top-100 player is way smaller in soccer.

Anyway, I read that this season there won't be a cap at all in the NFL. I guess we'll find out if the hard-cap is really a reason why parity exists.

oxxo
11-25-2010, 02:43 PM
It's not about markets. Like I said it's about the teams with more money/wealthier markets. Technically Indy is a bigger market by population, but definitely not by wealth. I'm sorry but there's no arguing that teams that can afford to splurge on all the exceptions and pass the luxury tax line every year don't have an exception. Just because some of them are BAD at using that money doesn't change the fact that they have more OPTIONS.

cordobes
11-25-2010, 07:42 PM
It's always good to question conventional wisdom. I've been hearing a lot that a hard-cap promotes parity because the NFL proves that, every team can win, there are lots of teams that can win the playoffs, etc. I took that for granted because I didn't know much about the NFL but once I read they only play 20 games per season and each roster is composed by 50 guys I started having doubts.

I'm now convinced that the effect of the hard-cap in NFL's parity is negligible to meaningless.

This first article suggests it but it's still anecdotal evidence:

http://blogs.forbes.com/sportsmoney/2010/11/11/with-no-salary-cap-parity-is-alive-and-well-in-nfl/


With No Salary Cap, Parity Is Alive And Well In NFL
Nov. 11 2010 - 1:56 pm
Posted by Andrew Brandt

Parity lives. According to Elias Sports Bureau, this season marks the first since 1959 – I think Brett Favre was a rookie then – that every NFL team has lost at least two of its first eight games.

Halfway through this 2010 NFL season, the NFL talks the talk and walks the walk of the mantra of all professional sports leagues — competitive balance. There are no “super teams” and it appears that every fan base outside of Buffalo, Dallas and Carolina can retain some hope to be playing in January when the playoffs begin.
Baseball’s bragging about balance

With Major League Baseball’s World Series just ending between two teams not familiar to any recent championship game – the Giants and Rangers – Commissioner Bud Selig was crowing. The fact that these middle-market teams triumphed over the Phillies and Yankees showed that MLB’s cherished “competitive balance” was alive and thriving.

Selig, the former owner of the Milwaukee Brewers and member of the Green Bay Packers Board of Directors — took special delight in this year’s postseason as the Rangers, possessing the fourth-smallest payroll in MLB ($55 million), dethroned the Yankees and their excessive payroll. To Selig, a World Series is a good one without the Yankees, the symbol of disproportionate spending in baseball.

Uncapped parity?

Ironically, the 2010 NFL and MLB have something in common: the lack of a Salary Cap. Baseball has never had a Cap and the NFL is in this unique year prior to the expiration of the CBA where the league is uncapped. In theory, the lack of a Cap should make the league less competitive, with large-market and large-revenue teams able to buy up talent without restriction on payroll. The Salary Cap is a key measures in league collective bargaining agreements designed to promote parity by placing all teams on a level playing field by restricting team payrolls to a comparable amount for all.

And guess what? With the Cap in place in 2009, there was much discussion about the lack of parity and a league of good and bad teams. Now, with no Cap in the NFL this year, we have this once-in-a-generation parity.


But I found more convincing stuff. I didn't know that the hard-cap was only established in the NFL in 1995 and that before that season there wasn't one (just like there isn't one this season).

http://www.advancednflstats.com/2009/02/nfl-without-salary-cap.html


The NFL without a salary cap?
Feb 25, 2009

The upcoming 2009 season could be the last year of the NFL salary cap. The current collective bargaining agreement expires following the 2010 season, but the agreement states that the final year of the agreement will not have a salary cap and there will be substantial limitations to free-agency. This might be the last year before the league returns to the pre-1994 days of dynasties, doormats, and mismatches.

What could we expect without a salary cap? In this article, I'll compare the 1978-1993 pre-salary cap NFL to the modern 1995-2008 league to get an idea of how things might change. Specifically, I'll compare parity levels from the era before the salary cap and after it.

(...)

I'll look at within-season parity first. How does the pre-cap era compare with the current era in terms of relative team strength? Season win totals should be a good place to start. After all, winning is the bottom line. Below is a histogram (frequency plot) of team win totals for both eras. The pre-cap era is in blue and the current era is in red.

http://farm4.static.flickr.com/3642/3310762764_f32e7f6c2f.jpg?v=0

The wider and flatter the distribution, the less parity there would be. More within-season parity would produce fewer extreme win totals and more records close to .500, resulting in a taller narrower distribution. Here we see very little difference between the two eras. It would be impossible for anyone to distinguish the difference between eras just by looking at win totals. In fact, the standard deviation in win totals for the current era is nearly identical to that of the pre-cap era, (both at 3.0 wins).

Here is another look at within-season parity. The next graph charts each season's standard deviation in wins(excluding the strike years of 1982 and 1987). When the cap was instituted in 1994, we'd expect to see some sort of effect.

http://farm4.static.flickr.com/3596/3309933977_2141aeeeca.jpg?v=0

But we really don't see any change. The salary cap doesn't appear to have had a detectable effect on within-season parity, at least in terms of team wins.

What about other measures? The next graph charts the standard deviation of team net point differentials. Net points (points scored minus points allowed) are known to be less random than win totals. If the cap had an effect on parity, we would see fewer blow outs, more close games, and accordingly smaller net point differences for each team.

http://farm4.static.flickr.com/3632/3309933997_8e2e6e0c7a.jpg?v=0


Again, there doesn't appear to be an effect on within-season parity.

We can't necessarily conclude that the salary cap had absolutely no effect on within-season parity, but we can say that whatever effect it did have was not noticable in terms of the things that matter to fans--wins and competitiveness. So if the salary cap is not extended past 2009, we probably won't be able to notice a difference in 2010.

These posts also point in the same general direction:

http://www.pro-football-reference.com/blog/?p=121

It seems the cap had an effect, albeit not a very large one, in allowing teams to get better/worse more quickly. I suppose that could happen in the NBA too... but at the cost of throwing away team-player continuity (which is the reason for prolonged excellence) and shifting the importance from the draft process + traditional team building (making a team grow, re-signing own free agents and keep adding small pieces/role-players) to the free agency process (more teams would try to copy what Miami did this season, clear out a ton of cap room to become instant contenders). It'd certainly make GMing a lot less interesting.

speakout4
11-25-2010, 08:35 PM
i am coming to this discussion rather late but my two cents in comparing nba to nfl.

True equity and revenue sharing seem to work in the nfl allowing small market teams to win the superbowl but in the nba only a small number of teams ever win (exception a small market team such as San Antonio), whereas any team can win in the nfl does anyone think that charlotte will ever be champs?

Why is it that we blame the owners for their incompetence but not the players who contribute to that incompetence by taking big salaries and not producing or even playing. This past summer very mediocre players received ridiculous contracts. Why? because supply of decent players was way less than demand. Is this incompetence or more likely a system that fails to place reasonable limits on salaries-aka hard cap.

I wonder whether keeping a tinsley, curry, etc. on the payroll for many years does not destroy interest in that franchise for that period of time. Small teams can't afford to buy their way out of the Bender, Tinsley, Miles, death sentences where big market teams enter into luxury tax options.

Just watch a game and see the empty seats in small market arenas and suggest just how they can make money with no loyal fan base. Do the pacers make money practically giving tickets away? If they are explain it to me.

When you look at this as one organization rather than individual components perhaps it is a successful enterprise as Boston, LA, Chicago net big revenues relative to what they pay out in salaries. Break this down into individual team components before you declare this is a successful system.

Take baseball where the Yankees can have a payroll 4-5 fold greater than their rivals. No hard cap there and blatant big market spending.

Bottom line is that if you want to see the pacers, Charlotte, OKC, or other small market teams do well then a hard cap is required.

Generally, I would not take the owners side. If you work for microsoft as a programmer you might expect to make more than the same job holder who works for a much smaller outfit. The lakers spend 1 1/2 times in salary that the pacers spend but what is their revenue ratio?

Eleazar
11-25-2010, 10:54 PM
It's always good to question conventional wisdom. I've been hearing a lot that a hard-cap promotes parity because the NFL proves that, every team can win, there are lots of teams that can win the playoffs, etc. I took that for granted because I didn't know much about the NFL but once I read they only play 20 games per season and each roster is composed by 50 guys I started having doubts.

I'm now convinced that the effect of the hard-cap in NFL's parity is negligible to meaningless.

This first article suggests it but it's still anecdotal evidence:

http://blogs.forbes.com/sportsmoney/2010/11/11/with-no-salary-cap-parity-is-alive-and-well-in-nfl/




But I found more convincing stuff. I didn't know that the hard-cap was only established in the NFL in 1995 and that before that season there wasn't one (just like there isn't one this season).

http://www.advancednflstats.com/2009/02/nfl-without-salary-cap.html



These posts also point in the same general direction:

http://www.pro-football-reference.com/blog/?p=121

It seems the cap had an effect, albeit not a very large one, in allowing teams to get better/worse more quickly. I suppose that could happen in the NBA too... but at the cost of throwing away team-player continuity (which is the reason for prolonged excellence) and shifting the importance from the draft process + traditional team building (making a team grow, re-signing own free agents and keep adding small pieces/role-players) to the free agency process (more teams would try to copy what Miami did this season, clear out a ton of cap room to become instant contenders). It'd certainly make GMing a lot less interesting.

First I just want to say you don't understand the game of football. It is much less skill based and it takes less time to figure out who is better. On top of that the physicality of the sport limits how often they can play.

Second I want to say good job at looking up stats that don't matter. You found stats that are blind to team or market. Yes of course there are going to be the normal distributions of wins because there are always teams that are clearly better and clearly worse every year. The difference is it changes almost every year. In the NBA it takes 4 years for there to be any real change. Usually it is the same 3 to 5 teams making the playoffs every year in each conference with the only variance being the last 3 or 4 spots. The league is very predictable. While the NFL is very unpredictable. The only teams that tend to make it every year are the teams that are the best at building through the draft. When was the last time the Colts brought in a big name FA? NE only did it though a trade. Steelers? Between those 3 teams only the Steelers were a perennial playoff team before the hard cap, in fact the other two constantly struggled to do anything worth mentioning.

What happened before the hard cap was the only teams that could keep their top players or bring in new ones were big market teams and teams with rich tradition like Green Bay. Smaller market teams rarely ever were able to overcome them.

What the NFL has turned into is a league where it is the teams who have the best managers and drafters win, not those who can afford to pay the top talent.

While the NBA is about who can trade for the best talent, then overpay them to stay.