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Thread: Ken Berger: Season can be saved

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    Default Ken Berger: Season can be saved

    http://www.cbssports.com/nba/story/1...n-can-be-saved

    Ken Berger
    CBSSports.com

    NEW YORK -- At one point during the most important negotiation in two years of psychological and economic warfare, someone took a moment for comic relief.

    It was much needed, and much appreciated given the stakes -- a cancelled season, a fractured league, a squandered opportunity to build upon astronomical growth and momentum.

    In the restroom outside the conference room where owners and players were trying to move the ball, as Billy Hunter put it, from the 2-yard-line to the end zone, there were two urinals: one tall one, and one short one. A piece of paper was taped to the wall above each.

    One said, "Players."

    The other said, "Owners."

    If things had blown up Tuesday -- if the anticipated fiery inferno of rhetoric, name-calling and ego-driven tirades had ensued -- then none of this would've been funny. But knowing what we know now -- that the owners and players have closed nearly all of the $8 billion gap that separated them a few months ago -- it might just be safe to laugh.

    Just maybe, the NBA's 2011-12 season can be saved.

    Despite the intransigence of the owners in their goal of achieving profitability and a level playing field ... despite the players' almost religious zeal for guaranteed contracts and other perks achieved over the years ... and despite formidable external forces that threatened to implode the negotiations ... the NBA and the players association are only about $80 million a year apart on the economics of a new collective bargaining agreement, multiple people with knowledge of the deal told CBSSports.com.

    So even though all parties left a Times Square hotel looking grim-faced and feeling disappointed, the two sides in theory have moved so close to a deal that it is almost incomprehensible they would choose hundreds of millions in losses -- or billions from a completely lost season -- instead.

    According to sources, here is how the two sides closed the gap, which stood at about $320 million in the first year of a new deal -- the difference between the players' standing offer that they get 54 percent of revenues and the owners' 46 percent offer -- when they walked into the room Tuesday.

    After the owners offered the players a 50-50 split of revenues that effectively was a 47-percent share with about $350 million in expenses deducted first, the two sides met in small groups in the hallway while each side's larger group caucused in separate rooms. As the hour grew late, the tension was rising and becoming palpable. Both sides recognized it was time to try everything possible to make a deal.

    In the group for the league side were commissioner David Stern, deputy commissioner Adam Silver and Spurs owner Peter Holt, the chairman of the labor relations committee. For the players, it was union president Derek Fisher, outside counsel Jeffrey Kessler and two of the brightest stars who attended Tuesday's crucial bargaining session -- Kobe Bryant and Kevin Garnett, according to one of the people with knowledge of the side meeting.

    In that group, the league -- sensing the opportunity for a deal was there -- proposed essentially a 50-50 split with no additional expense reductions over a seven-year proposal, with each side having the ability to opt out after the sixth year, two of the people said. This was the offer Stern described in his news conference Tuesday evening, one he and Silver thought would be enough to finally close the enormous gap between the two sides.

    The league's offer, according to four people familiar with it, came in a range of 49-51 -- with 49 percent guaranteed and a cap of 51 percent, the sources said.

    "There was a real opportunity to make progress," Stern said.

    Stern told the players and Kessler that he was bringing this proposal to his owners in an attempt to sell it, making no bones about the fact that he would. In fact, Stern said in the news conference, he did sell it; the owners were prepared to sign off on this 49-51 percent band. With many of the most polarizing system issues resolved -- the league previously had relented on its the most severe version of its hard team salary cap, agreed to drop its pursuit of rollbacks on existing contracts and offered to retain the basic structure of max contracts -- the framework of a deal was in sight.

    "Adam and I felt comfortable and confident that we would be able to report to the players that we could move to the next subject, because the split had been accomplished," Stern said.

    While the owners were caucusing, a member of the players' group returned with a counterproposal -- effectively 52 percent of basketball-related income (BRI) for the players with no additional expenses deducted. The players' counterproposal followed the format presented by the owners -- a 51-53 percent band, though sources gave different accounts of whether the players' offer included a guarantee at 51 percent and a cap at 53.

    So while Hunter and Stern remained publicly entrenched in the economic positions of their most recent formal proposals -- with the players asking for 53 percent and the league offering effectively 47 -- the reality is this: the gap has closed to 2 percentage points of BRI, the difference between the midpoint of the two offers, or stated differently, the value of one Gilbert Arenas.

    With each percentage point of BRI worth about $40 million, the two sides -- who were at one time $8 billion apart over 10 years -- are now a mere $80 million apart in the first year of a new deal. So you can see what the two sides saw Tuesday -- the road to a deal that, in its final form will be better than the alternative of missing a substantial portion of the regular season.

    "We've spent a lot of time with our teams walking through those scenarios of lost games, and the damage is enormous -- will be enormous," Silver said.

    Despite being at the cusp of an economic deal, the two sides left the hotel Tuesday night with no agreement, resulting in the league almost immediately cancelling the rest of the preseason schedule at a cost Stern estimated at $200 million.

    Stern also set a deadline of Monday for canceling the first two weeks of the regular season at a cost Silver said would be "in the hundreds of millions of dollars."

    The two sides have repeated often during these weeks of excruciating negotiations that the calendar is not their friend. But with a deal potentially within reach, they could well be on speaking terms with the calendar by Sunday.

    Though there were no immediate plans for the two sides to meet Wednesday, two people close to the discussions said a Thursday meeting was possible. Several key parties to the process will be unavailable from sundown Friday to sundown Saturday for Yom Kippur, the most solemn day of the Jewish calendar.

    If history is any guide, the day for an agreement in principle would be Sunday -- the day before regular season games would be lost. During the 1998-99 lockout, the first two weeks of the regular season were cancelled on Oct. 13, and a deal finally was reached on the eve of the deadline set by the league to cancel the rest of the season in January.

    "Our indication today to go to a 50 50 deal demonstrates even more potential movement on our part," Silver said. "So we haven't made a secret of the fact that we'd very much like to make a deal."

    If we've learned anything from these negotiations, it's that nothing of importance happens until the clock is about to strike midnight.

    Complications remain, of course, not the least of which is the fact that this informal side discussion of the two BRI bands would have to be worked through the formal process of getting each side's committee to sign off -- besides the fact that there is more negotiation to be had on both the split and the system. Also, by walking out without a deal Tuesday, the players association is vulnerable to the influence of agents who have made it clear they are unhappy with the course of negotiations and have openly threatened to encourage their clients to decertify the union.

    Two people with direct knowledge of the strategy being invoked by a group of seven super agents who wrote a letter to their clients over the weekend said the group -- including Arn Tellem, Bill Duffy, Mark Bartelstein, Dan Fegan, Jeff Schwartz, Leon Rose and Henry Thomas -- is willing to accept no less than 52 percent of BRI. There is disagreement within the ranks on that figure, with a hard-line faction pushing for the players not to retreat at all from the 57 percent of BRI they received under the previous CBA.

    One thing all the agents agree on is that they will insist on a full vote of the union membership and that players have ample time to review the deal, sources said.

    But the more time that goes by without closing the now comparatively narrow gap between the two sides, the more opportunity there will be for agents to apply pressure to the union -- and perhaps even encourage clients to hold a decertification vote, which would blow up the talks.

    One of the people with direct knowledge of the super agents' strategy said at least two strong voices in that camp have quelled their pursuit of decertification, which would remove the process from the negotiating room and throw it into federal court under anti-trust law. Such a move at this stage, the person with knowledge of the agents' approach said, would inject too much chaos with a deal within reach.

    As long as key system issues are preserved from the previous deal, one of the high-powered agents has told associates that he would accept 52 percent and "call it a wrap," a source said Tuesday. But the agent indicated his group is ready to advise clients to be willing to miss a month or more of games to achieve their goals.

    "Our guys have indicated a willingness to miss games," Hunter said.

    Recognizing the uncertainty and risk ahead, Fisher took direct aim Tuesday at the agents who have most vocally objected to the union's legal and bargaining strategies.

    "The only people that really decide whether we accept and ratify a deal are the guys that are standing right here and the other 400-plus guys that aren't here right now," Fisher said, flanked by several committee members and superstars Bryant, Garnett and Pierce. "And not out of disrespect, I'm just not inclined to engage in a discussion about what a group that doesn't control any part of this process has to say."

    If external forces and internal strife felt by both sides over failing to achieve everything they wanted can be held at bay, then the end is near. Labor negotiations that began more than two years ago in a joint news conference with Stern and Hunter at All-Star weekend in Phoenix will come full circle. On Tuesday, the league and the union held separate media briefings in adjacent rooms that somehow symbolized how close they really are.

    What has happened in between -- a devastating initial proposal from the owners, disbelief from the players, lawsuits, unfair labor practice charges, scathing rhetoric and finally, day after day of fruitless, seemingly pointless, make-believe negotiations -- has gotten us here.

    If they don't screw it up, we'll be able to look back on some of the lighter moments -- Roger Mason's "how u" tweet, "blogissists," the "50-50" cake and, finally, the dueling player-owner urinals -- and laugh.

    Just do me a favor: Don't flush it now.
    This is why I haven't given up hope quite yet, though earlier in the evening yesterday I had.

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    Default Re: Ken Berger: Season can be saved

    So, there is an agreement as long as fans are willing to pay an extra $4.33 per ticket for going to the games, huh?

    $80,000,000 divided by total games played (82 x 15 = 1230 games) = $975,609.80

    $975,609.80 divided by average of 15,000 attendance = $4.33 per ticket.



    If this were truly the case, wouldn't an agreement have been reached yesterday where the players could have voted today and gotten things settled?

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    Default Re: Ken Berger: Season can be saved

    I think what Berger and Sheridan have been saying for a while is correct, that a deal is there for the taking. And the two sides have been inching towards that deal, right on schedule to save the season.

    But that doesn't mean it's a slam dunk that a deal gets made. I do think that the main negotiators (Stern/Silver/Hunter/Fisher) already know what a compromise deal looks like, but the problem is that they still need to sell it to their respective sides. Whether it's the hardline owners, or star players or their agents, there is still a chance that any deal that the negotiators produce can be derailed. Both sides need to find enough votes in the middle.

    So, I'm cautiously optimistic, as before - nothing changes until Monday passes without a deal, I think.

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    Default Re: Ken Berger: Season can be saved

    Quote Originally Posted by Brad8888 View Post
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    So, there is an agreement as long as fans are willing to pay an extra $4.33 per ticket for going to the games, huh?

    $80,000,000 divided by total games played (82 x 15 = 1230 games) = $975,609.80

    $975,609.80 divided by average of 15,000 attendance = $4.33 per ticket.



    If this were truly the case, wouldn't an agreement have been reached yesterday where the players could have voted today and gotten things settled?
    Well, no, because then that extra 80,000,000 is NEW BRI and has to be split in and of itself, it wouldn't apply to some additional increase in the share of the EXISTING BRI. You'd owe the players $42M+ of that new $80M.

    If I have my math right, at 52% you'd have to raise tickets by a total of almost $200M to get a number where you'd break even on making up the $80M difference plus the BRI incurred from the price rise.

    You could say, "OK, that's maybe about $10 per ticket", but you aren't going to double the price of $10 tickets, or raise $20 tickets by over 50%, or even convince the Simons that they have to raise their club seat tickets by 13%-17% PLUS whatever they need to raise to cover the ability to keep cheap seats somewhat cheap.

    You are not talking easy numbers, here.
    BillS

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    Default Re: Ken Berger: Season can be saved

    Quote Originally Posted by BillS View Post
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    Well, no, because then that extra 80,000,000 is NEW BRI and has to be split in and of itself, it wouldn't apply to some additional increase in the share of the EXISTING BRI. You'd owe the players $42M+ of that new $80M.

    If I have my math right, at 52% you'd have to raise tickets by a total of almost $200M to get a number where you'd break even on making up the $80M difference plus the BRI incurred from the price rise.

    You could say, "OK, that's maybe about $10 per ticket", but you aren't going to double the price of $10 tickets, or raise $20 tickets by over 50%, or even convince the Simons that they have to raise their club seat tickets by 13%-17% PLUS whatever they need to raise to cover the ability to keep cheap seats somewhat cheap.

    You are not talking easy numbers, here.
    You are right, of course, and I appreciate you pointing out my mistake.

    With that said, I would suspect that the $200,000,000 could be made up through a combination of a variety of things from ticket price increases (that already are occuring even for the Pacers from what the reps who keep calling me about coming back as a season ticket holder are telling me), slight upward adjustments to advertising rates for existing advertisers, and the anticipated value of future TV contracts being increased slightly by the networks due to their desire to not lose games that they have nothing to fill the time slots with otherwise during a protracted lockout, as well as the agents chipping in a small percentage of their part of the pie. And that is not to mention a slight further downward revision in what the players receive as compensation to make up what remaining gap might still exist since the players have everything to lose and little to gain if they don't reach an agreement.

    If it is that close, it is ridiculous to not reach an agreement in my opinion, and I believe that failure at this stage would ultimately have at the very least the same impact that the MLB strikes had on that sport (after having baseball and the Reds as my top interest in professional sports, I stopped watching or even following baseball after the last work stoppage, and rarely do more than watch highlights nowdays, and I suspect that I am not alone), with the NBA not having the same emotional connectivity for many Americans that baseball has had. That could leave the NBA in some serious peril with the need for massive contractions of the league in future years.

    Unfortunately, the players and their agents would be the primary blame for this failure in my view, and I believe many others would feel the same way.

    Recognition of reality on the parts of all involved would be nice right about now.

    :End rant/.

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    Default Re: Ken Berger: Season can be saved

    Quote Originally Posted by Brad8888 View Post
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    With that said, I would suspect that the $200,000,000 could be made up through a combination of a variety of things from ticket price increases (that already are occuring even for the Pacers from what the reps who keep calling me about coming back as a season ticket holder are telling me), slight upward adjustments to advertising rates for existing advertisers, and the anticipated value of future TV contracts being increased slightly by the networks due to their desire to not lose games that they have nothing to fill the time slots with otherwise during a protracted lockout, as well as the agents chipping in a small percentage of their part of the pie. And that is not to mention a slight further downward revision in what the players receive as compensation to make up what remaining gap might still exist since the players have everything to lose and little to gain if they don't reach an agreement.
    I think there's very little of this kind of change in revenue structure that isn't already being considered in terms of what the owners are willing or able to split. While ticket prices are going back up for the Pacers, the operative word is "back" - and they still aren't as high as they were 4 years ago. I think sponsors are probably paying what the market will bear (broadcast advertiser revenue goes to the media outlet, that's how they can afford to pay for broadcast rights), and I don't imagine we're looking at anything near a $200M per year increase in the next national broadcast rights agreement, not since I expect the national media to sooner or later realize it would be cheaper just to negotiate an 82-game contract with the Miami Heat .

    Yes, it is close enough it seems we can see the end from here, but if it was just a matter of coming up with $200M in additional revenue, they could have come up with $300M in additional revenue last year and all the teams would have been profitable.
    BillS

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    Default Re: Ken Berger: Season can be saved

    Quote Originally Posted by Brad8888 View Post
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    So, there is an agreement as long as fans are willing to pay an extra $4.33 per ticket for going to the games, huh?

    $80,000,000 divided by total games played (82 x 15 = 1230 games) = $975,609.80

    $975,609.80 divided by average of 15,000 attendance = $4.33 per ticket.



    If this were truly the case, wouldn't an agreement have been reached yesterday where the players could have voted today and gotten things settled?
    The way I read it is the agreement will be made when they figure out who gets the $80 million or how it is split. It is not about generating an extra $80 mil.

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    Default Re: Ken Berger: Season can be saved

    New Berger article...

    NBPA, owners can reach finish line on new deal; here's how - CBSSports.com

    Quote Originally Posted by Ken Berger
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    Now, the hardest part of the job begins. Making that final move of a negotiation -- especially a $30 billion negotiation -- is always the most painful, the step both sides say they will never make.

    But it's the one both sides always do make, unless they are fools.

    And trust me, the people trying to close the deal on a new collective bargaining agreement for the NBA without losing huge chunks of the regular season -- not to mention their jobs -- are a lot of things, but they are no fools.

    So while we wait for things to go wrong (which they most assuredly will) and for the rhetoric to increase (which it already has with the union saying, "The players made a stand," in another letter to union members Tuesday night) -- here is a breakdown of the enormous closing of the economic gap that happened Tuesday in Times Square and what's left to be done:

    The owners and players walked into the negotiating room $2.5 billion apart on a seven-year deal -- the players at 54 percent of basketball-related income ($16.8 billion) and the owners offering 46 percent ($14.3 billion).

    By the time they walked out with their official bargaining positions on the players' share of 53 percent (players) and 50 percent (owners), they had closed the gap by a whopping $1.6 billion. The owners accounted for $1.3 billion with their move on the players' share from 46.

    So with the players at $16.5 billion over seven years and the owners at $15.6 billion, based on their formal positions, the negotiating gap is now $900 million.

    Where do they go from here? They just keep going until they find the landing spot. It is going to be painful -- in some ways, more painful than the $1.6 billion negotiation that happened Tuesday. Both sides will say they just can't do it, and will pull out every piece of leverage they have -- because leverage is still currency in these negotiations, until Sunday night, when money will be the only currency that matters.

    It can happen. Here's how:

    Each side already has signaled a willingness to at least discuss 51 percent for the players in some form, based on the league's informal offer of a 49-51 band and the players' informal counter of 51-53. Each percentage point move is worth $300 million, based on a seven-year deal. The numbers are large, but at least the math is neat.

    To figure out how much farther each side will go, you have to quantify how much they would lose by canceling the first two weeks of the regular season. For the players, it's $200 million -- $140.6 million for the 301 players under contract, plus an estimated $53.7 million for the 129 free agents, $4.4 million for the 30 first-round picks and $1.2 million for the 30 second-round picks, based on calculations provided by a front office executive.

    Tuesday, deputy commissioner Adam Silver estimated the losses associated with canceling the first two weeks of games as being "in the hundreds of millions." We know what the players' loss would be, so let's call it about the same $200 million for the owners. This doesn't count the collateral damage that is difficult to quantify, plus the slippery slope of cancellations leading to more cancellations as each side inevitably hardens its position by trying to recoup those losses. Fighting to get the $200 million back results in losing $200 million more, and before you know it, $4 billion is gone.

    So when the sides resume meeting -- possibly as early as Thursday, with a league-imposed Monday deadline to reach a deal before regular-season games are canceled -- each one moves another $200 million. (They'd lose that money anyway by failing to reach a deal.) The bargaining gap is now $500 million over seven years, or about $71 million a year.

    Here's how they close it: They split the difference. The magic number is $16.05 billion, or roughly 51.5 percent for the players and 48.5 for the owners. Given the format already discussed by the two sides, this could be accomplished with the players receiving a band of 51-52 percent.

    Is it foolproof? Hell no. For one thing, just as there are owners ready to make a deal (James Dolan, Jerry Buss, Micky Arison), there are those who will view less than 50 percent as a negotiating defeat. For another, the Super Seven -- powerful agents who wrote to their clients over the weekend warning them about accepting a bad deal -- were planning a conference call among themselves Wednesday afternoon to discuss the state of negotiations and what to do next.

    "You have a reasonable idea," a person connected to the negotiations said. "But you're not dealing with reasonable people."

    Indeed, according to a person with knowledge of the powerful agents' strategy, there are some serious reservations about how the National Basketball Players Association negotiated its way from 57 percent to where they are now -- a place that union chief Billy Hunter described Tuesday as "on the 2- or 3-yard line. The question is, can we punch it in?"

    To do so, the union will have to find a way to appease the agents, who view the owners' $1.3 billion move skeptically because of how low their initial bargaining position was -- and how far the players had already come before Tuesday, giving up almost $1 billion over seven years by going from 57 percent to 54. In addition, although league negotiators have agreed to drop their insistence on a hard team salary cap and rollbacks on existing contracts while leaving the max salary structure intact, the devil is in the details.

    The agents have been pushing behind the scenes for a more open and flexible system to allow for easier player movement, which they believe drives fan interest and revenue -- as was overwhelmingly the case during the free-agent summer of 2010. The NBPA has been successful only in preserving system elements, not adding to them.

    So the league could dig in at 51 percent for the players, and they could dig in pretty hard considering they just moved $1.3 billion in five hours Tuesday -- not to mention relaxing the system elements they agreed to preserve.

    Similarly, the players could dig in hard at 52 percent, having already made a $1.3 billion concession of their own by going from 57 percent under the previous deal to 53. Not inconsequentially, sources say 52 percent is a figure the most influential voices in the group of powerful agents would accept -- though at least one of them has told associates he'd be willing to miss a month of games to get it.

    Will anyone care about the month of games? Probably not. Will anyone miss the $800 million it would cost both sides? You bet.

    By the time negotiators reach that moment of truth, probably Sunday night, they will be standing on a hill insisting that they are willing to die there over 0.5 percent of BRI -- or $150 million, less than they would lose if the first two weeks were canceled Monday.

    I'm not going to say my only question is which hotel am I going to Sunday, because there are dozens, if not more than 100, negotiating points still to be resolved. But it may be time to deliver a new cake, with new numbers on it: 51-52.

    How u.

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    Default Re: Ken Berger: Season can be saved

    I think Ken Berger has been the best reporter during this whole CBA situation. and I still expect a deal before monday which I always said was the drop dead date. all the posturing on both sides is entertaining to watch though. I've been away for about a week and will be until Friday

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    Default Re: Ken Berger: Season can be saved

    Quote Originally Posted by Unclebuck View Post
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    I think Ken Berger has been the best reporter during this whole CBA situation. and I still expect a deal before monday which I always said was the drop dead date. all the posturing on both sides is entertaining to watch though. I've been away for about a week and will be until Friday
    I would agree and add Chris Sheidan and Sam Amick
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    Default Re: Ken Berger: Season can be saved

    Sheridan, Berger and Amick have been top of their games and its not even close on the others. (I think Aldridge has been the best of the second tier, but he just doesn't get as much news out as Berger, Amick and Sheridan have.)

    If this goes down the way its now being reported, Sheridan's site becomes an instant player in the basketball news realm.

    And if it DOESN'T go down right, I'm abandoning my "Adam Silver for next commissioner" campaign and backing Sheridan.
    Last edited by Sandman21; 10-05-2011 at 08:18 PM.
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    Default Re: Ken Berger: Season can be saved

    As far as the losses of revenue go for cancellation of games, if the owners are telling it straight about their $300 million loss, divided by 1230 games, the owners, on average lose $250,000 per game, though attendance and viewership would be improved at the start of a fresh season. I suspect that the early season might be a breakeven situation overall, the middle of the season seeing the largest losses overall due to fan apathy in the non-competitive markets, and the end of the regular season having somewhat better though still losing results. Then, the teams that make the playoffs suddenly become profitable for whatever home games they have during them, making up for some of their earlier losses (if there are any).

    So, in my opinion, for the owners overall the loss of the games is far less significant than for the players, and if the first weeks of the season are lost the owners might, for reasons different than the author indicates, have an incentive to become far harder in their negotiating stance because they actually are better off financially in the short term for being so due to the operating losses that would be reduced during the least desireable part of the season from a financial perspective.

    They had better "Git 'r done" quick or it could get quite protracted as we have feared.

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    Default Re: Ken Berger: Season can be saved

    This is definitely something new as well as extremely great news.

    Owners and players acknowledging they really can't go on with this anymore. They're going to need money.

    Nothing is likely going to change in the league if something happens Monday. Probably some compromises here and there, but not much. Same old unbalanced league, but I'm happy we have a decent young team and not coming in like it's 2008 again with nothing to look forward to.

    Here's to a Pacers season and a good one too with higher attendance!
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    Last Post: 05-10-2004, 01:52 PM

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