2011 Toronto Raptors/NBA/Labour Negotiations Spectacular

[Trolloc]

NBA players...underpaid...

http://www.sportsnet.ca/magazine/2011/11/10/grange_underpaid/

My father's a business owner and I have a more favourable opinion of owners then most people. My father has had issues in the past where employees wanted unionization. My father is in his 60's, been in business for over 30 years, ran two different companies that ultimately failed. To run his current business at times he had to take a larger mortgage or borrow money from people. When funds in the company were  low he would take money from his pocket to pay his guys. After 30 years of pinching pennies, my father lives a great life now. Drives a nice truck, lives in a million dollar home...all while never taking one penny out of his company. My point is, at one time some employees saw his nice truck\house and painted him as a greedy man using his employees muscle to live a great life. People tend to forget that the owner takes a great deal of risk, investing large sums of money and if the business doesn't work out, it would have a serious negative impact on them.

The relationship has to go both ways. Players disserve to be paid a fair amount of money, but, we can't forget the owners made the investment and take on 100% of the risk and the owners also couldn't make money without the players
One thing I learned too, no matter what you pay your employees...they will always feel they're worth more. It is a tricky situation with the NHL/NBA/NFL. With my father's employee it made me angry the guys that tried for unionization because, in my father's field, there are hundreds of companies. If you feel undercompensated it is easy to find other work. With these athletes, where do they go? Europe? Russia? Where they will make 50% less than they would make in North America. It is a really tricky situation. On one hand, we paint the players as greedy but the balance of power is with the owners. On the other, owners take all the risk, aren't they entitled to more money?

It is one of those issues that I am still trying to figure out.

 

[seahawk]

10 year deal with the option for either side to opt out after 6. 4 or 5 year contract limits are a bit of a win for the owners, if only to save them from themselves. NHLPA should take note because I think this will come up in the next CBA. 66 game schedule starting with a Christmas Day triple-header featuring Mavs-Heat. I'm not going to call either side a winner other than the fans.

 

[hockeyfan1]

NBA players...underpaid...

http://www.sportsnet.ca/magazine/2011/11/10/grange_underpaid/

My father's a business owner and I have a more favourable opinion of owners then most people. My father has had issues in the past where employees wanted unionization. My father is in his 60's, been in business for over 30 years, ran two different companies that ultimately failed. To run his current business at times he had to take a larger mortgage or borrow money from people. When funds in the company were  low he would take money from his pocket to pay his guys. After 30 years of pinching pennies, my father lives a great life now. Drives a nice truck, lives in a million dollar home...all while never taking one penny out of his company. My point is, at one time some employees saw his nice truck\house and painted him as a greedy man using his employees muscle to live a great life. People tend to forget that the owner takes a great deal of risk, investing large sums of money and if the business doesn't work out, it would have a serious negative impact on them.

The relationship has to go both ways. Players disserve to be paid a fair amount of money, but, we can't forget the owners made the investment and take on 100% of the risk and the owners also couldn't make money without the players
One thing I learned too, no matter what you pay your employees...they will always feel they're worth more. It is a tricky situation with the NHL/NBA/NFL. With my father's employee it made me angry the guys that tried for unionization because, in my father's field, there are hundreds of companies. If you feel undercompensated it is easy to find other work. With these athletes, where do they go? Europe? Russia? Where they will make 50% less than they would make in North America. It is a really tricky situation. On one hand, we paint the players as greedy but the balance of power is with the owners. On the other, owners take all the risk, aren't they entitled to more money?

It is one of those issues that I am still trying to figure out.

I understand where you're coming from.  My parents were (small-medium sized business owners too, quite successful, and extremely lucky to even have had a business in the first place (clothing).  We, as a family, and as business owners at the time, learned just how much effort it takes to run even a small business, all the details, and paying the employees ( as generous as my parents were), etc.


I can empathize up to a point with the owners, in the sports vernacular, but then again, as compared to the general business populace, many of these owners are plenty wealthy, otherwise they wouldn't even have bothered to have a franchise in the first place.


Of course, here's so much more than just owning a franchise -- revenue & profits from other sources of revenue tied or not tied in to the sport in question -- which one can say that the owners are probably entitled to more money, as you state.


Then, on the other hand.....

 

[Kin]

Both of you are trying to compare experiences with small/medium sized businesses where employees have, I'm guessing, very little in the way of leverage to NBA franchises. There's not much similarity there. The owners "risk" usually amounts to a small portion of a much larger fortune. Labour are millionaire celebrities. Owners often operate their businesses as if making money is an after thought or a smaller consideration considering their larger ventures.

 

[Guru Tugginmypuddah]

Both of you are trying to compare experiences with small/medium sized businesses where employees have, I'm guessing, very little in the way of leverage to NBA franchises. There's not much similarity there. The owners "risk" usually amounts to a small portion of a much larger fortune. Labour are millionaire celebrities. Owners often operate their businesses as if making money is an after thought or a smaller consideration considering their larger ventures.

Then go play basketball somewhere else. 

Oh, there is no where else to play basketball for what I'm offering you?

 

[Kin]

Then go play basketball somewhere else. 

Oh, there is no where else to play basketball for what I'm offering you?

Sorry, are you having an imaginary conversation with me where I'm an NBA player?

 

[hockeyfan1]

Both of you are trying to compare experiences with small/medium sized businesses where employees have, I'm guessing, very little in the way of leverage to NBA franchises. There's not much similarity there. The owners
"risk" usually amounts to a small portion of a much larger
fortune. Labour are millionaire celebrities. Owners often
operate their businesses as if making money is an after
thought or a smaller consideration considering their larger
ventures.

I stated ... "but then again, as compared to the general  business populace, many of these owners are plenty wealthy, otherwise they wouldn't even have bothered to have (had) a franchise in the first place".

Of course, small/medium-sized businesses/owners, etc., and sports franchise owners, in this case the NBA, are two different worlds, apart from the other, with little similarity.  In no way would I imply that they are all similar (hence my statement in quotatins above).

 

[Guru Tugginmypuddah]

Then go play basketball somewhere else. 

Oh, there is no where else to play basketball for what I'm offering you?

Sorry, are you having an imaginary conversation with me where I'm an NBA player?

Not really directed at you, but it comes down to, there are owners of sports teams who get tired of their toy costing them too much money.

These people didn't become wealthy by being stupid with their money, and it comes to a point where enough is enough. 

 

[Kin]

Not really directed at you, but it comes down to, there are owners of sports teams who get tired of their toy costing them too much money.

These people didn't become wealthy by being stupid with their money, and it comes to a point where enough is enough.

I wasn't advocating for the players there. I was just saying that these businesses aren't particularly comparable to small businesses being run by people for their livelihoods.

The issue is, for me, whether or not owners of teams should redress their own poor management by means of collective bargaining. Nobody holds guns to their heads as they spend the money they do on their toy and if they're smart businessmen they're capable of restraining themselves.

 

[Trolloc]

Not really directed at you, but it comes down to, there are owners of sports teams who get tired of their toy costing them too much money.

These people didn't become wealthy by being stupid with their money, and it comes to a point where enough is enough.

I wasn't advocating for the players there. I was just saying that these businesses aren't particularly comparable to small businesses being run by people for their livelihoods.

The issue is, for me, whether or not owners of teams should redress their own poor management by means of collective bargaining. Nobody holds guns to their heads as they spend the money they do on their toy and if they're smart businessmen they're capable of restraining themselves.

It is possible the system is broken and unless owners spend absurd amounts of money they will never get the high end talent. They may be in a situation where it is play by the overspending rules or spend a decade in the basement. That being said, I do agree mismanagement shouldn't come at the players expense. Sometimes the choice is spending big or going home.

 

[Kin]

It is possible the system is broken and unless owners spend absurd amounts of money they will never get the high end talent.

I don't think that holds up if you look at the salary structure of the league. There are lots of good, competitive teams whose salaries are in the lower third or middle third of the league. That includes the Heat, for what it's worth, who just signed the most high-end talent in the league.

The real problem has been that they've been giving too much money to middling talent or giving high-end money to players who don't end up being high-end talent. Those are failures of management, even if it's keeping up with the Joneses.

They may be in a situation where it is play by the overspending rules or spend a decade in the basement.

They're not really. They're in a situation where they need to be smart in order to be competitive without spending tons of money.

That being said, I do agree mismanagement shouldn't come at the players expense.

That to me was the central issue here and is the reigning issue in sports labour negotiations. The issue isn't whether the systems that exist make it impossible for teams to be profitable but rather whether or not the systems that exist make it so that profitability is guaranteed. The NBA's whole argument, in public, was "We lost money, therefore the system is broken" when anyone can see they've been running the league terribly for years. They've put teams in small markets, markets that have failed previously, spent heavily on crummy players and alienated their fans.

Does that sound like a fundamentally flawed system or a system that allows for flawed management? This position by the owners was just them taking their leverage and trying to idiot-proof the league and grabbing control.

That's what galls me about this. They never, ever started proposing a system where they'd have to take more responsibility.

 

[L K]

It is possible the system is broken and unless owners spend absurd amounts of money they will never get the high end talent.

I don't think that holds up if you look at the salary structure of the league. There are lots of good, competitive teams whose salaries are in the lower third or middle third of the league. That includes the Heat, for what it's worth, who just signed the most high-end talent in the league.

The real problem has been that they've been giving too much money to middling talent or giving high-end money to players who don't end up being high-end talent. Those are failures of management, even if it's keeping up with the Joneses.

They may be in a situation where it is play by the overspending rules or spend a decade in the basement.

They're not really. They're in a situation where they need to be smart in order to be competitive without spending tons of money.

That being said, I do agree mismanagement shouldn't come at the players expense.

That to me was the central issue here and is the reigning issue in sports labour negotiations. The issue isn't whether the systems that exist make it impossible for teams to be profitable but rather whether or not the systems that exist make it so that profitability is guaranteed. The NBA's whole argument, in public, was "We lost money, therefore the system is broken" when anyone can see they've been running the league terribly for years. They've put teams in small markets, markets that have failed previously, spent heavily on crummy players and alienated their fans.

Does that sound like a fundamentally flawed system or a system that allows for flawed management? This position by the owners was just them taking their leverage and trying to idiot-proof the league and grabbing control.

That's what galls me about this. They never, ever started proposing a system where they'd have to take more responsibility.

It's actually funny, because they put a more hard-line, "you have to spend X amount of the cap" requirement that is probably going to have a bigger effect on bottom lines than the old system for some of the cheaper owners.  Kind of like Florida being forced to spend 40 trillion dollars to get to the cap floor.

 

[Guru Tugginmypuddah]

It is possible the system is broken and unless owners spend absurd amounts of money they will never get the high end talent.

I don't think that holds up if you look at the salary structure of the league. There are lots of good, competitive teams whose salaries are in the lower third or middle third of the league. That includes the Heat, for what it's worth, who just signed the most high-end talent in the league.

The real problem has been that they've been giving too much money to middling talent or giving high-end money to players who don't end up being high-end talent. Those are failures of management, even if it's keeping up with the Joneses.

They may be in a situation where it is play by the overspending rules or spend a decade in the basement.

They're not really. They're in a situation where they need to be smart in order to be competitive without spending tons of money.

That being said, I do agree mismanagement shouldn't come at the players expense.

That to me was the central issue here and is the reigning issue in sports labour negotiations. The issue isn't whether the systems that exist make it impossible for teams to be profitable but rather whether or not the systems that exist make it so that profitability is guaranteed. The NBA's whole argument, in public, was "We lost money, therefore the system is broken" when anyone can see they've been running the league terribly for years. They've put teams in small markets, markets that have failed previously, spent heavily on crummy players and alienated their fans.

Does that sound like a fundamentally flawed system or a system that allows for flawed management? This position by the owners was just them taking their leverage and trying to idiot-proof the league and grabbing control.

That's what galls me about this. They never, ever started proposing a system where they'd have to take more responsibility.

So, are sports leagues in general, stupid or greedy or are the owners who buy these teams in crappy markets the suckers that are born every minute?  I suspect it's both, and really is no fault of the players. 

I do support the players, and think they should get the most they can, whatever sport is.  I also support the owners, that they should make some sort of profit or at least break even with their toy.

 

[Kin]

So, are sports leagues in general, stupid or greedy or are the owners who buy these teams in crappy markets the suckers that are born every minute?  I suspect it's both, and really is no fault of the players.

I think you should read the Malcolm Gladwell pieces I posted earlier in the thread. It talks about the different motivations owners can have for buying sports franchises and their attitudes towards them better than I can and isn't as reductive as to just say it's stupidity or greed. My quote from Terry Pegula is indicative, though, of the way that owners frequently have different opinions of their "businesses" when they're running them as opposed to come CBA time.

I do support the players, and think they should get the most they can, whatever sport is.  I also support the owners, that they should make some sort of profit or at least break even with their toy.

I think pro sports owners should be no different than anyone else when it comes to their business. They should be able to make a profit if they run their business well but they shouldn't be guaranteed a profit regardless of their own decisions.

 

[Deebo]

Raptors sign Magloire, or agreed to terms, I guess they can't sign until friday.

 

[maplesyrup]

Raptors sign Magloire, or agreed to terms, I guess they can't sign until friday.

Stop-gap until next year... Should make a bunch of fans happy.

 

[cw]

So, are sports leagues in general, stupid or greedy or are the owners who buy these teams in crappy markets the suckers that are born every minute?  I suspect it's both, and really is no fault of the players.

I think you should read the Malcolm Gladwell pieces I posted earlier in the thread. It talks about the different motivations owners can have for buying sports franchises and their attitudes towards them better than I can and isn't as reductive as to just say it's stupidity or greed. My quote from Terry Pegula is indicative, though, of the way that owners frequently have different opinions of their "businesses" when they're running them as opposed to come CBA time.

I do support the players, and think they should get the most they can, whatever sport is.  I also support the owners, that they should make some sort of profit or at least break even with their toy.

I think pro sports owners should be no different than anyone else when it comes to their business. They should be able to make a profit if they run their business well but they shouldn't be guaranteed a profit regardless of their own decisions.

I don't see how the NHL CBA guarantees profit to all the owners. Many teams don't make a profit in the NHL. Likewise, I don't see it in the NBA agreement.

Having said that, business investment can't always be like going to Las Vegas. There has to be a framework where an investor can see where they've got a respectable chance to get a reasonable return on their investment or they'll take their investment money elsewhere.

Once again, like the NHL, when the NBA players sat down and looked at the real numbers, they dropped their cut of the revenue pie from 57% to 51% or so. And that structure does something for the players many employees don't get - that as the business takes off or grows, their pay grows. It provides some security for both parties to get an agreed upon "fair share" of the proceeds.

And this is the very nature of collective bargaining. It's negotiating how much union members will get paid. Unions members want the most they can get. Owners want the best deal they can get for their bottom lines to give them the best chance to make money. Collective bargaining didn't guarantee the Airlines would make money. Agreements like this have not guaranteed a healthy bottom line for all owners of sports teams - it's just improved their chances of seeing a healthy bottom line.

One can offset the inaccurate claim that there's a guarantee of not losing money with there's a guarantee that the owners don't make out like bandits - which was a driving force behind the creation of many unions and collective bargaining in the first place.

This is collective bargaining - a two way street for labor negotiations. It isn't bargaining a business P&L. It's only bargaining the labor expense component of that business. In this case, it's roughly 50% of the business expense - not the whole enchilada.

If a coach diddles little boys or a stadium collapses and fans get killed or fans get food poisoning eating hot dogs or the owners accountant embezzles millions of dollars, do the players chip in to pay off that lawsuit? Nope. They're free and clear of a bunch of that risk (if it doesn't damage revenues) with a chunk of the revenue pie and in the NHL's case, guaranteed contracts.

All these deals do is provide individual owners of sports teams with a better, more stable chance to make dough like nearly every collectively bargained agreement might do. In exchange for that, the players get a piece of the action when the revenues grow (which has been the trend that has happened for decades for sports teams - a virtual guarantee).

 

[Kin]

I don't see how the NHL CBA guarantees profit to all the owners. Many teams don't make a profit in the NHL. Likewise, I don't see it in the NBA agreement.

Having said that, business investment can't always be like going to Las Vegas. There has to be a framework where an investor can see where they've got a respectable chance to get a reasonable return on their investment or they'll take their investment money elsewhere.

Again, I'd direct you to the articles by Gladwell and the quote from Pegula before you start talking to me about how the CBA's and the process of negotiating it should mirror what it is in other businesses.

Like I said above this is an issue where the league has run itself poorly for years. They put teams in bad markets, signed players to contracts that everyone with half a brain could see were terrible deals and ignored fans saying that there were too many games. So what did they see? Dilution of talent, losses and lowered attendance. And what was the owner's response. The system is broken. The system doesn't "allow" for them to earn a buck. The system allowed for smart, small-market teams like San Antonio to be profitable. The system just didn't allow for everyone to be profitable all the time and there's nothing more unpalatable to modern captains of industry quite like the idea that they don't get fantastically wealthy regardless of their actual performances. Run an investment bank or NBA team into the ground and the thinking in those circles is you should walk away with millions.

The system was fine. The system allowed teams to stand or fail on the strengths of their own decisions. Problem is, that would have required responsibility and proper management. But, like lots of big business these days, the concept of risk has been replaced by a culture of bailouts. Sports leagues can run themselves as terribly as they want and then, when the end results of their terrible decisions come home to roost, they cry poor to the players and lock them out demanding massive givebacks. That's "risk" in the world of the NBA.

Losses, any losses, are chalked up to a failure in the structure of the CBA, and it's never "Well, maybe it was stupid to put teams in tiny markets for the owner's vanity or give bench players 50 million dollars on the strength of one good year, we should really tighten things up". No, it's always "We don't know how to run our business. You need to agree to change the CBA so that it's idiot proof".

And they can do it because the owners are fantastically wealthy guys with other business interests that they do run well and have all the leverage in the world as a result. I fully expect the NHL to get a similar reduction in what they pay the players despite the existing CBA basically being written on the back of the NHLPA's bloated corpse. The NFL got it and nobody even tried to claim that the NFL wasn't profitable. CBA negotiations in sports leagues aren't about establishing an equitable structure by which everyone can earn a buck, they're about pissing matches where people are trying to stuff their pockets.

edit: and that, of course, is only the least egregious aspect of this. That only applies to clubs like the Hornets, Predators and so on. But because they negotiate under the laughable premise that they're one employer the same thing applies equally as well to every team regardless of actual financial circumstance. The idea that the Leafs, Lakers and Dallas Cowboys went into their most recent negotiations looking for "... a better, more stable chance to make dough" is a joke. Where's the guarantee that those owners don't "make out like bandits"?

 

[cw]

I don't see how the NHL CBA guarantees profit to all the owners. Many teams don't make a profit in the NHL. Likewise, I don't see it in the NBA agreement.

Having said that, business investment can't always be like going to Las Vegas. There has to be a framework where an investor can see where they've got a respectable chance to get a reasonable return on their investment or they'll take their investment money elsewhere.

Again, I'd direct you to the articles by Gladwell and the quote from Pegula before you start talking to me about how the CBA's and the process of negotiating it should mirror what it is in other businesses.

Like I said above this is an issue where the league has run itself poorly for years. They put teams in bad markets, signed players to contracts that everyone with half a brain could see were terrible deals and ignored fans saying that there were too many games. So what did they see? Dilution of talent, losses and lowered attendance. And what was the owner's response. The system is broken. The system doesn't "allow" for them to earn a buck. The system allowed for smart, small-market teams like San Antonio to be profitable. The system just didn't allow for everyone to be profitable all the time and there's nothing more unpalatable to modern captains of industry quite like the idea that they don't get fantastically wealthy regardless of their actual performances. Run an investment bank or NBA team into the ground and the thinking in those circles is you should walk away with millions.

The system was fine. The system allowed teams to stand or fail on the strengths of their own decisions. Problem is, that would have required responsibility and proper management. But, like lots of big business these days, the concept of risk has been replaced by a culture of bailouts. Sports leagues can run themselves as terribly as they want and then, when the end results of their terrible decisions come home to roost, they cry poor to the players and lock them out demanding massive givebacks. That's "risk" in the world of the NBA.

Losses, any losses, are chalked up to a failure in the structure of the CBA, and it's never "Well, maybe it was stupid to put teams in tiny markets for the owner's vanity or give bench players 50 million dollars on the strength of one good year, we should really tighten things up". No, it's always "We don't know how to run our business. You need to agree to change the CBA so that it's idiot proof".

And they can do it because the owners are fantastically wealthy guys with other business interests that they do run well and have all the leverage in the world as a result. I fully expect the NHL to get a similar reduction in what they pay the players despite the existing CBA basically being written on the back of the NHLPA's bloated corpse. The NFL got it and nobody even tried to claim that the NFL wasn't profitable. CBA negotiations in sports leagues aren't about establishing an equitable structure by which everyone can earn a buck, they're about pissing matches where people are trying to stuff their pockets.

This claim about the owners being guaranteed to make money was made with the NHL CBA in 2005. In 2011 according to Forbes guesses, 17 NHL teams lost money. In 2010, 16 NHL teams lost money. It's not a very good guarantee, is it.

That's not all about bad markets and bad decisions. It's more about being pretty close to the line - close to a break even structure in many of those cases. All GMs sign some bad deals - it is a part of the cost of doing business in sports. A few do stupid deals but it's a small % in the overall labor expense.

The fact that the NHL is at 57% and the NBA and NFL labor has dropped to 50% or so along with those bottom lines reflects that the NHL is probably too high and that all three have found this to be an equitable type of formula for their collective bargaining result.

Further, these "bad" markets is where business go to grow their business. A business grows or dies. To go into a new market can take many years (probably a generation) before the business stabilizes in this type of venture. One has to allow for that. If the league was shrunk to original six, the top salaries would dwarf 100% of the revenues for the original six. The players make more money with a bunch these "bad" markets. I'm not endorsing every particular market the league is in - some may well move. But I am endorsing a bunch of what they've done. It hurts some in the short term (10-20 years) but in the longer term as places like Dallas, Washington, Carolina, etc - places where folks questioned the league for being in stabilize, it is good for the NA acceptance, broadcasting and growth of the game. As I said recently, when historians look back on what Bettman did in expansion in the 90s, I think he's likely to be looked on much more favorably for that in 10-20 years.

 

[L K]

Raptors sign Magloire, or agreed to terms, I guess they can't sign until friday.

Stop-gap until next year... Should make a bunch of fans happy.

Not me.  He's a guy who refused Team Canada every year they came to him, and a guy who became an "all star" because of weak field.  Never really been a fan and a guy who is "Canadian" doesn't really show much home-town pride.  I'm not all that interested, nor do  I care.  He's a guy who is going to sit behind Bargnani, Davis, Johnson in the rotation getting 10-15 minutes a night at maximum.