David Stern’s Useful Idiots

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Vishnu Parasuraman (aka 2003alumgocanes) Follow on Twitter andFacebook

I am an NBA addict, to put it mildly.  Stealing the old NBA slogan, “I love this game.”   Every year, I plunk down $150 for NBA League Pass, and anxiously await opening night.  Needless to say, I was not thrilled about David Stern’s announcement to cancel the first 2 weeks of the NBA season, with threats to cancel further weeks if an agreement isn’t reached.  Immediately, the general public took sides against the “greedy” players or the “greedy” owners.  It’s always easy to call someone else greedy when it is not your money at stake.  The truth is, us fans weren’t really impacted until the games were actually canceled.  And, a closer understanding and examination of why that happened will show that the blame lies not with the owners or the players, but with the commissioner of the league:  David Stern.  To understand why, you must understand the process of negotiation and the cynical disdain with which Stern has decided to treat the NBA’s fans.

Collective Bargaining

Many people see this back and forth and question what is going on.  Can’t the owners of NBA franchises just pay whatever they want like any other business?  The answer to that is no, but the reasoning behind why that is the case would surprise some people.  Larry Coon, who wrote the Bible explaining the old Collective Bargaining Agreement (CBA), succinctly sums up why owners can’t pay whatever they want:

Incidentally, the CBA is also what prevents the NBA from being in violation of antitrust laws. Many of the NBA’s practices (salary cap, draft, etc.) would violate the Sherman Act were the CBA not arrived at through collective bargaining

Salary caps, the draft and any other restrictions put in place by the CBA are an ILLEGAL antitrust violation UNLESS they are collectively bargained between a union and the league.  Without this bargaining, there would be an open market.  What does an open market look like in sports?  We can look to soccer as a guide, where major European leagues lack a salary cap and luxury tax.

Cristiano Ronaldo is one of the best players in the world.  In the Summer of 2009, in an open market system, Real Madrid decided they wanted to acquire the star player from Manchester United.  In order to do so, they paid a $126 million transfer fee for his RIGHTS (the right to simply pay him) and then signed him to a contract of about $160 million over 6 years.  You read that correctly.  Real Madrid shelled out almost 3 times the entire Sacramento Kings’ rosters’ salary from last year for the right to sign Ronaldo, at which point they signed him to a contract that dwarfs the maximum contracts in the NBA.  It is not uncommon for good but not elite soccer talent to command a transfer fee of $30-$40 million.  Imagine Mark Cuban and James Dolan bidding for Lebron James’ services, and you would easily see his salary eclipsing that of an entire NBA roster (Jerry West once estimated that Kobe Bryant was worth anywhere from $60-$80 million a year to the Lakers).

So, it’s obvious why the owners want to enter into a CBA, where they can then keep salaries under control with a salary cap.  But why do the players want to go through the collective bargaining process?  To guarantee pensions, benefits and minimum salaries.  In short, the superstar players give up what would be exorbitant salaries so that less coveted players get paid more.  The combined player salary is less than it would be in an open market, but they make that sacrifice to distribute the wealth more evenly.

Without both sides agreeing to operate in this collective bargaining environment (which provides them with an antitrust exemption), salary caps and other restrictions on employment would violate antitrust law.  But that environment REQUIRES that both sides act selfishly.  The purpose of the CBA is to provide a system that is both profitable AND allows the employees (players) to be fairly compensated based on their revenue generation.  When they bargain, the owners work on the profitably aspect and the players on the compensation aspect.  They fight it out and eventually compromise to find a middle ground that is as fair to both sides as possible.  Without them acting selfishly, a fair deal won’t be reached.

In summary, the players and owners, as much as we might disagree with them, are doing exactly what the process REQUIRES to avoid violating the Sherman Antitrust Act.  Which leads us to our fearless leader who has once again been completely derelict in his duties as commissioner.  It’s not the first time, but it should be the last time.

David Stern – Why is he still here?

Over the past 15 years, David Stern has seen 2 disastrous events (prior to this one) greatly impact the NBA’s credibility:

  1. The 1998-1999 lockout
  2. The Tim Donaghy Scandal

I won’t go through all the details of both events, but somehow Stern survived a work stoppage and canceled games AND more ridiculously a situation in which an official was fixing games.  In the Donaghy Scandal, Stern continued to allow Donaghy to ref games AFTER he found out that Donaghy was being investigated.  Yet he somehow got by and retained his job.

The Current Lockout

As I explained earlier, the players and owners are acting in their own selfish interest as required by the collective bargaining process.  David Stern has 2 jobs here:

  1. Work for the owners.
  2. Protect the NBA as a whole.

He has certainly performed his first role.  But the second role?  His lack of concern for the state of the game actually caused the games to be canceled.

One of the reasons that the current fight dragged on for so long is that the initial position taken by the owners was extreme.  As lead negotiator for the owners, it is Stern’s duty to inform the owners when they are out of line.  The current CBA has the Basketball Related Income (BRI) split 57% players/43% owners.  What did Stern do when the owners approached him with the idea of a new BRI split of 39% players/61% owners?  He pitched it to the players.  It short-circuited the entire process and caused time to be wasted when this could have been worked out well in advance.

How ridiculous was the initial 39-61 proposal? Nate Silver of fivethiryeight.com calculated the BRI equivalent for each league and found the following:

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The LOWEST split currently is in baseball, at 54%.  Pitching a 39% split was not only unrealistic, but set a negative tone for the entire bargaining process.

As the negotiations have dragged on, rather than protecting the NBA brand, Stern has chosen to vilify the same players he will later rely on to sell the league.  He can (and should) be tough as nails in negotiations, but in public, it is completely self serving to bash the players.  To make matters worse, he (along with his minion Adam Silver) has decided to flatly lie about what has happened.

When Stern announced that the first 2 weeks of the season had been canceled, he stated, “We made, in our view, concession after concession.”  Apparently his view is disconnected from reality because he is lying here.  The NBA and the owners have not made any concessions.  Now, you can easily argue that they shouldn’t given that they are losing money, but that’s a separate issue.  At issue here is the commissioner of the NBA going in front of reporters and lying to the fans.  No concessions have been made by the owners.  There isn’t a single item that benefits the owners in the last CBA that has been removed in any proposal made by the NBA.  Likewise, there isn’t a single item that benefits the players not present in the current CBA that has been added to any NBA proposal.

Stern’s right-hand man, Adam Silver, continued with the ridiculous lies, stating that “It makes no sense for us to operate under the current model, where taxpayers … have a huge advantage over other teams” and continuing that the NBA is insisting on a system that “that allows all 30 teams to be able to compete for a championship.”  Sounds reasonable, right?  The problem is that it is a complete fabrication and misrepresents the current CBA.  Tax paying teams do NOT actually have an advantage.  The soft cap prevents a team from just signing whoever they want.  There are certain exemptions to get over the cap (Bird Rights to re-sign your own player without cap space, the mid-level exception, etc.), but the teams don’t have free will to just sign whoever they want for whatever they want.  The Miami Heat signed Lebron James by choosing to suffer for years and clear that space.  Several other teams tried and failed at that strategy.  But the point is that they had to work hard and sacrifice to get in that position.  It’s not like baseball (which is what Silver is implying) where you can just keep buying players if you are willing to pay the tax.  The New York Knicks proved the opposite was true, as they spent the better part of the last decade paying the luxury tax because of bad contracts, unable to add talented free agents until they finally got off those bad contracts. Can you imagine how bad the Knicks would have been had they not had their “huge” advantage from paying the tax?

Let’s examine last year’s playoffs participants by salary ranks:

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Where is this major advantage?  3 out of the 4 conference finalists were amongst the lowest teams in payrolls.

Anecdotal evidence such as Lebron going to Miami is actually a red herring.  The system didn’t cause Lebron to go to Miami.  In fact, the system (and the Bird Exception) is the only reason Lebron could have stayed in Cleveland, who didn’t have cap space to re-sign him.  Lebron left because after 7 years in Cleveland, he simply saw a situation that he found more enticing, largely due to the failure of Cleveland to put a championship roster around him (including at one point failing to trade for Amare Stoudemire).

While all the hoopla surrounded Lebron James last year, no one noticed that Finals MVP Dirk Nowitzki and rising superstar Kevin Durant quietly re-signed with their teams (one in a large market and one in a small market), precisely because they had confidence in their management.  On court success in the NBA has and always will be about competence, not money.  No one is buying a championship.  If you draft intelligently and make smart moves, you can build a dynasty in San Antonio just as easily as in Los Angeles.  If you spend stupidly, you can be irrelevant for an entire decade in New York.  We have seen all this in the current CBA.  It does not favor tax paying teams over non-tax paying teams, but competence over stupidity.

David Stern’s Useful Idiots

So why are Stern and Silver just lying to us?  To deflect blame from it belongs, themselves.  This entire process has been leaderless.  The NBA has a leader that is supposed to guide it through turmoil.  We found out yesterday that a federal mediator is now getting involved in the process and trying to broker a deal.  The same mediator successfully brokered a deal between Major League Soccer and the players to avert a lockout and was lauded by both sides.  The NBA has made a “call to the bullpen”, needing outside help from a neutral party to resolve their differences.  Great idea, right?  WHY DIDN’T THIS HAPPEN 2 MONTHS AGO?

Because this entire process has been ego-driven, with everyone taking their lead from the narcissistic commissioner who seemed more concerned with scoring cheap  public relations points (even at the expense of the truth) than actually protecting the game’s reputation.  Stern didn’t need help, he had everything under control.

Sure enough, after the first 2 weeks of the season were canceled, everyone lined up on a side (myself included), blaming the owners or the players.  We all took the bait.  “The owners are making ridiculous demands.”  “The players are getting millions to play a game.”  We all became David Stern’s useful idiots, allowing his cynicism to pay off and validating his assumption that we would turn on both parties (with more people turning on the players than the owners, which also benefits him) without wondering how they had years to resolve this, and are eventually going to resolve this, but couldn’t manage to do so before games were lost.

Don’t be Stern’s pawn.  Don’t let him get away with this.  Don’t be his useful idiot.  The lockout and impasse were caused by a changing economic landscape.  That was going to happen.  But how did it drag out this long?  Look no further than the man up top.

A league with a quality commissioner who is actually concerned with the good of the game doesn’t have to cancel games twice in 13 years due to a labor impasse because the owners locked out the players after a labor contract that the same commissioner brokered on behalf of those owners is now viewed to be inadequate.

A league with a quality commissioner who is actually concerned about the good of the game does not greet a massive referee betting scandal with talks of a rogue referee and continuing business as usual in lieu of making substantive changes to protect the game’s credibility.

Before this process started, David Stern quipped that this would be his last Collective Bargaining Agreement.  Let’s hope that the eventual resolution of this impasse is also his last act as commissioner and that he is replaced with someone who cares more about the NBA than his own ego.

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