Commentary

Lockout: Settlement on July 3?

Originally Published: October 21, 2010
By Chris Sheridan | ESPN.com

David SternGarrett W. Ellwood/Getty ImagesCommissioner David Stern knows it takes years to rebuild a league after a work stoppage.

NEW YORK -- Commissioner David Stern says everyone should know by late February whether the NBA is headed toward a lockout or toward a labor settlement.

With that statement in mind, here are two predictions:

Prediction No. 1: Come mid-February, Stern will say something along the lines of "it's too difficult to tell right now which track we're heading down."

Prediction No. 2: When D-Day arrives June 30 (the date the current labor agreement expires), the sides will agree to stop the clock and continue talking for another day or two or three.

Which means that July 2 or 3 or 4, we'll know for sure whether it's war or peace, lockout or no lockout.

I've been covering the NBA and its on-the-court and off-the-court business for more than a decade and a half, and I have gotten to know a vast majority of the key players in this drama personally. (Examples: Billy Hunter will not take a mulligan in golf if his manhood is challenged; lead NBA attorney Rick Buchanan has hair that would make Vinny Del Negro jealous; Stern has silver coffee urns brought to his office while his staff makes due with Gevalia machines.) And my opinion, coming out of Stern and deputy commissioner Adam Silver's news conference following the conclusion of the Board of Governors' meetings at the St. Regis Hotel, is this:

There's a 60 to 70 percent chance they settle, a 30 to 40 percent chance there is a lockout.

Here's why:

  • First and foremost, eventually they have to settle, because without a settlement, there is no NBA. Stern is no Gary Bettman, and he is not about to kill his sport. Further, Stern knows better than anyone that if there is a work stoppage, history has shown it takes about five years to build a business back to where it was before the stoppage.

  • If you settle without imposing a lockout, the public does not take sides. But if there is a lockout, the owners and the commissioner will have no choice but to demonize the very players they have spent the past five years promoting as such good global citizens through programs such as NBA Cares and Basketball Without Borders. All that sweat equity goes out the window if the players are portrayed or perceived as greedy.

  • If you look at an imaginary NBA growth chart that begins in 1999 -- when the last lockout ended -- and carries out 20 to 25 years, which is when LeBron James, Kevin Durant and their ilk likely will be nearing retirement, that chart continues to go up and up and up in terms of popularity, especially as it relates to the younger demographic that has tuned out baseball and embraced basketball. (And that's just domestically. The equation gets much larger when you factor in the global markets the league has cultivated so determinedly for the past decade.)

    Does it make sense to dynamite all that good will, all those good vibes and all that good future growth potential?

    Methinks not.

    Here's another thing: The faces of the players and the owners have turned over quite a bit since the last work stoppage in 1998-99, but the faces of the main power brokers (Stern and players' union director Hunter) and the faces of the lawyers who have to hammer out the eventual settlement are, for the most part, the same faces who've been negotiating these collective agreements and various team versus player grievances for a decade and a half.

    All those lawyers have developed their own relationship dynamics, and they all have one piece of shared common knowledge that they all know will ultimately be a major factor: The horse trading that goes on in these negotiations always happens at the end, and there's really no reason for any of those familiar faces to expect anything but the same to happen again this time.

    Stern makes the argument that sponsorship and season-ticket renewals will take a big hit in March, April and May if the uncertainty over a work stoppage lasts into late June. But I would retort that much of that economic damage can be undone, through hard work, over the course of the summer if a new collective bargaining agreement is in place in early July.

    Here's something else to chew on: Most people expect the National Football League to be going through its own labor war a year from now. And if there is no NFL next October, there are going to be an awful lot of idle sports fans, many in the demographic Stern is trying so hard to appeal to, sitting around looking for something to fill the void.

    Does the NBA really want to miss out on an opportunity to capture some of that audience? Again, methinks not.

    As badly as some teams are hurting economically, the owners are already discussing ways to create a revenue sharing pool larger than the $54 million they currently share. That alone will help give some of the weaker franchises a fighting chance to become profitable.

    From the players, the owners are seeking a fundamental change in the way basketball related income (BRI) is calculated, whereby expenses instead of just revenues would be included in the equation and the players would receive some percentage of that number (currently, players are guaranteed 57 percent of BRI). The union is not completely opposed philosophically to changing the BRI formula, but if it goes down that road, it is going to want to continue receiving a big slice of the pie.

    If the sides agree to keep expenses out of the BRI equation, the players would be open to negotiating down from their guaranteed 57 percent of revenue, so long as the soft salary cap (which includes the Larry Bird exception and the mid-level exception) survives in some form.

    "There seems to be a mutual determination to push and probe and do and discuss, because there's an increasing understanding on both sides of what the risk of not making a deal entails," Stern said.

    Remember, the sides already have mechanisms in place such as the luxury tax (paid by the highest-spending teams and redistributed to non-tax-paying teams) and the escrow tax (whereby 9 percent of players' salaries are withheld to ensure their percentage of revenues does not exceed 57 percent) that determine how their pools of money are divided up. Those structures can be maintained and tweaked in the new deal to give every owner an opportunity to be profitable so the entire operating system does not have to be reinvented.

    Owners and players met in a bargaining session earlier this week, Stern describing the ongoing discussions as no more than "constructive dialogue." More meetings are scheduled, and by the All-Star break we'll get the commish's reading on where things stand. After that, there will be more rhetoric, more doomsday predictions, maybe even a personal attack.

    But come late June (and/or the first few days of July), the time to get the deal done will have arrived.

    And the bottom line is this: Both sides might be stubborn, but they are not stupid.

    They are smart. And the smart thing to do when it comes down to money time is to find a middle ground that both sides can live with. It's pure common sense, and the NBA has too much invested in keeping that long-term growth chart moving upward to do something stupid that would damage its brand.

    In the end, cooler heads will probably prevail and reasonableness will probably triumph. I'll even go way out on a limb and take a gander at exactly when that'll happen: between 10 and 11 ET on the night of July 3, 2011 -- 70 to 71 hours after the sides stop the clock to continue talking.