SBD/April 18, 2011/Leagues and Governing Bodies

Stern Says NBA Owners Have Agreed To Submit New CBA Proposal To Players

Stern says league owners have agreed to submit a new CBA proposal
NBA Commissioner David Stern Friday said that the league's owners, during an "exhaustive two days of meetings" with the NBA BOG last week, "agreed to submit a new proposal" for a CBA to the NBPA, according to Chris Mannix of SI.com. It "wasn't made clear what changes would be in that proposal." Stern Friday "continued to hammer home the point that the NBA is bleeding cash." He "revealed that after losing $370 million in 2008-2009 and $340 million in '09-10, the league was projected to lose $300 million this season, a number Stern said could increase if a lockout is implemented on July 1." NBA Deputy Commissioner & COO Adam Silver said, "The labor uncertainty is beginning to have an impact on our business. We are in discussions with sponsors and other partners about relationships for next year and we can't assure them that we are going to have games. They, as you might imagine, (have begun) to pull back some of their spending on the NBA." A source briefed on last week's meetings said owners are "more resolved than ever" to implement a system that makes the league profitable "not just next year, but 10 or 15 years from now, too." Mannix wrote "unless the league makes significant concessions in its next proposal -- which multiple league sources call 'highly unlikely' -- the NBA will continue on its path toward a work stoppage" (SI.com, 4/15). CBSSPORTS.com's Ken Berger cited a source familiar with the owners' strategy as saying that they are "willing to budge on a key aspect of their January 2010 proposal by 'transitioning' to some of the hard-cap elements they are seeking in a new system." The owners also "want to deduct certain expenses off the top of gross revenues before calculating basketball-related income," of which the players receive 57% in the current deal. The players "already have proposed allowing owners to deduct construction and debt expenses from new and renovated arenas, so there would appear to be at least a starting point from which to negotiate." Berger noted 22 teams are "projected to lose money this season, while eight will be profitable" (CBSSPORTS.com, 4/15).

THINGS LOOKING UP? ESPN N.Y.'s Chris Sheridan wrote, "If you thought a lockout was a certainty, you may want to reconsider." Stern indicated that "movement is coming ... in announcing that NBA owners had authorized the labor relations committee to make a new formal proposal." Formal proposals "move the needle, and this will be the first one the owners have given the players" in nearly 16 months. Sheridan wrote, "When attendance is up for the seventh consecutive season, when television ratings are up 38 percent on ABC, 28 percent on ESPN and 42 percent on TNT, when video views on NBA.com are up 140 percent from a year ago, when global merchandise sales are up 20 percent in the past 12 months, there can be no question that business is booming. And we are all supposed to believe they are ready to take out the dynamite and blow that up? Sorry. It just doesn't pass the smell test" (ESPN.com, 4/15). In Jacksonville, Gene Frenette wrote under the header, "NBA On Fast Break Toward NFL's Foolish Path." Frenette: "Take heart, NFL, you're not the only league stupid enough to threaten killing the golden goose and turning off a fan base. The NBA is on a similar track" (JACKSONVILLE.com, 4/16).

MIXED MESSAGES: SPORTSBUSINESS JOURNAL's John Lombardo notes the NBA regular season was "so compelling" that it "pushed leaguewide revenue to an all-time high of $4.3 billion, delivered a record television audience for its network partners and brought higher than anticipated gate revenue." Overall, the NBA "drew 21.3 million fans" this season, the "fifth-highest attendance in NBA history." Nineteen of 30 teams "saw an average attendance increase, compared with 13 teams last season." Leaguewide team sponsorship revenue "hit record levels, though league executives would not disclose specific figures." NBA Exec VP/Team Marketing & Business Operations Chris Granger: "Revenue generation hasn't been the problem; it is the cost of generating revenue that has been the issue." For example, Granger said that "many teams have added ticket sales and service staff while investing in more sophisticated marketing and digital efforts in an effort to drive revenue" (SPORTSBUSINESS JOURNAL, 4/18 issue).

LOSING ITS WAY? The GLOBE & MAIL's Bruce Dowbiggin notes the NBA was "boasting record TV audiences as it began the playoffs this past weekend," but there is a "palpable sense that, on the verge of an almost certain lockout of its players this fall, the NBA has lost its way." The "bruited Miami Heat merger of LeBron James, Dwyane Wade and Chris Bosh was something less than the artistic and promotional success it was hoped to be." Also, the "tarnishing of James's star, the aging of Kobe Bryant and the tacky Carmelo Anthony auction in midseason took much lustre off a league driven by its star names," and the "atrophying of the Boston Celtics and the ugly move of the Sacramento Kings to Anaheim ... also dimmed the glow in the wake of a nasty lockout" (GLOBE & MAIL, 4/18).
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