Magic Number: Where the NBA and NBPA Should Settle the Basketball-Related Income Issue

A central issue currently being negotiated between the NBA and NBPA is how to divide basketball-related income (“BRI”) between the parties.  In short, BRI is “. . . any income received by the NBA, NBA Properties or NBA Media Ventures.”

In the most recent collective bargaining agreement, players earned 57 percent of BRI.

Citing huge losses by owners in recent years, from the outset of the NBA lockout on July 1, 2011, owners have sought to drastically reduce the percentage of BRI players receive in the new collective bargaining agreement.  Initially, owners offered players 46 percent of BRI.

As the lockout has persisted for over 90 days without significant progress being made toward adopting a new collective bargaining agreement, the players backed off of their request to maintain the status quo in terms of BRI.  This week, the players reportedly offered to settle for receiving 53 percent of BRI.  According to reports, this figure would have put $1 billion back in the pockets of owners over the course of six years.

However, the owners did not accept this offer, and reportedly countered with 47 percent on Tuesday, October 4, 2011.

Negotiations between the parties ended on October 4, 2011 without further meetings being scheduled.  Both sides reported that they are still far apart in terms of what they desire in a new collective bargaining agreement.

Given the status of negotiations over BRI, where can one expect that this carousel will land when negotiations end and a new collective bargaining agreement is reached?

The history of the negotiations arguably points to where players and owners will agree:  52 percent for the players and 48 percent for the owners.

At the outset of negotiations, the parties were ten percent apart in terms of what they deemed an acceptable BRI percentage.  The owners assert that they need to be compensated with a greater amount of BRI in order to deal with the financial losses they’ve been dealt during the tough economy.  The players assert that revenue sharing amongst teams would reduce the owner’s reliance upon BRI to make up for these losses.

However, the players have recognized that they must step off of their 57 percent demand in order to move negotiations forward.  Reducing their demand by four percent, their first offer of 53 percent is arguably a good faith effort to move negotiations forward.  This is demonstrated by the fact that from reports, the return of an additional four percent of BRI to the owners would provide owners $1 billion over six years to offset their losses.

In a perfect world, this offer by the players would have been enough to satisfy the owners and settle this issue.  For starters, it puts more money into the owner’s pockets than they received under the current collective bargaining agreement.  Additionally, it demonstrates the player’s willingness to earn less money so that the league can continue functioning.  Imagine going in for a year-end review at your job and telling your boss that you are willing to accept a four percent lower salary so that your boss can keep his business open.  By making this offer, that’s what the NBA has done.

However, this isn’t a perfect world and the NBA did not accept the player’s offer.

Arguably, the owner’s counter offer of 47 percent was a counter offer used to position themselves to receive the highest amount of BRI that the players are willing to offer.  It seems that the owners do not want to settle for anything less than receiving 50 percent of BRI.  By countering with a percentage that grants them 53 percent of BRI, they have positioned themselves to further negotiate and eventually accept an offer which puts them close to their goal BRI of 50-50.

Currently, the players and owners are six percent apart in terms of their desired BRI percentages.

However, in my opinion, the players will not settle for a collective bargaining agreement which grants them a BRI equal to that which the owners obtain.

This is due to the fact that the NBA is a league driven by the star-status of many of its players.  While some NBA fans support their hometown teams, it is arguable that most throw their support behind star players.  The Kobe’s, LeBron’s, Carmelo’s and DWade’s (and Dirk’s, in my case) are what draw fan’s attraction to the league.  Unlike other leagues, without its players, the NBA is nothing.  This is demonstrated by the fact that many of these stars have obtained lucrative contracts to play elsewhere during the course of the lockout.  By signing these contracts, they are demonstrating to the NBA that stars do not need it to earn a living; they can take their talents elsewhere.

In order to hang onto its stars, the NBA must properly compensate them.  It is unlikely that a BRI split of 51-49 would satisfy the demands of the players.

Thus, when a new collective bargaining agreement is reached, it is my assessment that players will receive 52 percent of BRI and owners will receive 48 percent of BRI.

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