How can you distinguish an optimist from a pessimist? Ask what he'll be doing on Nov. 1.
If the answer is "Watching NBA basketball," then you have found an optimist -- his glass is half full. For the NBA pessimist the glass is not only half empty, it's bone dry after being left to bake in the desert sun on a hot summer day. Somewhere in the middle lies the truth.
Following a weekend of talks that were long if not necessarily productive, the two sides in the labor dispute returned to a Manhattan conference room Monday for small group meetings that NBA commissioner David Stern said "set the table" for the large groups on Tuesday. At stake is the start of the NBA season.
As detailed by TrueHoop's Henry Abbott, it will take about 30 days to bootstrap the season once the two sides shake hands on a deal. That's how it went in 1999, when the two sides narrowly averted a canceled season on Jan. 5, and the first games tipped-off on Feb. 5. This year we're already past the 30-day milestone (that was Sunday), but compressing the process down to 28 days doesn't seem wholly unreasonable. That gives them until Tuesday.
Unfortunately, the two sides remain far apart on several key issues. "There's a huge bridge, gap, that I don't know if we're going to be able to close it or not," said National Basketball Players Association chief Billy Hunter. Stern was even more ominous. "I'm focused on [getting] the two committees in and seeing whether they can either have a season or not have a season," he said on Wednesday. "And that's what's at risk this weekend."
Along with the increased urgency came a change in the meeting dynamics, fueled by the presence of star players such as the Miami Heat's Dwyane Wade. A confrontation erupted Friday between Wade and Stern in response to a gesture that Wade perceived as a slight, which nearly derailed the proceedings. With the start of the NBA season so close to the brink, the two sides can ill afford such distractions -- however, the presence of prominent players is crucial with such little time remaining. If the union strikes a deal that players are dead-set against, then ratification of the agreement is in doubt. The union needs buy-in now, because Hunter and union president Derek Fisher are going to have very little time to sell a deal before the players vote on whether or not to accept it.
Can the two sides resolve their differences in two days, following two years of talks that yielded little progress?
They remain far apart on several key issues -- most notably the players' split of revenues. After receiving 57 percent of basketball-related income in the previous agreement, the owners are seeking to reduce the players' share of the pie to 46 percent -- and haven't budged from that stance. The players have dropped their demand to 53 percent, leaving a gap of 7 percent -- about $275 million in the first year of the agreement, and perhaps $1.8 billion over the life of a six-year deal -- between their respective offers.
The players are also dead-set against a hard cap, or anything that resembles one. The owners suggested an alternative in the form of a progressive luxury tax, but the players consider any such system that effectively caps team spending to be a hard cap in disguise, and therefore a non-starter.
If the framework of a deal is not in place by the close of business on Tuesday, then the calendar makes starting the season on time a virtual impossibility. The league will give the two sides this one last chance to find a satisfactory middle ground before acting, but an official announcement postponing the start of the season could come as early as Wednesday should the talks fail to result in an agreement.
At that point, both sides likely could retreat to their respective corners to regroup. If this happens, the situation will get worse before it gets better. "We agreed that once we start to lose them [the games] and players lose paychecks and owners lose money, positions on both sides will start to harden," Stern said. It may take until Nov. 15 -- when most players miss their first paychecks -- before the discussions start to thaw.
Many think this was the owners' intent all along. Time favors the owners in a protracted labor dispute, so some see the owners as stalling in order to break the union, with the real horse trading not starting until players start to miss paychecks. In other words, the owners won't start to deal until the players are ready to fold.
But even though the owners are favored in the long run, it doesn't mean they won't suffer scars in a protracted dispute. Even a single missed game hurts them in the pocketbook and in the eyes of the fans. While some hard-line owners say they'd rather wait -- or even cancel the season -- than accept a deal they don't like, the majority would probably accept a reasonable compromise in order to start the season on time. This gives the players a short window of opportunity in which they have leverage to extract some concessions from the owners before games are lost and the offers get worse.
A compromise would start with the owners bringing their offer for the players' revenue split up to at least 50 percent. Friday's bargaining session almost ended shortly after it began due to the owners' continued inflexibility over this issue with one player reportedly saying "There's no reason to go back in there."
The players' consider a 46 percent split to be drastic overreaching on the part of the owners. From their perspective the split has been at least 53 percent for 28 years, they agreed to 57 percent just six years ago, and revenues have continued to grow since that time -- including through the recent economic downturn. Yet the owners say they are now suffering massive losses and need the players to take 46 percent because the previous system isn't working.
In other words, the owners want to cut the players' share to a level lower than it has ever been, while revenues have been higher than they have ever been. The league hasn't been able to sway the players with this argument for two years. What chance do they have in these last two days before they are forced to lose regular-season games? Any hope of a compromise starts with significant movement from the owners on the revenue split. This is the biggest of the "big three" issues to resolve.
"We're apart on the split," Stern said following Monday's session. "But we know that the answer lies somewhere between where they were and where we are." Apparently, even Stern agrees that the owners' proposal needs to increase.
The second issue is revenue sharing. The small-market owners will never agree to a 50/50 split unless they know they're being covered by the big-market teams such as the New York Knicks and Los Angeles Lakers. This issue is among the owners themselves rather than between the owners and players, but it is crucial to a deal. A robust system of revenue sharing needs to be in place before a compromise can be reached on the split between the owners and players.
The third big issue is the salary cap system, which includes guarantees, exceptions, amnesty provisions, franchise tags, contract lengths, luxury tax, and the like. The two sides discussed system issues in detail over the weekend, trying to build momentum before tacking the revenue split. But that's doing it backward -- the system is a function of the revenue split, not the other way around. The lower the revenue split, the more of the previous system the players will be able to retain. At 50 percent the players may be able to keep most of the previous system. But the players might not be able to keep any of these provisions if they insist on 53 percent.
For the players, it may come down to a choice between a more favorable split of the revenue or a salary cap system like they had before, or perhaps something in the middle if the two sides compromise on both issues.
The bottom line is that both sides want a deal. Both sides want arenas to be filled on Nov. 1 as the NBA season tips off. But both sides also want to maximize the money they get out of the NBA, and this money has to come at the expense of the other side.
"We're not near anything. But wherever that is, we're closer than we were before," Stern said following Saturday's session.
Hardly comforting words with so much on the line, and with so little time to find an acceptable middle ground.
Author note: Once again, many thanks to my team of legal and financial analysts for their assistance with this article.