Related Note: LISTEN to my Wednesday radio podcasts for more lockout analysis along with breakdowns of last week's NBA Draft.
The NBA is coming off one of its most exciting playoffs in years. Love him or hate him, a Mark Cuban-owned team winning a championship is GREAT for the game, as is a European shedding the "soft" label and being the best player on the floor during a physical six game series. And, despite a lackluster draft and the looming threat of a lockout, the draft posted its highest viewership in 15 years, with an average of 3.2 million households.
On the court, the league is healthy. There is an influx of star-power and the great franchises of old -- namely the Chicago Bulls, Boston Celtics and LA Lakers -- are true contenders. Even smaller market teams are relevant. The Oklahoma City Thunder has Russell Westbrook and Kevin Durant, the Sacramento Kings now have Jimmer Fredette (ticket sales have already been boosted) and LA's longtime evil stepchild, the Clippers, have one of the game's brightest young stars in Blake Griffin.
All of this leaves many fans asking not only when the next season will be (January in my estimation), but also, why are we heading to a work stoppage? With all of the money being generated, why (and how) is there such a fractured relationship between owners and players?
The problem, like most, goes both ways.
One of the key problems with the NBA structure is the lack of revenue sharing.
Revenue sharing is vastly important because it puts a significant disadvantage on the secondary markets that simply cannot compete with larger ones like New York, LA or Chicago.
To put it blatantly, the inability for the owners and the league to create equal revenue sharing for all teams (owners are currently proposing a 50-50 split) keeps the NBA in prehistoric times economically, despite its longing to appeal to such a young demographic.
Despite its current lockout, the NFL has found the one plausible way to allow small market franchises to compete with major markets: television contracts. The contracts with FOX and CBS ensure that every single game is on TV. The result is simple and effective: no major market team can form a massive monopoly, such as the Knicks do with MSG, or the Yankees do with the YES network.
The meteoric rise of the Thunder has not convinced most NBA fans that their team has a real shot at a title. Many around the league worry that onetime rival teams lack the parity necessary to keep both sides' supporters engaged -- and they're right.
Since Commissioner David Stern took over 28 seasons ago, only eight franchises have won titles: the Lakers with eight, the Bulls with six, the Spurs with four, the Celtics and Pistons with three each, the Rockets with two and the Heat and now Mavericks with one. Even a sport like baseball -- amidst the Yankee dominance -- has seen 18 different baseball franchises win the World Series in that same time span.
So whose fault is the lockout? Who is most responsible?
While the general perception is that the owners are the ones to blame, it is worth noting that they have moved roughly $650 million annually on their salary demands, offering to guarantee players a total of no less than $2 billion in salary and benefits over the life of a 10-year CBA, a commitment nobody expected a year ago.
Initially, owners also wanted to completely ban fully guaranteed deals to protect themselves from injuries and poor judgment, like Eddy Curry (see below). The current proposal states that contracts would be for a maximum of three or four years, as opposed to the five- and six-year deals free agents can sign under the current collective bargaining agreement, with the extra year in both cases going to a player re-signing with his current team.
With the CBA as it's currently constructed, players are guaranteed 57 percent of the league revenues, a clip thought to total $3.8 billion for the '10-'11 season.
Furthermore, owners have also offered a "flex cap," essentially allowing a median $62 million target for all teams (and $4 million above the current soft-cap limit); a proposal which the NBPA rejected and will likely do so once again Thursday, where the final meeting between the two parties will take place before the CBA expires at midnight.
One of the main gripes players have with the owners is the current luxury-tax system. Despite what the owners may think, it simply does not present a consistent opportunity for franchises like Milwaukee and Minnesota to be competitive, both on and off the floor.
Even a team like Memphis, whom ESPN The Magazine recently ranked as No. 1 overall in their "ultimate standings" in two categories, including the hottest teams in all of sports and as the organization that provided the best value for their fans. Even still, the Grizzlies--whose fans consistently sell out the FedEx Forum--can't financially compete with the Celtics, Bulls, Knicks or Lakers because of the drastically steeper ticket prices, especially with luxury suites.
The other vital issue here is that the players believe the owners are inflating their financial losses. During the 2009-'10 season, the owners are claiming they lost $370 million.
That's a fair point as well. When Joe Johnson -- a fine player but not a max player -- signs a deal worth $124 million, Eddy Curry is still making $11.2 million (without playing a single game) and Gilbert Arenas continues to earn over $62 million through 2014, we see clear disconnect between what the owners are saying and actually doing.
"Everyone, regardless of financial status, is looking to find ways to recuperate financial losses," said one respected 10-year veteran readying for free agency. But he, unlike many, thinks both sides are trying everything. "I am sure no stone has been left unturned."
Billy Hunter is the executive director of the NBA Player's Association, and he doesn't exactly feel the same way.
"We have little confidence in [the owners'] projections because obviously the league's performance demonstrated their projections were off," he said recently. "We had the best Finals in years, Game 7 had the highest TV rating in 12 years, the '09-'10 BRI (Basketball Related Income) was the highest in NBA history, player salaries went down, and right now we're experiencing an all-time high in season-ticket sales coupled with the fact that the interest being demonstrated by the public is unprecedented.”
With the influx of marquee free agents lately, the challenges that small market owners face are further illuminated.
In truth, free agency is simply not a luxury that small market owners have. The only chance to land a primetime talent is to get him in the draft, but even then, who knows what happens when the big guns come calling. Yes, I'm looking at you LeBron, Chris Bosh and Amar'e Stoudemire ... and pretty soon, I will be looking at you too Dwight Howard and Chris Paul.
Speaking of marquee free agents, we in turn must harp back on guaranteed contracts, which may just be the biggest problem of all.
Guaranteed contracts -- along with an equal amount of revenue sharing -- have been a death sentence to the NBA.
Amidst the mess that has preceded and surely will proceed, Adam Silver, the NBA's Deputy Commissioner, recently told the Huffington Post he was still confident that a deal would get done.
"This is a business dispute," he says. "Unlike any other negotiation, it has to be resolved between these two parties. We can't run this league without the players and they can't operate without us. [I told the draftees] to have confidence in your union and your representatives to get the best deal done for all of us."
Direct the blame towards whomever you want, the owners or the players. Bottom line? There is enough bad behavior to go around. If you want to blame Stern as well, go ahead, but remember, he is the facilitator here, and has to finely walk the line of representing both parties.
At the end of the day, though, the owners will most likely have the power and resiliency to wait it out because they are the billionaires writing the checks. Whether or not the millionaire players have enough unity and alignment to stick together over the long term to fight this battle to the end and, thus, make things right, will prove instrumental moving forward.
With all of this dysfunction surrounding a major corporation, is it not fair to compare it to the current financial debacle on Capitol Hill? Everyone knows how bad the problem is in Washington, yet our elected leaders cannot for the life of them get together and solve it.
In the NBA, the two sides are as far apart as ever. And, like in Washington, matters are going to be much worse before they can begin to heal.
Plus, check out my brand new HuffPost sports blog, The Schultz Report, for a fresh and daily outlook on all things sports.