Billion-dollar question: NBA facing long timeout? Rising salaries spur basketball owners to lock out players

June 30, 1998|By Jerry Bembry | Jerry Bembry,SUN STAFF

It's a sport that boasts the most recognizable figure in sports, Michael Jordan. It's a league that's been a model of how to do business, having never lost a regular-season game to a work stoppage. Yet after a season when owners paid out $1 billion in compensation to players, the National Basketball Association is saying enough is enough.

Commissioner David Stern announced yesterday what has been rumored for months: The NBA will lock out its players beginning at midnight tonight. The move puts on hold free-agent signings, which were to begin tomorrow. Though it's the third time in four years that the NBA has imposed a lockout, the owners' desire to curb escalating salaries -- and the players' reluctance to give back -- may carry this work stoppage into the start of next season.

"We can't afford to play the season under the current system -- that's the reality," a solemn Stern said during a news conference yesterday afternoon. "Since primary beneficiaries of the current system are the players, their risk is greater than the owners' -- although there is a mutual risk in respect to the fans."

To assess that risk, Stern need look no further than the players strike in Major League Baseball during 1994 and 1995, from which baseball just recently recovered. But, according to Stern, while salaries have been increasing, NBA owners have experienced a steady decline in profits in each of the past four years.

"The final numbers aren't in, but, for the first time as a whole, we believe the league was actually unprofitable last season," said Stern, saying nearly half the teams lost money last season.

Under the collective bargaining agreement that is in effect through the 2000-2001 season, the players are guaranteed 48 percent of basketball-related revenue.

According to the NBA, players received 57 percent of basketball-related revenue last season -- roughly $1 billion. And with that percentage expected to continue its steady rise, the owners recommended a lockout by a vote of 27-2.

Billy Hunter, president of the National Basketball Players Association, could not immediately be reached for comment, but his group has stood firm in its desire to hold on to the Larry Bird exception, which allows teams to exceed the salary cap to hold )) on to their free agents.

Thus, the Chicago Bulls were able to re-sign Jordan for approximately $35 million last year, well above the allotted $26.9 million-per-team salary cap. The average salary in the NBA last season was about $2.6 million. Approximately 55 percent of the players make more than $1 million.

"At the last meeting, the union said unless the owners were prepared to agree to maintain the Larry Bird exception exactly where it was, they had nothing further to talk about," said NBA deputy commissioner Russ Granik. "We can't have a situation where we go back to the owners again and say we have a system that is totally open-ended. We can't do that again. It didn't work too well the last few years."

Granik said the league has made four proposals, "all involving player salaries going up each year.

"The players made one set of proposals and have never moved off those proposals in any way on economic issues."

With neither side apparently willing to budge, a lockout could stretch longer than the three-month lockout of 1995 (the 1996 lockout was over in less than three hours). The two sides have met nine times since April 1 in attempts to iron out an agreement, but the last session lasted a half-hour. No new sessions are scheduled before tonight's midnight deadline.

"We were in touch with the union. We stood ready to meet," Stern said. "Instead of working with a deal that was not working, we will lock out."

The lockout not only puts a hold on free-agent signings, but it also bans teams from talking with players and prohibits players from working out at team facilities (injured players will be allowed to rehabilitate with team trainers outside of NBA facilities). The league will allow teams to fulfill commitments to charity games already scheduled by players.

"We hope those games will go on," Granik said.

A casualty of the lockout is the group of NBA players that was expected to represent the United States next month at the World Championships of Basketball in Athens, Greece. The players stated last month that they would boycott the tournament in the event of a lockout, even though they signed a contract with USA Basketball, a separate entity from the NBA.

USA Basketball, which is headed by Granik, announced June 17 that it would replace the NBA players with a combination of college players, Continental Basketball Association players, Americans playing overseas and retired NBA players.

That, in effect, could put an end to the "Dream Teams" the NBA introduced during the 1992 Olympics. The union had suggested a moratorium that would allow the players to compete in Greece, but the league declined.

The concern for the league, and its owners, is reduced spending on salaries. And the league is willing to risk a work stoppage to do that.

"Yes, that is fair and accurate," was Stern's response, when asked whether the league could miss games. "There are a number of clubs that will do better not operating than operating. That's something the players don't seem to understand."

Key issues

The two main issues leading to the NBA lockout:

Basketball-related revenue: Under the collective bargaining agreement, the NBA has the option to reopen the agreement if players are paid more than 51.8 percent of the league's basketball-related revenue. Last season, the league paid out 57 percent (approximately $1 billion). Owners are exercising their right to reopen the agreement.

Larry Bird exception: Players want to maintain the exception, which allows free agents to re-sign with their teams for any amount, not subject to the $26.9 million-per-team salary cap.

Pub Date: 6/30/98

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