What percentage of BRI should players get in the new CBA?

[LooseCannon]

Forget hard cap vs soft cap for a moment.  Currently, the players receive up to 57% of basketball-related income.  A portion of salaries are held in escrow and given back to the teams if salaries exceed 57% of BRI.  According to reports, the players have offered to bring that down to 54.3%, while the owners' offers appear to want to push that down to 39%.

You could keep the same ceiling, but lower the threshold to something lower than 57%.  You can go with a hard cap and offer to make up a difference if salaries fall below a certain threshold.  The mechanics aren't that important right now.

It's a mistake to think of the salary cap, whether hard or soft, in terms of a set dollar amount.  Instead, you should consider it as a percentage of BRI.  The soft cap is currently set at 51% of BRI and exceptions are allowed to take it up to 57%.

Pick a number, probably between 39& and 57%, and tell me what percentage of the money you think should be going to the players.

[Spilling Green Dye]

45%

[KGs Knee]

100%

I don't pay money to see guys in suits.  I pay money to see players.



Now, obviously the league wouldn't be able to function like this, so, it's impossible.  The players should definitely not be recieving less than 50% under any circumstances though.  The 54% number the players have put forth sounds about right.

[Fafnir]

Around 50% give or take a few points, after legitimate deductions for some expenses. I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

[KGs Knee]

I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

I agree

If you don't have enough liquid assets to buy a team, then don't.  If I were the players I would try to get some sort of stipulation in the new CBA preventing prospective buyers from buying teams on loan.  It is just as much as anything the reason owners are in financial straights currently.

[greenpride32]

I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

I agree

If you don't have enough liquid assets to buy a team, then don't.  If I were the players I would try to get some sort of stipulation in the new CBA preventing prospective buyers from buying teams on loan.  It is just as much as anything the reason owners are in financial straights currently.

Most people in this country that buy a home do so on a loan and the interest is treated as an expense that is tax deductible.  I don't see how NBA ownership is any different.  The owners are only able to secure such large loans because they have siginficant assets as collateral, they aren't in any financial straights. 
 

[Boris Badenov]

I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

I agree

If you don't have enough liquid assets to buy a team, then don't.  If I were the players I would try to get some sort of stipulation in the new CBA preventing prospective buyers from buying teams on loan.  It is just as much as anything the reason owners are in financial straights currently.

In every other business setting, we let owners borrow money to finance the firm, and we recognize that interest costs are an expense associated with doing that. Why should the NBA be any different?

And as a practical matter, you can't ask that only people with no debt be allowed to purchase teams - those people just don't exist. Everyone with enough net worth to buy an NBA team carries lots of debt.

[KGs Knee]

[Most people in this country that buy a home do so on a loan and the interest is treated as an expense that is tax deductible.  I don't see how NBA ownership is any different.  The owners are only able to secure such large loans because they have siginficant assets as collateral, they aren't in any financial straights. 

In every other business setting, we let owners borrow money to finance the firm, and we recognize that interest costs are an expense associated with doing that. Why should the NBA be any different?

And as a practical matter, you can't ask that only people with no debt be allowed to purchase teams - those people just don't exist. Everyone with enough net worth to buy an NBA team carries lots of debt.

Buying anything on credit is quite often a bad idea.  It is one of the main reasons our economy is in such bad shape right now.  It is unavoidable at times, but, credit is used far too often for what could be considered reasonably prudent.

Furthermore, I never said prospective buyers could not have outside debt, but that they should not be buying teams with someone else's money.  Two different things.  Your outside debt, and team finances should be seperate.  The problem isn't owners being in financial straights prior to buying a team, the problem is buying the team puts them in that position.

[slamtheking]

I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

I agree

If you don't have enough liquid assets to buy a team, then don't.  If I were the players I would try to get some sort of stipulation in the new CBA preventing prospective buyers from buying teams on loan.  It is just as much as anything the reason owners are in financial straights currently.

Very good point.

I think it should be 67% of Net Profit with clear definitions of what constitutes basketball operating expenses. This would include staff salaries, arena costs, concession/merchandising expense, etc...   That 67% would be expected to cover salaries, health care and retirement benefits (including the monies currently being directed towards older players that retired before the recent CBA agreements.  I know there's concerns about how to guarantee there will be Net amounts after expenses but with the flow of money coming in, there really shouldn't be an issue.  The total amount would be determined at the end of the year.

This net amount would also lump in monies from concessions, tickets, promotions, broadcasting fees, merchandising, appearance fees, etc....  including any monies the players earn at non-NBA events (because they're parlaying their NBA-related fame into extra cash). 

Each team splits the remaining 33% amongst themselves in a manner they determine (whether equally or based on a percentage of monies raised or based on wins or whatever formula they like)

I'd go a step further in really levelling the playing field between teams by giving the lump sum to the players association and letting them divvy up the monies amongst the players in whatever manner they determine.  This puts the onus on the players union to figure out how much a player is worth. 
- I'd allow the teams to control whatever players they draft for 5-6 years.  2 rounds of drafts.  Players can resign with their teams for any length of time or move on to other teams as a free agent.  Money no longer becomes an issue.  Teams cannot acquire more than 3 FAs in a year.  This will hopefully slow any new Heatles situations.
- They can release a player at any time and acquire a player at any time prior to the playoffs.  Rosters set at 15 with 12 dressing for games.  Playoff rosters set a month before the season ends.  Again, the player union has to determine how to pay players for partial seasons, underperformance, league experience, stat producers, role players, etc...
- They can trade anyone at any time.  Since they don't have to worry about salaries, they can make trades strictly based on talent.  The commissioner would have full authority to revoke trades that are too imbalanced or penalize teams that pull something underhanded to collude on stacking a particular team.

Just some thoughts.  It's too radical for this league but with this type of a financial structure, it should eliminate the root cause of strikes or lockouts.  I think the players union would dissolve into a cesspool of infighting but if they don't like it, let them get real jobs -- you know, the ones that Lebron mocks.

[Fafnir]

I'm not a fan of allowing owners to count their massive interest payments on their financed team purchases as expenses.

I agree

If you don't have enough liquid assets to buy a team, then don't.  If I were the players I would try to get some sort of stipulation in the new CBA preventing prospective buyers from buying teams on loan.  It is just as much as anything the reason owners are in financial straights currently.

In every other business setting, we let owners borrow money to finance the firm, and we recognize that interest costs are an expense associated with doing that. Why should the NBA be any different?

And as a practical matter, you can't ask that only people with no debt be allowed to purchase teams - those people just don't exist. Everyone with enough net worth to buy an NBA team carries lots of debt.

Because what often happens is that you have billionaires financing sports team purchases entirely on debt and then using the team to repay the debt, often conducted through shell corporations so that if things go bad the owner doesn't have liability.

So they claim the team isn't "profitable" when they're deducting the purchase costs from their gross revenues. They paid too much for the team and then demand that everyone else take a haircut because they paid the previous owner too much.

If you're taking loans to cover short term cash flows, or even year to year shortfalls that is legitimate.

This is a side show to the NBA's overall problems, the league as its currently structured is losing money even if you don't count the acquistion interest costs. Fundamentally I get the owners position, currently they assume all of the risk that is associated with the business of the NBA. I just hope they can work it out.

[Chris]

This is a REALLY complicated question.  Honestly, I am with the owners that there needs to be something worked in to be looking at income after expenses.  Currently, the league is losing money because they are paying the players 57% of the income, and the 43% does not cover the expenses.  So you have the players making all profit, and overall, owners are actually losing money on it. 

[LooseCannon]

Buying anything on credit is quite often a bad idea.  It is one of the main reasons our economy is in such bad shape right now.  It is unavoidable at times, but, credit is used far too often for what could be considered reasonably prudent.

Furthermore, I never said prospective buyers could not have outside debt, but that they should not be buying teams with someone else's money.  Two different things.  Your outside debt, and team finances should be seperate.  The problem isn't owners being in financial straights prior to buying a team, the problem is buying the team puts them in that position.

It's not sound investing to have $300 million lying around in a bank account so that you can write a check to buy a controlling interest in a team.  People with a ton of money make money because it's all invested.

There's a transactional cost to liquifying assets, so financing the purchase of a sports team through loans may actually save money for the buyers.  These owners could sell off assets and purchase teams upfront in cash and they should probably made to show that they are capable of it, but they shouldn't be forced to go that route.

I don't think it makes sense to count interest on financing as an expense to be debited against basketball-related income.  Not unless you want to also account for capital gains from selling a team as part of income.  You would have to use accounting tricks to smooth out the numbers of have massive swings in BRI from year to year.  It's better to just leave the entire investment side of owning a sports team out of the equation and focus on the annual revenue streams.

[Donoghus]

It's ridiculous, IMO, that the players are pulling that much BRI in the first place.  57% is a lot. 

I'd drop it below 50% and propose something like 48%. 

[LooseCannon]

I think it should be 67% of Net Profit with clear definitions of what constitutes basketball operating expenses.

Of all the objections I might have to your ideas, the first is that the owners would never go for the level of disclosure that would allow the players to feel comfortable taking a percentage of net profits.  Just look at all those big Hollywood movies that show no net profits due to accounting tricks meant to keep from paying stars who have percentage agreements as part of their contracts.

[Fafnir]

It's ridiculous, IMO, that the players are pulling that much BRI in the first place.  57% is a lot. 

I'd drop it below 50% and propose something like 48%. 

Yeah the players need to make less money if the league is losing money as an aggregate.