The NBA standoff pits the elite vs. the elite
By George F. Will,
Kevin Garnett, 35, the Boston Celtics forward who has had a stellar career, was with the Minnesota Timberwolves in 2004 when a teammate, Latrell Sprewell, augmented the national stock of unfortunate pronouncements. Dissatisfied with a three-year, $21 million contract extension offer, Sprewell said: “I’ve got my family to feed.”
Remembering the ridicule that Sprewell received, Garnett must know the players’ public relations problems as their union, with his emphatic support, tussles with team owners over, among other things, the players’ share of the National Basketball Association’s almost $4.5 billion in revenue last season. With 25 million Americans unemployed, underemployed or too discouraged to seek employment, why should anyone care that fewer than 450 jobs are jeopardized by a labor dispute? The jobs are those of America’s highest-paid professional athletes. NBA players’ average salary is $5.1 million, and even those receiving the NBA minimum ($474,000) are in the highest tax bracket.
The NBA’s dispute, which has already caused cancellation of the preseason and the first two weeks of the regular season, at a cost of perhaps $500 million, illustrates an agreeable truth: Man is an economic animal, rationally maximizing income, except when he isn’t. Many of the players are prepared to lose substantial income by prolonging negotiations over a new collective bargaining agreement. They are doing so to win concessions that will primarily benefit players much younger than Garnett. Fans accuse the players of avarice, but the longer the impasse persists, and the larger the losses, the more altruism will explain this.
From his office overlooking St. Patrick’s Cathedral, David Stern, NBA commissioner since 1984, can brood upon the Book of Job: Man is born unto trouble, as the sparks fly upward. Stern says that 22 of 30 teams lost money last year and their cumulative loss of $450 million exceeded the profits of the other eight.
The owners want players to receive much less than their current 57 percent of “basketball-related income.” The owners originally said 47 percent; the players grudgingly said maybe 53 percent. A 50-50 split has been suggested, but the players say 53 is low enough. Every percentage point means $40 million spread over the rosters of 30 teams. Not much.
There are other issues, including the severity of a “luxury tax” on the highest payrolls to restrain high spending on free-agent players. But Garnett has seen this before. He went directly from high school to the NBA. In 1997, the Timberwolves gave him a six-year, $126 million contract, which gave the rest of the owners heartburn. They caused the league’s first work stoppage and forced a new collective bargaining agreement. Under its salary cap, the best six-year deal that Garnett could have received would have been about $70 million.
Labor-management disputes test the two sides’ animal spirits and pain thresholds. The former favor the players, who — owners frequently forget this — have climbed to the narrow peak of their profession’s pyramid because they are ferocious competitors who loathe losing at anything. Owners, however, have higher pain thresholds because they have longer time horizons: They do not have short careers; they do have deep pockets.
Sports leagues must accommodate two competing imperatives. The leagues must encourage the entrepreneurial pursuit of excellence, meaning superiority, by each individual franchise. But the leagues are selling entertainment, which requires competitive balance. A perennial problem is that teams’ cities vary as sports markets, so teams’ resources do, too.
The NFL, which gets so much of its revenue from national television contracts, distributes this to its teams in equal portions, so a team in a small city in northern Wisconsin can compete with New York teams. But recently, the small-market San Antonio Spurs won four NBA championships in nine years.
In Major League Baseball, whose economic model of largely local revenue developed before the invention of broadcasting (or the internal combustion engine), huge disparities of local broadcast revenue tilt the playing field against small-market teams. These disparities have been mitigated by revenue sharing. In baseball and basketball, negotiations usually involve three, not two, sides — the players, the richest teams’ owners and the other owners. All their futures are bright.
Basketball is booming, globally. Almost one in five players last season was not American, and when the U.S. team played China in the 2008 Olympics, 1 billion people watched. Selling 1 percent of them an item of team apparel would mean serious money for everyone to fight over, which is a great American game.