I love the concept of small pieces, loosely joined.
I love the concept of small pieces, loosely joined.
I think everyone agrees that there’s an ocean of difference that separates the NBA and the NBPA – what amazes me is that Tom Ziller (SBNation.com) found 94 issues to talk about, as well as a final, 95th plea of “Let us watch our teams disappoint us. Take our money, please!” The categories? Player Salaries, Other Expenses/Debt, Revenue Sharing, Contraction, Arena Issues, Guaranteed Contracts/Amnesty, Contract Length and Terms, Revenue Split. If you have the time and inclination, you can read all of Tom’s Theses here: http://www.sbnation.com/nba/2011/8/15/2363784/nba-lockout-2011-95-t…
But here’s some of what I think, based on the volumes of suggestions and info that Tom provided.
Player salaries are 57 percent of the league’s basketball-related income. “Salaries were $2.1 billion last season. Basketball-related income was $3.8 billion. The league says it lost $300 million. That means that salaries accounted for 51 percent of expenses. The owners had to come up with $26 million to cover the 57% threshold set in player contracts.”
Now, here’s where I diverged for a moment from Ziller’s treatise and went looking for a few numbers. 10 of the NBA’s owners are billionaires. With a B. And when you average out the net worth of all the owners (whose financials have been reported – Forbes.com, USA Today & HoopsHype.com), you still get a number that resembles $2.4 Billion each. For everyone who isn’t a math genius (myself included) they had to pay out, on average, .04% of their net worth to cover the loss or about $950,000 each. It’s a significant sum to regular folk. I’m sure they found a way to write it off on their taxes.
As you can imagine, getting the two sides to agree on what’s a reasonable split between basketball-related profits and salaries is less of a “can’t we all just get along” conversation, and more like trying to get Oklahoma and Texas fans to agree which one has the better football team.
The players’ salaries are dependent on “basketball-related revenues” – not “NBA-related revenues.” I’m sure the owners make bank on arena sponsorships, arena naming and luxury suite income. In the chicken or the egg conundrum, if they didn’t have games or players, owners would have limited ways to monetize those assets.
Expenses: “While revenue and player salaries have each grown at roughly 3.5 percent over the last four years, non-player expenses have grown at more than 5 percent” – and everything from new merchandise to locker room upgrades are singled out for that hike. (However, the NBA saw 4 percent revenue growth in 2011.)
Now this is where finance enters in. In order to help get its teams better interest rates, the NBA engages JPMorgan Chase to manage a credit facility for the teams, the line for which is $2.3 billion, and is loaned out at preferred rates. Each team has a cap to keep it from borrowing more than would be an acceptable business risk. What’s interesting about this? 19 teams have loans with the NBA’s credit facility, making interest payments of up to $9 million a year. That’s $171 million annually. In interest payments. Doing the math, one could deduce that “interest payments alone account for 3.6 percent of the NBA’s annual total expenses.” Is it fair to include the interest on the purchase of a franchise as a league loss? Is it right that individuals worth millions or billions of dollars should be borrowing money to buy franchises? There are also restrictions on how loans can be used for arenas – but at an average net worth of $2.4 billion – shouldn’t owners be able to drum up a little support for arena improvements on their own?
Revenue sharing is an “all we need is love” view of the NBA world. Let’s say you work at McDonalds in Los Angeles – would you want 10% of your pay to go to a McDonalds employee in Indianapolis, to make up for the difference between your pay and his? Of course not. And while that’s grossly oversimplifying (and not exactly an apples to apples comparison), this is again a chicken or the egg situation; without the players, the NBA would have no revenue to share. The NBA maintains that revenue sharing is a matter between owners, and will be decided between owners and put into place when collective bargaining is resolved. Translation? ”We’re signing the checks, so we’ll decide how we’re going to help our organization thrive, even if you guys are the ones that are generating our revenue.” Loosely speaking, of course.
And on the subject of contraction, even though David Stern brought it up in his podcast with Billy Simmons in mid-August, I’d like to know which owner is going to raise his hand to voluntarily close down his franchise. Seriously. Are they going to line the owners up and play Red Rover until someone doesn’t break through to determine this?
Read all of Ziller’s suggestions on Arena Issues, Guaranteed Contracts of Amnesty, Contract Length & Terms & Revenue Split here: http://www.sbnation.com/nba/2011/8/15/2363784/nba-lockout-2011-95-t…. It’s an education in and of itself.
When your goal is for the greater good - whether it’s in football, business, life… - it allows clear decisions to rise to the surface, unfettered by ego. If you let the past define your present rather than simply inform your decisions, you can impede your own reality. Get out of your own way and act for the greater good.
So I’ve been reading a lot about the NBA lockout… the potential for legacies to be created and empires destroyed seems a question to some and a certainty to others. wouldn’t it be interesting if just for a moment, everyone stopped operating out of fear — fear there will be a delayed start to a season or fear there won’t be any season, fear of which way percentage points go and dollar signs add up or don’t, fear of what they may never have or fear of losing a half-step to the kid that’s coming up next.
The kid’s already out there who’s going to take your place, no matter whether you relo and be a token pro in another league or stay and watch the chessboard - which seems to be a popular choice but for a few.. By doing nothing, you dilute your brand. The kid’s already beat all of you because he’s still showing up, not waiting for someone to give him anything but, instead, taking the opportunity - just playing because he loves the game. Do you remember when you did, too?
Great PR involves great, authentic storytelling. Never underestimate the power of that concept when you’re sitting around a table listening to others contemplate how something should be spun. People appreciate (and reward) authenticity. A storyteller should always be a key part of any business strategy no matter what title you want to give them… marcomm, PR, public affairs, communications. Find one if you don’t have one and keep them at the table… and if you do have one, give them a raise.
"Tell them your story. Storytelling works," said Lou Hoffman, president and CEO of The Hoffman Agency. “Just be honest and open with people. No one rejoices over paying more money and undoubtedly some unhappy campers would still defect. But most people get the concept that if a company’s costs go up, the price of the product/services also goes up.Read more at www.bulldogreporter.com
Sometimes having courage simply means “I will try again tomorrow…”
Not where I wanted to be tonight… Cali might need another new knee :-( (@ Westvet) http://4sq.com/nVa5yg
"A recent study published by eMarketer found consumers are more likely to purchase from brands that answer them on Twitter, proving brands cannot afford to ignore social media as a consumer channel. "
I think this points to a very important trend — people may soon be skipping on the 1-800-call-us with hold times in favor of connecting with companies on Twitter who respond to them. I think people are more likely to turn to Twitter to vent issues and ask questions, probably in that order, depending on the issue, and when a company actually shows that they’re listening to what consumers are saying, you really do score loyalty points. Will the call center go by the wayside in favor of getting resolutions in 140 characters or less?
terribly inconvenient time to get writer’s block.
If you’ve ever stared at a camera thinking “don’t smile,” you might be taking years off your life - http://on.ted.com/9Rs9