The NBA has laid off 114 employees accounting for 11% of its workforce. The layoffs are not a direct result of the lockout but meant to attack the same underlying issue of expenses outstripping revenues.
Full story from the Trib here.
NEW YORK — The NBA laid off about 114 people over the last two days, planned cost-cutting moves that a league spokesman said Thursday are "not a direct result of the lockout."
The laid off employees represent about 11 percent of the league office workforce in New York, New Jersey and internationally.
Spokesman Mike Bass told The Associated Press the layoffs are "not a direct result of the lockout but rather a response to the same underlying issue; that is, the league's expenses far outpace our revenues."
"The roughly 11 percent reduction in headcount from the league office is part of larger cost-cutting measures to reduce our costs by $50 million across all areas of our business," Bass said.
I was initially fairly strongly on the players side of things, but more and more evidence is mounting that the league has real issues that do need to be resolved through a very significant rollback of salaries.
RDA was shown to not be the major factor it was once thought of as deadspin had to retract their article.
The other depreciation they show on the balance sheet appears to be legitimate depreciation on capital assets for stadiums, practice facilities, and legitimate business expenses.
The NBA clearly needs to do a much better job running itself than it is. The NHL isn't in this same boat despite the owners splitting up 30 million less per team than the NBA while having no reason to have considerably greater expenses than the NBA does.
However, the NBA has laid off 275 people over the last three years, they've shut down some of their global offices, and appear to be looking internally to fix their cost situation as well as asking the players to take a hit.
In the end, I still maintain that they won't get a deal done without a missed season until the owners offer the players a percentage of league revenue going forward rather than simply offering them a flat rate with no growth potential with league revenue growth.
The players won't (and shouldn't) stand for a deal that leaves them at 36% of BRI by the end of the CBA. However, a 50/50 revenue split would rollback 300 million from the players to the owners. An amount which would have made the league profitable (even after depreciation/interest) over the last CBA.
While some teams would certainly still show a balance sheet loss, almost every team would have positive cash flow. Factor other cost savings into the picture, and the NBA is in good shape again.
Of course, their present stance is to play hardball and absolutely crush the players to ensure billions in operating profit every year.
Their present 45 million dollar hard cap that doesn't adjust for inflation with a 33% rollback on present salaries would push the league to 22% of BRI by the end of the deal. A number which is absolutely ridiculous relative to any other sport given that no other major professional sport is presently under 55% of revenue.
Their previous 62 million flex cap offer would have pushed BRI to 36% by the end of the deal. It was a deal that was plausible in the short term, but meant way too big a shift in revenue by the end of the deal as it would cost the players 8 billion over the life of the deal.
If the players agree to give back one billion over the next five seasons [approximately double what they've offered so far and about 1/4 what the owners are asking for], the owners should jump on it. Its a number that should push all but the mostly poorly run teams into a land of operating profits without any revenue sharing.
It would also give them a far better five year profit model than four years of basketball on a better deal after losing a season of the NBA where revenues would likely decline considerable and one season would have none at all.
Given the players initial negotiating stance with little pressure on the negotiations wasn't miles off from that point, it seems likely that there's room to get there without a missed season, but it's the owners who need to do the serious moving on their position to make it happen.
Like any negotiation, both sides will need to meet in the middle, but the owners will need to cover 75% of the gap because their initial stance was so far from reasonable that meeting in the exact middle isn't going to get a deal done.