Friday, April 29, 2005

Lockout 2

Ok, so now I've decimated the owner's position and said the players need to yield to keep the sport healthy, what the heck is supposed to happen? It involves the dreaded s-word: "Salary Cap". If you give the owners everything they want, you end up with the NFL but far less rich and popular. Owners make lots of money every year, players have absolutely zero job security, and only the best players make anything even remotely approaching what the owners are making.

So what kind of salary cap are we talking about? I would advocate a soft salary cap, which means that each team can only spend a certain amount on player salaries, with some exceptions. The NBA has a soft cap, and some of their exceptions make a lot of sense. For instance, teams can go over the cap if they resign their own free agents. I would also advocate another feature of the NBA Collective Bargaining Agreement (CBA), having maximum and minimum salaries that are indexed by the number of years in the league. Bonuses (signing and otherwise) would be prorated over the life of the contract, as the NFL does.

So what about linkage? Well, you would use revenue and expense history to set the inital salary cap, but the cap each year would not be hard linked to expenses- perhaps it could go up by a certain percentage each year unless revenues dropped or something like that. I'm sure this will be a sticky negotiation point, but if there is no definite linkage (hard and fast relationship between league revenues and player payroll) I think the players will deal.

So why no linkage? For one, it's too easy to hide revenue. When teams are owned by companies that broadcast games or otherwise provide team revenue, through accounting tricks you can make the team (or parent company) almost as rich or as poor as you want. Cablevision has the exclusive local contract the Rangers, and they own the Rangers. Cablevision could pay the Rangers far under market rate for the TV rights, making the Rangers look very troubled financially. Then Cablevision is doing great because they just paid a buck and a half for the TV rights and got millions in advertising revenue that never shows up in the Rangers' books. I'm sure there are millions of variations on this scheme. The Flyers are owned by Comcast, the biggest cable provider in the country. The Ducks are owned by Disney, who owns ABC and ESPN. Up till now, the owners have not provided all the financial information the players' union has requested. Hmm, I wonder why that is?

Are players going to make the same salaries under the new system as they did? No, but they don't expect to anyway- otherwise they would not have proposed a 24% pay cut right off the bat. But with some tweaking of the structure, free agent rules, and salary arbitration, they won't be struggling to put food on the table (unlike Latrell Sprewell).

2 comments:

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Irzan said...

Hey ... thanks for visiting my blog .. i got your link from the referring pages ... nice job at your blog!

Keep up the good work... maybe we can link each other someday ... :)

Cheerio...

http://lifeinside.blogspot.com