Trouble ahead? Looming labor battle could blunt NBA's boom

By Michael McCarthy, USA TODAY

Updated |

NBA fans continued to pack houses, and arenas were at least 90% filled for the seventh consecutive season. NBA fans continued to pack houses, and arenas were at least 90% filled for the seventh consecutive season.

By Jonathan Ferrey, Getty Images

Five years after the Miami Heat beat the Dallas Mavericks to win their first championship, the teams are poised for a rematch as the NBA enjoys a renaissance.

  • NBA attendance and ratings are up, but the league says many clubs are losing money. An NFL-style lockout is possible when the labor deal expires June 30.

    By Sean Dougherty, USA TODAY

    NBA attendance and ratings are up, but the league says many clubs are losing money. An NFL-style lockout is possible when the labor deal expires June 30.

By Sean Dougherty, USA TODAY

NBA attendance and ratings are up, but the league says many clubs are losing money. An NFL-style lockout is possible when the labor deal expires June 30.

Just four players — including Dirk Nowitzki (FSY)   and Dwyane Wade (FSY)  — remain with those teams from that 2006 title series. Superstar LeBron James (FSY)   joined the Heat, a team that also includes Chris Bosh (FSY)   and the so-called supporting cast assembled by NBA Co-Executive of the Year Pat Riley. Mavericks owner Mark Cuban remains a polarizing figure for fans and teams alike who, despite various machinations, could not get an NBA title-winning combination on the court, until perhaps now.

The league, which spent years struggling to recover from a devastating labor dispute that disrupted the 1998-99 season, is experiencing an upswing in attendance, TV ratings and merchandise sales. The NBA's popularity and buzz is at levels not seen since the heyday of Michael Jordan's Chicago Bulls, Magic Johnson (FSY) 's  Los Angeles Lakers and Larry Bird's Boston Celtics.

Instead of basking in its success, however, the $4 billion industry is poised to plunge into the same labor abyss as the NFL because billionaire owners and millionaire players can't agree on how to slice the pie.

The turmoil threatens to wipe out the 2011-12 season and many of the advances the money-losing league has made since bouncing back from the last labor war and referee Tim Donaghy's point-shaving scandal of 2007.

"We're looking at a scenario where we're riding a high of excitement and the game is thriving, to coming back to reality and understanding we're in a labor battle where there may not be games and players may be locked out," said James Jones (FSY)  , the Heat's National Basketball Players Association representative.

The collective bargaining agreement between the league and the NBPA expires June 30. Owners could borrow a page from the NFL owners' playbook and lock out players July 1, sports business and labor experts predict.

"I really think there's a possibility of a long labor crisis in the NBA," said Michael McCann, director of the Sports Law Institute at the University of Vermont Law School. "The owners want two things: they want the allocation of revenue, which is currently 57% to 43% in favor of the players, to be more like a 50-50 split. The league also wants a hard salary cap."

The league wants to slash up to $750 million in player payroll and make all 30 clubs profitable and competitive. The NBPA is likely to fight against a hard salary cap. They're defending the status quo in which NBA players rule as the country's highest-paid pro athletes, with an average salary of $5 million according to Forbes.

"I truly hope and pray there's no lockout," said Mark Jackson (FSY)  , ESPN's top game analyst, who played for the Indiana Pacers during the 1998-99 season. "When you look at football, I think you can learn from their experience. Especially when you look at the NBA, and the success it had as a whole this year, you want to build on this momentum."

Jackson's on-air partner Jeff Van Gundy said lost games would be a "huge problem" for the league.

Attendance, ratings up

Not to mention for the NBA's national TV partners — Disney's ESPN/ABC and Turner Sports' TNT— which had their most-watched regular seasons. "This is really in the hands of both sides to work out a resolution. There's nothing we can do to influence either side," said Doug White, ESPN's senior director of programming and acquisitions.

Ditto for corporate sponsors such as Nike, Anheuser-Busch, Adidas and Coca-Cola.

"Like NBA fans everywhere, we hope for a resolution that gets the players on-court in the 2011-12 season," Nike spokesman Brian Strong said.

New York Knicks forward Jared Jeffries (FSY)   says the NBA's 430 or so players have been preparing for a possible lockout for two years.

"We've worried a lot about it. I think guys have prepared themselves," Jeffries said. "Guys have put away money, guys have been very smart in planning ahead. There will always be situations where guys get in a tough financial bind. But that happens in every profession."

By most metrics, the NBA posted an outstanding season:

• Total regular-season attendance rose 1% to 21.3 million, just shy of the league record 21.8 million for the 2006-07 season, before the economic downturn.

• NBA arenas were filled at or over 90% capacity for the seventh consecutive season. Average game attendance of 17,306 was the fifth highest. The record is 17,757 during 2006-07.

• TV partners TNT and ABC/ESPN saw audience gains of 42%, 38% and 28%, respectively.

• As stars including James, Carmelo Anthony (FSY)   and Amar'e Stoudemire changed teams and donned new jerseys, merchandise sales rose 60% at and 20% globally.

• The teaming of Anthony and Stoudemire helped the Knicks post a winning record for the first time in 10 years. The comeback of the previously floundering club in the media, marketing and fashion capital of the country is "good for the game," said Scott O'Neill, president of Madison Square Garden Sports.

"There's 18 million people (in the New York area). A lot of the taste-makers and influencers are in our arena every night. So I think we have an incredible opportunity. The good news for us is it's just the beginning."

Stern: 22 teams lose money

The bad news is Commissioner David Stern predicts the league will lose about $300 million this season. In an interview with USA TODAY this month, Stern predicted 22 of 30 clubs will lose money.

"We've always had some money-losing franchises, but the losses (now) are more sizable, … We have eight franchises that make money and 22 that lose. But the 22 that lose, lose a lot. And (they) cancel out what we make and take us down into a loss situation," Stern said.

Some financially struggling franchises such as the Sacramento Kings and New Orleans Hornets could be on the move.

Make no mistake, the NBA and union are closely watching the labor struggle between Commissioner Roger Goodell's NFL and the players, he said.

The driving issue for NBA owners isn't revenues but expenses. Stern said the NBA is spending more than it's taking in. The owners want a more favorable revenue split, but Stern wouldn't give hard numbers.

"The owners generate $4 billion a year, more than that actually," Stern said. "The players get well over $2 billion in salaries and benefits. We just need something that continues our business success and revenue generation — but which lightens the player expense load on the owners."

Of course, owners handed out those lucrative contracts, points out Forbes executive editor Mike Ozanian. "I don't feel sorry for either side," he said.

The NBPA believes far fewer clubs are operating in the red. Billy Hunter, NBPA executive director since 1996, said at the Sports Lawyers Association meeting May 21 in Washington that it took six years to recover from the 1998-99 lockout

According to Hunter, the NBA's second and most recent contract proposal was worse than the first.The players union last week filed a charge with the National Labor Relations Board accusing the NBA of consistently engaging in unfair labor practices.

"I keep hearing from fans that this is the best NBA season they have watched and that they have enjoyed," said the Knicks' Roger Mason Jr. (FSY)  , vice president of the NBPA's executive committee. "There's so much excitement, I think it would devastate the fans if we weren't able to work it out."

So who's right? That depends on who's doing the counting and what accounting methods are used, Ozanian said. Forbes found 17 teams lost money during the 2009-10 season. That was the worst financial performance since the lockout-shortened season. The clubs' average operating income for 2009-10 declined 22% to $6.1 million, the lowest since the 2002-03 season.

"They're just desperate enough to believe they have more to gain by shutting down," Ozanian says. "I think the (NBPA) is going to get rolled. There's too many owners losing too much money. In the NFL, it's not like that. There it's more about: We want to make more money."

Contributing: Jeff Zillgitt in Miami; Associated Press

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