NBA Lockout: How Mavs' Cuban Is A 'Villain'
The labor dispute is, in its simplest form, all about how to divide the enormous wealth in the NBA – that's enormous wealth for both sides. … and let's not allow the owners or the players to claim anything less.
What do the owners want?
A harder salary cap. They began negotiations by proposing a $45 million hard cap with no exceptions but have apparently moved off that, proposing a "flex cap." (Truth: What we've learned in all sports is that a cap is a cap, and ways to twist around it are endless.)
What do the players want?
The freedom allowed in the current system, plus a continuation of the larger share of revenue to be devoted to players salaries. Under the old CBA, the players received 57 percent of the NBA's basketball-related income. Once applied under cap rules, that meant the distribution of $2.17 billion last season. The players are willing to drop that to 54 percent – but the owners want to lock in a number -- $2 billion – wish would likely mean a severe reduction of the percentage of the players' take should the league's revenue grow as expected. Some projections have that locked-in $2 billion figure as equaling as low as 40 percent of what a given future season's revenue might be.
The owners are arguing that such belt-tightening is necessary because they lost $370 million last season and that 22 of the 30 teams are losing money. They want the players to see themselves as "partners'' in this "losing'' proposition … but of course, at this early stage in negotiations – and it is early, as the only true deadline is the beginning of next season – there are no partners.
There are only villains.
Which brings me to Mark Cuban.
Cuban and the Dallas Mavericks are double bullseye's here, the defending champions uniquely positioned to serve as Exhibit A for both the prosecution and the defense cases.
What the owners side will argue about Cuban and the Mavs: The Mavs are the financial outlier, spenders who make the rest of us look bad, cheap, broke.
The accounting tricks that create that argument seem flimsy to me. I would argue furthermore that this collection of owners – many representing "new blood'' to combine with "old money'' – bought in and/or stayed in the NBA knowing full well that franchise values were high and that the cost of doing business was high, too.
This is where the players side counters, rightfully, that it is not their responsibility to manage the owners' wallets, not their responsibility to caution the owners about their own financial foolishness.
I'll go a step beyond that: What the best owners, like Cuban, do to compete is NOT foolish. It is not foolish to pay a sixth man like Jason Terry over $10 million a year to be a "backup'' if that is a key piece to contention. It is not foolish for Boston to pay Garnett and Pierce and Allen if that's what it takes to win a title. Financially speaking, there is nothing foolish about Miami's teaming of Wade, LeBron and Bosh.
Owners are generally not only smart businessmen, but are also competitive sportsmen. I've always argued that their profits don't need to occur like an employee's, with a paycheck every two weeks. Their profits come with success … and they come at the end of the ride, when an owner opts to sell.
Why don't more of them sell now? If it's so burdensome to own an NBA team, why don't they get out?
Because it's not that burdensome. That's why.
The owners (as a unit) are actually arguing against their own success now, against Cuban's success. There is a payroll gap between the likes of the Mavs and the Lakers and the likes of the Kings; in fact, Sacramento's $45 million payroll is half that of the last two NBA champs.
But how is that defensible on the part of the Kings? Why did they only spend $45 million? It's a chicken-or-egg question, maybe, but if Sacto would quit spending just $45 million, maybe it'd be a better team and a more profitable franchise.
But no. Sacramento's ineptitude is being blamed on Mark Cuban.
My colleague Tom Ziller (as much a Kings guy as I am a Mavs guy) wrote on SB Nation before the start of the Finals:
"You think the Miami Heat are wearing the black hats entering the 2011 NBA Finals? No, the Dallas Mavericks and their leader -- Mark Cuban -- are really what's wrong with the NBA.''
"Only one team has spent more money in the last decade than the Dallas Mavericks. Not the Lakers, not the Heat: only the New York Knicks, for a time led by an Isiah Thomas with a credit card and no conscience. The Mavericks have spent $851 million on payroll in the past decade, some $130 million more than the Lakers and $240 million more than the Heat.''
And there's the Sacramento view, and one that will make its way to the negotiating table:
Mark Cuban spends TOO MUCH MONEY TRYING TO WIN.
The same sentiment is expressed by another respected colleague, Richard Justice of the Houston Chronicle. Richard writes:
"All I know is that an owner trying to operate in the black has no chance against an owner like Mark Cuban who will spend whatever it takes to win.''
It's almost a badge of honor, I guess. The little-market guys in Sacramento think Cuban's a villain. The big-market guys in Houston think you have "no chance'' to beat Cuban's spending.
Of course, to say Dallas won a title due simply to Cuban's pocketbook ignores lots of facts, three of which I will highlight here.
1. They also won a title due to players, coaches, scouting, resilience, patience and good fortune.
2. If spending "$851 million on payroll in the past decade'' is such an unbeatable formula, why do the unbeatable Mavs only have one single lonesome title in the last decade to show for it? Orlando and San Antonio win consistently in their small markets. The Clippers and Knicks stink consistently in two of the largest cities on the planet.
There is not solid proof that bigger cities equals more wins.
3. Completely ignored outside of Dallas (and the work of DB.com, led by our David Lord): Cuban in recent years has operated on a budget. The $3 mil trade sweeteners do not happen anymore. The taking on of bad salaries didn't happen this year at the deadline, did it? He still spends … but he spends wisely.
And if you want a winning formula – if there is such a thing – thar she blows. Not just spending. Spending wisely. And not just managing assets in general … but asset management as a science.
Which brings me to the one area where the players will agree with the owners: Cuban's ownership is at the hub of this wheel.
"Losing money, eh? Really?'' the players can argue. "The average price of a non-premium NBA seat last season was $48. The cap last season was $58 million and more than half the teams could afford to exceed it. Mark Cuban just laughed out loud in court at his litigious minority partner Ross Perot – laughed! – at the notion that the Mavs' finances are mismanaged!''
What the players can (and will, I believe) argue is that Cuban, sitting (literally or figuratively) at the other side of the table is, if he's supportive of the "we're-all-going-bankrupt!'' position … fibbing.
Cuban has the financial wherewithal to write personal checks for some expenses. (The $340,000 bill for the city of Dallas parade is just one example.) But every franchise in sports can "juggle the books'' in the sense that ownership can show losses based on "depreciation'' or on how he pays his own salary and the salaries of family members.
Similarly, an owner can contract his basketball team to buy pickles from his pickle factory, beer from his distributorship, cars from his dealership. Who is in charge of arranging these deals and setting this prices?
The owner of the basketball team and the owner of the pickle factory. Who are one in the same.
It's a good thing this isn't an argument to go before a jury, because in at least this area, Cuban would be obligated to "tattle'' on his partners' legal-but-camouflaged arrangements with themselves.
And there is this: Cuban has a player-friendly reputation. But DB.com's David Lord is hearing that the Mavs owner's position in this negotiations is "far more 'hard-line' than you might imagine.'''
If true, "player-friendly'' is dead ... for this offseason, anyway.
There are other issues here, of course, including:
*Owners would love to find a way to prevent free agency from creeping into the picture years before the player is actually free, as happened with Deron Williams and Utah's pre-emptive trade of him to New Jersey. Dwight Howard in Orlando and Chris Paul in New Orleans are the next candidates to spend entire seasons being centerpieces in "where-are-they-going?'' gossip.
I'm fine with the argument that true free agency is good for sports. But "pre-free agency'' is not. Really, I would think the players could be made to see the unhealthy situation that existed in post-LeBron Cleveland.
*There is the argument from the players side that any cap in any form is too "hard.'' From what we read, there seems to be elbow room given from both sides on issues like this one, and maximum years on guaranteed contracts,
*There are concerns about an increasing gap between the "haves'' and the "have-nots.'' The example baseball-minded insiders will cite: The Kansas City Royals vs. the New York Yankees, the former seemingly positioned to serve as nothing more than a farm team for the latter. Revenue sharing is the answer here. But the question is "who should be in on the sharing?''
The Lakers have a new TV deal that could be worth as much as $3 billion over the next 20 years. That's with local TV! And it's the mining of a vein that simply doesn't flow into Oklahoma City or Portland or Milwaukee.
How much of LA's television deal is the result of population base and how much of it is due to the excellent work of a franchise in developing an iconic brand? I had this conversation recently with Brian Cuban, brother of Mark, and I've had it many times with Cowboys owner Jerry Jones:
What constitutes "small market''? Before Tom Hicks bought the Texas Rangers, they were "small market'' while playing just down the road from the Cowboys, considered to be "huge market.'' If the Milwaukee Bucks were successful on the court, wouldn't their market suddenly expand into Illinois and Iowa and the Dakotas, and suddenly they'd be a "regional team''? (As the Packers surely are.)
The Jones family chose to own the Cowboys. The Brown family chooses to own the Cincinnati Bengals. How much should the Jones family's work and success and investment-turned-to-profit be handed over to the Brown family in Cincinnati?
The NFL, up to now, has revenue sharing. The Giants and Cowboys carry teams like the Bengals and do so for the overall health of the league. NBA players would surely suggest that basketball owners that cannot afford to stay in business seek assistance from their own side – from the owners side – rather from their foes in this negotiation.
It's an odd position being taken by commissioner David Stern on this subject, I think. One of the platforms is that EVERY owner, no matter his circumstances, deserves to make an annual profit. Sorry, Chancellor Stern, but that's not the way business works and that's not the way sports works. If you do a poor job, spend too foolishly or too frugally, and your audience refuses to pay for those $48 seats, there is nothing in the rules of the worlds of business or of sports that means you must "win.''
It's sports. Not EVERY owner can win.
I would argue that even the "small-market'' owners are fabulously wealthy and that most owners in sports do NOT use their teams as day-to-day profit centers. And that therefore, they can afford to remain competitive until they cannot (because their pickle factory closed) … and that if and when they cannot, they should simply sell their franchise and pocket hundreds of millions of dollars more than any of them originally paid for the club.
*And then there are justifiably selfish concerns, like the one the Mavs have about Tyson Chandler.
Should Cuban eventually vote along with his ownership partners to limit his own spending, it could handicap his ability to re-sign his own players. What if a new rule renders it financially impossible for Dallas to give Chandler the sort of salary he can be offered by teams that are under the future cap?
What if Lord is right about Cuban being a "hard-liner''?
If that happens – if the Dallas owner doesn't create a way for the Dallas team to keep the championship-level status is has earned – the Mavs audience might see him in a less-than-flattering light.
The owners aren't being honest or realistic in their position. The business of basketball is bankrupting none of them. Business is, in fact, booming and growing.
The players are being honest … and their desire to retain 54 percent of revenues has merit. But they aren't being realistic in that matching t-shirts aside, guys who have five-year-long careers (on average) aren't really going to forfeit one-fifth of their earning power ($1 million or $10 million or $20 million) while being concerned about revenue percentages being too low a decade from now.
I think Mark Cuban should be applauded by all involved for what he's done. He's created a model that players should love … turned around a franchise in a way that should give his partners hope … and invests resources (not just money, but also intellect and time and passion) in a way every fan says he'd do, too, if he could.
But that's not how this is going to go down.
The owners will paint Cuban as a villain for having "overspent'' to win a title.
The players will paint Cuban as a villain for not illustrating the truth, that he needn't be an outlier … because other billionaires should be just as desirous of winning as he is.
And Mavs fans? They just want their World Champions intact and on the court, defending their title – and they will want Mark Cuban to muscle his way to making both happen.