Businesses Reeling In Wake Of NBA Lockout

Guest

Pablo Torre, reporter, Sports Illustrated

After weeks of game postponements, the NBA league made a final offer to players — and the players rejected it. Canceling games affects players and fans, but it can also be devastating for the many businesses that revolve around the industry.

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BRIAN NAYLOR, HOST:

The NBA season may be over without a single tip-off. After several rounds of postponing games for weeks at a time, the league made what it called a final offer to players who, yesterday, rejected it. The players' union announced plans to disband the union and file an antitrust lawsuit against team owners. The season was scheduled to open November 1.

Now, after two years of negotiations and 137 days under a lockout, the schedule for the season is completely blank. Canceling games affects the players and the fans, of course, but a ripple effect extends to the many businesses that revolve around the industry, from the bars and restaurants that host sporting events to the shops that sell NBA gear.

How is the lockout affecting you? 800-989-8255. Our email address is talk@npr.org. And you can join the conversation at our website. Go to npr.org and click on TALK OF THE NATION.

Joining us now from our bureau in New York is Pablo Torre. He's a reporter with Sports Illustrated. Pablo, welcome to the program.

PABLO TORRE: Thanks for having me, Brian.

NAYLOR: So what are the chances that we're going to see any NBA action this season?

TORRE: Well, you know, you can't say for sure at this point, but it's certainly not looking good. I mean, this is the bleakest it's been since the - you know, since this two-year saga began in - when David Stern is using language like nuclear winter of the NBA. That's certainly not encouraging.

NAYLOR: Yeah.

TORRE: And certainly the shift from, you know, the negotiations over hotel boardrooms to inside of the judicial system and the courtroom is not encouraging either.

NAYLOR: And I don't want - this is a really complex back-and-forth kind of thing, but why did the players turn down this most recent offer that the NBA says was its final offer?

TORRE: Well, let's deal with it on two levels. The first level, I guess, in terms of the tenor of the negotiations, which is a big aspect, is that the players really felt sort of disrespected. I mean, their egos were severely insulted by the NBA. The mere act of offering an ultimatum, you know, we heard veiled allusions to the plantation owner mentality here, and a lot of the players took that to heart, in all honesty. They want to be treated as equals, but they had, in their mind, their intelligence and their intellectual abilities to sort through a complex economic problem insulted.

Now, the second level, which is the actual sort of the brass tacks of it, is - well, there's two buckets in that too. It's very complicated, as you said. Well, one is the basketball-related income, which is - which was in favor of the players, 57 percent to 43 percent. That's the bulk of the NBA's revenue.

NAYLOR: And this is - when you say basketball-related income, what does that mean?

TORRE: Yes. That means, basically, in layman's terms, the vast majority of income from basketball-related activities, ticket sales and so forth and so on. That's sort of the big bucket of money coming into the NBA. And then you had the owners basically saying, you know, we want 50-50 on that. And the players, ultimately, it was reported, began to drift towards the 50-50 split very, very reluctantly.

But it turned out that the second bucket of these brass tacks issues, that being the system issues in terms of how can contracts be negotiated, what are the restrictions on teams in terms of signing certain players, the size and length of contracts, those rules ended up being, it seems, an insurmountable hurdle for the players, and that ended up being the last straw, as it were, in the negotiations.

NAYLOR: So what's the point - they said that they're going to disband their own union. What's the point of that?

TORRE: Yeah. So they're taking a cue from the NFL players' union, in a sense. They saw that, you know, when you have a - you know, the players' union, you can disband and sue the league on antitrust grounds because they are, in fact, running a de facto monopoly, a fact circumvented by the fact that they can collectively bargain with a union.

Now, it's different in this case because the NFL players decertified, and the NBA players here, in this sense, would seek to disclaim. Now, that's legal jargon, but the basic line of thought is a disclaimer on the union basically saying they do not represent us can move this issue more quickly through the federal court system. Basically, in effect, they can hope to get a shortened timeline. And in fact, in an attempt to save the season, some of the NFL players were subject to - in a more protracted timeline there even though that they were able to actually have the NFL season in time.

NAYLOR: We're asking our listeners to join us in the conversation. Call us at 800-989-8255, or email us at talk@npr.org, where we received an email from Jessica, who says that the NBA lockout has affected me financially. I work for Target Center box office, and basketball season is usually a steady source of income. This year, instead of working one or two games a week, I'm only working one event per month. Thank goodness for day jobs. Target Center, I guess, is in Minneapolis. This is, you know, we see this dispute between some basketball players who are making millions of dollars and owners who are making, you know...

TORRE: Billions.

NAYLOR: Billions. Tens of millions, whatever. But there's a lot of folks who were - at a much lower level who are really feeling the impact of this.

TORRE: Yeah. You know, there's a sense of, you know, a sports team is in a sense of public trust, and that's an emotional way. But we also forget that these are huge, huge multimillion dollar enterprises where you employ everybody, from the towel boy working in the locker room to the concessions people to the folks hired to clean up after the aisles, and all of those jobs certainly evaporate, if not are just put on hold, for as long as the lockout goes on.

NAYLOR: And so we're talking about the labor issues and the union is disbanding, something the NFL Players Association did earlier this year. I guess before that was all resolved, the NFL players and owners were able to reach an agreement without too much being missed except for the preseason. It seems to be a little bit more intractable.

TORRE: Yeah. You know, one of the big fundamental things to understand about the differences between these two lockouts is that the NFL owners are in such a better place financially. Now, we can quibble with exactly how many owners are in trouble in the NBA. The NBA and David Stern would have you believe that 22 of 30 teams are losing money, which is a staggering number when you think about it. In the NFL, everybody pretty much is doing well. It's a profit machine over there. And so in terms of how bad the economics of the current league are, the NBA certainly has a significant edge there in terms of how dysfunctional everything is.

NAYLOR: Let's take a call now. Reed is on the line with us from Memphis, Tennessee. Thanks for calling TALK OF THE NATION.

REED: How's it going y'all?

NAYLOR: All right. So how's the strike affecting you? No Grizzlies, right?

REED: Yeah. Let me know the Grizzlies. During the season, it's a pretty good joint out here. I mean, people love, you know, they love their sports teams. And quite honestly, I think it's going to make the neighborhood a little bit safer, I would hope because, you know, a lot of times you open your window at night and you got people standing in the street, you know, they're talking about the game that just happened. They're, you know, acting a fool. So I don't know, man.

I don't know what all the people, the Grizzlies fans are going to do now that, you know, we're not - probably not going to get the season. But I hope everybody's going to be safe, you know, watch some football or watch the (unintelligible) or something.

NAYLOR: All right. Thank you, Reed. Aside from the rowdiness around some of the arenas, there are a lot of bars and restaurants, souvenir stores that are - hotels doing a lot less business this year. What are your, you know, it's - I guess it's hard to understand that - we were talking before about the millionaires versus the billionaires. I mean, LeBron James is getting, what? Sixteen million a year or something. With endorsements, I think, for a lot of people, it's hard to understand why this or how this is a labor issue. What...

TORRE: Right. Right, and I think that's certainly an understandable concern. And, you know, that's one of the things that the players and the owners, I think, when they look back on this, will come to understand is that it's - I think sports fans' interest is only so inelastic, you know? It's in such a time — in such a unique time right now that it's crazy. It's really crazy to think that they could throw away four billion dollars in revenue because they couldn't agree on a couple of, quote, unquote, "system issues," or just how to divide that pot especially, you know, in an economic climate, which is so, so devastating to so many.

It's not a good time to be quibbling over the millions and millions of dollars when people can't really even begin to wrap their minds around what it might be like to be in any of their shoes.

NAYLOR: Brandon(ph) is on the line with us now from Minneapolis. Brandon, you've already bought your season tickets.

BRENDAN: Yeah. I already got the season tickets. Me and my wife have been - we've been watching the Timberwolves for about probably a year or two. And, like, to know that there's no season is - it kind of kills you because that's like, you know, our other thing that we do. We either, you know, watchin' Vikings' games or we're going actually going down to the Target Center and enjoy the atmosphere, even though the team doesn't win very much anymore.

But it's always fun to kind of get away and be able to, you know, see a game. And it's just - it's kind of discouraging. I really hope it doesn't end up like hockey did that one year when so many people just lost interest.

NAYLOR: And they were out for the entire year, right, the NHL?

BRENDAN: Right. They were gone the whole year. And, like, the sad thing about it, I was a sports intern. I was covering hockey when I was living in St. Louis. And I was really starting to enjoy it. And then that following year, they're gone. I'm like, well I'm not going to worry about watching hockey next year. I don't know any of the players anymore. Some people leave. Some people go, you know, this case with the pros; I don't know a lot of people looking to go to Europe, maybe just, you know, not do anything for the whole year. And now I'm working at this park for the park board, you know, like where kids normally sign up for to play basketball at this particular period of time. There is like maybe two or three sign-ups for kids. And I think, normally, they would be 10, 12 or it'd be full by now because nobody's seeing them on TV.

TORRE: All right. Yeah.

NAYLOR: Thanks, Brandon. Pablo, I'm wondering this is something that - it's got to worry the players and the league that should there be a long lockout or the season is lost, are they going to be able to get those fans back?

TORRE: Yeah, yeah. I don't know what the magnitude of the disgust, as it were, is going to be. That'll all become clearer once the messaging from both sides begins. I will say that the league and the union, especially, really, in terms of the union, they've done a pretty bad job in terms of articulating what exactly they're fighting for; what's their, sort of, animating spirit in terms of why they're rebelling here. And that's something I think that going to have to - will have to be clarified and really made in - I mean, one of the things that's been ignored is really just the fans, you know?

We haven't the league and the unions really, you know, really speak to the fans in a heartfelt, genuine, substantive way. In a lot of ways, they have been so trapped in their, sort of, turmoil there in these boardrooms that they've lost sight of the fact that they have this public trust issue that can erode over time as we saw with hockey.

NAYLOR: You're listening to TALK OF THE NATION from NPR News. We have an email here from Jessica in Connecticut who writes that - I'm sorry. Utah. I'm so happy for the lockout. Not being a sports fan, it's nice to spend so much more time in the evening with my husband without him being distracted by the basketball game on TV.

I'm wondering what are the players doing with themselves while they're not playing basketball or at least not playing in the U.S.? Did this - there was some talk of players joining European leagues. Has that, in fact, happened?

(SOUNDBITE OF LAUGHTER)

TORRE: Yeah. We've had a couple of players already over there. Deron Williams, the point guard, an All-Star for the Utah Jazz is overseas. Ty Lawson, another point guard, is over there. But one of the problems with the timing here, is that a lot of these overseas teams have full rosters already. It's going to be very interesting in terms of what kind of jobs are available for players. I do not think that you're going to have a lot of players just automatically sliding into an overseas uniform. There's going to be a bit of messiness there in terms of getting roster spots.

And then in terms of the non-basketball stuff, we've actually, you know, one of the other products here that may go up in interest is college basketball. And so you've seen, well, on that level, you've seen some players actually going back to, first, get their degrees, which is a great thing. Rajon Rondo and Kevin Love and Kyrie Irving, to name a couple of All-Star caliber players, are all getting their degrees, going back to classes. You have some players becoming assistant coaches. University of Texas has a couple of ex-players, Tristan Thompson and Royal Ivey, over there serving on their coaching staff.

And then you just have players who will be engaging in their other business interests. Now one of the things to remember about that though is that without this NBA income - I had one NBA money manager predict to me that by not having a season, over 70 percent of NBA players may well be committing financial suicide. So many of these guys live week to week, paycheck to paycheck, and to not have that income is going to be a dramatic change. So you wonder what kind of activities and enterprises they'll have to resort to when you don't have the big money flowing in that they were so used to.

NAYLOR: Let's take one more quick call here from Kelly in River Falls, Wisconsin. How are you dealing with no NBA season?

KELLY: Well, I'd like to see them play, but I'm with the players. I go to see the players, not to go to see David Stern. And I just say that, you know, that I think he needs to go. Mark Cuban wants to speak to this issue, but he puts a gag order on him, so I think this - David Stern has gotten a little power nuts and all with success, and I'm backing the players 100 percent.

NAYLOR: All right. Thanks, Kelly. Pablo Torre, is there any sense that David Stern, the NBA commissioner, is going to be out of a job anytime soon? Or are the owners pretty happy with the tack that he's been taking?

TORRE: Yeah, that's a billion dollar question. This is certainly the lowest point in his tenure. He had been overseeing one of the greatest growth periods in professional sports. And now he's really dealing with a divided ownership between the big market teams and the small market teams. And certainly, the players are none too happy with him, too. So if there is a time for an exit for David Stern, this lockout would be the thing that heralds it.

NAYLOR: But - so are there - is there a faction of owners, Mark Cuban was mentioned as one that have big issues with the way Stern is conducting things?

TORRE: Yes. Yeah. In terms of which, you know, which owners are you paying attention to, really, there's a very vocal faction of smaller market teams reportedly, where these are the guys who are really suffering economically. Some of the owners like Mark Cuban, Miami Heat's owner Micky Arison is another billionaire who's doing fine for himself and seems to be on that side of wanting to speak out. Those guys are doing OK. But it's the smaller market teams that are really suffering that are pushing for the harshness that we've seen from David Stern.

NAYLOR: Pablo Torre is a reporter with Sports Illustrated. He joined us from our New York bureau. Thanks very much for your time.

TORRE: Thank you, Brian.

NAYLOR: Tomorrow, Robert Frank tells us why the super rich have become the most unstable force in the U.S. economy. Join us for that conversation. This is TALK OF THE NATION from NPR News. I'm Brian Naylor in Washington.

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