NBA Owners Have Most To Gain From Lockout Agreement

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The NBA lockout is a wrap, so what exactly was all the fuss over again?

The Wall Street Journal did a breakdown of who stands to gain the most from the agreement and they’re saying the owners are definitely #winning:

The biggest changes will be off the court after owners scored an obvious economic win. The two sides will split the league’s $4 billion in annual revenue almost equally, while in previous agreements the players received 57%. On the court, despite systematic changes like reducing contract length and increasing fees for high-spending teams, most think it will be business as usual.

“It’s not exactly the same as it’s always been, but it’s closest to that than something new—this is not a seismic shift,” said Tom Penn, a former Portland Trailblazers executive and a salary-cap expert. “The system still favors aggressive owners who are in go-for-it mode. It will just cost them more.”

The league also scored a victory on the business side. The 10-year deal, with an option to terminate after six years by either side, saves not only this season but also the NBA’s image as a viable option for advertising.

“The big winners are anyone involved in marketing and financing in the NBA—the advertisers, the sponsors, they’ve got continuity now,” said David Carter, executive director of the Sports Business Institute at the University of Southern California’s Marshall School of Business. “A lot of people are focusing on what this means right away, but you have to look at it as 10 years that marketing partners and TV partners know they have this.”

The NBA salvages its national TV contract with Walt Disney Co.’s ESPN and ABC and Time Warner Inc.’s Turner Sports, which pay the league a combined $930 million per year. Advertisers spent $807 million on NBA games that aired on cable and network TV last season, according to WPP PLC’s Kantar Media. An average of two million people watched regular-season NBA games last year on ESPN, while an average of 2.5 million watched such games on Turner’s TNT, according to Nielsen.

NBA Deputy Commissioner Adam Silver said that competitive advantage was “critical” in the negotiations and that the goal of the new deal was for all 30 teams to compete. But USC’s Mr. Carter said although that will be a valuable ticket-selling message for small-market teams, it will still be a “rarity” for small teams to compete at the level of more high-profile teams under the new deal.

Mr. Penn, who is now an analyst at ESPN, said small-market teams will still face the same obstacles in the new system, adding that for struggling teams to “make financial ends meet and spend the money you need, it would be nearly impossible to keep up with the Joneses.”

The other losers, Mr. Penn said, are the stars. “This is a tough deal for the superstars,” he said. “The years of contract they can sign for goes down, the annual raises go down, maximum salaries over the long term will either level off or go down depending on the salary cap. Once again they won’t be getting their fair share.”

Not every star will suffer however. Mr. Penn said that the short-term beneficiaries of the resolution are the Miami Heat, which has three stars—LeBron James, Chris Bosh and Dwyane Wade—in the lineup whose contracts have been set, while the rest of the league enters a frantic free-agency period.

“I would say the losers in many ways are the fans because you don’t know what product you’re going to get for a significant amount of money,” said Jeff Van Gundy, an ESPN commentator and former NBA coach who took the New York Knicks to the Finals during the lockout-shortened 1999 season.

“If you look at it, the drop in the offensive numbers in 1999 was significant, the efficiency of players was poor,” Mr. Van Gundy said. “You can’t skip steps [like training camp], and what the NBA and its players have agreed to is skipping steps and then saying ‘OK, let’s go play great basketball’—and it doesn’t happen that way and the people that pay the brunt of that are the fans.”

Training camps and free agency will launch simultaneously on Dec. 9, NBA Commissioner David Stern said, meaning that some teams will start practice with only a handful of players while trying to recruit others. To add to the unpredictability, the league has yet to unveil its 66-game schedule, which is set to begin Dec. 25.