Player-Owner War Isn't NBA's Real Problem

Michele Roberts’ provocative statements about the NBA’s salary-cap system could serve as a starting point to discuss how the league might operate under a new collective bargaining agreement -- and, more important, its new national television contract.

The Jazz can still pack the arena.

Photographer: Melissa Majchrzak/NBAE via Getty Images

Michele Roberts’s provocative statements about the National Basketball Association’s salary-cap system, among other things, could serve as a starting point to discuss how the league might operate under a new collective bargaining agreement -- and, more important, its new national television contract.

“I don't know of any space other than the world of sports where there's this notion that we will artificially deflate what someone's able to make, just because," Roberts, the players’ union's new executive director, told ESPN the Magazine. "It's incredibly un-American."

Either the league or the NBA Players Association can opt out of the current CBA in 2017. The new nine-year, $24 billion TV contract, which will triple the league's revenues and put all 30 teams on solid financial footing for the first time in NBA history, starts with the 2016-2017 season. Per the current CBA, the players and owners will split the TV dollars on a 50-50 basis, thus sending team revenues and player salaries soaring.

Putting aside the argument that there are several professions that have collectively bargained systems that cap salaries (typically based on seniority), salary caps didn’t come into existence in sports “just because.” They were introduced to help remedy the problem that every sports league, with the possible exception of the NFL, created for itself through overexpansion: financial disparity between big markets and small markets.

Every league has determined at some point that it seemingly makes economic sense to broaden its appeal and have teams in such places as Milwaukee, Portland and Charlotte. Yet these markets are not only a fraction the size of New York, Los Angeles or Chicago -- with far more limited access to ticket buyers and sizable companies -- but also are saturated with other teams and televised sports. (When it comes to population disparities, not much in sports makes sense. Consider arena capacities: The Delta Center in Salt Lake City, the 34th-largest market in the U.S., seats nearly 20,000 -- about 1,000 more than the Staples Center in Los Angeles, the No. 2 market.)

The pressure to win is more pronounced due to this oversaturation -- with more choices, fans can be far more selective in determining whether to spend their time and money with their local teams. Nobody is the Only Game in Town any longer. In order to win, Charlotte and Milwaukee must have better players than New York and Los Angeles have -- and that means spending more money to attract or retain these winning players. Sports isn’t like the busy intersection with a thriving fast-food restaurant on each corner: In sports, two of those outlets have to win and two have to lose.

Think of it this way: Without a salary cap, how can Oklahoma City, the 44th-largest market, retain Kevin Durant if the New York Knicks could offer him tens of millions of dollars more -- and still run a profitable business? The new TV deal helps the Thunder compete under the current system -- I speak from experience, having worked in small-market Indiana and oversaturated Minnesota -- and perhaps even tiptoe into the luxury tax to retain Durant, but a noncap system would fundamentally change the dynamics. That’s the trade-off for having a 30-team league, not having one made up of strictly the top 10 markets.

Due to long-term arena leases and other contractually obligated commitments, it wouldn't actually make sense for sports leagues to contract teams -- even if that seems a reasonable argument. Roberts’s union members wouldn’t like that, either: Dropping the six smallest-market NBA teams would result in the loss of 90 or so of those jobs.

Still, the time has never been more right to discuss several big-picture issues in the NBA. The league should explore shortening the season, as every team will see a sizable uptick in revenues in 2016-2017 due to the national TV deal. And it seems like an appropriate time to start discussing how to reward the nonfungible players -- the true box-office stars, of which there are a handful -- for their work in making the NBA more valuable than ever.

Following the announcement of the new TV deal last month, LeBron James went out of his way to thank former Commissioner David Stern for leading the league to this new and enviable position. Whether management needs talent more than talent needs management is a meaningless argument. Roberts’s comments hopefully will not be a harbinger of a cold war between the league and its players but the start of a dialogue on how players and management can continue the NBA’s climb to the top of the National Football League's mountain.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.