NBA Collective Bargaining Agreement Project

NBA Collective Bargaining Agreement Project - N Table of...

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N Table of Contents I. CBA Background Page 2 II. Issues Page 5 III. NBA Proposal Page 7 IV. Players Proposal Page 9 V. Outcome Page 10 VI. References Page 14
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CBA Background During 1998-1999 the NBA (National Basketball Association) had suffered a loss of 32 games not being played due to a lockout by Commissioner David Stern and the NBA’s owners. So when it came to the CBA of 2005 the owners and the NBPA (National Basketball Players Association) union they were steadfast on avoiding a reoccurrence of a similar lookout happening again. As talks heated up surrounding the upcoming CBA of 2005 David Stern regretted the not so good attention that the teams were getting but stated that not all the teams were experiencing such bad fate. Even though eleven of the thirty NBA teams had experienced negative operating revenues in 2004-2005 the attendance at games had risen to an all-time high in history to being the fourth highest ever. And the NBA’s franchises equity value had also risen in 2005 tapping in at 9 percent, this meant money in the bank, millions upon millions for the NBA owners . Both sides carefully examined the revenue figures but the one that stuck out the most was the BRI (basketball related revenue) which would stay the same as the BRI for 1999. Players would get 57% of revenues and the owners would get 43%. And to help the teams that were struggling with operating expenses the luxury tax (the NBA’s sole revenue sharing tax) was changed so it could take effect year after year. The luxury tax taxed the teams whose roster reflected an increase in BRI of 61.1%. Before that the luxury tax taxed player’s salaries that exceeded 61.1% of BRI. Even with a decline in U.S. and worldwide economies since 2008, revenues for the NBA have continued to increase ever since the CBA of 2005 took effect. The NBA has increased to more than $460 million in the last five years alone. Unfortunately, the increases have suffered losses each year to the tune of $210 million to $135 million to $89 million to $35 million, which
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is by far a long way off from 9% in 2004-2005. As a result, the owner equity has suffered losses of 3.6% during 2008-2009. Due to those losses the owners have had difficulty supporting operating losses. During 2008-2009 twelve teams reported losses. Being that the CBA of 2005 put the NBA in jeopardy of losing $400 million for 2009- 2010, Stern has promised the owners that he will make it up to them in the net CBA. Stern has stated that, “[The NBA] would like to get profitable, have return on investment. There’s a swing of somewhere in the neighborhood of $750-to-800 million that we like to change.” Executive director of the NBPA, Billy Hunter disagrees with Stern. Hunter reflection the NBA’s revenues and noticed that the NBA has had many high-priced re-signings along with free agent acquisitions during the summer months of 2010 and insists the owners are fine financially. Hunter disagrees with Stern’s cost cutting being that seventeen teams had attendance well over
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This note was uploaded on 12/18/2011 for the course HR HR595 taught by Professor Tammiclearfield during the Spring '09 term at Keller Graduate School of Management.

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NBA Collective Bargaining Agreement Project - N Table of...

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