1. Labor Crap: One of the more entertaining seasons in recent memory is over and we are left with a nasty hangover in the form of a likely prolonged labor dispute. There already has been a lot of great stuff written about the dispute and the issues seem to have been well identified. Still, we will take our shot and see if we break any new or different ground. It is complicated negotiation but let’s boil it down to its essence anyway: the NBA states that most of its teams are not profitable and they want to impose a hard cap on salaries and renegotiate the revenue split (currently the players receive 57% of revenues). Sounds pretty simple right? Just pick some numbers in the middle and find a reasonable split and go play ball. Not so fast.
The NBA has opened its books to show its calculations as to why it needs to change the system and shown losses of $360 million. The players have taken the position that the losses of roughly $360 million are overstated and based upon creative accounting. Specifically, the NBPA has argued that the losses are unfairly enhanced by about 150% based upon accounting tricks. The NBPA says the losses are actually closer to $90 million because the NBA has counted amortization and depreciation of costs when teams are sold to create paper losses that don’t reflect the actual financial status of the teams. Indeed, this week Nate Silver of the New York Times wrote an article that concluded, based upon number provided by Forbes, the NBA is, in fact, quite profitable. The NBA quickly responded stating that the Forbes data was totally wrong and that the losses projected were not related to any accounting tricks (Silver responded to the NBA noting that Forbes’ projections were relatively close to those seen in leaked financials of the New Orleans Hornets but conceding that without the actual data his projections did rest on assumptions that cannot be verified.
So where does that leave us? The NBA and NBPA both seem to agree that league is losing money on some level, though the level of losses is in dispute. In addition, the NBPA’s argument that amortization is improper doesn’t hold much water. Basically, amortization is the process of spread cost/liabilities over several years to balance a team’s budget. This is a perfectly legitimate accounting practice in the abstract. In addition, the players are conferred an actual benefit in the practice because if a team is forced to charge the cost of purchase all up front the team will appear illiquid and will not be able to invest in the team, namely player salaries. Now it is true that some amortization tactics can be tricky (by charging too much or depreciating over too many years). But the practice cannot be rejected as improper absent a showing that the numbers used for these specific balance sheets are unreasonable.
Sports labor disputes usually, though, have a way of working themselves out thusly: if the league is earnest and honest in its belief of financial peril, it will not open up again until it obtains terms that are acceptable. Conversely, when leagues treated players like serfs (as all sport leagues did for decades) the players have little incentive to play. Given that the NBPA is getting more basketball revenue than the NBA, it cannot be said the NBA players fall into that serf category anymore. So, if the NBA can really save money by shutting it down, the players have little recourse but to hunker down until they need cash to survive (this is basically what happened in the 1998-99 lockout season).
I have no idea whether the NBA has trumped up its losses at this time but their claims that the system has problems seems much more credible than that of the NFL (which has refused to open up its books to the NFLPA). Ultimately, this will all have to be resolved in negotiations. The obvious answers here seem to be that the NBPA is going to have give back on the revenue split. As for contracts, the NBA implied that it wanted to give each franchise a better opportunity to keep stars, which means that even with a harder cap than the current one, there will be some mechanism for a team to overbid to keep its own players from leaving in free agency. It also seems likely that the mid-level exception will be eliminated too, as most of the egregious contracts have come from overpaying decent players through this cap loophole. Apart from that, anything goes under a new agreement.
Are you wondering who to root for in this fight? The answer is no one. Neither side appears to be acting unreasonable at this juncture (though that might change). This is just a negotiation between two sophisticated parties. We have to just hope that the deal gets done earlier rather than later so we can have some hoops to watch. One more thing…the NBA obtained nearly full capitulation against the NBPA in the 1999 agreement and the NBPA still ending up doing quite well. So, hopefully, the NBPA realizes that its downside is limited unless the NBA really rolls back the rules to reserve clause days or imposes a super low/super hard cap.
2. Yao Retires?: The other story in the news is that Yao Ming is likely retiring as a result of his nagging foot/ankle injuries. It is a little early to look back at Yao’s career but certainly he made his impact as a very good center and as the first star from the Far East in the NBA. Yao’s short career doesn’t have quite enough meat to merit the FAQ treatment we usually give retiring stars but let’s quickly look at some of it for fun anyway:
-Yao, The Prospect
Yao first burst into international prominence as the star of China in the early 2000s, which was punctuated by a cover story in the ESPN, The Magazine predicting him to be “the next big thing” or something to that effect. The buzz on Yao as an actual player was interesting. Some predicted he would be too soft to play effectively in the NBA, while others noted his short arms might prevent him from being a defensive presence. I also vividly remember many comparing him to Rik Smits (ie a nice scorer but not a boarder or shot blocker) and Danny Ainge marveling that his arms were “too short” when he saw a video of Yao posting up chairs during workouts. Ming ended up being a no-brain number one pick despite any concerns because of the international buzz and his legit prospect status as a mobile big man.
-Yao, The Rookie
The plan for the Rockets was to bring Ming along slowly as a rookie, since he was young (22) and he had never really competed at the NBA level. Yap played no more than 24 minutes his first two weeks in the NBA but began to show serious flashes of ability. His third game of the season against Toronto, Ming had 8 points and 4 boards in 24 minutes and 10 points in 14 minutes against the Suns a week later. The watershed game, and my most memorable Ming Moment, was a 23-minutes, 20-point (on 9-9 shooting), 6-board game against the Lakers two days after the Suns game. Sure, Shaq was injured and didn’t play but Yao looked like a serious player and his time grew from there as it was clear that his ability matched the hype.
-Not Quite Rookie of the Year
At the end of the season Yao had 13.5 ppg, .498 FG%, 8.2 rpg, and 1.8 bpg in 29.0 mpg and a 20.6 PER. But ROY went to Amare Stoudemire of the Suns, who didn’t have quite as good numbers (13.5 ppg, 8.8 rpg, 1.1 bpg in 31.3 mpg and a 16.2 PER). At the time, I remember being a bit rankled because Yao seemed to be the better player and the better prospect going forward. Amare, of course, ended up being the more valuable player overall, as he matched Yao offensively and played many more games. Still, Yao has the higher career PER at the moment (23.0 to 22.6) and the player I would prefer to have had he remained healthy.
-No Playoff Wins?
Yao wasn’t dogged with one of those silly “he isn’t a winner” raps that some stars have had but Yao actually won only one playoff series in his NBA career. As for playoff memories there aren’t too many: Yao’s 2004-05 Rockets played six tough games against the Mavs in the first round before getting eviscerated by about 40 in Game 7 (Yao had a great 29.0 PER in that series). In 2006-07, the Rockets lost to the Jazz in the First Round in seven games. The teams were very evenly matched but the loss stung because the top seed Mavs were upset in the First Round and the Jazz used that absence to easily make it to the Conference Finals–something Houston surely could’ve done too if they had eked out the series. This was also the Yao team with the best SRS and the last Rocket team that had Tracy McGrady playing at a star level. In 2007-08, the Rockets won 55 games (the most since Hakeem Olajuwon years) and had an incredible 22-game win streak but still lost in the First Round to their old nemesis Utah. Finally in 2008-09, the Rockets beat the the Blazers in the First Round in six games between two evenly matched 50-something win teams. Houston then took the eventual champ Lakers seven games in Round Two (little Aaron Brooks gave L.A. fits). Though we didn’t know it at the time, Yao’s career ostensibly ended after that lost seriesto L.A.
Yao played at least 80 games his first three seasons in the NBA. The next three years he missed close to 30 games per year, before returning to play 77 games in 2008-09. He has played five games since then. Some have wondered, legitimately, whether Yao being forced to play for the Chinese National Team every summer wore him down and ended his career early. Yao never complained about this (or even implied that this bothered him) but his playing with China was a condition of allowing him to come to the NBA.
-Yao and the Hall of Fame
Some are reflexively touting Yao for the Hall of Fame. Yao has had a very nice career but the numbers don’t really merit the Hall. Yao has played only 486 games in his career, nearly 100 less than even Brad Daugherty. To make the Hall based upon such an abbreviated career, it would have to be a ridiculously good career. Yao was very good (he never had a PER lower than 20.6 in a full season and maxed out at 26.5 in 2006-07) but I don’t see it. That being said, Yao will almost certainly make the Hall of Fame, given that he is the first great player from the Far East and his arrival marks the opening of that region to the NBA (the Hall of Fame loves honoring such players). I don’t have a real problem with this judgment but the resume is not quite there on the court.
Certainly, the advertising market definitely was affected by Yao’s presence (remember how popular Tracy McGrady got in China because the Chinese happened to see him play during Yao games?) but no actual NBA talent has not really entered the NBA from China just yet (Sun Yue played 10 games with the Lakers in 2009 and Yi Jianlian was lottery pick but hasn’t panned out). Nor have any of China’s neighbors brought much to the table (Ha Seung Jin from Korea and Yuta Tabuse of Japan each made cameos in the mid-2000s). Yao may have sowed the seeds for something bigger in terms of bringing Asian talent to the NBA but, so far, the impact has been mostly financial.