David Stern Lock Out

Maybe I should have entitled this piece David Stern “Look Out.” The longer the lockout continues, and the closer you look at what Stern is demanding from the players, the more you realize that it is Stern and not the players who are being unreasonable.  I am an avid fan, and a Miami Heat season ticket holder, and as much as I will miss the game, I do not believe the players should meet his demands.

I know it is hard for many to have sympathy with either the owners or the players, but that does not mean the players should allow Stern to exploit the current economic situation.  Here’s why:

The new collective bargaining agreement is about the future, not the past.  It should not be used to make up for any losses the owners may have realized over the past five years.  We are all aware of just how bad the economy has been during the past five years.  Many businesses have lost money and most individuals have seen their savings take a big hit or worse yet, lost their jobs.  That is what happens during a recession.  Who ever said that the owners of NBA franchises should be “recession proof.”

David Stern stated that a 50/50 split of revenues would make the NBA a true partnership, and feels the 57/43 (in favor of the players) split over the past 5 years is unfair to the owners.  But what he fails to mention is that the owners own an appreciating asset (the franchise) while the players have a depreciating asset (their talent).  If Stern wants a real partnership he should offer the players a 50/50 split on any increase in value when a franchise is sold.  Obviously that is not going to happen.

From what I have read, the losses, Stern is talking about may be computed in accordance with generally accepted accounting principles but here is the problem.  The owners get to write off, as a tax deduction, a portion of their initial investment in the franchise.  That depreciation expense enables the owner to show an accounting loss when in fact the franchise is profitable on a cash basis.  It’s legal but that doesn’t mean the franchise has indeed suffered a loss.  As mentioned before, these franchises “appreciate” over time.  It’s a great business.

Finally, Stern does not want another 5-year agreement, he wants a 10 year deal.  If he can base that agreement on the economic data of the past 5 years, the owners will make a killing when the economy recovers.  He insults the players and fans with his patronizing attitude.  I don’t believe we are all that stupid.

At his age, he obviously wants to go out with a bang.  If he can force the players to accept his terms I am guessing he will be in line for a substantial bonus.

But I am betting he won’t be around much longer.  When an employee puts his or her interest ahead of the employer, the employee usually gets shown the door.  We can only hope.

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