NBA’s dysfunctional finances might mean a long lockout

  • Article by: JIM SOUHAN , Star Tribune
  • Updated: June 30, 2011 - 11:13 PM

The NFL's business model works, so owners and players will settle soon. The NBA, with unproven players making millions, needs fixing.

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Some NBA players, such as Lakers guard Kobe Bryant (right), are worth every million they make. But the league gets into financial dire straits by throwing large sums of money at young, unproven players.

Photo: Mark J. Terrill, Associated Press

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The NBA locked out its players Thursday, joining the NFL in shutting down its league to seek a better financial deal for owners.

Imagine November without any Vikings or Timberwolves victories. It will be just like last November.

There's little reason to lump the NFL and NBA labor disputes together, other than the fact that both the Vikings and the Wolves play 16 meaningful games a year.

The NFL possesses an excellent business model that has made its owners even richer than they were before they bought their teams, and I believe the league will end its lockout in time to play a full season. That would make sense for both sides.

NFL owners make lots of money. They would like to make more. Considering that NFL players play the most violent of our major sports and possess the worst contracts and medical benefits, there is real reason for dispute here. But because the NFL is so successful and so few of its players can stand to miss paychecks, both sides are highly motivated to settle and preserve the 2011 season.

The NBA is different. Many teams are at least claiming to lose money, and while billionaire owners can afford to lose a few bucks, that's not how rich people think. If they thought that way, they never would have become rich.

The NBA is also unique in that the bulk of its players, by any metric, are overpaid. There are a handful of stars in the league who draw fans and raise TV ratings. For every Kobe Bryant (24 million a year and worth it) there are two Rashard Lewises ($20 million and not worth half.)

That's hyperbole, by the way. If there were two Rashard Lewises, the NBA would be in Chapter 11.

Baseball players play every day and have to wait six years, often following an apprenticeship in the minor leagues, to enjoy free agency and exorbitant paydays. Baseball will always have overpaid players because owners and general managers make mistakes, not because the game's financial system is broken.

The NBA's is broken. It is designed to reward 20-year-olds with immense, long-term, guaranteed contracts. Anyone who has ever parented knows how stupid this is.

This is why an estimated 60 percent of NBA players, according to a Sports Illustrated investigation, are broke within five years of retiring despite an average annual salary in their league of $5.85 million. Many NBA players make fortunes before they prove they can do their jobs. That system is unfair to the stars of the league, and proves to be unfair to the youngsters, too, because they are made wealthy before they know what to do with the wealth.

That's got to be an aggravation for NBA owners. They overpay their players, and many of their players don't even benefit from being overpaid.

NFL players go broke in droves, too. Sports Illustrated estimated that 78 percent of NFL players are bankrupt or close within two years of retirement, but the NFL statistic is less surprising. In general, NFL players make less money, less of the money they sign for is guaranteed, their careers are shorter and they face greater risk of brain and other injuries that can affect them the rest of their lives.

The NBA and the NBA Players Association met Thursday, then the league didn't even wait until the late-night deadline for negotiations to announce the lockout.

This one could last a long time. While conventional wisdom holds that the NBA's successful postseason would make the league less likely to jeopardize the next season, that's merely wishful thinking.

The NBA enjoyed robust ratings during the playoffs and teams still lost money. Commissioner David Stern won't start another season until a system more favorable to the owners is in place. Some of his owners actually will lose less money during a lockout than they did during the season.

For Wolves fans, the lockout comes at a bad time. David Kahn has built a roster that is at least interesting and at best promising.

The lockout means that by their next opening day, Ricky Rubio will have reached legal drinking age, and Tanguy Ngombo will be collecting his pension.

Jim Souhan can be heard Sundays from 10 a.m. to noon and weekdays at 2:40 p.m. on 1500ESPN. His Twitter name is Souhanstrib. jsouhan@startribune.com

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