For David Stern This Lockout Is Personal

by Paul Knepper

NBA Commissioner David Stern is often credited with rescuing the league from the dark days of the late 70’s and early 80’s and developing it into the prosperous enterprise it is today. During his 27 years on the job, he’s overseen the boom years of the 1980’s and has been instrumental in expanding basketball’s popularity around the globe.

Stern is so well respected within the game, by fans and the media that his reputation has remained unscathed, despite a lockout shortened season in 1999, the “Malice at the Palace,” a controversial dress code and perhaps most remarkably, a referee’s admission that he bet on games.

But the current lockout is different. The stakes are greater than ever for the commissioner as he faces the prospect of adding a lost season to his resume.

Many fans see Stern’s role as NBA commissioner as that of an independent guardian of the game, someone to oversee league issues, such as marketing, television rights, rules of the game, public relations, discipline and relations with the players’ union.

In actuality, Stern works for the owners.  Essentially, he’s the CEO of the NBA and the owners are the shareholders. They decide if he stays or goes and like any investors, their primary concern is their bottom line. His concern for the quality and growth of the product is based on its value to them.

Based on Stern’s recommendation, the owners locked out the players on July 1st, claiming that under the last collected bargaining agreement 22 of the 30 teams were losing money to the tune of over $300 million a year. Currently, 57% of “basketball related income” is going to the players and the owners want to grab a larger slice of that pie. They intend to do so by among other things, lowering maximum salaries and implementing a hard salary cap.

The players have contested the owners’ accounting and raised a question as to why so many investors are buying into the league if it’s in such financial trouble. Two teams have been sold since the lockout began. Hedge fund founder Joshua Harris bought the Philadelphia 76ers last month for $280 million and this week California businessman Alex Meruelo purchased an Atlanta Hawks franchise with some of the poorest attendance numbers in the league.

In May, billionaire Tom Gores bought the Detroit Pistons and their arena The Palace at Auburn Hills for $325 million, despite the near certainty of a lockout, and the Charlotte Bobcats, Golden State Warriors, New Jersey Nets and Washington Wizards also changed hands in the past two years.

At a press conference announcing his purchase of the Hawks Meruelo stated, “this is a tremendous opportunity for growth.” That’s a curious statement given the current lockout and the owners’ claim that they’re losing money.

Meruelo, like several owners before him, based his assumption on the word of the esteemed commissioner. Desperate to lure new investors, Stern made assurances that the lockout would lead to a new collective bargaining agreement much more favorable to the owners.

The commissioner pushed hard for the lockout and now he owns it. Failure to secure a deal to the owners liking would severely damage his credibility with current and future investors and could even put his job in jeopardy.

Stern’s legacy is also riding on the results of the lockout. Over the years, it’s the commish has made it apparent that he cares about how he’ll be remembered. Ultimately, his legacy will be shaped primarily by the media and fans, not the owners. A lost season on his watch may be in the owners’ best interest, but would do irreparable harm to his pristine image in the eyes of the public.

Reported schisms within the ranks of the owners have further complicated matters for Stern. Team owners have different priorities and in some cases conflicting interests based on their specific circumstances.

Owners of veteran teams capable of competing for a championship are less inclined to lose an entire season in an attempt to break the players union. The same can be said for profitable big city teams, which also raises the divisive issue of revenue sharing between big and small market teams.

Owners who bought into the league in the 80’s or 90’s and saw the value of their franchises multiply may not be as determined as the newer owners to break with the current system at all costs. Then there’s a group of owners who owned NHL teams when the hockey league lost the entire 2004-2005 season to a lockout and are convinced that sitting out an NBA season will lead to similar favorable results.

The recent success of the league places even more pressure on Stern to make a deal. The 2011 playoffs were riveting. Ticket sales and television ratings were up this past season and with several highly marketable young stars and a marquee team/villain in the Miami Heat, there’s a solid foundation for the league to continue to build on. An extended lockout would kill any existing momentum.

Well over a month into the lockout, the players and owners appear to still be miles apart and the owners have escalated the conflict by filing a claim of unfair labor practices against the players. National Basketball Players Association Executive Director Billy Hunter recently predicted that the entire season would be lost, which appears to be the common sentiment among the players, many of whom have explored alternative options overseas.

In the autumn of his career, the commissioner faces his greatest challenge. With his reputation on the line, he must appease several competing factions while pushing through wholesale changes to the revenue distribution system for a $3 billion a year business. It’s not surprising that he’s been uncharacteristically surly lately. David Stern owns this lockout, but it may end up owning him.