No, its because it is unreasonable. Other leagues should be a reflection of why the agreement is currently totally wrong. Add to that they have a Mid-Level exception as well as a luxury tax arrangement, the payments are out of control.
The players do deserve a big slice of the pie no doubt, but 52-48 or 50/50 is enough. Why do they deserve 57% of the revenue and risk that other people who earn $20,000 a year would lose jobs than a guy like Gilbert earns $20m a year in a flawed system.
I'm not saying it can't be 57%, I'm not saying that they should just go with something other leagues have, but what makes the NBA so much of an exception over other leagues?. Particularly that they are running at a loss. And Billy Hunters accounting is stupid.
I love that article. But it's also full of biased garbage from Hunter.
So interest expense isn't a payment? So if Hunter has a mortgage and he pays monthly installments....He thinks that is all principal payment? Of course not. The majority of what anyone pays every year is interest.
So that interest paid isn't real money? That is total bullshit. To say that they should exclude it is to go against every accounting policy in the world.
GAAP has been something that has been rolled out across the world in order to ensure that the majority of accounting practices remain consistent. The issue with the previous American Policies were that they were so dramatically pathetic and had so many policies so far out of wack with the rest of the world it was meaning noone was essentially wanting to do business with them.
Hunter's logic is flawed with respect to interest. In fact, its downright wrong.
Amortisation policies are also under guided under the GAAP policies. Usually it is determined via two things - 1) The useful live of the intangible asset (usually the goodwill associated with the purchase or the "value of the name") or 2) standard 10-20 years amortisation which is the case for most things in Australia depending on the type of asset.
Now the issue with discussing Amortisation is that it is necessary under accounting policy to depreciate over time. That isn't just a specific NBA thing. Hunter's claim that a company can just change that is wrong. If they did the IRS would be knocking on their door saying that their accounting policies are wrong. That is if that issue had slipped past the scope of the professional independent auditors that look over the books.
And only looking at the Balance Sheet or Profit and Loss Statement is incorrect with regards to assessing whether the clubs are losing money.
The only real indicator is reviewing Cash Flow statements for companies. This would essentially show us whether the club is inherently liquid. This would identify cash inflow/outflows and if they are in a net loss position then their statement for losses is real.
If a team since the last CBA is showing net loss in their cash flow every year then the team is losing its money.
I read the deadspin article attached as well and while some of those look like "Phantom" items, they are permissible under law and essentially is reducing the overall value of the team for resale if they do sell it. While they also get tax benefits for it, it would be reducing the team's "Goodwill" if it gets sold, which is what the amortisation debate is about...so essentially...the team ends up losing whichever way they do it.
But I can't review the books, I'd love to!...but I can't so I can't see their cash flow.
But based on the economy over there at the moment. The outrageous contracts being issued and overall reckless spending, the league needs to be reigned in to protect itself.
It needs to level off the revenue to be an even split, it needs to ensure there is a hard cap to take away the luxury tax, it needs an appropriate revenue sharing program to aid small market teams and they need to get rid of the Mid-Level exception. That is a small way to get this mess fixed.
The next is to ensure the NBA & NBAPA have an internal audit team that goes around and monitors spending and has controls in place around spending at all these franchises. That is the next step. That way both NBA officials and NBAPA Officials have 100% visibility and are able to clean up bad franchises.
If they don't do those things above, the NBA will be dead in its current form in 5-10 years and the team will be contracted. While contraction isn't a bad idea to increase slice of pie per team, it doesn't need to be if the processes above are followed and fixed.
Both sides need to sit down and throw out everything that has been done in the past. They need to say "This is our environment now. We need to fix this....this is out of control". The players need to ease up on their wanting of 55-60% of the pie and the owners need to put in place appropriate controls in place to control spending. If the NBA is going to thrive and even survive...concessions need to be made on both sides...not just the owners.
That is my argument. But hey...I'd just love to see harmony in all professional leagues. God amateur sports are awesome. None of this BS.
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