The old man had been sitting quietly at the table for some time, staring straight ahead, when he finally began muttering. For hours the old man had listened as the NBA Board of Governors talked about player salaries; at one point he even joined a panel discussion—"It's Delightful, It's Delicious, It's Depreciation." Now his comments, barely audible at first, became louder with each passing speaker.
He and the other owners sat beneath a crystal teardrop chandelier that hovered over the meeting like a great sorrow. The old man had disliked the owners' meetings since the young Turks had taken over, men who had built fortunes by doing two things well—buying and selling. He seemed especially galled by the fact that three of the league's franchises were now owned by men who had been successful automobile dealers.
"Car salesmen!" he had shouted at his wife a few nights earlier. "I am sitting in my home watching the Carson show on TV—that Sammy Davis Jr., what a funny man. And deep! We could all learn a lot from him—when a member of the Board of Governors suddenly comes galloping across my screen on the back of an elephant. Says his name is Dumbo. The elephant's name he doesn't give, but a nice-looking animal. He is pushing Subarus and wearing a 10-gallon hat. With this man I am supposed to discuss the salvation of professional basketball? Not in a million years! To him I'll go if I want the odometer on my Lincoln rolled back. I would rather follow his elephant in heavy traffic than talk to him about the future of the NBA."
His wife had tried to calm him. "These men who own pro basketball teams are captains of industry," she had said. "Empire builders, buyers, sellers, titans."
November 1, 1982
"Hooples!" he interposed. "Shriners on an endless fire-engine ride. Spending their money as if blowing dough were a way of flexing their muscles. The cluck in Philadelphia just paid $13.2 million for Moses Malone because he's tired of waiting to win a championship. He's been an owner in the NBA for two years. Maybe you expected him to wait forever?"
Suddenly the old man pointed at the TV. "There is your best and your brightest," he said with a sneer, "lashed to the hump of a camel! Most of the serious writing this man has done in his life has been on windshields with a white shoe-polish applicator!" His wife patted his hand soothingly while the old man glumly meditated on what had happened to his game.
"The New York Knicks—you should excuse me while my heart is breaking; there is a franchise that once stood for something!—are just a cog in the carpet-bagging conglomerate called Gulf + Western. Last month the Knicks signed Bernard King to an offer sheet of $4.5 million for five years, then they lost him when the Golden State Warriors matched the offer. Then they traded a terrific guard for him. Gulf + Western doesn't have an elephant, but somewhere at Madison Square Garden there is a horse's ass giving rides.
"Now you may ask, is Bernard King worth $900,000 a year? And I would answer, were the kings of Israel Toyota salesmen? No and no. The insanity of this business is that the only way you can sign a free agent in today's market is to pay him what he's not worth. If you offered him only as much money as he was really worth, the team that had him in the first place would match your price and keep him."
All of these things had gone through the old man's mind as he sat in the conference room, listening to a litany of the league's financial failures. His sotto voce harangue passed through the teeth he had been grinding together with a sound like the escape of compressed air. Then he closed his eyes and leaned back in his chair. Several other owners noticed the old man in repose and assumed that he had fallen asleep. "Hooples," he repeated under his breath. Soon it would be his turn to speak, and he knew that he would be ready.
There was a time when the most challenging aspect of NBA ownership was answering questions like, "What is a Zollner?" and "How come NBA basketballs are brown?" But the start of the league's 37th season this week brings with it more troubling questions, questions about the solvency of several franchises, the growing threat of a players' strike and the effect of the upward spiral of player salaries on the first two problems. This time, however, the trouble isn't merely money, it's a struggle for control of the game. Representatives of the league and the NBA Players Association have been trying to work out their differences since July, and so far the only thing the league has announced is that a new preppy-looking orange ball will replace the old brown model.
"This isn't just another three-year go-around about meal money," says Commissioner Larry O'Brien. "The future of the league is at stake. Right now there is a dark cloud hanging over the season." And that cloud rains questions:
If it is true that last season NBA teams suffered losses totaling $15 to $20 million and that no more than seven of the league's 23 franchises showed a profit, is it possible that by moving to one of the NBA's glamor teams, Moses Malone can part that red sea? Or will the dreaded "ripple effect" created by the Malone signing lead to even higher salaries and perhaps result in the less stable franchises going under? "The ripple effect moves with the speed of light," says Kansas City Kings General Manager Joe Axelson.
The NBA says player salaries account for 72% of each team's gross revenues, on the average. Since negotiations began, it has been the owners rather than the players who have been demanding concessions, pointing out that while the average player makes $218,000 a year, the highest in any team sport, the average team loses $700,000. "If anything," says one member of the Board of Governors, "it will be the owners who go on strike." Last week, following a special board meeting in Chicago to discuss the negotiations, O'Brien announced that if the two sides are unable to agree on "an entirely new approach to the way in which player compensation is structured," the league would impose its own cost-saving measures. Those would include cutting the present 12-man rosters to 10, shifting the cost of some fringe benefits to the players, and requiring teams to fly coach unless the players are willing to pay the difference between coach and first class. "All we've heard so far is a one-sided group of demands by the owners that they refuse to get off," says Players Association General Counsel Larry Fleisher. "We have no intention of saving them from themselves, which is what they seem to want. They say they're a sick and dying industry. That's ridiculous. What they're also saying is that there are three teams in trouble, but that they want us to make concessions that would help the whole league."
O'Brien cautioned the players, "This isn't garbage time. I think the owners feel very strongly that this situation has to be resolved before October 29. The ultimate responsibility for the start of the season rests with the players."
Do the owners actually want a strike? "I've heard it," O'Brien admits. One of the owners involved in a big free-agent signing this summer has told friends he hopes the players do strike, because with his payroll he actually figures to lose less money if the players walk than he would if the games are played. "We don't have any owners who want a strike for the sake of a strike," says NBA Executive Vice-President David Stern, "but it's going to be relatively painless for some of them. If you're running at a loss, then a strike could actually prove to be a profitable experience."
Another question is: Can professional basketball in San Diego survive Donald Sterling and his Reign of Error? Sterling is a good example of the kind of ownership problems the league has had in recent years. Eighteen months ago he purchased the Clippers for $13.5 million and pledged to spend "unlimited sums" to turn the team into an immediate contender. With vast real estate holdings and an estimated net worth of close to $300 million, Sterling looked like just the man to do it, too. He started his crusade with a campaign to boost ticket sales that, oddly enough, featured Sterling's grinning face on billboards throughout San Diego County. That was but the first indication of the kind of bizarre year that lay in store for the franchise. On opening night last season before a home crowd, Sterling became so excited by the Clippers' 125-110 victory over Houston that he unbuttoned his shirt to the navel while the game was in progress, and as it ended he pranced across the court and jumped into the arms of Coach Paul Silas. And he kissed him.
By mid-January Sterling had been fined $10,000 by the league for suggesting that the Clippers might purposely lose games in order to get the first pick in the draft and a shot at Virginia's Ralph Sampson. Then things got really strange. Before the season was over, Sterling would fail to make deferred compensation payments to half a dozen former players, among them Silas. He would fail to pay operating expenses (the Hyatt House in Oakland refused to accommodate the Clippers at the end of last season for not paying their bills). And he owed $225,000 to the players' and general managers' pension funds and $300,000 to assorted other creditors. And that's not mentioning the time he took an NBA executive, who was visiting from New York, to an expensive restaurant in San Diego and then had to stick his guest with the check when the waiter informed Sterling that the computer had rejected his credit card.
For some reason, people in San Diego just never warmed up to Don Sterling. "Evidently the fans there think he's a joke," says San Antonio President Angelo Drossos, who is on the NBA's nine-member Advisory-Finance Committee. The committee evidently has reservations about Sterling, too. On Oct. 7 Sterling appointed L.A. attorney Alan Rothenberg, who has had previous involvements with league franchises, to run the team. It didn't help Sterling's credibility that in June he had made an unsuccessful attempt to move the Clippers to Los Angeles, or that his new assistant general manager is Patricia Simmons, a former model and occasional Sterling companion, who has what one San Diego newspaper described as "no known basketball background." But she has a decidedly stunning foreground. When Silas was in China on a Players Association exhibition tour this summer, Simmons moved into his office. When Silas returned, he found his belongings stacked in the hallway.
Sterling isn't the only eccentric NBA owner, just the worst. Last year Cleveland owner Ted Stepien had the league in an uproar because of the immoderate salaries he was paying free agents, and because he was trading away the franchise's future to acquire them. "Goodness, Cleveland doesn't have a first-round pick for years," says San Antonio Spurs Coach Stan Albeck. "Whoever he is, he's a high school freshman right now."
This year's non-model owner seems to be Harold Katz, the diet-center mogul who owns the Philadelphia 76ers. Two months ago Katz signed Malone to his huge contract after the Houston Rockets, Malone's old team, matched the Sixers' offer sheet and traded him to Philadelphia. "We had kept a clipping in which Philadelphia's general manager was quoted as saying, 'This is madness,' speaking about us," says Los Angeles Lakers owner Jerry Buss, a heavy spender in the free-agent market in his own right. "We circled that quote, attached it to a copy of a story about Moses' contract, and sent it back to them."
Buss wasn't alone in being upset. "I think it was something that Mr. Katz wouldn't have done in another business which is his livelihood," says Drossos, "because his investing public would think he isn't playing with a full deck. How can we as a league tell the world, the players, and the fans that we're in financial trouble when one of our partners, who was apparently sane at the time, offers a player $13 million and gives up a draft choice [Sampson?] and another quality player [Caldwell Jones] worth maybe $20 million? How can you explain doing that unless somebody is holding a gun at your head? I don't blame the players and the Players Association for laughing when we say we're losing money."
The Dallas Mavericks, who are entering their third season in the NBA as one of the league's most improved teams, have carefully avoided the free-agent market and what general manager Norm Sonju sees as the "quick fix" mentality of some teams. "The Moses deal just doesn't add up mathematically," says Sonju, who delivers his sermons on fiscal responsibility with evangelical zeal. "It won't work. What they did was subtract Darryl Dawkins, then they subtracted Caldwell Jones, and they say, hmmm, it's not going to cost us that much. The problem is that what it does is fracture the salary structure of that team. Surely the Doctor [Julius Erving] sees what Moses is making, and he has to wonder why he's not worth more." That, folks, is the ripple effect in full force.
Buss has been one of the league's most frequently criticized owners because of the Lakers' enormous payroll, but even he is talking about retrenchment now. "My guess is that this thing is going to settle down and salaries will decrease in the next three to five years," Buss says. "If you notice, the people who had gone into the free-agency market in the beginning haven't gone in for a second dip. I suspect everybody is going to take at least one plunge for a superstar-type player, but after you've done that once you've really limited your ability to go back in."
Stepien, one of the biggest busts in the free-agent market, evidently found some truth in Buss's postulate. After spending $700,000 a year for Center James Edwards and $800,000 for Forward Scott Wedman last year and getting nothing in return but abuse and the worst record in the league, Stepien stayed out of this year's market. The fact that the Cavaliers took in $2.8 million last season and paid their players $3.7 million, finishing the year with a total operating loss of $5.1 million, may have had something to do with that.
"The situation we have now is a result of pure greed and shortsightedness by new owners who want to wear a championship ring right away," says K.C.'s Axelson, a 13-year veteran of the league and the NBA's vice-president in charge of operations the past three years. "They've been successful in their own business ventures, and they want to be equally successful in this one." Buss, who made his fortune in Southern California real estate before buying the Lakers, and then won the league championship in his first year, probably wouldn't dispute that. But Buss believes there is another factor at work in the rapid escalation of player salaries.
The world-champion Lakers spent most of the off-season trying to sign Bob McAdoo, a veteran free agent who helped them win the title last June. Buss concedes that both fan pressure and the possibility that without McAdoo the Lakers might not be as good as they were last season weighed heavily on his mind during the negotiations. As a result, when the team reached agreement with McAdoo last week, the 31-year-old forward got more than he's worth (but less than the Sixers had offered him). Really, Buss paid more for No. 1 draft pick James Worthy—an estimated $500,000 a year—than he probably would have had to if he had been able to sign McAdoo earlier.
"I can determine what is reasonable to pay McAdoo based on the finances of the company," Buss says. "If I decide to pay him more than that, I have to raise ticket prices even further, or I have to take a loss and subsidize him out of my own pocket. The pressures on me if I don't sign him are that I'm subject to being second-guessed if I lower the competitiveness of my team. And I also upset the fans who adore Bob McAdoo. From a public-relations standpoint, I don't want to do either of those things because it begins to affect my gate. And when that happens I can afford even less than before. The only thing to do if I don't want to gouge my fans is to limit the salary I'm going to pay him. But when he compares the numbers I offer him to those being paid comparable players, he sees he's not getting enough and wants more. It becomes a domino effect. It sounds insane, I know. If I offer $600,000 and he wants $800,000, I have to consider that $200,000 difference and wonder if it's worth fan alienation and competitive drop. The tendency is to give in."
The Golden State Warriors made the same kind of decision last year when they agreed to renegotiate Forward Larry Smith's contract, which had two years to run. "It's not easy to sit in the stands and hear people booing your team because you won't give a player the kind of money he wants," says Warrior Executive Vice-President Ken Macker. "Eventually you succumb to fan pressure. What's ironic is that so far it hasn't been CBS or cable TV that's been paying for the player's new contract. It's been that man in the stands who's doing the booing."
Almost every NBA owner would like to find himself in the situation of the NFL owners—the players on strike because the two sides couldn't agree on how to split $1.6 billion. Some NBA owners feel that the road to NFL-like parity of earnings is a revenue-sharing arrangement similar to football's. The trouble is, most of the teams that are making money, or expect to in the near future, see no reason why they should bankroll the spendthrifts. Dallas owner Donald Carter is still angry at the owners who repeatedly changed the terms of his franchise's entry into the league, and sees no reason why he should ever share his revenue with teams that might be on the verge of folding. "They made us dance naked, dance naked and dance naked," Carter has said. "They won't get any sympathy from me to bail them out."
In their negotiations with the union, the owners had at first hoped to get some financial relief by imposing a salary cap on each team—the sum of $2.8 million has been bruited about—but Special Master Kingman Brewster ruled that limiting salaries would also unjustly limit the mobility of free agents. Since that time the league has asked the players to be "reasonable," and for the time being the owners have a unified bargaining position. No one knows how long that will last. "People don't do the normal thing in the NBA," says Kansas City Kings Coach Cotton Fitzsimmons. The players start with a built-in advantage in any negotiations because of the owners' fractiousness. "Believe me," says Axelson, "there isn't going to be any concerted effort in this league."
For their part, the players have shown little willingness to give up any of the gains they've made through collective bargaining or individual initiative. "The owners have got to keep tabs on themselves," says Players Association President Bob Lanier, the Milwaukee Bucks center. "If they would stop paying these humongous salaries, there wouldn't be a problem." The league is afraid that the players' union is willing to wait and see if teams actually do go under before agreeing to any concessions. "It might improve the league," says Lanier. "We may have to lose some players in the process, but it might make it a more quality league."
Assuming that the league is unable to get the players to agree to a salary-limit formula ("It will never happen," vows Fleisher), the owners will have to settle for hammering away at reducing roster sizes, eliminating mandatory first-class travel, eliminating guaranteed contracts and trying to get a share of the money the players haul in from shoe endorsements, as well as holding the line on the players' demand for a percentage of future cable TV revenues. The owners want to protect the profits they foresee coming from cable and do away with the guaranteed contracts that often result in teams paying players who are no longer even in the league. "I'm a little at a loss to understand how agents who feel their players are superstars and can't miss have to insist on guaranteed contracts," says Red McCombs, the owner of the Denver Nuggets.
McCombs is one of two new owners to join the league since the end of last season; he paid $10 million for the Nuggets. The other is Charlie Thomas, who bought the Houston Rockets for $11 million. Thomas also owns 20 prospering Ford dealerships, not to mention a prize bull named Mr. Suva No. 203. When Thomas was getting started in the car-selling business, he worked as a manager in McCombs' Ford dealership in San Antonio. One of the best salesmen working with Thomas on the lot was a young car hustler named Angelo Drossos.
The meeting was nearly over now, and the men were beginning to shuffle their papers and stir in their seats. Slowly the old man climbed out of his chair, and when he was standing, he poked a hole in the air with his stubby forefinger and spoke. "Boys, I'm an old man," he said, "and I know you are all sharp young fellas with acres of Japanese cars to move and elephants to ride. I won't keep you. Just a few words of advice. Later you'll thank me."
He put his hands on the table and leaned toward his audience with a leer. "Wise up, Hooples! Stop treating the NBA like it was some kind of theme park put here for your amusement. For 20 years I've owned my team, and in that time the Celtics have had 10 owners. An owner comes in for three years, takes his tax write-off, gets his jollies and then gets out. Now some of you think you can have a strike and not have economic chaos with it. Morons! What are the American people supposed to do with the NFL season a shambles and the NBA on strike? There will be a run on the bowling alleys, leagues will be formed, rayon shirts will be bought."
The old man turned and began to walk toward the exit. At the door he stopped and shook his fist at them. "Talk to the players!" the old man roared. "Invite them over for a test drive, let them ride on your camels. Show them you care about the game almost as much as you care about being bigshots in the newspapers. Don't try to undo the problems of a decade in a single negotiation. It's a good game you've got here. Don't louse it up now."