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NATIONAL BASKETBALL ASSOCIATION MEDIA CONFERENCE
July 14, 2015
COMMISSIONER SILVER:¬† Thanks and hello, everybody.¬† So far we're having a great Las Vegas Summer League.¬† It's our 11th year here.¬† We have 23 NBA teams here plus a Development League team.¬† We've had record attendance.¬† We set an all‑time attendance record opening night on Friday night at Thomas & Mack with almost 12,500 people, and the competition's been terrific.
We opened with Minnesota‑Lakers, the first and second pick, and all of the games have been available on NBA TV, so it's 67 games.¬† It's been fantastic.¬† Digital programming as well for all our assets.¬† So we couldn't be more pleased.¬† I didn't make it personally down to the Orlando Summer League, but I got reports that's going well.¬† And we're also thrilled that Utah's Summer League is back, and we're very excited for the Jazz.¬† It was an important fixture in their summer and we're pleased that that's back and teams have wanted to attend.
As you all know because the Summer League has been so successful we've moved our summer meetings with our teams to Las Vegas as well as a meeting of the Board of Governors.
The Board of Governors meeting took place today.¬† We also had a Competition Committee meeting yesterday, and today's meeting is going to be followed by two days of meetings with our teams, and it's all aspects of the teams.¬† We have multiple tracks of different executives, communications people, marketing people, sales people, et cetera.¬† We have over 1,300 people from our teams here together with league officials and all in, with the all the Summer League players who are here, we're bringing almost 3,500 people to Las Vegas.¬† So, again, it's become very important for the league and very important event for Las Vegas as well.
A few of the things that came up at the Competition Committee that were discussed by the Board:¬† There's been a lot of discussion about playoff seeding, especially this year as to whether a division winner should get a top four seed.¬† The recommendation from the Competition Committee is that we should seed one through eight based on conference standings for the playoffs.¬† So we should eliminate the preference for a division winner in playoff seedings.
That recommendation was discussed at the Board today.¬† It wasn't voted on yet because we wanted all the owners to have an opportunity to go back and discuss that recommendation with their general managers and their coaches, and we'll vote on it before the beginning of the season.¬† It's my expectation that that change will be adopted before the beginning of this coming season.
We also talked about the addition of a countdown clock.¬† For those of you, most of you in this room who attend a lot of games, you probably notice we added a countdown clock this season moving into the beginning of the game and halftime.¬† The reason we did that is so we could have the consistency across all our arenas in terms of the timing.¬† The next step now is to add that clock for the quarter breaks and for the timeouts as well.
It's not necessarily done to shorten the timeouts, but the reason we're doing this is there is just too much inconsistency.¬† We did all the timings throughout the course of the season, and sometimes some timeouts are varying by almost a minute or so in length.¬† So two issues:¬† One, it isn't just for competitive reasons.¬† It should be consistent.¬† You should know exactly how long a timeout should be.¬† And number two for clarity, I think, for coaches, so they know precisely.¬† They can look at a clock and know we have 15 seconds left to communicate whatever messages to the players and then they're going to be called back on the floor.¬† So that's a change we know we're going to be implementing for the season.
We also talked about changes in the escape lane. ¬†So all of you, again, media in this room are familiar with the baseline configurations.¬† We had a few high‑profile incidents this year of players crashing into still photographers, cameramen along the sidelines.¬† Of course LeBron hit his head during The Finals.¬† It's something we've been discussing with The Players Association.¬† Obviously, we both are concerned about player safety, and we're always looking to find the right balance between accommodating the media and the television crews that are covering our game and of course player safety.
So what we presented to both at the Competition Committee and to the owners today was widening those escape lanes which appear right next to the stanchion.¬† So widening these escape lanes by an additional foot, having a cameraman positioned and then creating yet another escape lane on the other side of the cameraman.¬† So we'd be widening the two existing escape lanes and creating two more escape lanes sort of almost right in the middle of that quadrant from the stanchion and the end zone on each side of the floor.
We think it's necessary.¬† There's been advances, of course, in technology in terms of the use of the automated cameras that appear on the stanchions themselves, there is more use of pool photography.¬† But, again, it's a constant balance we're looking to achieve in terms of getting those great images out to our fans around the world, allowing the media to appropriately cover our game and finding the right balance for player safety.
Lastly, at the meeting today we discussed and celebrated the fact that two long‑time league executives are going to be leaving.¬† Joel Litvin, our President of Basketball Operations, who has been with the league for 27 years, started as a staff attorney at the league in 1988, is stepping down at the end of August.¬† The owners gave him a huge round of applause and thanked him for all his contributions to the league.
And (Rod) Thorn is going to be leaving us in August.¬† Rod has spent over a half a century in the league.¬† Number two draft pick from the Baltimore Bullets in 1963, a storied career in the NBA with the 76ers, the Nets, other teams.¬† Came back to the league office to help me with the transition after David Stern left or came right before David left.
And I thank you, Rod, and thank you, Joel, for your service.¬† I'm happy to answer any questions all of you have.
Q.¬† When the Milwaukee Bucks president announced that the team could be moved here to Las Vegas, it got a whole lot of people excited here.¬† What would you tell people here in Las Vegas about how realistic that is?
COMMISSIONER SILVER:¬† I would say that is not realistic in the short term.¬† I would say we are hopeful that the vote, which I understand is taking place tomorrow in Wisconsin, will go in favor of the Milwaukee Bucks, and that team will stay there for a long time.¬† So while we love the Las Vegas market, and, as I said earlier, I think we've become a large part of the summer economy here, that my hope is that that team is not going to relocate.
Q.¬† Can you talk about your thoughts on DeAndre Jordan's situation, and also was the moratorium discussed as far as any possible changes?
COMMISSIONER SILVER:¬† Yeah, the moratorium was discussed, and nobody had a great idea, frankly, in terms of how to change it.¬† I think there was some discussion about whether the moratorium potentially should be a bit shorter.¬† But as I've said the other day, it's an imperfect system.¬† And we still think we're striking the right balance between teams having the opportunity to talk to players when they become free agents and creating certainty at some point when contracts are entered into.
I would say from a personal standpoint, it was not a great look.¬† I mean, it's not what we want to see happen in the moratorium period.¬† It wasn't created so players could enter into, in essence, oral agreements only to have those agreements superseded by binding agreements.¬† Of course, under our collective bargaining agreement, there is no dispute that only a signed agreement is binding once the moratorium expires, and I don't think anybody's questioning that.
But there was a breakdown in the system to a certain extent.¬† Teams come to rely on those assurances.¬† Having said that, I think certainly there are decisions I've made in my life where I've had second thoughts and if you're not bound by an agreement, DeAndre Jordan was exercising a right that he has under the collective bargaining agreement.¬† And as he said, I'm not sure it's his proudest moment either, but, again, he was exercising a right that he appropriately has under the collective bargaining agreement.
There is no suggestion that the Clippers did not have a right to continue talking to him.¬† But it leaves the Mavericks in a difficult position.
I will say that I think Mark Cuban has moved on.¬† He's an extraordinarily competitive guy and has done a fantastic job managing his team over the years, and he'll continue to be competitive.¬† In terms of the moratorium itself, just so it's clear, that is collectively bargained with our union.¬† The actual beginning and end dates of the moratorium were set in advance throughout the collective bargaining agreement.¬† So if we were to change it, we'd have to negotiate with the Players Association.
I do have a sense from some of the players and from some of the player representatives that they may feel it's a little long as well because they have the same interest and certainty.¬† And what happens when teams can't sign, especially the star players, and they're building their rosters around them, it's a hold up for a lot of other players in the league who teams are telling they can't make commitments to them either during that interim period.
So it may be that we do need to take a fresh look and shorten it for a few days.¬† But no one, at least from the owners¬í standpoint, came up with a better solution to how to deal with free agency.
Q.¬† (No microphone)?
COMMISSIONER SILVER:¬† We could change the next collective bargaining agreement, but nothing ever prevents us from sitting down with the players on any issue and agreeing outside of the context of a full‑out collective bargaining agreement that we should change some aspect of it.
Q.¬† Was there any further discussion on Hack‑a‑Shaq intentional fouling?
COMMISSIONER SILVER:¬† There was further discussion on the so‑called Hack‑a‑Shaq issue both at the Competition Committee and the owners meeting, and we came out status quo.¬† I think most said what I've said before.¬† While, again, we recognize we are an entertainment product and we're competing for eyeballs, number one.¬† It's almost counter intuitive, but the ratings don't show people are tuning it off.¬† Maybe if it became even more prevalent fans truly would flip the channel.¬† But at least so far that hasn't been the case.
I think, number two, there is a sense, especially from the basketball people, that it would be sending the wrong message to the larger basketball community, particularly youth basketball to de‑emphasize the need for guys to hit free throws.
I think also from a competitive standpoint, as I've said before, especially in the playoffs, I think 75 percent of the incidents of so‑called Hack‑a‑Shaq were two players, DeAndre Jordan, Dwight Howard, and then the case is should we be changing the rule for two players?
From a personal standpoint, I think we have to continue to monitor it.¬† Because we did present some data to both the Competition Committee and at the Board of Governors meeting showing that use of that strategy is continuing, and of course we can't really have a principled objection to it anymore because we changed the rule in the last two minutes, and commentators have pointed out why are the last two minutes unique as opposed to the rest of the game?¬† And that was a compromise.¬† I only say we'll continue to monitor it.
My sense, often there is a marketplace correction on issues like that, that there will be a focus on particular players hitting their free throws.¬† You know, the analytics say if you can hit roughly 50 percent of your free throws, it's not an effective‑‑ generally an effective strategy.¬† So we'll see.
We'll continue to watch it.¬† But I think there was a strong sense both from the Competition Committee and the Board of Governors that we should not be changing that rule right now.
Q.¬† Not the special moratorium question, but on the first day there was like $1.5 billion in deals agreed to, and we all kind of know obviously what the cap did this year, what the cap's going to do in the next couple of years.¬† Does it concern you at all?¬† We all knew what the money was with the new TV deal and all that was struck, but does it concern you at all that the money to the regular fan is starting to look really ginormous and some of them might start to wonder soon if they're going to get priced out.¬† Because obviously as everything rises, there is going to be‑‑ they're going to feel some of that as well.¬† What would you tell fans that see these mind boggling numbers?¬† Do they have reason to worry about the affordability of NBA games going forward?
COMMISSIONER SILVER:¬† I'm actually not sure there is a direct correlation between the affordability of our games and the contracts to our players, because ultimately there is a marketplace for tickets.¬† That's what we see in the very sophisticated secondary market now.
I mean, if we price our tickets under market, what fans do is they turn around and buy them from us and retail and sell them for a higher price.¬† If we price our tickets too high, people won't buy them.¬† In fact, when we in essence artificially tried to create more lower-priced tickets, inevitably what happens is brokers buy those tickets and re-sell them at a higher price.
The fact is for, especially on a global basis, 99 percent plus of our fans experience our games through media of some sort.¬† Whether it's streaming media or conventional television.¬† In terms of the announced new contract signings, again, we have a partnership with the players, so to the extent we're generating more revenue, the players are going to do better.¬† It's roughly a 50‑50 deal, and those contracts are ultimately a product of the 50 percent of the revenue that the players receive.¬† So the better the league does, the better our players do.
And I think most fans recognize that to the extent that these guys have a special and unique talent that are being rewarded by the marketplace.¬† It's very difficult to make value judgments.¬† I'm like any other fan when I say, oh, my God, I can't believe that compared to a teacher or doctor or someone else.¬† But we live in a market economy.¬† So that's how values are set.
So the simple answer is, no, it doesn't bother me.¬† But part of my job is always looking at the larger system in terms of the profitability of our teams.
Right now under our system, we largely are paying our players off the gross.¬† Expenses are also increasing dramatically.¬† One of the things we talked about with our owners is the large investment that we're going to continue to need to make upgrading our arenas.¬† There was a question before about Las Vegas versus Milwaukee.¬† Again, it was our hope that we build a new arena in Milwaukee.¬† But even with the partnership with the local and state government it's still going to require another $250 million investment from our owners.
In San Francisco there is a proposal on the table from the Warriors to privately finance an arena which will be even far more expensive than the arena in Milwaukee.¬† So, again, I'm not complaining.¬† I think we have a fair deal and we're very appreciative of the support we get from our fans, from our sponsors, from our network part partners.¬† But it's an increasingly complex business.¬† But we're proud that we have a partnership with the players.
Q.¬† You mentioned Milwaukee and the vote I think is going to be tomorrow in the state senate.¬† The Bucks have been very insistent the last several weeks saying, if not for this vote, there is a chance that the team could move.¬† I wonder from a timing standpoint is there no give on the league standpoint from that 2017 deadline?¬† Is it your sense also that if this vote goes no for this funding that the team won't move?
COMMISSIONER SILVER:¬† I think it's premature to talk about whether there is give on any deadlines.¬† Again, we've worked very closely with Wes Edens and Marc Lasry, the owners of the team.¬† I've been to the community several times and met with local elected officials.¬† It seems like everyone's desire is to keep the team there.¬† So I think if things didn't go the way we hoped on Wednesday, we'd have to understand why and understand what's on the table.
Obviously, we're keeping all our options open, but it's very much our desire and hope that that team stay in Milwaukee.¬† As you know, it's a storied franchise in this league.¬† Fantastic fans there.
You have a unique situation with a former owner, Senator Herb Kohl is donating $100 million of his own money to a new arena project there.¬† Marquette University needs a new state‑of‑the‑art arena for them to play their games.¬† These arenas are increasingly fixtures in the community.¬† It's where graduations take place.¬† It's where, in essence, it's the local town hall.¬† So there are lots of reasons why cities in this day and age need state‑of‑the‑art arenas.¬† So, again, it's my hope that we'll work something out with Milwaukee.
Q.¬† Obviously, with the Summer League and the exhibitions and Team USA, it feels that you have a positive response about your place here now.¬† Two things, one, do you see anything that will preclude a team ever coming here?¬† And also, would it be, I guess, a reason for the years to watch the NBA to come in here and see how does this city respond to its first major professional franchise before you'd even make a decision?
COMMISSIONER SILVER:¬† Yeah, in terms of the NHL, I know Gary Bettman well and I'm watching what they're doing, but they're completely independent of us.¬† And there are no obstacles whatsoever in terms of the city to us coming to Las Vegas.
I think, as you know, we've been here with an All‑Star Game.¬† We chose to place our largest Summer League here, and the reception we receive in this community is terrific.¬† We never suggested that the fact that sports betting takes place legally in Las Vegas is an impediment to us coming here.¬† The ultimate issue, whether it's Las Vegas, Seattle or any other community interested in an expansion team, we, unlike the NHL, are not in an expansion mode right now.¬† Even coming out of our owners meeting today, we're very focused on the health of 30 franchises and continue to build our fan base outside of the United States.¬† It doesn't mean expansion will never be in our future, but it's just not at the moment.
Q.¬† Does the incidence of tampering in terms of players recruiting other players seems to be increasing, especially with social media it's much more public.¬† Does that bother you at all, or is that something you view as out of our realm?
COMMISSIONER SILVER:¬† Well, it's largely out of our realm.¬† And I technically would not call it tampering.¬† We've made a decision that when a player is talking to another player and saying I'd love to play with you, and that's not done at the behest of the team, we accept that.
I think it's not ideal.¬† I mean, because you wouldn't‑‑ preferably you wouldn't want a player to be doing what a team couldn't otherwise do.¬† But I think there is a practical reality that the notion that we'd try to restrict players from having private conversations with each other or even frankly social media conversations with each other just doesn't make sense.¬† So I think it's part of the world.
I will say that in looking at the recent batch of free agents what I think is a very positive sign for the league is that teams are rewarding strong management.¬† And that players are rewarding strong management, and when players make decisions of where to go, especially when you have a cap system, putting aside marketplace difference in terms of expense and living there and tax rates in a cap system, there is a large recruiting aspect.
As a combination of our last collective bargaining agreement, the fact we have strong revenue sharing component now, a much harder tax and then social media, the world's shrank in many ways for our teams.¬† I've said this before, the differential between the size of market has become much less important to players.¬† They can be huge stars regardless of the market they're playing in, and I think that's very positive for the league.
The goal, of course, is to have a robust 30‑team league, not just a league where teams can afford in large markets or owners who are willing to lose lots of money can have top‑notch payrolls.¬† So I think it's very positive.¬† The league is very healthy.¬† I think owners recognize that and our owners are extremely competitive.
We introduced, by the way, I should have said earlier, Tony Ressler to his new meeting, first meeting as the owner of the Atlanta Hawks.¬† Somebody I've known for a while, but we're thrilled to have him in the league.¬† Somebody else who has been extraordinarily successful in his primary business, come in to the league, going to compete hard to win.¬† That makes for a very healthy league.
Q.¬† With some of the contracts accepted during this free agency and next year with LeBron potentially signing the biggest contract in league history, how do you expect that to affect talks for a new collective bargaining agreement?¬† And do you expect The Players Association to actually opt out?
COMMISSIONER SILVER:¬† You know, I'm not sure if the Players Association is going to opt out.¬† Michele (Roberts) made some early remarks suggesting maybe they were leaning that direction, but she hasn't told me that she plans to opt out.¬† And I know that in discussions that she and I have had and I've had with Players Association representatives, it's clear the goal on both sides is to avoid any sort of work stoppage whatsoever and maybe even to avoid the opt out.
In terms of LeBron's contract or new contracts, one of the things we're learning is that there is so much that's unpredictable when the cap is moving so dramatically as it did‑‑ as it will next year and the year after that we're continuing to study how our system is absorbing the money.¬† For example, we guarantee in essence 50‑plus percent, somewhere between 50 and 51 percent to the players.¬† When the negotiated contracts don't reach that guaranteed percentage, we write a check flat out to the union for the shortfall.
There are projections that for next year we could be writing a check moving close to half a billion dollars to the Players Association.¬† That's not of course the ideal outcome from our standpoint.¬† It's not something we predicted when we went into this collective bargaining agreement.
Now it's happened because the revenue we generated was much higher than we had ever modeled.¬† But we're also learning that when you have all that money coming into the system, team behavior isn't necessarily predictable either.
So I'm sure just like the Players Association is continuing to monitor it and see how it's impacting players, we're going to be doing the same thing.¬† I think as we and the Players Association talked about getting together even as soon as this summer to begin talking about how we feel the system is working, what changes we both potentially would like to see to make it even better.
Q.¬† In reference to that revenue, how many teams are still losing money and why?
COMMISSIONER SILVER:¬† I don't know the precise number and don't want to get into it, but a significant number of teams are continuing to lose money and they continue to lose money because their expenses exceed their revenue.¬† Even with revenue sharing and fairly robust revenue sharing when some teams are receiving over $20 million checks from their partners.¬† That in order to compete across this league with a relatively harsh tax, teams are spending enormous amounts of money on payroll.¬† Some of the contracts we talked about.¬† They still have enormous expenses in terms of arena costs.¬† Teams are building new practice facilities.¬† The cost of their infrastructure in terms of their sales people, marketing people, the infrastructure of the teams have gone up, and in some cases their local television is much smaller than in other markets.¬† In some cases because of historical deals, and in some cases just because the market won't command the kinds of dollars that you can get in the larger markets.
Just so everybody understands the conundrum.¬† So when the Lakers get a fantastic local television deal, because if they generate $140 million in local television, 50 percent of that goes to the players.¬† But it's not ‑‑ the Lakers are only paying their 1/30th of the 50 percent to the players.¬† That money gets distributed among all the teams.
So even if a team is moderately successful in a smaller market, if there is outside success in a larger market, that raises the payrolls for everybody.¬† So, again, I will say as we have done historically with the Players Association, and rather than at least publicly having a back and forth with the union on our revenue and expenses, we've made absolutely clear to them just as we have historically that we will share the audited financials of the league office and all 30 teams.
So it's my hope that if we begin by sharing of that information and building trust from it in terms of what our actual finances are, that will lead to an understanding, a common understanding, of what the league finances are and will move us that much closer to a long‑term relationship, long‑term collective bargaining agreement.
THE MODERATOR:¬† Thank you, Adam.¬† Thank you all for being here.
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