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October 23, 2015

Adam Silver

COMMISSIONER SILVER: Before we start, I just want to pierce the veil on the fourth estate for a moment and welcome Jeff Zillgitt from USA Today for being back here and back to work. Jeff, I know you had a personal health issue you dealt with this summer. From a personal standpoint, it's wonderful to see you.
Now you can ask me whatever tough question you want, but I just wanted to say that.
For all of you, we just concluded two days of meetings with our owners, three‑quarters of a day of committee meetings, followed by an executive session, then a general session. Last night, Mark Parker, the CEO of Nike, did a Q&A with Stephanie Ruhle from Bloomberg TV. Really fascinating Q&A for our owners about the business of sports, Nike's business in particular, their global expansion, a real focus on China. Of course, Nike is going to become our on‑court apparel partner beginning in the '17-18 season. We're thrilled to be entering into that relationship with Nike and we're very appreciative to Mark Parker for flying across the country to talk to our owners.
In addition, we talked about a broad range of business issues and basketball issues. Kiki VanDeWeghe made a presentation about the state of our Replay Center. We're making some changes this season, bringing a large portion of our replays to the Replay Center in order to expedite on‑court replays.
We talked about the state of the game. We talked a little bit about our officiating program as well. We gave an update on the operation of the Collective Bargaining Agreement, some recent player moves over the summer, projections on the cap and tax -- those are things we typically talk about with our owners. Our Deputy Commissioner, Mark Tatum, made a presentation on the state of our business, talking particularly about international preseason games we had this year.
We talked about Daily Fantasy, which is on everyone's mind. We discussed that both with one of our committees and we discussed it with the board, the full board as well.
In addition, we talked about basketball and how much everyone was looking forward to getting back to work, how excited we were about the upcoming season.
Lastly, we re-elected Glen Taylor, principal owner of the Minnesota Timberwolves, as Chairman of the Board for yet another one‑year term.
With that, happy to answer any questions you have.

Q. Michele Roberts was recently quoted as saying she feels optimistic about discussions you guys have had. Do you share her optimism? And what is the state of discussions you're having with her that may lead either side to believe there will not be a work stoppage?
COMMISSIONER SILVER: I would say I'm extremely optimistic about the state of the league. I think in terms of the financial health of the league and our current collective bargaining system, that's what we talked about with our owners. I've had the same discussions with Michele and her colleagues. I think there is reason to be optimistic.
We are in the process of developing I would say a personal relationship, which I would say is the predicate for any constructive negotiation. Certainly it's important to build trust across the table, not just between me and Michele, but we have a Labor Relations Committee, they have an Executive Committee plus officers at the Players' Association that we'll be dealing with. We've begun that process. We've sat across from each other. Michele and I have had regular lunches and other discussions about business matters. So that gives me a sense of optimism.
We haven't engaged in any sort of I would say formal or informal way on the substance of the Collective Bargaining Agreement yet. We've talked a lot about the financials of the league. I've certainly made certain public statements, Michele has made certain other public statements in response. I think the necessary first step is a full sharing of information about the state of the league, the state of the financials, the impact of the new television money that's going to come in next season at the beginning of our television deals, which are going to have a big impact on profitability of the teams and a huge impact on the salaries of the players as well.
I certainly have no reason to be pessimistic, but we haven't engaged in any real intensive way on issues around the Collective Bargaining Agreement yet.
But I remain optimistic in a general way just because I think things are going so well for the teams and the players right now.

Q. Speaking of the sharing of information with the union, you had mentioned back in July that a significant number, I think was the way you put it, of teams were still losing money. I've heard one-third floated. With the TV money, the $24 billion that starts to flow in next fall, is it safe to conclude that that significant number of teams comes down and how far could that come down once you account for the new revenue?
COMMISSIONER SILVER: It’s absolutely safe to conclude the new television revenue will have a substantial impact on the finances of the league and the players' salaries as well. We all know that from the cap projection.
I'd say in terms of the financials, maybe I learned my lesson last time in terms of the public discourse about the financial state of our teams and the back and forth that ensued with the union.
I'll only say that again, just like we did last time around with the collective bargaining process, we will share the complete financials of our teams and the league with the Players' Association. I expect, as they've done in the past, they will bring in their own expert economists and accountants and go through our finances, we'll answer whatever questions we have. I think that is critically important because I think that's the predicate for a fair deal because otherwise each side is just picking numbers.

Q. There's always been a great deal of cynicism on the players' side of this. I don't think that has waned much, if at all. Are you confident in the sharing of information? Is that a necessary precursor that that cynicism has to come down? Do you have to allay that before you can get an agreement to wherever this is going?
COMMISSIONER SILVER: It's not a necessary predicate to reach an agreement. I think, though, for people to believe they're entering into a fair agreement, it is a necessary predicate. Certainly if I were on the side of the players, I would want to have a general understanding of the owners' finances, team finances, to ensure I was getting a so‑called fair share of the revenue. I think without it, certainly in other industries, other sports leagues, there isn't that sharing of information, and they conclude deals.
One, I should say even without the sharing of financial information, largely because of the amount that's written on this industry by the people in this room, by other sports industry publications, you can get a pretty fair sense of our industry even if we weren't sharing financial information. Certainly the gate revenue from our arenas, television, most of our sponsorship deals. The exact numbers aren't public record, but it's pretty close.
I think there's a pretty decent understanding, even before we shared detailed financials, of what the state of the league is.
But having said that, I think through sharing that information hopefully you can reduce the cynicism. I understand that we're not going to convince everyone across the table that they're not missing something somehow in terms of looking at the macroeconomics of the league.
Again, I think we have as good a relationship as we've ever had with the Players' Association. I think that players are increasingly sophisticated about the business of sports, I think in part not just because of the magnitude of their personal deals, but they're investors now. I'm talking to individual players all the time who are making investments, whether it's sports apparel companies, sport tech companies.
So I think in a very helpful way they're seeing things from both sides of the table. By the way, the fact that we now have former players who are owners in our league, and I've learned just because Michael Jordan is an owner, Grant Hill is an owner, David Robinson, Shaquille O'Neal, who has a small percentage of the Sacramento Kings, it would be foolhardy to think that just because they are at the table, the players will say, Now I get it and I believe everything they say.
But I think it's helpful because what's great about the life cycle of this league right now is when you have former players who become owners, I think in talking to a lot of our players, their goal maybe is to own an NBA team one day or be a successful business person.
I think when they have that perspective and they see that in terms of being successful in a business that you can't just look at overall revenue, you have to look at profitability, you have to look at the amount of money that's being put at risk, what the expected return is, all those business concepts in a really positive way our players are becoming very sophisticated about finance. They're very wealthy in their own right, so they're looking at how they can not just make a lot of money but preserve a lot of money for themselves.
That gives me cause for optimism as well.

Q. I was curious what the status of any investigation into the incident or whatever word you'd like to call it with Derek Fisher and Matt Barnes and if there was any timeframe on when or if punishment will be handed down to either one of them?
COMMISSIONER SILVER: I don't have a time frame and we are looking into it.

Q. As a follow‑up, earlier this week James Dolan and Isiah Thomas had an interview with HBO and spoke about the lawsuit back in 2007. From the league standpoint, was that something that you were, I don't know if 'upset' is the right word, but would you prefer that issues like that were not being rehashed and re-discussed seven or eight years later?
COMMISSIONER SILVER: Not necessarily. I think it's important that, whether it's Isiah Thomas or Jim Dolan, that they let the world, sports fans, know how they feel. I think, no, it's not great to hear and see those issues rehashed. But I think especially in the case of Isiah Thomas, I'll focus more on him because he's actively involved with the Liberty, with the WNBA right now, and I think for our fans, for people who follow the industry, I think it's important that you represent yourself publicly.
We're in a very public industry. I've talked a lot about transparency. I think name calling doesn't help. To the extent there are issues that haven't been addressed directly historically, and he's an active participant in one of our leagues, I think it's beneficial that he be out there, and frankly expose himself to the scrutiny of the media.
It's your guys' jobs. If you want to question him, I think it's appropriate, and he should answer, as well. I don't want to dwell on those issues, but I don't view it as a negative sort of to air those issues publicly.

Q. Since it is October and it's fresh in everyone's mind, was there this week or has there been discussion about the preseason, the length of this period of the year and the number of games that teams play?
COMMISSIONER SILVER: There was not a discussion in the meetings we were just in. But I think it's on our list of issues to address with the Players' Association.
I think there's a general sense right now that in this day and age where players are in condition all year round, are working out hard in the summer, that we don't necessarily need an eight‑game preseason moving into the regular season. There still is a sense that training camp is very important. You have a lot of young players in the league. You have maybe more movement than you had historically. So practice time is still important. There's a financial component of the preseason as well that we have to look at with the Players' Association.
But I'm almost certain that will be addressed when we get into a more formal bargaining setting with the players. I think the expectation is we'll be reducing the number of preseason games. Precisely where the line will be is uncertain.

Q. What are your thoughts on Thabo Sefolosha's recent acquittal and the almost certainty he's going to file a civil lawsuit?
COMMISSIONER SILVER: I'd say first of all I consider Thabo a friend. We traveled to South Africa together two summers ago as part of the Basketball without Borders program. I spent a lot of time with him there.
I would say I was disheartened over the incident. I felt terrible for him personally that he was injured as a result, that he missed games, that he missed critically important games going into the playoffs. I'm happy for him that it has been resolved, and also thrilled to see him back on the court.
I don't know anything about his civil lawsuit. I saw his lawyer filed the notice that is the prerequisite for a lawsuit in New York. I can't speak to that. I have no sense of whether that's a certainty, but I certainly would stay completely out of that.

Q. Sports science has taken hold in the league. The league is tracking injuries, the density of the schedule more thoroughly than ever. The players' union has a full‑time sports scientist. How open are owners to the idea that the regular season might not always be 82 games?
COMMISSIONER SILVER: You know, I'd say the new generation of owners who are part of this league are incredibly open‑minded on all issues. I should have said earlier, for someone like me who has been involved in the league for over two decades now, the level of engagement at these owners' meetings is at an all‑time high. They come in prepared with strong views on the issues. Some of them have real expertise on technology, on the issues of health. They have big staffs themselves, the teams that are studying these issues so well.
We haven't had a discussion as to a different number of regular‑season games. And, look, a lot of the economics of this league, the investments that go into our arenas are built, are predicated on the current regular season we have now.
Same for the players, by the way, because they're sophisticated as well and they understand if you reduce the number of games in the season, there will be an economic impact on us both.
Having said that, we also recognize that the health and well‑being of the players is critically important, not just for injuries that cause them to lose games, but in terms of their ability to perform at a high level.
I will say that with all the health science that's now going into the examination of the schedule, both from the players’ union and from the league, what we've concluded so far is the critical issue is fatigue, not necessarily the number of games that are played. As a simple matter, you don't see more injuries the latter half of the season than you do early in the season. Where you see the direct correlation so far is when players are tired, coming out of four games out of five nights, back‑to‑backs, et cetera. As a result, that's why you see much more sophistication of minutes management by coaches and general managers in this league right now.
So the league has taken a new approach. The schedule, we're successful in practically eliminating four out of five, four games in five nights, dramatically reducing the number of back‑to‑backs. In an ongoing discussion with the union, it's necessarily less about reducing the number of games in the regular season, but maybe spreading the schedule out a little bit more to create more rest.
But we're open‑minded on it and it's something we're continuing to look at.

Q. With USA Basketball naming Gregg Popovich as the coach, was there any sort of desire from the league to go back to an NBA coach? As far as the qualifiers, you said you're not releasing players, would that be his call if he wants to coach? Is there an expectation he would or wouldn't for the games that would interfere for the NBA calendar?
COMMISSIONER SILVER: In terms of an NBA coach returning, I think there's an understanding among the board members of USA Basketball -- I'm not a board member, I wasn’t at the meetings, but Mark Tatum is -- that it made sense to rotate back to an NBA coach after the long tenure of CoachK. So I would say that was our expectation that it would move back to an NBA coach.
In terms of Coach Popovich, the USAB program, it's fantastic you have gone from CoachK, who will go down as the greatest or certainly one of the greatest college coaches of all time, to an NBA coach who is viewed as one of our greatest coaches ever. I think it's wonderful for the program. I spoke to Coach Popovich about it. He's thrilled and excited to serve his country and to coach the team.
In terms of interruptions in our schedule, what we've told FIBA, and they understand, is that the NBA will not stop its season or will not pull players out of games for FIBA competitions that take place during our season. It's our expectation that neither Coach Popovich nor any of the players will be pulled out of any aspect of our season for Olympic competition.

Q. You mentioned, as usual, part of the discussion today was about cap projections, revenue projections, so forth. What are your concerns about unintended consequences of the dramatic spike in the cap the next two years in terms of competitive balance, player talent distribution, payroll distribution. In your discussions with Michele, is there any more time or room for any negotiation on that front or is that a dead issue at this point?
COMMISSIONER SILVER: You know, I would never speak for the Players' Association, so I wouldn't say anything to that issue.
One of the issues we discussed at our board meeting is the significant shortfall we're projecting once the television money comes into the system.
As you all know, we have committed to paying on a scale between 49 and 51 percent of BRI revenue to the players. When the new television money comes in, we'll be at the high end of that scale at 51%. Because through the process of negotiating individual contracts we will not have paid out the full 51%, and we guarantee that 51% to the players, we will have a shortfall that we project in the hundreds of millions of dollars.
So for planning purposes for our teams, it's incumbent on us to tell them they need to reserve, in terms of their team accounting, many hundreds of millions of dollars divided by 30 will be large checks for each team that we will pay over to the Players' Association, just as we did this past summer. It was just a smaller amount of money.
I would say that's clearly an unintended consequence of this system. You could maybe say it's a high‑class problem to have when you dramatically under‑projected the amount of money that would come into the season. But we certainly never planned for a system, and I would say I don't think the Players' Association did either, where the money we agreed to pay to the players would not be expressed in individual player contracts, but rather paid over in a large check at the end of the season.
In addition, as you pointed out, when teams that have carefully planned for cap room in building their team over many seasons have had that process disrupted as a result, again, maybe arguably a good problem to have, by a lot of additional money, unprojected money coming into the system. So all of a sudden if you have a player who is becoming a free agent who you don't want to lose, you may have been planning for the fact that three or four teams may have had cap room for that player, and now 20 teams may have cap room for that player. Conversely, teams that thought they didn't have cap room may have a lot of cap room.
So certainly unintended consequences. I'm not necessarily here saying that’s a negative so far. I think part of it, we have to see how it plays out in the system. I know I say that a lesson learned for us and maybe for the Players' Association as well. When we sit down to talk with them again, depending what the scope is of the issues that we discuss during the negotiations we'll have over the next several months, I think from a league standpoint we may want to take a fresh look at some of those system elements to see if there's a better way of expressing that money directly to players.
So I find there are all kinds of unintended consequences always in terms of team behavior. As much as Rick Buchanan and Dan Rube and others at the league office do our best to try to model team behavior, a lot of it is unpredictable. That's why we feel we need a system in the first place.
But this system has evolved, this cap system, has evolved over many years. Then you add in most recently a much more robust revenue‑sharing system as well, and money that individual teams generate also, of course, has a direct impact on the payroll for every other team based on the way our cap system operates.
There's a lot swirling around there. Here I look forward to the engagement with the Players' Association on these issues because both sides I think understand it's all of our problem/issue, and that there are issues in terms of how money gets distributed among the players and there are competitive issues for our teams.
We have an existing agreement at least on the macroeconomics, but the individual economics can have huge impacts on individual teams or the movement of a player and the individual salary of a player.

Q. You mentioned Daily Fantasy was something that was discussed over the last couple of days. I believe you had some comments in the media earlier this week. Can you give any insight into what the nature of those discussions were and if the league's relationship with the industry needs to be re-examined?
COMMISSIONER SILVER: Absolutely. We gave our owners an update on our current FanDuel relationship. Again, as you know, we have a small piece of equity in FanDuel. We reviewed with our owners what our position is in FanDuel as well as the marketing relationship we have with FanDuel. Several of our teams have marketing relationships with DraftKings. We discussed those relationships as well.
We gave an update on what we see as the state of the industry. Obviously there's a lot that's been reported on in the last few weeks. There have been state commissions that have announced investigations. There have been other political entities that have announced that they're looking into Daily Fantasy as well.
I think that's a situation where it's most efficient for the league on behalf of all of our teams to be studying those issues and reporting on them.
Our position hasn't changed. Certainly what we didn't suggest by any means to our teams, to our owners, that we had changed our position on being an active participant in the Daily Fantasy business. We did tell them that it's something we monitor daily, sometimes hourly, based on the reports in your paper and from other media outlets. We said, We'll wait and see if there are any further developments.
I continue to view it as a positive in that if the alternative is this massive underground illegal sports betting industry, and to the extent that Daily Fantasy, albeit not viewed as gambling under the law, is a form of entertainment engagement that fans want to engage in and enjoy, I think it's positive for the industry.
So that continues to be my personal position. As I said, it's something that I've spent a lot of time studying and trying to understand, looking at how other jurisdictions deal with it as well outside of the United States where our sport is very popular, and there's fantasy participation, gaming participation.
It was more sort of just a state of the industry. I will say that this group of owners, many of them individually have knowledge of the industry. Many technologists in the room, some who have individual investments in Daily Fantasy companies. I think it was information flowing both to the teams and back from the teams to us in terms of counsel and advice on how we should be looking at the business.
THE MODERATOR: Thank you, Adam.

FastScripts Transcript by ASAP Sports

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