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July 12, 2010

Adam Silver

David Stern

COMMISSIONER STERN: Hi, everybody. Thanks for coming and being interested.
We had a terrific meeting with our ownership today, basically one representative per team. There was a fair amount of discussion about Collective Bargaining and Revenue Sharing, which were the main items on the agenda that had been circulated some time ago.
But I do want to spend a few minutes here, as I did there, in discussing free agent signings, one in particular and three in particular.
I think I'd like to make the point forcefully that our players, having negotiated for the right to be free agents at some point in their career, are totally within their rights to seek employment with any other team. And that's something that we agreed to; that's something that we embrace; that's our system.
I think that, from what I know and what I read in the press, Miami did a pretty good job of clearing out cap space and putting together a plan that would attract three free agents to Miami.
With respect to LeBron's departure from Cleveland, you know, a couple of things. One, he was certainly entitled to do that. I think he's both a terrific player and a very good person. Had he asked my advice in advance, I might have suggested that he advise Cleveland at an earlier time than apparently he did that he was leaving, even without announcing where he was going, so we could have eliminated that. I would have advised him not to embark on what has been come known as 'the decision.'
I think that the advice that he received on this was poor. His performance was fine. His honesty and his integrity shine through. But this decision was ill-conceived, badly produced and poorly executed. Those who were interested in it were given our opinion prior to its airing.
That said, I think that remarks by Dan Gilbert, the owner of the Cavaliers, catalyzed as they may have been by hurt with respect to the manner and the fact for himself, his team, and particularly for the people of Cleveland, those understandable, were ill-advised and imprudent. I have notified Cleveland that they will be fined $100,000 for those remarks under my power as Commissioner.
Equally imprudent, I believe, are the remarks by my good friend Jesse Jackson which purport to make this into a racial matter. I find that to be, however well-meaning Jesse may be in the premises on this one, he is, as he rarely is, mistaken. I would have told him so had he called me before he issued his statement this morning.
But he is a good friend of the NBA and our players, has worked arduously in many good causes, and we work together in many matters. I have a great deal of respect for him. We would just call this a disagreement amongst friends.
We're going to have a good year. We are waiting anxiously, watching the summer league to see what additional players will be playing in Miami. We have a lot of teams that like their rosters and are looking forward to the season. And I think that, as I've said to others, I came of age as Commissioner when there were these two teams called Boston and L.A. who actually didn't have three Hall of Famers but four, sometimes four and a half. For those of you who are maybe too young to remember, there was this guy named Larry and Kevin and Robert, D.J. Danny Ainge, throw in along the way a Bill Walton or a Scott Wedman, all kinds of other things, you know. Michael Jordan had a heck of a run, but he had this guy named Scottie Pippen, Bill Cartwright, Horace Grant, Mr. Harper, Kerr, Paxson.
I mean, I think the one thing we all learned, and I don't mean to diminish the reigning champion Lakers who may have that now with Pau and Andrew Bynum and this guy called Kobe, getting some Hall of Fame games from Artest and Lamar Odom. It's going to be great. As fans we're really excited. So let's not get too overexcited by other issues here.
We probably have more season tickets sold right now than at any other pre-season time in our history, or actually at all in our history, period. So that's good.
With respect to Collective Bargaining, we reviewed with our teams the importance of it. Our finances are what they are. Really, we've provided them to the players. I think, as I understand their answer, is that, We agree with your numbers, we just would eliminate some of them from the final calculation.
So we're not as far apart as they would say at all. It's just that they don't like our numbers, and they would change them. We reviewed that with the owners. But that's understandable.
We reviewed their proposal with the owners. Basically where we are is that we're asking for fundamental changes in the system and the players, as Billy Hunter has said publicly, would very much like the present system to continue. So you can fill in the gaps for yourselves on that. We don't really want to negotiate that here.
And the system is the system which we're living under. That is to say, our teams are urged and expected to compete as hard as they can within the system. If they have cap room, owners spend it because they want to win. That's a good thing for our fans and a good thing for our players, but it isn't a great thing for our owners.
But we're trying to change that system so they can continue to compete in a system that has a little bit different tilt so that it has a sustainable business model. We discussed that. We discussed it at length.
That report was given by Peter Holt and Adam Silver, who will be heading the negotiations. Peter is the chairman of the Labor Relations Committee.
Then Joel Litvin led a robust discussion on Revenue Sharing because we are determined to have these twin tracks so that at the conclusion of our Collective Bargaining there will be a Revenue Sharing system that is considerably more robust and that we can feel confident will result in every team being able to compete on an equal footing with every other team. That is our goal.
Those are sort of the twinned goals that we have. It's an independent but parallel track, and we expect them all, whenever it is that we reach our settlement of our Collective Bargaining negotiations, that is when we will be ready to have a Revenue Sharing system much revised in place.
Both equally involve, in the words of diplomacy, frank and open discussions amongst owners in a very positive way. This was a good meeting. Everyone participated. There was a lot of interest. You know, this is a good place to have it because everyone gets to see some pretty interesting basketball, as well, especially on NBA TV if you can't make it out to the buildings.
One more thing. We anticipate being in touch with the players and attempting to set up a meeting for the summer. We'll work on that. There will be one, I have no doubt, to continue our dialogue because I know that we are very anxious to try to make an agreement, and I certainly believe the players when they say that, as well.
So we'll keep on talking, keep on watching free agent signing, keep on watching the roster movement that I could sense from the whispers around the side of the room are going to continue, as we have another exciting year.
Are there any questions?

Q. Commissioner, I'm wondering how much discussion there was. You said these guys were totally within their rights to go as free agents wherever they like. How much discussion was there amongst the owners of you looking into whether there was any sort of collusion or previous deal?
COMMISSIONER STERN: What we told the owners was that the three players are totally, as our system has evolved, within their rights to talk to each other, whether it be at a Players Association meeting, a Collective Bargaining meeting, an All-Star Game, an Olympic team. That is not tampering or collusion that is prohibited. However, it may be technical. That's our rule right now, our practice. You're allowed to do that.
If somebody has some formal charge they'd like to lodge based upon a variety of gossip, bound together with some innuendo, infused by hearsay, I'd be happy to receive the charge, and we'll take care of it from that point on.

Q. On that subject, does somebody have to lodge a tampering complaint from a team or can you initiate an investigation on your own if you wanted to? Has anything that you've seen, read, heard in all the gossip and innuendo you've mentioned given you pause?
COMMISSIONER STERN: Our historic practice has been waiting for a team to lodge, although we have without public announcement on previous occasions, continued to monitor our league. And we continue to do that. There's nothing here at this time that is causing us to launch an investigation.

Q. When did you first hear of LeBron's decision? What was your initial reaction?
COMMISSIONER STERN: It was before the decision. My initial reaction was, you know, congratulations to LeBron and to the Heat. Isn't this going to be exciting. There's going to be lots written.
I didn't quite know how much would be written because in all of my years I've never seen - I'm a devout reader of The Sports Business Daily - and I've never seen so many pages devoted to one subject, not to the World Cup, not to the World Series, but to the decision and its aftermath. I'm sorry, the baseball All-Star Game. It was just wild.
But I knew about it. For us, we put a system in place. Everyone has a right to do to do what they can do fairly. The teams go out and try to out-hustle each other. The players try to get to places where they can win. As long as that's happening in a fair and open way...

Q. You're like, Whoa?
COMMISSIONER STERN: No, no, I wasn't like 'Whoa,' you know. It was more like a 'Hmm, that's pretty good.'

Q. Did anybody in the meeting say they plan on putting any tampering charges or going forward with something?

Q. Just your thoughts on three of the top free agents taking less than their max, what that might look like when you're talking about how much of the pie the players get revenue-wise and whatnot, where players who could have gotten the most money possible through the system decided not to?
COMMISSIONER STERN: Sitting here today, I don't know what the discount that they gave in the premises. I guess what I would say is that it doesn't surprise me that at the day there are players who would take very modestly less than they can get for the opportunity to win a championship.
I think we all know, those of us in and about the sport, know what the drive to win is and how much our players want to do that. And I think that reflects well on them and their intensity.

Q. Going back to Collective Bargaining. At a time that revenue exceeded your projections by a fairly significant amount, you mentioned ticket sales, how does that impact or not the goals you have as we go into the Collective Bargaining and your thoughts on the need to change rather than make revisions to the system?
COMMISSIONER STERN: I think it's fair to say, as we have before, that we know how to increase revenue, but our expenses, particularly player expenses, go with it, and that results in sort of a suboptimal system that is no longer one that the owners are willing to sustain. So I don't believe that it changes anything.
Our owners spend within the system. They're encouraged, praised, and otherwise driven to improve their teams. Of course, they have the capacity. It winds up driving them to unprofitability. They want to change that system so when they get driven to it, whatever they do, there won't be losses. That's all.
ADAM SILVER: Part of the problem with the existing system is it's based largely on revenue, not net revenue. Although our actual revenue numbers were better than what we projected, it came at a large cost. Our teams did a spectacular job in a down economy of increasing ticket sales, but that came at the cost of additional promotions, additional marketing, additional staff. They largely made up for a reduction in season ticket sales by selling more individual tickets.
Again, that's not accounted for by just looking at the better revenue numbers we hit as opposed to what we had initially projected.
COMMISSIONER STERN: It should be said that the ultimate revenue number was substantially helped by a spectacular seven-game championship series.
ADAM SILVER: We sold out, as I understand it, every game of every playoff series.
COMMISSIONER STERN: So the playoffs, for some limited number of teams, were marginally better. But the effect was to raise the revenue and increase the cap and raise the tax threshold. So it's all part of the same system that the owners are determined to change.

Q. Was there any specific discussions moving forward about possibly tweaking the free agency policies, that kind of thing, in lieu of what happened?
COMMISSIONER STERN: Well, I would say that we agreed so we could get to the subject of Revenue Sharing, Collective Bargaining, that the Labor Relations Committee was the one that was going to be charged initially with looking at what has emerged here and see whether we believe any changes are necessary as a matter of negotiation in the Collective Bargaining.
So, yes, the answer is it was delegated to the Labor Relations Committee.

Q. I know no matter what number is spent in an off-season, you'll say this is just what owners are allowed to do under the current system. But this summer especially, with so many teams clearing this cap room, spending well in excess of a billion dollars in new money, how does the league make the argument that it's the players or the union that has to save the owners from themselves?
COMMISSIONER STERN: We're not asking the players or union to save the owners from themselves. Your numbers are sort of way off and your use of the phrase 'new money' is just flat out wrong.
In other words, we've got teams who actually cleared the cap and then spent up to it. Teams that were formerly taxpayers came down, as they had to, then they spent up to the cap.
So in some ways, look at the Heat, the Knicks, previously taxpayers. It was not new money. To them, it made sense to do what they did under the system. But if you get all the teams spending to the cap, you have a system that is not sustainable for us.
It's fun to call it a billion dollars, but you should look at it in terms of yearly salary under the cap.
ADAM SILVER: I'd add two points. Under the current system, we guarantee we will pay the players 57% of the revenue. Number two, our teams have no business choice but to compete for players.

Q. David, what would you have preferred Dan to say after LeBron left? Are you concerned with LeBron leaving about the future health of the Cleveland market?
COMMISSIONER STERN: No. I think that Dan Gilbert is a good owner, and I think he was completely correct in expressing his disappointment and his determination to win. In fact, if he wants to guarantee a championship, more power to him. I'm going to tune in to watch to see whether he can do it. And expressing his disappointment and hurt, you know, at losing a player of LeBron's stature, I understand that, too.
But you would read the rest of the statement to see where I think it was a little bit to the extreme in his follow-on interview. It's those two that caused me to make the decision that I did.
We value our players. They're human. They make choices sometimes that we wish they hadn't made. But they're still, you know, part of us. We wish them well wherever they play. We certainly wish the Cavaliers well. Based upon Dan's I think record in this league, his other business endeavors, I think the Cleveland market will do fine.
I think it's fair to say, as transcendent as any player is, they don't win games by themselves. LeBron didn't win 60 plus games for Cleveland; there was a team that did that. That's what wins championships as well: teams.

Q. You said that the Heat was within their rights to sign the three players as they did, followed the rules. What do you tell to owners in Milwaukee, Memphis, Sacramento that even if they did that, the chances of them doing the same thing wouldn't happen where you've had seven teams win the championship in the last 30 years? Does this affect competitive balance? What do you tell owners in the smaller markets that the same thing obviously wouldn't occur, to sign three all-star caliber players?
COMMISSIONER STERN: I think I would ask whether San Antonio, Portland and Utah would qualify for you as smaller markets.

Q. Yeah, they would.
COMMISSIONER STERN: That's all. I mean, in other words, players like to go where they can win. Obviously they also like to go sometimes where there are bright lights. But the cap is a leveler of that, and I think we've had teams in small markets in our finals doing quite well.
I think that it's about management and building. Recognize in a free agent market you're at something of a disadvantage if all things are being equal, but they're never quite equal. There's a coaching philosophy, there's a playing philosophy, there's an opening on the roster, there's a history. We've had a number of small teams who have done quite well in our league.
ADAM SILVER: I'll add one of the goals of a new Collective Bargaining Agreement is to create more parity throughout the league so that more fans and more cities have hope that their teams are competing for a championship every year. That is something we need to improve through a new bargaining agreement.

Q. Just wanted to find out if there's anything that can be done going forward to try and ensure that players don't conspire with other players when they want to play together.
COMMISSIONER STERN: I wouldn't adopt your word 'conspire.' Do you mean can we do something to stop players, whether at union meetings or otherwise, talking about whether they might someday play together?

Q. Right.
COMMISSIONER STERN: No. That's not our intention to legislate that and cause investigation of private conversations by our players to be an ongoing part of our league.

Q. Commissioner, I know that Pat Riley has been reluctant to travel overseas and participate in some of the things you have going on in Europe. How much would you like to see this Miami Heat team go?
COMMISSIONER STERN: I wouldn't say that anymore. We had Miami in London and Paris. We'll have them again. It's the new Pat. Remember, Pat was the guy who used to tell his players they couldn't talk to any other players. I don't think so anymore (smiling).
I think Pat has been a very cooperative executive in our league, and we look forward to seeing him in Miami and all over the world.

Q. Can you shed any light on this players proposal compared to the last one? During the playoffs you were in strong disagreement with Billy when he used the word 'baloney' in reference to the losses. Is there any incremental progress from how they're portraying this?
COMMISSIONER STERN: I guess what I would say is that, judging from their proposal, which basically embraces the current system, that we haven't closed any gap yet. But we're going to be resilient and prepared to spend the time necessary to see whether there's a deal to be had here, and we're going to do it for as long as possible.

Q. Understanding that you're saying the rise in the cap was based on some revenues that went up, obviously expenses went up, too, you're saying this shouldn't give us the impression that things are better than they were. Is the $400 million in losses still an operative figure?
COMMISSIONER STERN: I think the number is about $370 million. That's what it was when I summarized, when I rounded it to 4.

Q. The rise in the cap does not indicate that things are any better than they were a year ago when you were projecting a $50 million cap?
COMMISSIONER STERN: No. As soon as we get it, we spend it. That is the current system. We try to compete. Our fans love that. So we'd like to keep the league as competitive as possible, give all of our teams the opportunity to tell their fans they have a chance to win, and have some profit in it for the owners.

Q. At this time there's a lot of people that are expecting a lockout. Do you feel any better, worse, about the situation right now, a year from now?
COMMISSIONER STERN: I don't know how many Collective Bargainings I've participated in over the last too many years. We've thus far only had one failure to reach a deal in 1998. And many of the others have started out poorly, had predictions of doom and gloom, et cetera. You just keep on plugging.
I think we've got a long way to go, but we have a lot of time to get there. That's the optimism that we're going to maintain until we don't. But I think that's a worthy goal, to maintain the optimism in support of seeking a deal.

Q. Were there any interesting exchanges between the Heat ownership and Cleveland? Did you have to keep them away at the meeting?
COMMISSIONER STERN: No. It was all very cordial, as all NBA meetings are.
Thank you very much.

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