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February 19, 2011

David Stern


COMMISSIONER STERN: Good afternoon. Thanks for being interested. Thanks for coming. I'll make a few brief opening remarks, not that brief, because I have some notes, but then I'll open it up to questions. And my lead is, the game is in great shape. It's never been better. We have an extremely exciting season. It's very competitive, lots of interesting storey lines, and the talent level is as good as it's ever been; and if you don't believe me, you should have watched the Rookie-Sophomore game about the future, because it's very promising, as well.
There are great performances across the league, and the fan response has been telling. We have had the largest audiences on our TNT/ESPN combined since our inception, and that tells you something about you know what our fans are liking us.
And here we are at All-Star, which to me, is the consummate, ultimate celebration of our game. It reflects the breadth and spoke of what we strive to be; the NBA Cares Day of Service where the All-Stars were out in force, building learning, playing, and living centers where we can make an impact on the community into which we come.
We had the NBA All-Star Technology Summitt where we came together with our many partners to talk about a lot of things that I think reflected well on the NBA's leadership position in social media and digital technology.
I was able to kick off the Jam Session where our fans were allowed to come in and encouraged to come into the best interactive basketball experience that exists, and I got to congratulate the winners and losers of the National Wheelchair Basketball Association All-Star Game. It was great.
And you know, we did have the All-Star Celebrity Game, interesting MVP. Who knows. You know, it's a great life. You learn all kinds of good stuff. For those of you who don't remember, we introduced you to LL Cool J, but I think it was a very long time ago at an All-Star Weekend just like this.
And you know, this morning, many of our guests, several hundred, heard Fareed Zakaria at the news maker breakfast talking about world affairs and sort of placing the small little issue that is we at the NBA have into the proper global perspective.
Of course, tonight, we are going to see the varied talents of our players across a wide array of events, which is always exciting to us. And tomorrow -- oh, also, we had the D-League, don't forget our D-League All-Star Game; and tomorrow we have the Legends Brunch, which for us, is what gives us a component of a family reunion, and we think that's terrific.
And we do all of that as a lead-in to the All-Star Game where, as I've said before, we really have -- dessert is really our main dish because we see the greatest athletes in the world take this tremendous stage. I'm told there is a Magenta Carpet coming. I haven't been invited to walk on it. I just want you to know that. We'll see how that goes.
And in tonight's events, the stars are participating not just from the NBA but the WNBA. We have legends, we have talented point guards, three-point experts, great Slam Dunkers and it's a great night to be a fan of the NBA. And, oh, by the way, we have seven international players who were either elected to or will be participating in All-Star Weekend talking about the great scope of our week, which is being televised in 200 territories and countries and 40 languages.
We are here at the basketball capital of the world and I want to thank Tim Leiweke at AEG, and all that he and Phil Anschutz have done in being great hosts for us. I want to thank Jerry Buss and the Lakers, Donald Sterling and the Clippers, and I want to thank Mayor Villaraigosa who asked us to come back, and we said we would, so here we are and we are back.
Before I open up to questions, I should mention this little issue about collective bargaining. I think it's fair to say that we and the players have each made proposals to the other. We have each expressed to the other our dissatisfaction with each other's proposals. And at yesterday's meeting, I think in a very positive vein, we each agreed, the union and the teams agreed that you know everything was available to be discussed, and that we would set up a series of meetings and discuss away so that by the time the agreement currently in effect expires on June 30th, we will hopefully be able to assure our fans that we did all we could possibly do to have a replacement agreement in effect, and that's our intention, to work as hard as possible to cause that to occur.
You know, our goals as we state them are relatively simple. We want a sustainable business model that enables 30 teams to be able to compete for a championship that fairly compensates our union members who are currently the best-paid union members in the world, and after the agreement that we hope to consummate, they will it remain the best-paid union members in the world in a league that is more competitive and hopefully profitable.
So there you have it, and I'm happy to take any questions.

Q. When you bought the Hornets in December, your goal was to burnish the economics of the team. How is that coming now and how do you respond to the fan support and the business support for the recent re-upping of business contracts?
COMMISSIONER STERN: Well, I would say that we couldn't have hoped for more than the response that we have been getting. The fans have stepped up in terms of ticket sales. The business community has stepped up. The renewals are underway and we are doing very well with renewals, and we are doing very well preliminarily with business support, and we are also doing very well with the expressed and real support that Mayor Landrieu and Governor Jindal are giving us and we expect there to be -- we expect it to propel the club to success.

Q. Are you still confident about the team's future in New Orleans?

Q. Do you want to expand on that a little bit?

Q. You've shared numbers with the Players Association, but there seems to be still some difference of opinion on the interpretation of those numbers and what that means for the state of the league, things like whether debt service should be in there, issues like that. What is your position on that?
COMMISSIONER STERN: Well, I think that there's no disagreement about the numbers. There's a little intramural disagreement about certain items. But we have agreed to sit down and talk about what the deal point is, which will subsume those numbers.
We sort of both agreed that the numbers are what they are and it doesn't pay to argue about them anymore. They are real. They can be argued about in terms of whether they are x or x-minus a little bit but the numbers are real and the losses are real and the need from our perspective for a different business model; that's what is governing our decision, and if it weren't, we would have stayed in the Collective Bargaining Agreement for another year but we have opted out.

Q. The Lakers just signed a $3 billion agreement, which is local TV revenue which would be a very strong argument for increased revenue sharing, helping to solve this problem.
COMMISSIONER STERN: Yes -- no, you increase revenue sharing, doesn't solve a problem, if there are losses, because you can't revenue share your way to a profit as a league. And what it does do, and there are no shortage of teams that haven't made the point in the last several days in that when we get this agreement right with the players, yes, teams that do quite as well as the Lakers do will look forward to being part of the payers in a robust revenue sharing plan which is going to occur at the same time as we make a new Collective Bargaining Agreement.

Q. Over the past four years, you've had such big markets as Boston, L.A., Miami, and possibly now New York making big moves. Is there a concern that all of the best players are just going to the big markets and it could really affect a lot of small-market franchises long term?
COMMISSIONER STERN: I guess I would deal with that in a general restatement of what I just said. Our goal in these negotiations is to come up with a system where all 30 teams over a period of time have the ability to compete. I think what you'll also see is that the teams that are, that, have been competing the hardest in terms of moving along in the playoffs, are taxpayers. And we don't think that your ability to pay taxes to have a roster should be a part of the competitive landscape.
And so we are addressing the issue in our proposals that you just addressed.

Q. So is it a good thing or a bad thing or how do you --
COMMISSIONER STERN: I think it would be a good thing if more teams could compete, including -- we are very focused through revenue sharing and this deal, this agreement that we are trying to get, on having small markets with the capacity to compete in this league, and succeed in this league.

Q. You have expressed some concern about players moving around and in the sense that there's so much speculation about it ahead of the fact. What do you think about franchising players as a solution to that?
COMMISSIONER STERN: Well, I think it wouldn't surprise me if in the course of negotiations, the franchise player designation becomes an item of discussion. It has not yet been put on the table. But if it isn't that, there will be something else to discuss.
You know, when you are out there, with 53 million likes on Facebook and 30-some-odd million followers and gazillions of views on YouTube, people will find things to write about, to talk about, to blog about, to Tweet about; it's what I call the digital water cooler.
So if it isn't one thing, it's going to be something else. That's what we do; we provide fodder for our fans, the media that follows us, and so that kind of speculation is going to happen whether a player has a tag, doesn't have a tag, whether he would be tagged, whether he wouldn't be tagged. We now understand that if social media can change regimes, it can do a lot in our game and it's fine and fun.

Q. The present environment is such that if LeBron goes to Cleveland, everybody look as the end of the rookie scale four years down and then there's kind of a crescendo over four years, if there was a seven or eight-year franchise tag, it would by definition give some grace period.
COMMISSIONER STERN: Yes, that's true and that's a subject for negotiation; I think not here, but ultimately between the union and the teams as to how that should be used, if it should be used at all.

Q. At the beginning of the season you mentioned contraction. Is that an option right now? Is it on the table right now, and if so, for which teams?
COMMISSIONER STERN: I would say it's not currently on the table. There's been no proposal about contraction. But what I said to you -- what I said earlier was the subject has been raised internally with respect to no particular team, but with respect to the concept that if we have 35 million dollars plus or minus of shared revenue that goes to a team, and we are talking about more robust revenue sharing that could be, who knows, let's say another 15 million dollars in a certain case; that's 15 million dollars, and some owners have been heard to suggest that that would be better used to buy out the team rather than to feed it.
And that sentiment is out there. It's not a majority sentiment but it's out there and it's something that we'll be discussing I would say internally, but it's not currently on the table.

Q. I don't know if you've seen this new book about the Donaghy scandal, but having read it I found myself there now, three of the four conspirators have said something on the record to somebody, and they are unanimous -- the fourth by the way is Donaghy himself, and they are unanimous that he was really good at winning bets on games he officiated, really bad at winning bets on any other games and he was gambling on games since 2003 until he left the league and the report that he looked at 16 games. How confident can we be that there are not fixed games in the NBA?
COMMISSIONER STERN: I have not read the new book or seen it yet, although I'm happy with each All-Star Weekend or Finals to present an opportunity for a convicted felon to issue yet another tome on his misdeeds.
So we'll see if there's anything new suggested, Mr. Pedowitz will be asked to continue to review it as we have with each one that has been published, because we want to make sure that we get to the bottom of it all.
But right now, I don't have any more information other than I know you always confirm your sources; so I commend you to confirming the convicted felon's sources.

Q. The Union seems to be frustrated with what it perceives as a lack of willingness on your part to truly negotiate. And is it just that it's too soon to move much off your proposal or is it this time around, you're not moving?
COMMISSIONER STERN: Actually, I'm counting to ten. Because what I really want to say is that I liked yesterday's meeting, because the Union agreed to talk about some things that they said were nonnegotiable. So it's exactly the opposite.
We have put some proposals on the table over here. The Union put some over there. We said, we're happy to talk about them. There are certain of our proposals that they said they didn't want to talk about.
Yesterday what I heard for the first time in response to our statement that we're willing to talk about everything, is that they were willing to talk about everything. And so we welcome that and now we are going to spend our time setting up small and large groups to talk about everything. And then we'll see how it goes.

Q. Can you offer any specifics about things that they did not want to talk about that now they said they will?
COMMISSIONER STERN: In broad generalities, what we are looking to do is make our league more competitive, and in order to do that, there are certain system changes that cover a lot of different subjects that change the status quo, and we'll have to see how the discussions go on those. I don't propose to list them here and go on to negotiate here.

Q. Can you update us on the status of negotiations between the Kings and the group in Anaheim at the Pond? And also, what is the league's position on Sacramento as a market in light of its struggles to get an arena built?
COMMISSIONER STERN: Well, as I am not aware of the current status of any negotiations that the Kings are engaged in; I do know, because I read in the newspapers, that they have -- they are supposed to have had discussions with Orange County, and they have.
But with respect to Sacramento, all I'll say is that we and they have tried very hard over the years to see whether a new building could be built, and with the collapse of the last attempt, which took a few years, and several million dollars, on behalf of the league, I said we are not going to spend any more time on that; that that is for the Maloofs and the people of Sacramento. I don't know where that is right now. I mean, I do know; I talk to Mayor Johnson from time to time in relation to the various projects he's engaged, but I'm not driving it and we'll see how it goes.

Q. So you are not going to let us know how deeply these conversations are going, whether they are ongoing or have been tabled?
COMMISSIONER STERN: If what has been tabled?

Q. Negotiations between the Maloofs and representatives of Anaheim.
COMMISSIONER STERN: Sitting here I don't know whether they are ongoing. No one has told me that they have been tabled, and no one has told me that they are ongoing.

Q. General thoughts on Pistons prospective owner Tom Gores and the general status of the Pistons sale.
COMMISSIONER STERN: I'm going to catch up with Mr. Gores either tonight or tomorrow to say hi. I met with him at my offices where he met with our entire senior staff, and we know that there are very intense negotiations going on, which are in their final stages, which means either there will be a deal or there won't be a deal within the next week. And every indication is that there will be a deal, and we'll see how that goes.

Q. I want to ask you a little bit more about revenue sharing because you have always presented it as sort of a league issue, separate from the CBA, but Billy last night was saying that they would need to see what the revenue sharing would be before they would agree to that.
COMMISSIONER STERN: That's okay. I mean, we are proceeding as a league issue, and we are not -- when we get to the final solution of the revenue sharing issue, we are not going to hide it from anybody. And so that doesn't upset me at all. But, in fact, it's important as part of what we are trying to do here, because we have a fundamental shift going on, not just through a change in the competitive structure and the economic structure under the Collective Bargaining Agreement; but in the appropriately-put increase in revenue sharing so that all teams from revenue sharing and the change in the Collective Bargaining Agreement have the opportunity to both compete and be profitable.

Q. So that's going on separate now?
THE MODERATOR: Yes. This parts of my head is white from the collective bargaining and this part from the revenue sharing discussions, and they are equally intense, I assure you.
But the good news is, is that our teams are in broad general agreement that there has to be more robust revenue sharing, and we are working on a formula which has potential to change, because the Collective Bargaining Agreement fits in, as well, to see how the economic situation is going to be turning out. But there won't be any secrets about it when we get to it.

Q. Obviously there are a lot of issues that you all in the union are working through, but is there an established pecking order in which you guys hope to foresee at this point?
COMMISSIONER STERN: No. The established order, the way we do things, is we go back to New York and we start setting up meetings. Probably first in small groups to go over certain -- that's where I become, quote, staff; the small groups of the staff meet with the union staff, and then at the appropriate time, we bring in the principles, which are the player representatives, and the owners or members that we expect there to be. And it's also allowable to let the lawyers talk to each other, and it's okay to talk on the telephone to go over issues, as well. There's no specific magic to how it gets done. But I think the most important thing is that there be continued communication and the building of trust.

Q. In the discussions you have had already, has there been any consensus reached by the two sides on any particular point that you can elaborate or discuss in some detail right now?
COMMISSIONER STERN: No, I wouldn't want to discuss that. I think the only consensus is that if the owners asked Billy to represent us, he could do it; and if the players asked me to represent them, I could do it.
We understand each other. We understand what's at stake here, and we understand that it's nothing personal; that we have a job to do, and we would be well-advised to do all we could to get it done. And I would say there's a broad, general consensus on that. But it's hard to get a consensus on any one issue, because they are all so interrelated.
So you listen and you talk a little bit, and we understand certain things from the negotiation, even though the union has never said it and they understand certain things from us, even though we have never said it. And if we asked them to confirm it, they would say no, and if they asked us to confirm it we would say no.
But that's just the way it is when you negotiate. And we hope and believe that we are dealing with people of good faith, and they know -- they hope and believe that they are dealing with us and we have decided that we are going to go through a process of trying to build trust and there's nothing personal at stake here.
I think this is probably Billy's third, and it's probably my 13th; so we have been there and we have done it. As Peter Holt, the head of the Labor Relations Committee is heard to say, this isn't his first rodeo, and that's really true of the owners and the teams, and the union members, as well. But it would not be right or fair to talk about specifics like that.

Q. The union in the past has been skeptical to say the least about the league's claims of losing $300 million out a year, and you opened up by saying there's no disagreement by the numbers. Are you saying the union now agrees with your figures of how much the league is losing?
COMMISSIONER STERN: I don't want to force Billy to disagree with me publically. But I would say to you that there's no disagreement about the numbers. There's disagreement about certain components of the numbers that whether they should be included or not; and the interest and the amortization or something like that.
In yesterday's session, I would say it's fair to say that we are setting up the next meetings. The union's position was, let's not argue about the numbers. Let's just go and negotiate about the outcome. And that worked for us, because we don't have to keep -- that was good to hear. Now, you can read a lot into that if you like, or not, but we are off that argument because it doesn't now it get us any place.

Q. If there is indeed any agreement about revenue expenses, etc., there's agreement about the numbers generally as you say. Is that, if anything, what would give you hope at this point, given the lack of progress up until now that there may be ability to avoid a lockout?
THE MODERATOR: I would say what gives me hope is the fact that a lockout would have huge negative consequences for everybody. And that's what gives me the hope and the belief that we are going to knock ourselves out to get it done, because you know, with respect to the numbers themselves, just to repeat, the certified financial reports have been given. The income tax returns have been made available. And so the only thing left is the argument about, well, you should move this here or that there. Anything else would be accusing us of -- and our teams, of a brand of conduct that wouldn't lie with respect to any accusations.
So we have given them what they have asked for, and we feel quite comfortable. But the argument, it was good rhetoric early on to say it's bologna or some other brand of meat. But now as we get down to the July 1 or June 30 deadline, it's time to start negotiating and get rid of that rhetoric. I think we have excised it.
We need a different kind of model; if we thought we didn't, we would have extended the Collective Bargaining Agreement by a year, which was all right. So at this point, the owners know what their numbers are and what they need to do, and I think the players are beginning to understand it.

Q. The Latin American basketball has constant growth now. What does the league see on these players and this growth helps the league in what way?
COMMISSIONER STERN: Oh, well, to have world-class players from Latin America? It makes our league stronger. There I was as recently as Beijing when there was Team Argentina with six NBA players receiving the bronze medal. It makes us stronger. Argentina, Brazil, and many other countries I think that are yet to deliver their first players to the NBA.
We think that sitting here with 86 non-U.S. players in our league makes us very strong and the sport is growing tremendously around the world, but there seems to be a new awakening in Latin America, and we are working with potential leagues in México and elsewhere to develop the sport at the grass roots basis because they are all ultimately going to flow into the NBA, if they are the most elite.

Q. Can you please explain to us the difference between the New Orleans Hornets issues and the former Seattle Sonics? The NBA bought the Hornets with the intention to keep the team in the city. Could the NBA have done it also with Seattle, even if there were problems with the arena? And could you give us a percentage of the possibility of Seattle having a new team back?
COMMISSIONER STERN: All of this from Italy. Bona serra. (Laughter).

Q. Also second question, please -- (laughter).
COMMISSIONER STERN: Wait a minute. Just a minute. Momento.
With respect to Seattle, you actually explained the answer in your question. Because you said, the arena was not adequate. And it wasn't.
And in New Orleans, the arena was recently built and is adequate. And so this was a city -- and New Orleans has a special, I'd say place, given the devastation of Katrina and the difficulties there. You know, we wanted to make sure it had a chance to demonstrate that it was an NBA city. It had the facility, and we did what we had to do in Seattle. And it had an owner that was not prepared to continue to fund it, and we had a lot of relationships that we thought it paid to keep strong by stepping in and buying it, operating it, and shining it up for sale in New Orleans.
Seattle was a completely different situation. Everyone agreed, it needed a new building; a new building couldn't be built, and the ownership decided to move it out. That's all. I'll introduce you to Ailene from Sacramento, though. (Laughter).

Q. How would you characterize the gap that needs to be bridged in this current negotiation compared to the negotiation back in '99?
THE MODERATOR: Probably I'd say -- we had a huge gap back then and we have a huge gap now. But you work hard to close it. And I think we have the capacity to do it. Of course we are smarter now than we were then. We've already had a lockout. We know what it feels like.

Q. What were you able to learn from '99 to bring to this negotiation that might help things?
COMMISSIONER STERN: Well, we haven't been able to learn enough because we don't have a deal. We are a learning organization, and I think the union is, too. I think what we have learned, and what the union has learned, is that we both have the capacity to shut down the league; that there's no magic that's going to keep this league operating if we don't make a deal. That's a very instructive lesson.

Q. With all of the talk of contraction and relocation and adequate facilities, Kansas City is a city that has an adequate facility in the Sprint Center, have you been contacted by anyone representing AEG or Kansas City about their desire to have a franchise housed in the Sprint Center?
COMMISSIONER STERN: We have had some dialogue with AEG about Kansas City, but at the present time, there doesn't team to be an ownership group for that city.

Q. Is the only way it would happen is if there would be relocation as opposed to expansion?
COMMISSIONER STERN: There is not going to be expansion at this time or frankly in the foreseeable future.

Q. Is there any concern on the league's part about the brand of the NBA taking a hit now with advertisers and sponsors as labor talks continue, and have you been tempted to drop your salary to a dollar like Goodell in case of a stoppage?
THE MODERATOR: Well, I would say that last time, I didn't take any salary. I think a dollar would be too high in the event of a work stoppage.
And with respect to -- and with respect to sponsors, we have the largest activation on a global scale that we have had in our history for this All-Star Game. We are going to have it in the playoffs, and we are going to have it for the Finals. Hopefully, we'll go rolling right into next season; although it's possible that we won't.
All it does is sharpen for us what is at stake, but we are looking forward to the meetings that we are planning to schedule with the union.
Thank you very much for coming.

End of FastScripts

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