The NBA reportedly lost nearly $2 billion over the last six years. Posted by Ben Golliver. 

On Tuesday, we noted a back-and-forth between the New York Times and the National Basketball Association involving a dispute over how profitable the league has been in recent years. The Times used financial estimates provided by Forbes to conclude that the NBA could potentially be misrepresenting its financial losses; the NBA fired back by disputing the report in a statement, saying that the league had failed to turn a profit in each season of the recently expired collective bargaining agreement, concluding that its losses were "substantial and indisputable."

On Wednesday, Forbes.com reported that it has obtained new, audited financial information concerning the NBA's economic health. The new report references "net income," which it defines as income "after the deduction of all costs" that gives "a more definitive picture."

Sources close to the NBA labor negotiations have provided net income numbers for the league each year over the last five years, plus projected losses for the 2010-11 season. Given that the NBA is saying that they are running at a net loss, as opposed to the NFL, which is saying they are seeing profits declining, the NBA is compelled to open their books as part of labor law, and have done so. The following numbers are audited figures. If the projected figures are correct, the NBA will have lost $1.845 billion over the last six years...

The following shows the losses, as well as the number of teams that reportedly have run at a loss the last five years, plus projected losses for the 2010-11 season:

• 05-06: 19 clubs ran at a loss, total losses of $220 million
• 06-07: 21 clubs ran at a loss, total losses of $285 million
• 07-08: 23 clubs ran at a loss, total losses of $330 million
• 08-09: 24 clubs ran at a loss, total losses of $370 million
• 09-10: 23 clubs ran at a loss, total losses of $340 million
• * 10-11 23 clubs ran at a loss, total loss of $300 million

The release of these figures marks another step in the right direction for the league, as transparency with regards to their losses has become a hot button topic, especially this week. With that said, the top-level numbers don't do much to further the NBA's case in the public eye, other than to show that their claims of a "broken system" aren't entirely without merit.

The perception of the league's financial success (TV ratings, website traffic, increased ticket sales) may in fact badly outweigh the league's actual financial success. While it might not be fair, the burden of proof falls on the NBA to fully document and explain its position of hardship. Otherwise, the assumption from a public who can't relate to the sums of money being discussed is that the league is guilty of exaggerating their losses. Skepticism will continue until a full analysis of the league's books are allowed by an independent source. 

The National Basketball Association has released new specifics about its financial struggles. Posted by Ben Golliver. 

On Tuesday, we noted a New York Times analysis of the National Basketball Association's finances which concluded that data collected by Forbes makes it seem that perhaps the league isn't in as dire a shape as it claims to be.

Later Tuesday, the Times printed a statement from the NBA which said the figures used "do not reflect reality" and shed new light on the league's financial struggles.

The statement, attributed to spokesman Tim Frank, said the NBA has incurred "substantial and indisputable losses" and reiterated that the league's books have been shared with the National Basketball Players Association. 

Here are a few choice cuts.

The N.B.A. and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years. 

The league lost money every year of the just expiring CBA. During these years, the league has never had positive Net Income, EBITDA or Operating Income.

Ticket revenues have increased 12% over the 10 year period, not the 22% reported.

In 2009-10, 23 teams had net income losses. The losses were in no way "small" as 11 teams lost more than $20M each on a net income basis ... Our net loss for that year, including the gains from the seven profitable teams, was -$340 million. 

As of yet, the NBA has not made its books available to independent media analysis. Its claims are therefore unverifiable. There will be skeptics until (if?) that last step is ever completed. 

Just because they are unverifiable, however, doesn't necessarily mean they are totally unreliable. What the NBA is admitting too here is pretty striking. Year after year of losses. A plurality of teams losing money. A third of the league's teams losing lots of money. All this despite rising ticket revenues and a solid television deal.

Given all of this new math, solely blaming the players, whose salaries are tied to Basketball-Related Income, simply doesn't add up. Increasing transparency as the league has seems only to only increase the questions the owners should be asking of each other.

Here's three questions for starters. To what degree do they need to protect themselves from themselves when it comes to spending on player salaries? How much does revenue sharing need to increase? How serious are they, really, about a hard cap system?  Those are big, hard questions that will eventually require sacrifices and compromises from someone.

Posted by EOB Staff

Well, now you've done it, NBA. You've locked out the players with neither side willing to budge. The owners want to set back decades of negotiations to the Stone Age by implementing a hard cap and decreasing the players' share of the profits. The players want everything to remain the same, basically, and not to lose their diamond-studded shirts. This thing's going to take a while. That's pretty clear. 

So we thought instead of us just sitting around moaning about this lockout, which, trust us, we're going to do, we'd actually do something positive. In that spirit, we thought we'd take a look at what we feel the owners and players should work on changing about the NBA, while they're locked out. As long as you're blowing up the NBA universe and starting over, you might as well be comprehensive about it. 

From Matt Moore:

Finally Put Up For The D-League -- The owners like it because it gives them somewhere to stash talent they can keep an eye on. The league likes it because it helps reduce the bust rate. The coaches like it because it gives them somewhere to send head cases when they're bugging them. The players like it because it means more jobs, conceivably. So why on earth won't both sides agree to substantial changes to the NBA D-League to make it a true development system?

Whenever the NBA starts up again, the following teams will own either part or all of their D-League affiliate: the Lakers, the Spurs, the Warriors, the Thunder, the Mavericks, the Nets, and the Knicks. That's seven out of 30 possible teams, leaving only nine D-League teams without an owner, and forcing 23 NBA teams to share those nine teams. Clearly, there's a trend towards buying in. 

When you look at the number of players out of the draft each year who bust, wouldn't it be worth investing in a legitimate development system so that those players can grow into the players teams need them to be before they're cast aside? But the keys to a viable D-League don't just end with actual development. Elton Brand, among others, has expressed a willingness in the past to play for a D-League team while rehabbing from injury. Instead of forcing a player back early, where coaches will be nearly forced to overplay them to try and win games, the D-League could serve the same function as minor league baseball, helping players recover from injury on a timeline, with controlled minutes and longer rest. Worried about a player's conditioning coming back from a year-long absence? Instead of having him sit in a suit game after game, have him go five minutes at a time for a week in the D-League, then 10, then 20, before returning to the main club. 

Most confusing about the lack of progress for the D-League is just how cheap it is. Essentially, for the cost of a single year of Sasha Vujacic, you could not only buy a D-League franchise or set one up from scratch, but actually make substantial improvements in training, staff, travel and organizational structure. Everything is cheap in the league, and cutting corners won't set you back.

Instead of wasting two roster spots for guys who sit on the bench in a league that doesn't really practice all that much, assign two roster-spots to the D-League. Those players are paid under $1 million on non-guaranteed contracts (just like most mid-season call-ups), and if they are brought up, another non-guaranteed player is sent down, if applicable. Teams can also develop coaching staff at that level as well. 

The league has flourished under Dan Reed, and has proven it can work as a development system for talent. Look at Aaron Brooks, Reggie Williams, Jordan Farmar for starters. It's time the NBA and the players' association actually commits to it. 

Close The Trade-Buyout-Re-Sign Loophole -- This one's tricky to deal with, but it needs to be expressed, if only for the sake of not annoying us. You throw an aging, expiring contract in as filler for a trade. That player agrees to a buyout with the salary-shredding team that traded for him and waives him. The player then returns to the team he was traded from and immediately re-signs. It's pointless, it's ridiculous, it needs to go away. Either we need more lax agreements on trade rules to allow these deals to go through without needing those players traded, or a measure to prevent the teams from re-signing that player. I don't believe it's any sort of unfair advantage like some coaches do, any team can pull off the same type of deal. But it still seems skuzzy and takes away from the integrity of the game for very little advantage, in a way that could be avoided. Player movement needs to be maintained under the new CBA (beware the hard-cap), but this is one facet that could use a little more restriction. 

From Ben Golliver:

Season-Ending Injury -- In recent years, both the Golden State Warriors and Portland Trail Blazers have dealt with serious rashes of injuries that, at times, made it difficult to field a full roster of healthy players. The NBA currently has an emergency system in place to help teams who lose multiple players to extended injuries: the league grants a "hardship exemption", which temporarily creates a roster spot until a player comes back healthy. This system is a bit cumbersome, forcing teams to sign and waive players regularly and really only serves as a stopgap solution when disaster strikes multiple players. A better idea would be to allow a team to slap a "season-ending injury" designation on a player, subject to league approval. Once approved by the league, that player would be removed from the team's 15-man roster for the rest of the season, freeing up a spot for the team to sign a replacement player. The current system penalizes a team twice when a player suffers a season-ending injury: They suffer both the loss of the player and the difficulty of replacing him. This tweak wouldn't fix the first issue (nothing can heal injuries) but would alleviate the second problem. If a team had a rash of injuries at a particular position, they could go out and find the best available replacement player at that position rather than scrambling together unconventional lineups made up of their current healthy players. Ideally, teams would be able to do this up to two times a season.

International Buy-Outs -- Ask almost any top European player and they will say that it is their dream to play in the NBA. Ask almost any NBA executive and they will tell you they are committed to scouring the globe to find the best available talent. The only thing standing between the two sides in this globalized, modern reality? Complicated buyouts inserted into European contracts and an arcane NBA rule which says teams can only contribute $500,000 to help a player out of his contract. The current system is incredibly inefficient and leads to worst-case scenarios like the Ricky Rubio situation, which dominated headlines for multiple years, tying up the Minnesota Timberwolves and causing his stock to plummet on draft night because teams were uncertain about his contract status. With the rising size of buyouts, there's no question the $500,000 limit needs to be raised. To where? $1 million? $2 million? One idea is to simply not cap the contribution amount in any way. There is serious merit to this idea. European players already sacrifice financially when they come to the United States because they are subject to lower-dollar rookie deals when drafted. Often, stars are taking a pay cut to follow their dream. Asking them to contribute their own money to the buyout on top of that to make the transition is excessive. If an NBA team wants a player, it should bear the full financial burden of acquiring him. Will European teams respond by increasing their buyouts even further? Possibly. But competition between European clubs for a young star's services should keep the buyouts at a reasonable level if it's clear that player is using his time in Europe as a stepping stone to the NBA.

Revenue Sharing -- An NBA.com article wrote that there is a "chasm" between the owners and players in their labor negotiations. There's a similar canyon between small-market owners and big-market owners in terms of revenue generating potential, especially when it comes to television deals. The NBA has preached its commitment to creating a new system where all 30 teams have the opportunity to compete for a title -- a noble goal. That can only happen when all 30 teams have a more equal ability to spend on player salaries. On their new TV deal, the Lakers will make $150 million a year, more than enough to cover their $90 million payroll (which is tops in the league). A small market team might be lucky to make $10 to 15 million per year on its TV deal, which equates to roughly one-third of their payroll. Expecting the Lakers and other big-market teams to make up all the difference between the two poles is excessive, but surely there's a compromise that can be reached to make the division more equitable. The only viable alternative is contraction, which is a far worse eventuality for the league, even if its big-dollar teams might not think so.

From Royce Young:

No more inactive lists -- Can anyone really explain the point of this to me? Why are teams allowed 15 roster spots but three of those guys can't dress? What sense does that make? 

Those final three guys aren't going to play much anyway, but take a team that has a project big man on the roster. Every night, he's in a suit. But in certain blowout situations, it would probably be nice to get him two or three minutes of run. Except you can't, because he's wearing dress shoes and a tie.

I suppose it requires a bit of strategy in the end for a coach to select guys to be active, but that's just silly. Maybe it's an owner thing. If coaches could dress 15 guys, more teams would fill up the roster meaning more salaries for an owner to pay. But that's a horrible reason for it.

Get rid of inactive spots and just make it a simple 15-man roster where everyone is eligible. If a guy gets hurt, add a disabled list type of place so that guy doesn't hog a roster spot, but allow everyone to dress. It definitely makes a lot more sense than forcing three guys to wear suits. 

Eliminate the second round of the NBA draft -- On the surface, this idea doesn't seem like it should matter much. All second-round contracts aren't guaranteed and all teams have are the rights to a player. But restructuring the draft to eliminate the second round helps players find a home. 

Instead of a team using the 34th pick on a good college junior because he's a good third point guard to have on the roster, if everyone was simply a free agent in the second round, that player could find a fit that's a lot better for him. 

Most second rounders don't make it anyway, but there are always five or six that are quality pickups for a team. Some get signed, some don't. And the ones that don't end up going to Europe or the D-League, sometimes because they're a small forward and were picked by the Heat. If the contracts aren't guaranteed anyway, what purpose does the second round really have other than it's decent TV?

Posted by Matt Moore

How did we get here? How could things have gotten this badly this quickly? Didn't we just have a CBA agreement in 2005? Why didn't talks start sooner?

These are the questions we ask ourselves as the NBA begins its second lockout in 12 years this weekend. To help us understand how we got here, in contrast to Ken Berger's work on where we're headed, we present this timeline of relevant CBA dates. This is not a complete listing of every development, but hopefully provides some context of how we got from a stable and happy NBA, to one which may not play another game until fall of 2012.

January 20th, 1999: The NBA lockout ends after nearly seven months of non-talks. The two sides had been locked in bitter negotiations and went 36 days before engaging in the first bargaining session after the lockout. In a negotiation considered a win for the owners, the rookie scale was introduced along with the mid-level and veteran exceptions.

June 2nd, 2005: The NBA and NBPA come to an agreement on a new CBA, avoiding a lockout for the second time in six years. Under the new agreement, max contracts are shortened and raises curtailed.

July 22, 2005: The NHL owners' contingent secures a monumental victory over the NHLPA after a year-long lockout, securing a hard cap and keeping revenue sharing off the table. This has two effects on the NBA ownership. One, they see that a league can implement a hard cap in the modern era if its willing to go the distance. Two, NBA team owners who also own stakes in NHL franchises are convinced that a lockout, regardless of how long it takes, is worth it if they are able to secure changes for guaranteed profitability.

February 15th, 2009: In light of an ever-worsening economic downturn, Billy Hunter and David Stern appear at a joint press conference during All-Star Weekend in Phoenix and reveal they are in talks to reopen the collective bargaining agreement. At the press conference, both sides make it clear they are looking to get out in front of the expiration of the current deal in 2011.

Hunter: "We all understand that we live and benefit from the success of the NBA. The last thing we want to do is see it lose its vitality. We will do everything possible to reach a deal.

Whether or not that means we will reopen before the expiration of the current contract's conclusion is another question. But I can say to you that we are anxious to reach a deal."

Stern: "Just to talk about frameworks and understandings and say when we get to the last day and then it is either one side or the other, it leads to bad things."

The two sides were aware, even at that point, of how far apart they were, and vowed to work to start negotiations, substantitive negotiations, to avoid the question of a labor stoppage coming down to right before the expiration of the CBA in 2011. This is more than two years before the expiration date.

Substantive negotiations do not begin until May of 2011.

More on NBA Lockout

Analysis

Ken Berger Congratulations, NBA owners, you got what you wanted. Read >>

Related links

Berger: Proposal to bridge CBA gap Golliver: Lockout primer: The issues Durant: Players won't cave Jamison: Players more unified than in '98 Moore: What damage the lockout brings NBA.com different as lockout begins Latest NBA news & rumors

Video

Berger: NBA announces lockout Stern, Silver talk NBA lockout Hunter discusses labor talks Derek Fisher on negotiations

February 19th, 2009: The New York Times speaks with former agent David Falk in advance of his book release, who makes bold and severe statements about the upcoming talks. Falk becomes one of the first to publicly forcast the owners' push for a hard cap.

“I think it’s going to be very, very extreme,” Falk said, “because I think that the times are extreme.”

February 27th, 2009: The AP reports that the NBA has lined up $200 million in loans to teams facing financial hardship during the economic crisis.

March 8th, 2009: ESPN and the Star-Tribune report that Glen Taylor, owner of the Minnesota Timberwolves, along with then-head-coach Kevin McHale were "rebuked" by the league office for comments made about the labor agreement. Most notably, McHale provided the first look at just how severe of changes to the existing agreement the owners would be looking for in negotiations, saying how the players should prepare for "major changes."

The league then authored a memo, according to reports, instructing teams not to make "any unauthorized statements" regarding the CBA, nor to speak with any player regarding the CBA or relevant discussions thereof.

March 20th 2009: Stern tells ESPN that he and Hunter have agreed to begin "substantive discussions, perhaps as early as May" in advance of the CBA's 2011 expiration. Notably, Stern says that when the current deal expires, it will not be "owners taking a hard line, it's going to be [both sides] dealing with new financial realities.

The owners will not offer a formal proposal until January of 2010, nearly 11 months later.

September 18th, 2009: The NBA officials' representative in the midst of a lockout of referees claims that NBA management received raises during the financial crisis the league has used to illustrate the need for overhauls of both the officials' and players' CBA. The referees' lockout is later resolved in what is considered another win for the owners.

December 18th, 2009: Ken Berger of CBSSports.com reports that the league and players will meet over All-Star Weekend in Dallas with the first official proposals to be exchanged. It will have been a year since the Hunter-Stern presser vowing to proceed with negotiations early. Both sides continue to say the last thing they want is a lockout.

January 29th, 2010: The first substantive signs that the negotiations will become bitter and that the owners plan to take a hard line come to light as Berger reports that the owners' position is one of "(the players) need us more than we need them." Berger reports that the owners are "unified" and "determined to crush the union."

February 12th, 2010: Both sides realize after the first exchange of proposals just how far apart they are. Billy Hunter says afterwards that the owners actually pulled their proposal because it was so extreme. The terms "heated" and "contentious" are used,  Berger reports. It is the first indication how nasty this will become.

February 13th, 2010: Stern speaks at All-Star Weekend. Stern ridicules the assertion that the owners' proposal was "taken off the table." Later reports reveal how severe the owners' initial proposal was. Instead of considering this the extreme measure as an opening to a negotiation, the league represents this as the cold hard truth of what to expect in negotiations. The word lockout starts being bandied about.

July 2nd, 2010: Berger reports that the players provide their first counter-proposal to ownership, five months after the owners' proposal at All-Star Weekend. The players' proposal not only lacks the substantive changes suggested by the owners in their initial proposal, but in fact seeks to provide more flexibility and earning potential for players. Even as an opening offer to set the marks for the negotiation, it's unrealistic at best.

We are inside of a year remaining in the CBA. The owners will not respond to the proposal in kind for over nine months.

August 12th, 2010: Star players become involved in the talks for the first time since All-Star Weekend, but while the tenor of the conversation is improved, there is still a "gulf, not a gap" an executive tells Berger.

Notably, the players' association makes its first concession in regards to the total money spent on salaries. This is important as it sets the tone for the players being more willing to compromise, while the owners remain solid in their initial positions. This will later seemingly provide ammunition for the owners to believe they can eventually get the union to cave, if drastic measures are implemented.

October 21st, 2010: The league makes it known how severe their desired changes are, giving the estimate of $750 to $800 million in reduced salaries for the players. Everything is on the table for them, from contraction to revenue sharing, but the league makes its expectations crystal clear.

November 14th, 2010: Ken Berger of CBSSports.com reports of upcoming meetings scheduled for November 18th, described as "two-on-two" sessions with the heaviest hitters, involving Stern, Adam Silver, Hunter, and Derek Fisher. The hope is that smaller meetings will create more substantive progress.

March 30th, 2011: Ken Berger of CBSSports.com reports that the NBA has sent financial data from the teams for the 2009-2010 season to the NBPA. The disclosures reveal substantial losses in how they are calculated. The players' association will later deny the accuracy of the data and the conclusions gathered from it.

April, 2011: Ownership finally provides another formal proposal. It has been nine months since the players' last proposal.

June 8th, 2011: Players say there have been no changes at all in the owners' demands. 

June 21st, 2011: The owners' latest proposal seems like a compromise, moving away from a hard-cap to a "flex-cap" and softening their position on the BRI split, slightly. Players feel these measures are red herrings. 

June 22nd, 2011: Hunter tells reporters that the owners demands "can't be met."

June 28th, 2011: The owners and players agree to one final meeting, hours before a lockout. It will have been two and a half years since talks began at All-Star 20009.

June 30th, 2011: Owners notify players that the two sides are too far apart. The lockout begins at 12:01 a.m. EST, Friday, July 1st, 2011.

Posted by Matt Moore

In a turn of events that should surprise absolutely no one, the owners got what they wanted. They've locked the players out and are now digging in for the long wait until the union cracks and they can get what they want: more money. I'm not going to go off the deep end on some proletariat hop, but either side in this should stay away from any sort of moral plea in the press.

But nonetheless, here we are, with what is rapidly becoming an ideological dispute instead of a business negotiation. And the damage as this lockout extends will go way beyond just the gross number of luxury vehicles owned. Here's a look at the lockout and the damage done:

The League: Well, so much for all that momentum. Riding high off of the best season in years, the league now faces a monumental setback. Baseball took a hit. The NBA took a hit, last time.

David Stern is nearing the end of his tenure. Is this going to be the last big thing he's known for? Is this the note he's going out on, being the carriage driver that allowed the ownership to drive the league off the cliff? Stern has a legacy to watch over, and while his constant and long-time devotion to the owners, taking very much an "I work for the owners, I'm not bigger than them" attitude, he is responsible as a caretaker of this sport. It's his job to watch out for its legacy, for the "good of the game." And if this lockout winds up as a complete disaster, the sports version of "Judgment Day" from the "Terminator" series, that's going to go on his permanent record. The league faces a responsibility to make sure that the backbone they stick up for so much, the owners, doesn't destroy the whole body.

Owners: Well, for starters, their public perception is going to plummet. A tip? People think billionaires arguing with millionaires are stupid. And the owners' cute little "We're going to take a hard line" thing isn't going to go over great, either. Will it affect their daily life? No. They can just stay inside the mansions while the rest of the world hates them a bit more every day. But it does get tiresome having people contantly ask you when you're going to end the lockout. Public perception is clearly not something the owners care about, as you can tell from their actions. But it gets tiresome being the bad guys, and they're going to be so for a while.

There are financial ramifications here. Once you start losing out on the season, the owners aren't just losing ticket sales. It's sponsorships, and community events, and merchandise, and everything else. That's actual lost revenue, just potential revenue. For men who have built their lives around growing the black ink, the red marks are going to be distressing.

This concludes how this lockout will damage the owners. Don't cry for them, Argentina.

Players: They'll deal with the scrutiny a lot more. Yes, educated fans will understand that the owners have been ridiculous in their negotiation approach and that the players didn't strike. Sadly, far too many people will simply question why they're not playing. And the result is a hit to something that does count, their public image. Getting product and event endorsements, invitations to elite functions, media opportunities to highlight their public profiles, all of that depends on the public image. And in a lockout, that will be harmed not just from negative reaction to the fact they're not playing, but from the fact they won't be seen.

The biggest stars will maintain. But the effect will be there. How about the actual money? Most NBA players haven't divested their income. They don't have multiple outlets of revenue. Many of them have probably saved very little. So when November rolls around and the checks don't come, that lifestyle adjustment will be real. The minimum players will obviously feel it first and most. But even some mid-level veterans live their lives according to their means. Think of it as if you made middle-class money in this country, and then all of a sudden you were put on indefinite furlough. Could you live on less if you'd planned well? Sure. But you've still built your life around the level of income you're making now. That adjustment can be difficult. Well, maybe not difficult, but inconvenient.

Charities: There will still be charity events. But the players don't have the disposable income to splurge as they usually do. The owners are in "baton the hatches" mode. Which means that a ton of money and resources that normally go to charity will likely be impacted. Even if the wealthiest players still devote their funds, things will be scaled back a bit. Media attention on these events will be less, knowing that the players won't be able to talk about the lockout as both sides duck the issue in the press. And there will be cut backs. Teams will be tightening their belts to save their owners money, not to save jobs in most instances, but to save the owners dough that they're losing in a lockout they created. Non-profits have already taken serious hits throughout the recession, and now those that have benefited so much from team and player involvement will have cuts.

Employees: Some teams have been wise enough to set aside funds to continue to pay their staff, at least for the most part, throughout the summer and into however how much of the season is impacted by the lockout. Others, not so fortunate. Multiple team employees have told me that their management groups are using this as an opportunity to cut the chaff from their organizations, laying off people that they feel they can do without. While some trimming may be necessary, that's still job loss. These are people who do not make hundreds of thousands of dollars, who just happen to be employed by an NBA team.

You have the impact when games are missed. Concession workers, arena staffs, security crews, etc. Most of these are part-time positions, so primary sources of income won't be affected, but who can afford to lose a gig like that if you're working multiple jobs? What about the extra crewmen hired by television production, both locally and nationally? What about writers, bloggers, editors, developers in the media? Okay, no one cares about those, but still.

Again, some teams have planned for this. Maybe the damage will be minimal. But there will be damage, and the longer this goes, the worse it's going to get.

The reality is, we won't know the damage this lockout will cause until it's over.

The NBA officially announced that it would be locking out its players on Thursday afternoon. Posted by Ben Golliver. 

On Thursday afternoon, CBSSports.com's Ken Berger reported that representatives of the NBA owners had informed representatives of the National Basketball Players Association that the league would proceed with a lockout after negotiations for a new Collective Bargaining Agreement in New York proved unsuccessful.

Within hours, the NBA released an official statement on its website, confirming that a lockout will commence early Friday morning.

Here's the full text of the statement via NBA.com.

The National Basketball Association announced that it will commence a lockout of its players, effective at 12:01 am ET on July 1, until a new collective bargaining agreement is reached with the National Basketball Players Association.

"The expiring collective bargaining agreement created a broken system that produced huge financial losses for our teams," said NBA Deputy Commissioner Adam Silver. "We need a sustainable business model that allows all 30 teams to be able to compete for a championship, fairly compensates our players, and provides teams, if well-managed, with an opportunity to be profitable."

"We have made several proposals to the union, including a deal targeting $2 billion annually as the players' share -- an average of approximately $5 million per player that could increase along with league revenue growth," said Silver. "Elements of our proposal would also better align players' pay with performance."

"We will continue to make every effort to reach a new agreement that is fair and in the best interests of our teams, our players, our fans, and our game."

During the lockout, players will not receive their salaries; teams will not negotiate, sign or trade player contracts; players will not be able to use team facilities for any purpose; and teams will not conduct or facilitate any summer camps, exhibitions, practices, workouts, coaching sessions, or team meetings.

There's nothing groundbreaking in the five paragraph statement. The same themes that have been hammered on for months now are repeated: a broken financial system, aligning pay with performance and creating a better competitive environment for small-market teams.

NBA commissioner David Stern says he is not scared of an NBA lockout. Posted by Ben Golliver.

Following a bargaining session in New York City on Thursday, NBA owners informed the players that there would be a league-wide lockout, effective at midnight.

After that announcement, NBA commissioner David Stern and his deputy, Adam Silver, addressed reporters in a televised press conference.

Stern was asked what scares him about an upcoming lockout, which could result in a work stoppage and missed games if the two sides are not able to reach a compromise and create a new collective bargaining agreement.

Stern said, "I'm not scared, I'm resigned to the potential damage that it can cause to our league. As I said earlier, all of the people who earn a living from our league, as we get deeper into it, these things have a capacity to take on a life of their own. You never can predict what will happen."

During the 2010-2011 NBA season, the league enjoyed record television ratings and website traffic. A lockout, some fear, could damage that progress made and turn fans off.

Here's video of NBA commissioner David Stern saying that he is not scared.

The NBA owners have informed the players that there will be a lockout. Posted by Ben Golliver.



CBSSports.com's Ken Berger reports from New York City that the NBA owners have informed representatives of the National Basketball Players Association that they will be instituting a lockout, as no deal was reached on a new collective bargaining agreement.

This decision was expected, given the lack of progress during recent negotiating sessions. The two sides had until midnight Thursday to negotiate a deal that would have avoided a lockout. The lockout will officially begin at 12:01 AM eastern time. Berger reports that the two sides have not yet scheduled any future bargaining sessions.

Berger also reports that the players union "has no plans to decertify as of now and will continue to negotiate, according to a source." That decision will allow the two sides to continue negotiating.

Berger quotes Derek Fisher, president of the NBPA, regarding a "last-ditch proposal" presented to the owners on Thursday: ""It was met with the reality that we'll probably be locked out tonight."

He also quotes Billy Hunter, Executive Director of the NBPA: "I've been anticipating this lockout for the last two or three years, and now it's here."

The Associated Press adds these additional details.

Despite a three-hour meeting Thursday, the NBA and its players could not close the enormous gap that remained in their positions. The CBA was due to expire at midnight.

All league business is officially on hold, starting with the free agency period that would have opened Friday, and games eventually could be lost, too. The last lockout reduced the 1998-99 season to just a 50-game schedule, the only time the NBA missed games for a work stoppage.

The sides remained far apart on just about every major issue, from salaries to the salary cap, revenues to revenue sharing.

Players, who previously offered to reduce their salaries by $500 million over five years, considered the owners' proposal for a "flex" cap, where each team would be targeted to spend $62 million, a hard cap. Although the league said total player compensation would never dip below $2 billion over the life of its proposed 10-year deal, that would amount to a pay cut for the players, who were paid more than $2.1 billion this season in salaries and benefits.

Owners also wanted a reduction in the players' guarantee of 57 percent of basketball revenues.

NBA commissioner David Stern told reporters in a televised press conference that the players suggested that the two sides should "start from scratch" in their forthcoming negotiations.

"The players on the way out suggested to us that when we reconvene maybe that we should start from scratch. Maybe there are things that we should think about that we haven't thought about before. I don't mean to suggest [the league's current offer] is 'off the table' in any threatening way, it just hasn't done the job. The question is what does it take on both sides to get the job done."

Stern also said: "I'm not scared, I'm resigned to the potential damage it could cause to our league."

Here are live updates as they come in from New York City regarding the labor negotiations.

Yahoo! Sports quotes NBPA representative Matt Bonner: "We tried to avoid a lockout. Unfortunately we could not reach a deal."
 
CNBC.com reports that Billy Hunter, the Executive Director of the NBPA, said: "Their position was that we're too far away... the gap is too great." The site also quoted Hunter on the decision not to decertify the union: "I just don't think it's necessary."

The New York Post reports that Hunter expects the two sides to meet "in two weeks" to continue their negotiations. The paper also notes that the players association has requested "documentation" from the owners.

The Salt Lake Tribune quotes Utah Jazz guard Raja Bell on the union's resolve: "We're not going to crack."

This post will continue to update throughout the day as news breaks.