NBA ALL-STAR WEEKEND

February 19, 2005

Russ Granik

Billy Hunter

David Stern

COMMISSIONER DAVID STERN: I'd just like to thank Stan and the entire Kroenke organization because we have been wonderfully received in Denver. It just seems that the town, the number of banners, the number of All-Star events, the number of community relations events and sort of the visibility of NBA is just great. Obviously, we're feeling awfully good about the-- you know, the talent that's here, the Rookie and Sophomores, I cannot-- I can't kid you. I was rooting for the Rookies to stay tough in the second half, but the talent on that Sophomore team is extraordinary, and to think that the All-Star Game is going to have two great teams with the elder statesmen being Grant Hill and Shaq, tells you something about how we feel about the future of our game and the growth of our players. I thought what we would do is, having said that, is turn to collective bargaining, and ask Billy Hunter to make whatever remarks he wants to make about that or any other subject, and then I'll correct the record. (Laughter). And you can ask us any questions you have, and then Billy says he has more important things to do and we'll let him go, and then we'll let you take target practice at Russ and me. Billy, it's all yours.

BILLY HUNTER: David and I arm wrestled and I lost, so I get to go first. The players are excited about being here, so the reception has been great. I'm in the process of having meetings with our owners. You are aware that at least for the last year or so we have had several sessions of negotiations, collective bargaining with the owners, we have had large meetings where we've had the players present along with our negotiating committee and as of most recent, we have been meeting in smaller groups. Yesterday we had a large meeting. What I'm able to report is while there's some significant differences, we are making progress, and it's our intent to intensify the negotiations over the next month or so, and to see how much progress we can make, to see if we can close the gaps, and if we can hopefully get an agreement between the respective sides prior to the close of the season, obviously as quickly as possible and make every effort to do it in an expeditious fashion. We think there's a possible window of opportunity for which we can generate a lot of good will, if we can come to a meeting of the minds and we think that we'll then project the NBA in a very positive position, particularly in view of what's happening in ice hockey. We went down that road seven years ago, we are trying to avoid it. David and I have agreed, along with our respective constituencies, that we'll do everything we can within reason to reach an accord.

COMMISSIONER DAVID STERN: I have nothing to add or correct.

COMMISSIONER DAVID STERN: Yes, even more so. I would say that we went through a rancorous and system-changing negotiation and on each side, we think that some small things need to be made, compared to the changes that were made, but we're mindful of the fact that one man's small change may be viewed as a relatively large order by another, and that's what we're talking about, but we-- I think, I agree that on the scale of things, although there are differences that separate us and they are important, and we're hoping they can be resolved, they don't rise to the magnitude of the issues that separated us six years ago.

COMMISSIONER DAVID STERN: Us?

COMMISSIONER DAVID STERN: I was asked that, actually, on TNT 20 minutes ago, whether I thought that we would be in agreement by the end of the season, and I said I thought there would be. It may be combining sort of reality with hope, but I think there will be a deal by the end of the season.

COMMISSIONER DAVID STERN: It's the opening prayer at each of our meetings. (Laughter). I mean, I don't know what else to say. We talk about it. "What do you hear? What's new? What do you think?" And it sort of drives us to say, okay, we may not be talking with everyone in this room about how we feel about every position, and we don't intend to, but we have a pretty good idea where the other guy stands, and the question is, what trades can we make to narrow the gap. So we are pretty well revealed to each other, even if we are not that revealed to the public, and I think that's really what, in a way, didn't happen in hockey, without characterizing one side or the other.

BILLY HUNTER: Well, I'm just going to say, I'm just going to deliberate avoid answering your question, simply because I don't think that it in any way helps to enhance or facilitate the negotiations. I don't want to provide you an insight to what's happening in the room between our respective sides.

COMMISSIONER DAVID STERN: I agree.

RUSS GRANIK: But they have asked for plenty. (Laughter) Don't let anyone kid about that.

COMMISSIONER DAVID STERN: Let me answer for Billy. There have been plenty of things that have been asked for and there are points that go both ways on a wide variety of economic issues that have been put on the table, so it's not a one-sided negotiation.

BILLY HUNTER: Our players seem to be a lot better educated and more sophisticated this time around than they were the last time, and maybe that's just because we have spent so much time with them. We know we have got a younger group of guys, so we have been doing a lot of hand-handling. Our guys are well aware, they understand the economics of the situation. We know that there are certain decisions that the NBA must make that would impact next season, i.e., say with regard to exhibition games, other charitable activities that they may engage in over the summer. Our players are also very involved in NBA activities post-season, and so to that extent, you know, it's always better, if you can, to make the deal now rather than later. So I've sort of set a time line for myself that we are really going to aggressively pursue and hope that we can reach it. If we can't, then it won't be because we haven't tried, and each of us will know by then what our respective positions are.

COMMISSIONER DAVID STERN: That's a fair description. I mean, we may not be able to bridge the gap, but we're going to know what the gap is. It's going to be very well defined, and then we'll see. But I'm really optimistic that we'll be able to do it.

COMMISSIONER DAVID STERN: I would say, speaking historically and generally, that's a major issue because that's not something that occurs without agreement between the league and the Players Association. And whether that could happen and the circumstances under which it could happen are, and would be intense subjects of collective bargaining and negotiation. I would just say on behalf of the league, it is our intention to grow what we will call NBA Development League, in any event, because we think it has served a variety of purposes, having to do with the 15 players that are in the league already from it, the referees, the coaches, the front office personnel. But obviously, from our perspective, and we have put it on the table, I won't talk about the negotiations, it would be-- it would be our view that one of the things we'd like to do is have younger players subject to having their contracts assigned, but we understand that there can be differences of opinion on that issue.

COMMISSIONER DAVID STERN: That is accurate. We are talking about adding four teams. And in any event, we'd like to bulk that league up and have a minor league NBA Development League, which provides a variety of options for young men who haven't, for whatever reason, have not been able to make it in the NBA, and don't think college is appropriate, and they are at least 20 years of age, and generally do good things in that circumstance; and that includes the possibility, we're negotiating on now, of adding four teams to the NBA Development League in any event.

BILLY HUNTER: I haven't gotten into any specifics. Generally what you can talk about D League, that's one of the things you struggle with, that I struggle with. I guess in view of last night where you watch the Rookie-Sophomore game and you see the talent, the pool of talent, obviously there are 24 players that were reflected there. I guess it would be difficult for me to envision some of those guys being in the D League. But it's just something that we have to address as we go.

COMMISSIONER DAVID STERN: Nope. We're discussing everything having to do with our relationship and the operation of this league, and basically most things having to do with the operation of this league are a matter of negotiation with our players. There's a wide array of subjects that we've started to go over, have been over, move around a bit, and you know, it's going to be a long list of things. That's why we're getting back to New York, we're going to spend three days a week, it looks like, until we either can't stand each other or we can make a deal, or maybe we will stand each other and we still won't make a deal. But one way or the other, we're going to exhaust ourselves.

BILLY HUNTER: But I think it goes back to Lacy's original question about posturing. That's what we are doing, trying to eliminate the posturing and get to the nitty-gritty. (Laughter).

BILLY HUNTER: Well, when you talk in terms of cost-certainty, I haven't had a diuretic since the last time I talked to you, so it still might be just as repugnant as it was before, but it may not be so repugnant that we can't reach a deal. What we're going to do -- we understand, David and I have been down this road before, and we know what it's like to have gone through a seven-month lockout. I know what it's like for the players to have lost $500million of income, and for the league to have lost a billion dollars. I can foresee, or I have some idea of what the impact would be now, particularly in view of the growth that has occurred over the last six years. Our players are making a substantial sum of money. The league appears to be thriving, and we would be foolish, you know, to not make every effort to make a deal and to be separated by something that shouldn't be something that prohibits that from occurring.

COMMISSIONER DAVID STERN: And that's a statement that really, Billy and I and the owners and the players at yesterday's meeting made to each other in terms of what an opportunity this is, and how good it would be if we could do it and recognizing that it might be that we couldn't do it, but it wouldn't be a good idea if we didn't do it without trying as hard as we possibly could. And we are committed to doing that.

BILLY HUNTER: I would think that if we are unable to get a deal and we're looking at a lockout, I can see you folks just having a field day with us, and, you know, I don't want to go through that. (Laughter).

COMMISSIONER DAVID STERN: Oh, hell, Billy, after 21 years, after a while, you build up-- can we let Billy go? No? I promised him we would try as hard as possible. (Laughter).

BILLY HUNTER: The way we address it with our players is the way we did six years ago, the players are well aware of what the franchise values are. They are well aware of the growth and the vitality that the league is experiencing, and they know how intricate a part of that process they are, so I just keep that in front of them, that's all.

COMMISSIONER DAVID STERN: I would like to add to that, since Bloomberg used to be Bloomberg Business News, so you should keep aware that that's a fact but that would require accounting for the cost of money, which we don't include in developing our operating losses. So when you hear me saying that players made 10 billion under the Collective Bargaining Agreement in terms of salaries and benefits, and the owners lost 1 billion, that's operating. You're right, there have been franchise sales, and if you'd like to sit and compute the franchise sales and put back in the cost of money that went on loans to buy those franchises and carry them and the like. So maybe on that accounting it isn't a billion; maybe it's 600 million; maybe it's 300 million, but the balance, you know, is something that we do talk about and talk about very specifically. Those are points that the players have made, and with their economists and our economists. So every subject that's been open to discussion, including that particular one.

COMMISSIONER DAVID STERN: Like which ones?

COMMISSIONER DAVID STERN: Actually, if we could ever get this deal done, in addition to the four cities that we're talking to, which are southwestern cities, I think it's fair to say that the idea of putting minor league franchises in large cities, especially in urban America, is a great idea and one that we will be exploring.

COMMISSIONER DAVID STERN: I think we are off of collective bargaining, okay. Hold that question and we'll get to it in a second.

COMMISSIONER DAVID STERN: Why would we? (Laughter).

COMMISSIONER DAVID STERN: It's a subject of negotiation. So, we'll talk about it. You know, Russ is harder than I am. I'm "Easy Dave," but he says there will be something like it. I'm just not going to go there. We're involved in these sort of really, intricate and complex questions.

COMMISSIONER DAVID STERN: I'm easy on that one. Everything is an economic issue. I mean that sincerely. Because it affects our business, in terms of our responsibility, the way we are viewed, the players' maturity and how they deal with the community. On a broader sense, everything we are talking about, even though it may turn out to be about a minor league or D League or age limit, it all relates to the operation of this league and at the bottom it sort of all could be referred to as an economic question.

RUSS GRANIK: On any issue, we only make progress to the extent that it's going to be part of an overall deal. Nothing exists on its own. So while you talk about one issue, you say, okay, we think we're nearing something there, but you're only there if three other issues get resolved in a certain way, as well. So I don't think you can ever say that there's an important issue and we've now solved it. It doesn't work that way.

COMMISSIONER DAVID STERN: Right. You say park it. Okay, we might be willing to go here, now let's talk about this. Well, we don't really like that. So we're really not willing to go there. So it's putting different pieces on a map here, with a very specific agreement among us that if we don't have an agreement on the whole deal, we have an agreement on nothing and there's been no movement on anything, and that's just the way it is, because then you can't get the other side to talk, if you say, okay, you agreed. No one's agreed to anything. You just sort of move pieces around and see how it feels and see whether, you know, sort of the collective bargaining bouillabaisse that you've created tastes better than you thought it might.

COMMISSIONER DAVID STERN: Who did he ask that question to?

COMMISSIONER DAVID STERN: Okay.

BILLY HUNTER: I could not quite hear everything.

COMMISSIONER DAVID STERN: Sam was saying in effect that in light of not just our business and hockey, but players' salary and the state of the world, how do we think that we would be treated or considered if we were unable to make an agreement.

BILLY HUNTER: Well, you know, I believe that people have a lot of choices. I happened to have attended the Tech Summit yesterday and I was listening to all of the various pundits that were there, and they were surmising about the choices that people have and what one has to do in order to keep their product, you know, vital and to ensure that a specific or particular audience is engaged. It's taken us a few years to have recovered from the last lockout, and I would hate to think how people would react this time around on the heels of what's happening in ice hockey, coupled with the fact that the league appears to be doing so well, that I think that people might kind of turn in on. I'm always mindful of the fact that the NBA is perceived as a black product, and so I have to be sensitive of that. So all of that goes into the equation when I'm trying to negotiate a deal.

BILLY HUNTER: Well, I guess it could be a catastrophe. I would hope that it wouldn't be. I would assume if we got into a lockout mode, which we are trying to avoid, I would think it would get very ugly between the two of us.

COMMISSIONER DAVID STERN: You know, I would be busy in the midst of a lockout trying to explain why it wasn't a catastrophe, but I'm not sure my heart would be in it.

COMMISSIONER DAVID STERN: Everything that's a subject of interaction with the union is on the table in these negotiations.

COMMISSIONER DAVID STERN: That's not part of collective bargaining.

COMMISSIONER DAVID STERN: No, you can't go, Billy, one more.

BILLY HUNTER: If the fan base is, you know, that tuned in, I think they want to ensure that the season is not lost, but there's a lot involved in operating a business, even though we're the union part of it, I know what they have to go through with their sponsors, with season ticket sales, etc., and all of those things are impacted, and I'm sure that there are specific time lines that the NBA feels it has to meet. The fans are happy as long as when October rolls around the players go to camp, exhibition games are played and then the season starts on time.

COMMISSIONER DAVID STERN: Billy, only made one misstatement there. He said "their sponsors." He meant to say "our sponsors."

BILLY HUNTER: Our sponsors.

COMMISSIONER DAVID STERN: Since we have a percentage of the gross deal here.

BILLY HUNTER: We are in a partnership, I have to remember our sponsors.

COMMISSIONER DAVID STERN: Our sponsors, so we are trying to reframe it. (Laughter). The reality is there's a big potential damage, because if people think that if we are sliding into an abyss, that has a huge impact on all sides of our business, on every aspect of our business, long before a lockout and certainly regardless of whether the season starts again on time. There are huge economic impacts, which affect the negotiating, the negotiating strategy and literally the negotiating offers. And we are both mindful of the reason why we should attempt to avoid that slide.

BILLY HUNTER: What I was saying is that what we've agreed to do is starting next week, to literally set aside five consecutive days, and we are going to meet for as long as we have to meet, to really see if we can cut through this thing. You know, if we were to reach an agreement at the end of those five days, all well and good. I'm still saying that within my own mind I'm trying to accomplish an agreement before the close of this season, and the sooner, the better.

COMMISSIONER DAVID STERN: Before there are more questions, there are other things we'd like to talk about, all of the knitty-gritty and important things in the NBA. So Russ, why don't you say something?

RUSS GRANIK: I want to say something about the game. Usually the last few years at these things we have been a little bit on the defensive, I think. We try to avoid hyperbole, so I would just say we are feeling pretty comfortable about the way the game looks this season. There's been a lot of mention about the event last night, the Rookie Challenge, and the kind of players that we were looking at, the talent there, particularly I think even the second year looks better than the first year, and next year we expect it would be the same way. Even in the rookie class, there are some things that are maybe a little surprising, to me at least, we have a couple of really good big men. There's been a lot of talk in recent seasons about how we are just not going to see any more about American big men, unfortunately Mr.Okafor could not play, but he's obviously having a stellar season. We continue to see our international players be more and more of a factor and not just making contributions but starring in this league, and several of them will be playing tomorrow night. But I think the most exciting thing for us that's happening this year in contrast to maybe a past few years is maybe we're seeing a kind of contrast in styles, both of which are working well, so I think that's going to make the playoffs really, really interesting. You've got Phoenix and Seattle, who I think none of us really expected to be as good as they are, and playing a very active running game. Miami, you know, Shaq getting up and down the court maybe more than he has had to in the last few years. But at the same time, you've still got two-- in the Eastern Conference you have two very, very strong teams. San Antonio and Detroit, which are not playing that kind of a game. I think it's going to be very, very interesting and the fans are looking to see what's going to happen when we really get into that showdown. But it's obvious that what we are seeing is that teams can win in a variety of ways under the rules we now have in effect, and people are feeling good about that. We had a competition committee meeting yesterday and although we always discuss a few things around the edges, I can tell you I don't think there's likely to be any kind of significant change; possibly even no change at all for the rules for next year. I think that shows that the teams are feeling pretty comfortable with the way the game is going now. I guess the other things I wanted to mention, which has gotten some attention this past week, the arena guidelines that we promulgated to all of the teams earlier in the week. This really does flow off of David's commitment after the incident in Detroit, that we would look into all of the different aspects of what happened, and talk to the experts in the various fields and try and come up with a set of guidelines that would do whatever you can, whatever we can to try and avoid similar situations like that. Some things you can't protect against absolutely, but we think we are taking a lot of right steps, and the three main areas are security issues and obviously we don't want to discuss the details of that, but we have come up with guidelines for teams to utilize in terms of where they place security within their arena. All of our arenas have done a pretty good job in the last several years in terms of the staff they have and the things they prepare for. We just feel there are certain positioning things that could be done a little better to try and prevent the kind of incident that took place in Detroit, and we also have new rules out now applying to all of the teams about sale of alcohol, and you've seen the kind of things, talking about the number of serves and sizes, and how long you can continue to serve alcohol during the game. We worked very closely with team techniques for effective alcohol management in putting these together. Lastly was a fan code of conduct, I don't think there's anything in there that would be surprising to any of you, but it's an attempt to sort of clarify, this is what's expected of fans in the arena. This is the kind of environment we hope to create in an arena and hopefully have the support of the fans toward that end. We've put all of those things in effect for this weekend. I don't know if it will even be noticeable in a lot of respects. We have told our teams that we'd like them all to have these things in effect immediately after this week for the next home game. We recognize, I know a lot of you will go and check on the cup sizes and servings, etc. We've told the teams, we understand if there are certain reasons why it's going to take a little time, if you can't get to certain things in the next week, and so I think it's going to be a process of some number of weeks as we get this all into effect. Certainly, by next year, we expect every one of these things that we've talked about to be in place in every arena and we are going to make sure they follow it.

COMMISSIONER DAVID STERN: With respect to two open questions, I don't want to spend too much time on the Ron Artest matter. I'm a victim of my own inability to say that I'd like never to say never, but I don't anticipate that there will be an application for reinstatement, and I'm not thinking about the subject now, period. With respect to the alleged lack of fundamentals by our players, which was another question, I don't think that given summer leagues, rookie camps, and 17 assistant coaches per team or some number that seems to be approaching that, that making training camp longer is a subject that's going to get too much consideration. In fact, if anything, the union has pushed to make it shorter. I don't mean here, but in past discussions, you know, who will attend and veterans, etc. A couple of other issues that I would just like to mention before we open it up to general subjects are that, No.1, for those of you who missed it, we have appointed a new president of the WNBA, her name is Donna Orinder, who in addition to being an All-American in her playing days at Queens College and the WBL, where she was an All-Star, is a 17-year veteran of the business of sport at the Professional Golfers Association, the PGA Tour. And two weeks ago we announced a new expansion franchise in the WNBA for Chicago. I guess a final personal note, my additional week here in Colorado is going to be cut short. I'm going back to New York to participate on behalf of the United States to tell the Olympic visitation committee why America is a great place to stage the 2012 Olympics. And we'll see. Any questions?

COMMISSIONER DAVID STERN: I think it's purely cyclical. I think that sports medicine is such that careers get extended and the like, and I think we are just in the process of recharging, restocking, and we're just seeing sort of an unending flow of talent.

COMMISSIONER DAVID STERN: Well, Russ would probably use "stew," s-t-e-w. I think there is a player job description in professional sports, and it doesn't stop at the court, period. And we know what it is and we preach what it is and the union understands what it is, and it's something that is becoming increasingly important to being a professional athlete.

RUSS GRANIK: I would not often try and speak for Billy by I think on this one, I think Billy would answer the same way. I think that's his view of a player's obligation in the league, also.

RUSS GRANIK: On the first issue, on the 3-point shot, I think it's too early for us to say what impact it's had. It really has had very little impact on scoring, which may be surprising. But for those of you who have not followed, the fact that we don't allow in the Development League this year, until I guess the last, what is it, three minutes, a three-point shot-- well, you can take the shot but you only get two points for it, as an experiment. It really doesn't seem to have changed the game dramatically. I think we've got to do-- when the season is over, Stu Jackson and his staff are going to do a thorough evaluation involving shooting percentages and everything. We'll take a look at it. I would not be surprised if we go with it for another year. It's hard to say if that will or won't have an impact on the NBA. Right now, we are feeling pretty comfortable with the look of the NBA. Certainly, there's no movement to do that, there has not been any discussion with our competition committee, and it was just among things that we thought was worth giving a shot and seeing, you know, almost to just see how the 3-point shot impacts the flow, without particular relation to that exact rule.

COMMISSIONER DAVID STERN: I just have an additional take, and basketball fans can differ, because we talk about this a lot: Presumably if it were in effect long enough in terms of skills, there might be a mid-range shot, if you've eliminated the bonus, in effect for the longer shot, why take it? I think it would take a very long time to see that, but it's just sort of something we talk about, which is not just how it affects the game but how it affects to your question, the development of a player.

RUSS GRANIK: I think clearly that the development of young talent is perhaps the biggest reason. David said there were a number of reasons why the Development League has been important. I think that's probably No.1, and I think that we have to look and see where things ends up in collective bargaining and what their relationship is with the Development League, you know, where age limits ends. But almost under any circumstance, there are going to be players, whatever age they are permitted to be drafted in the NBA, still may or may not be quite ready to play and can probably do better by playing every day in the Development League in games under officials, or at least being trained to be N.B.A. officials, and rules other than a couple of experiments that are similar and learning the game that way, rather than by sitting on the bench and only playing a couple of minutes in garbage time. We clearly see the Development League as serving that purpose.

COMMISSIONER DAVID STERN: We're in an interesting dilemma here. Business is good in terms of gate receipts, average, television revenues, etc., and actually franchises are selling at a very nice value. But we are operationally not making a profit as a league, and I'd say half our teams are losing money. But what I've begun to delineate is between voluntary expenses and involuntary expenses, and talking to some of our owners about that, and all we can do is sort of provide a certain framework and then it's up to the teams to either do what they can. Some teams elect to spend more money. Some teams, for reasons that make sense to them and some don't. I would say the state of the league is pretty good, but it could be it could use some improving as an economic matter.

COMMISSIONER DAVID STERN: Actually, business is better than ever. In other words, revenues are better than ever. We'll set a record for attendance this year. We'll set a record for gate receipts for individual games this year. We'll probably have our highest revenue from local TV in our history, which is again up. We are in the midst of a six-year deal that is averaging 76.7 million a year, which is higher for the networks, higher than we've ever had before. That said, given our current economic system, we're spending a good percentage of it on players' salaries, on increased costs due to fuel, security and other things that teams can or can't do. And so on an individual basis, there's probably good reason for us to be having a negotiation to, as I like to say, drop a few more pennies of each dollar to the bottom line. But nevertheless, the indications from the revenue side are quite good, and the indications on the talent side and the state of our game are quite strong. And with a relatively modest adjustment, we think the health on an operational basis could be dramatically improved. But one man's definition of modest might be another person's definition of immodest. So that's a subject for negotiation.

COMMISSIONER DAVID STERN: I think the team is a lot more competitive than we thought it was going to be. Beyond that, I don't-- you know, I think that the team has been well-embraced by the city. We knew we had an issue going into a building that was too large, inappropriately constructed for us, and, you know, old and difficult to access. But as a collective decision, we thought that it was a good idea to be there, get it acclimated and then move into this state-of-the-art, sold-out new building and we think that's going to occur. So you know, we think it's great. People look at the 24,000-seat building and see the gap between the attendance and the capacity, but that's something that doesn't come as a surprise to us, and we think it's been very strongly received, and we're very happy with the expansion, and we think that we could not be happier with the ownership and the management team that he has put in place.

COMMISSIONER DAVID STERN: I guess what I would say is that we're going to come out of collective bargaining able to give you whatever assurances that you need and that's not taking place. Even though we are pretty happy with the state right now, we recognize reasons beyond actual use to move forward and dispel even the possibility or the kinds of sort of modest accusations that can be made or whatever the reality is or isn't. So that's a subject for collective bargaining as well.

COMMISSIONER DAVID STERN: No, I'm not. I'm not concerned now that there are problems, but watching what's swirling around, I think it would be prudent to eliminate that even as a question, so we'll see how we do for next year's All-Star press conference. In other words, it's just a good idea, and we said to our players, you know, when we see what has happened in other sports and what the suppositions have been, etc., it just seems to be prudent to say, let's just get that issue out of any possibility. But it's not a problem at the present time that we think we have. But it's a potent issue as it relates to baseball and the media around it, and we think it would be smart of us to deal with it.