How About Pay Cuts?

On: 17 September 2009

Fernandez and Encarnado

Aside from the Barako Bulls, everyone in the Philippine Basketball Association (PBA) office suspects that the management of the Sta. Lucia Realtors is also facing financial difficulties as a result of the credit crunch. It was reported that last year, the company underwent corporate restructuring after they found out that they incurred a loss of about PhP 74.6-million from January to September, mostly due to operational costs and taxes.

The financial problem was said to be the main reason why SLR have been dumping salaries of their players through trades. They shipped off point guard Denok Miranda to San Miguel Beer, before sending their team captain and 14-year veteran, Dennis Espino, to the Coca-Cola Tigers. The Realtors received draft picks from both transactions, with back-up big man Jason Misolas coming on-board from the Tigers.

If the report is true, it might be prudent for the management to also ask basketball operations employees to accept a 10 percent pay cut in order to avoid further layoffs and remain competitive. The salary cut should cover everyone in the department, including team manager Buddy Encarnado, head coach Boyet Fernandez, assistant coaches, scouts and others.

Despite a slight recovery during the first half of 2009, with a net income of PhP 5.29-million compared to PhP 85.02-million in losses in the same period last year, the financial situation is not expected to change significantly anytime soon. Hence, the salary cuts could help stop the bleeding for now.

Reduction in player salaries may be hard to implement because they are guaranteed when they signed the contract, but these guarantees may be amended in the future to be at a certain level only. The management can argue that because of falling revenues, the players will also have to do their share in order to extend the life of the franchise.

In the National Basketball Association (NBA), the Miami Heat just recently asked many of its employees to accept a 20 percent pay cut because of the economic downturn. A few years back, players of the Los Angeles Lakers led by Karl Malone also voluntarily asked for a lower salary in order to play with some of the best players in the league and work with the best staff capable of giving them a championship ring.

Another option could be to asked the PBA Board to scale up the league's sponsorship deals to increase revenue and mitigate the impact of a worse-case scenario.

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