The NBA's salary-cap will be recalculated as a result
of a decision last week by Chicago-based NBA Systems
Arbitrator Kenneth Dam, according to Dan Wasserman of the
Newark STAR-LEDGER. Dam asked to rule on whether revenues
from luxury suites, arena naming rights, pouring rights and
bonus payments from sponsorship deals should "count as
Basketball Related Income (BRI) for salary cap purposes."
In his ruling, Dam "threw enough bones to the both" the NBA
and the Players Union "to allow both sides to claim partial
victory." Results of Dam's decision:
POURING RIGHTS: Pouring rights revenue will be included
in BRI "unless the revenues go to an entity completely
unrelated to the team." NAMING RIGHTS: Dam excluded
stadium naming rights unless the revenues go directly to the
team. LUXURY SUITE: Luxury suite income will be excluded
from the salary cap pool "where the income goes to an entity
unrelated to the team, unless the team receives a direct cut
or some other benefit such as rent reduction in return for
not getting a piece of the luxury suite revenues."
SPONSORSHIPS: Wasserman notes "the union won an important
battle" over bonus payments on long term sponsor deals. The
league argued if a team signed a ten-year, $20M deal, with a
$10M bonus up front, then the deal should count $2M per year
against the cap based on average. But Dam rules "against
the league and declared that the moneys will count against
the cap in the year in which they are received, including
bonus money" (Newark STAR-LEDGER/SportsTicker, 1/22).
ADD IT UP: Coopers and Lybrand accountants will now
recalculate revenues used for determining the salary cap.
The NBPA wanted any adjustment to apply towards next season
"since most players are already under contract." But Dam
ruled that the adjustment would apply for this year (Dan
Wasserman, Newark STAR-LEDGER/SportsTicker, 1/22).
