SBD/May 16, 2011/Leagues and Governing Bodies

NBA Proposing $45M Hard Salary Cap, Non-Guaranteed Player Contracts

The NBA’s initial proposal for a new CBA "called for a $45 million per team hard salary cap along with non-guaranteed player contracts and significant cuts in annual salary increases," according to John Lombardo of SPORTSBUSINESS JOURNAL. The details, spelled out in an April 26 memo issued by NBPA Exec Dir Billy Hunter, "marks the league’s push for a major overhaul of the NBA’s economic model and emphasizes to players an aggressive bid to significantly slash costs and shorten contracts." The memo "was sent to all NBA players and was dated just days prior to the league delivering to the union a new labor proposal, which a source said still included the $45 million hard cap but added a phase-in of the cap over a few years." The memo’s "most eye-popping element is the league’s proposed $45 million hard cap, which cuts the current $58 million soft cap by nearly 25 percent." The inclusion of non-guaranteed player contracts "represents a radical shift for players who have long benefited from guaranteed deals." Hunter in his memo said, "The nature of the owners’ demands is so onerous that I feel it is imperative to reinforce the message of our recent team meetings with this letter." The memo also "explains that players would be put into one of four categories under a hard cap system, namely, Category A: a minimum salary player; Category B: a rookie wage scale player; Category C: a maximum salary player; and Category D: a player 'fighting for whatever room remains under the new hard salary cap after the three above categories are accounted for'" (SPORTSBUSINESS JOURNAL, 5/16 issue). Agent Mark Termini said, "The NBA effectively has a hard-cap system now due to the mechanics of the luxury tax. Very few teams are willing to pay it, so that luxury tax number becomes the de facto salary limit each season for almost every team" (Lorain MORNING JOURNAL, 5/14).

BUSINESS AS USUAL: In New Orleans, John Reid reported unlike some NBA teams that have "begun bracing for a potential lockout with staff reductions," the Hornets are taking a "business-as-usual approach." Hornets President Hugh Weber said that the team is "eschewing cost-cutting measures and instead focusing on its objective of selling 10,000 season tickets for 2011-12." The team "has sold about 8,000 season tickets to date." Weber said that "nothing has changed operationally from the Hornets’ perspective." Weber: "Certainly we work internally on what our objectives are and what type of personnel (players) we need to get in. It’s really unrelated to the CBA conversations. We are not actively involved in negotiating it" (New Orleans TIMES-PICAYUNE, 5/14). 

READY FOR ANYTHING: In Boston, Julian Benbow noted if there is a lockout, teams "will be in a holding pattern over the offseason, with everything from free agency to summer league in limbo." Celtics President of Basketball Operations Danny Ainge said, "When we learn what the new rules will be and we learn what kind of money we have to spend and what sort of things we can and can’t do, we’ll be prepared. We’ll be preparing for lots of different scenarios and following collective bargaining conversations, even now hoping that nothing happens and we just go as is or move forward on July 1. But we’ll be prepared for anything" (BOSTON GLOBE, 5/14).
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