SBD/November 28, 2011/Leagues and Governing Bodies

Specifics On The Deal Terms In The NBA's New CBA

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Silver (r) thinks CBA will give all fans hope their team can compete for championships
Following the NBA's announcement Saturday of a tentative agreement for a new CBA, NBA Deputy Commissioner & COO Adam Silver said the new framework should result in more competitive balance. Silver: "I think it will largely prevent the high spending teams from competing in the free agency market in a way that they have been able to in the past." He added, "You never can be sure with how a new system will work but we feel ultimately it will give fans in every community hope that their team can compete for championships and that their basis for believing in their team will be a function of management of that team" (NOLA.com, 11/26). In San Antonio, Buck Harvey wrote the "only ones who will be disappointed" by the new CBA are "those who thought the NBA was closer to a level-playing field." Harvey: "As it turns out? It’s been leveled for 24 or 25 teams. Business will change for the other half-dozen franchises, too. Now they will think twice before they burn through a few extra million; they used to think only once" (MYSANANTONIO.com, 11/26). Spurs Owner and NBA Labor Relations Committee Chair Peter Holt said, "It's exciting, whether you're in a small market or a large market. Our fans are going to really have a lot of hope and a lot of excitement going forward" (MYSANANTONIO.com, 11/27).

SPECIFICS OF NBA's PROPOSED LABOR DEAL
The players will receive anywhere from 49 percent to 51 percent of basketball-related income based on revenue projections.
Maximum contract lengths: five years for Larry Bird rights players; four years for non-Bird players.
A player finishing his rookie scale contract will be eligible to receive a maximum salary equal to 30 percent of the salary cap if he signs with his prior team and meets certain performance benchmarks.
Annual salary increases: 7.5 percent for Bird players; and 4.5 percent for non-Bird players.
Midlevel exception: up to $5 million starting salary with four-year maximum contract length for teams that don't exceed the luxury tax threshold by more than $4 million.
New $2.5 million exception for teams below the salary cap to go over the cap.
No reduction in rookie scale or minimum salaries.
Player options are allowed for all players, similar to the previous collective bargaining agreement.
Extend-and-trade contracts will continue to be permitted.
Escrow pool: Ten percent of player salaries will be held each year.
Teams now have three days to match offer sheets given to their own restricted free agents.
Minimum team salary increases to 85 percent of the salary cap in the first two years of the deal and 90 percent of the cap in the years thereafter.
Each team has one amnesty clause to use on a player currently under contract. The players' salary will be removed from the team's cap (SPORTS.YAHOO.com, 11/26).

IT'S ALL ABOUT COMPROMISE
: CBSSPORTS.com's Ken Berger wrote the labor dispute "finally came down to something that had been sorely lacking. Compromise" (CBSSPORTS.com, 11/26). USA TODAY's Jeff Zillgitt writes, "For long time, it looked as if players were going to get crushed on many of the issues." However, they recovered "considerable ground on those issues." Zillgitt: "How did it get done? Compromise" (USA TODAY, 11/28). SI.com's Chris Mannix noted the NBA is "happy with this deal," and the players are "OK with it." The league "got much of what it wanted." It "reduced the players' share of BRI by at least six percent and will ultimately put significant restrictions on player movement, through the luxury tax, that will prevent big or more attractive markets from luring top players away from their incumbent teams" (SI.com, 11/26). TRUE HOOP's Henry Abbott noted compared to NBA Commissioner David Stern, NBPA Exec Dir Billy Hunter "has a bigger, less predictable group that has surprised him more than once in this process with stridence." Many of the players "are incredibly competitive and are sensitive to the idea Stern and the owners have walked on them." Abbott wrote if he were selling the deal to the players, "these are some of the points I'd make: NBA free agency -- the bedrock of every players’ market value -- is not everything it once was, but it’s alive and well." In addition, the Bird exception "is essentially untouched," and minimum team payrolls "will be climbing" (ESPN.com, 11/26). In L.A., Wharton & Bresnahan noted it "appears that owners stand to benefit the most" from the new deal. Owners "sought to cut expenses," and also "wanted to stop wealthy, large-market franchises from grossly outspending their small-market competitors." That means "less money for players, but they appeared to score a minor victory with provisions that would allow free agents to move easily around the league" (L.A. TIMES, 11/27).

Hunter (l) in a memo told players their share
of BRI from '11-12 season will be 51.2%
THE LEAGUE'S DEMANDS:
In Minneapolis, Jerry Zgoda wrote the sides struck a deal “that apparently satisfies NBA owners’ two biggest demands.” It will put as much as $1B in “their pockets over the life” of a 10-year deal, and it will "help even the playing field with a luxury tax that restricts the richest from spending at will for free agents and conceivably will prevent a parade of superstars from dictating where they will play” (Minneapolis STAR TRIBUNE, 11/27). NBCSPORTS.com’s Kurt Helin wrote owners won in a “massive way,” as they got the players to essentially accept a 12% salary cut that will cover losses and “small market owners should be able to break even or turn a profit.” But the “players got enough small victories -- and a couple key ones -- that this is a deal they can live with” (NBCSPORTS.com, 11/26). In Oakland, Tim Kawakami wrote “the battle wasn’t ever about competitive balance, even though David Stern said it was. It was about redistributing the revenue split, and that’s pretty much it.” The “heart of the system seems to be relatively unchanged” (OAKLAND TRIBUNE, 11/27). In N.Y., Gartland & Berman noted the owners "relented slightly on their previous stand that players receive no more than 50 percent" of BRI. The NBPA "discussed the news with more subdued enthusiasm than Stern" (N.Y. POST, 11/27). In Charlotte, Rick Bonnell noted to "make a deal Saturday, the league backed off some of the more extreme system-rule changes" (CHARLOTTE OBSERVER, 11/27). In West Palm Beach, Ethan Skolnick noted the owners "relented on some minor issues, like the rookie salary scale and minimum salaries," and they "didn’t get a hard salary cap or non-guaranteed contracts." But Skolnick wrote, "Make no mistake -- this was a rout. Players gave up roughly $300 million per year, and they will have to settle for shorter contracts" (PALMBEACHPOST.com, 11/26). In Miami, Joseph Goodman noted owners "will be remembered for winning the lockout battle, but the players did receive a small victory on one system issue." Owners must spend 85% of the salary cap "on team payroll in the first two years of the deal and 90 percent the three years after that" (MIAMI HERALD, 11/27). ESPN.com's Ric Bucher cited sources as saying that the players "apparently did win some concessions on vital system issues -- including the split of basketball-related income -- that prompted union leaders to reject the previous offer without a vote." Hunter told players Saturday night in a memo that their "share of BRI from the 2011-12 season will be 51.2 percent" (ESPN.com, 11/26). In N.Y., Mike Lupica writes, "Big guys win." The star players "still get theirs, don't worry about them." And "deep-pocket owners willing to spend can still get the star players they want" (N.Y. DAILY NEWS, 11/28). In Toronto, Ryan Wolstat wrote it is "hard to believe that the owners allowed the infamous extend-and-trade clause to stand after all of their talk about levelling the playing field, making life harder for the rich clubs and keeping fans in all cities connected with star players." Wolstat added, "Expect to hear a lot of grumbling from the league's lesser lights who likely take a step or two back while the stars come out ahead" (TORONTO SUN, 11/27).

PLAYER MOVEMENT: ESPN.com’s Larry Coon noted with the “elimination of the harsher penalties for taxpaying teams, the union hopes it is able to preserve the freedom of movement that is the lifeblood of free agency” (ESPN.com, 11/26). In Dallas, Eddie Sefko wrote the owners “got what they hope will be a more restrictive system of free agency for big-spending teams that are over the luxury-tax threshold.” The players, meanwhile, “kept many of the free-agent components that were important to them” (DALLAS MORNING NEWS, 11/27). Also in Dallas, Tim Cowlishaw wrote, “I’m not sure the new NBA will look drastically different from the old one. ... I think little was lost and at least something useful probably was gained.” The NBA “remains a league without a hard salary cap,” and the best news for fans is that the “days of incomprehensible trades may be coming to an end” (DALLAS MORNING NEWS, 11/27). The WALL STREET JOURNAL's Kevin Clark writes fans "won't notice much of a difference" in the new CBA. Despite "systematic changes like reducing contract length and increasing fees for high-spending teams, most think it will be business as usual." Former Trail Blazers exec Tom Penn said, "This is not a seismic shift. The system still favors aggressive owners who are in go-for-it mode. It will just cost them more" (WALL STREET JOURNAL, 11/28). In Ft. Lauderdale, Ira Winderman noted nowhere is the proposed new CBA “more punitive than with the toll it will exact on teams operating above the luxury-tax threshold” (South Florida SUN-SENTINEL, 11/27). ESPN.com’s Brian Windhorst noted the Heat “ended up being winners in the 11th hour system changes the owners made to get the players to finally agree on the framework” of a CBA. Reportedly, the “biggest move was owners allowing teams that are not more than $4 million over the luxury tax line to use the full mid-level exception of $5 million” (ESPN.com, 11/26).

AMNESTY NOW! In N.Y., Howard Beck notes the NBA is "giving every team a multimillion-dollar do-over as part of its new labor deal." Under the amnesty clause, "each team can waive one player and remove him from the salary cap -- creating room to sign another player and potentially saving millions in luxury-tax penalties." The new labor deal is "packed with measures to mitigate payroll gaffes: shorter contracts, smaller raises and a new 'stretch' provision that lets teams spread payments (and cap hits) over several years." The intention is to "let teams recover more quickly from their mistakes and to provide roster flexibility" (N.Y. TIMES, 11/28). The SUN-SENTINEL's Winderman notes instead of players "being released under the league's 'amnesty' provision going directly to the open market, a bidding system has been put in place for teams operating below the league's salary cap to add such players at a deep discount." A source said the clause is there "so the Lakers can't go in and scoop up all the players" (South Florida SUN-SENTINEL, 11/28).

SOLVING THE RIDDLE: NBCSPORTS.com’s Matt Moore wrote over the next six years, “owners have a lot to prove. They have to prove they can profit under the new system, that their biggest enemy is not themselves and their own inabilities to control spending and make wise decisions. They have to prove that competitive balance can be achieved and that small markets can now compete.” The BRI split “should help, but there’s still the capacity for teams to fail” (NBCSPORTS.com, 11/26). In Newark, Dave D’Alessandro wrote for the “first time in NBA history, we get to watch general managers -- the drunken sailors of these proceedings -- try to get control of themselves.” The rules “have changed,” and the constraints “seem to be real, even without a hard cap” (Newark STAR-LEDGER, 11/27). In N.Y., Harvey Araton wrote Stern “did ultimately prove that he remains an effective dealmaker.” But he wondered, “Will the sport ultimately benefit or bomb without superteams playing deep into June?” (N.Y. TIMES, 11/27). But in Philadelphia, Phil Sheridan wrote it “sounds as if the league and the union just wasted a perfect opportunity to create a system that does work.” The league appears to be “counting on improved revenue-sharing and a more onerous luxury tax to discourage the big-market teams from overspending.” Sheridan: “Unfortunately, there isn't enough real change in the deal itself to justify the six-month lockout” (PHILADELPHIA INQUIRER, 11/27).
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