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Whether 'flex' or hard, salary cap still NBA labor impasse

By Steve Aschburner, for NBA.com
Posted Jun 21 2011 6:54PM

NEW YORK -- The owners call it a "flex" cap. The players still call it a hard cap. Whether the two sides in the NBA's negotiations of a new collective bargaining agreement ever bridge their gap in salary-cap terminology might go a long way toward determining whether the league gets thrown into a lockout come July 1.

In a session Tuesday that NBA commissioner David Stern had labeled critical to the parties' ability to get a new labor contract in place by the current one's June 30 expiration, the owners revealed more specifics from their latest proposal than the union did. One of those was the "flex" salary cap in which a targeted team-payroll amount -- $62 million, Stern said -- would be bracketed by a minimum and a maximum, both still undetermined even in the owners' proposal.

It sounds similar to the current structure that features a "soft" cap, bracketed by a minimum on the low end and a luxury-tax threshold at the high end. Except that, once a team spent up to the maximum, it would not be able to exceed that amount, period. That's where the what the players consider a "hard cap" resides.

The league also announced that it would guarantee a minimum of $2 billion in annual player compensation in each of the desired 10 years of a new CBA. That amount could go up, Stern said while meeting with reporters alongside NBA deputy commissioner Adam Silver.

But more significant was the idea that the owners are willing to pay the players essentially what they're paying now ($2.1 billion). Much of the negotiating and rhetoric of these labor talks have been based on the losses being incurred now -- 22 of the 30 teams allegedly are losing money -- and the need for a dramatic fix of the system that, in earlier ownership proposals, sought rollbacks in player salaries and benefits of approximately $750 million.

How is that possible? By the owners getting money held from players' paychecks (currently 8 percent) as "escrow" -- a safeguard of the 57/43 split of basketball-related income -- in what would become, instead, a rebate. Also, the existing definition of BRI would be modified in a way that would favor the owners. Stern indicated, too, that a phase-in of the new system would favor the owners less in its early years, more down the road.

"We made what we think is a very significant offer to the players to avoid a work stoppage," Stern said, noting that the owners met in caucus at one point, in the middle of Tuesday's session, to respond to the players. "This is virtually the best shot we think we have to both demonstrate to the players our good faith [and] our desire to go as far as we can to avoid a lockout."

Problem is, what was new Tuesday to the public discussion of these labor talks wasn't necessarily new to the wrangling behind closed doors.

The "flex cap" was not introduced in the four-hour session -- it had been on the table before. And rejected by the players before.

They still view it as a hard cap, since it does impose a ceiling.

"Today was productive. There was movement. But we're still very far apart," said Lakers guard Derek Fisher, president of the National Basketball Players Association. "The hard salary cap concept is something that we're really having difficulty trying to get past. Our players just don't see that as the best way to tackle [things]."

Billy Hunter, executive director of the union and a master of metaphors, characterized the progress in negotiations as a darkened room in which a door has been opened just enough for a sliver of light. "You'd like to be able to open the door," Hunter said. "At least you can see you're not blind anymore."

But asked where the two sides might be now, if they were 100 miles apart when the day began, Hunter said: "Ninety-nine."

Hunter said the players' proposal Tuesday focused on expenses that teams are incurring. "We obviously went far enough to whet their palate," he said.

Stern, though, labeled the tweaks in the players' proposal as "modest." And Hunter conceded that union's challenge now to bring an "offer of some consequence" when the sides meet again Friday, most likely again at a midtown Manhattan hotel.

Seven members of the owners' labor relations committee attended Tuesday's meeting, along with 13 players and the various lawyers, economic experts and league executives. The union has a meeting of player representatives from all 30 teams scheduled for Thursday. The owners have a Board of Governors meeting set for Dallas next Tuesday.

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