Posted Oct 10 2011 3:30PM
NEW YORK -- In one small but encouraging sign in the last-minute negotiations between the NBA and the National Basketball Players Association on a new collective bargaining agreement, a source who has been briefed on the discussions between the two sides said Monday afternoon that the sides are close to an agreement on one "system" aspect that has proven troublesome -- a new, shorter mid-level exception for free agents.
Owners have sought a major reduction in the mid-level, one of the key ways that teams over the salary cap are nonetheless able to add players. Implemented in the 1999 CBA after players agreed to accept maximums on player salaries, the mid-level was designed to give non-superstar players a chance at a good payday during their careers, and it has done just that. Tied to the average salary in the NBA, last year's mid-level started at $5.8 million. With annual 8 percent raises, a five-year mid-level contract would be worth $37 million.
And while some mid-level signings -- like Detroit's signing of Chauncey Billups in 2002 -- worked out, many other players who've been signed to mid-level deals over the years have not performed as hoped by their teams. And because contracts are guaranteed, teams were locked into those deals for several more years than they'd like. Owners have looked to shorten the mid-level to as few as three years and to limit the overall amount that the mid-level could be used for.
The two sides spent almost all of their five-plus hours of negotiations on Sunday on system issues, and not the split of Basketball-Related Income that the players will receive in the next CBA.
Even if the sides are close on the mid-level, they still have a number of vexing issues to solve to keep the league from canceling the first two weeks of the regular season on Monday, as Commissioner David Stern said it would do if there isn't a new CBA agreement late today.
The sides are 3 percent apart on the BRI split, with owners offering a 50-50 split of BRI; and players seeking 53 percent. Each percentage point is worth about $40 million, based on the $4.2 billion of revenue generated last season, so the sides are $120 million apart in the first year of a proposed multiyear deal. Owners have been reluctant to go even to 50 percent, according to sources with knowledge of the discussions, while several prominent player agents and high-profile players have been adamant in asking the union to stick to 53 percent. But both sides have discussed, at least conceptually, coming to 51 percent. with Stern talking to the players about a "window" between 49 percent and 51 percent of BRI last week. The players countered with an offer of a guaranteed 51 percent that could rise to 53 percent.
On the system side, the sides are still working on how the salary cap will be implemented. At one point, the league discussed a "flex cap" that would set a $62 million cap as a goal for each team, but allow certain exceptions to a rigid final cap number. The league has also proposed a "supertax" that would further punish teams that exceed the luxury tax threshold. In the last CBA a team had to pay a $1 tax for every dollar it was above the tax threshold of $70.307 million. Owners have proposed increasing that tax to as much as $4 for every $1 in a scale that would increase as teams went further and further above the threshold.
Other issues such as length of player contracts and the amount of annual raises in those contracts and the amount of money players would put in an escrow system that would repay owners if salaries exceed a certain amount are also still far from being resolved. Players have also asked that enhanced revenue sharing be part of the method by which teams that are struggling financially be helped. Stern has said that the league will have a much bigger revenue sharing plan in the next deal, with the current $60 million that is shared between teams at least tripled in the first two years of a new plan and quadrupled by year three.
But big-market teams are still uneasy about sharing their local television money with teams that aren't doing as well. The Lakers just signed a new 20-year deal with Time Warner in Los Angeles that will create two new channels, including one in Spanish, to broadcast Lakers games. The deal is reportedly worth up to $3 billion for the team, though Time Warner has disputed that number. The Celtics extended their own lucrative deal earlier this summer with Comcast Sports New England, extending their deal with CSNE through 2037 and receiving equity in the network that is reportedly up to 20 percent.
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