Posted Jul 12 2011 12:14PM
Escrow money withheld from all NBA players' paychecks each season will be returned to them this offseason for the first time, providing a $160 million infusion of cash in the midst of the league's labor lockout.
The escrow funds -- representing eight percent of each NBA player's salary -- are held back each season to ensure that the players' share of basketball-related income does not exceed the contractually agreed-upon percentage, currently 57 percent. This year, for the first time since the system was introduced in the collective bargaining agreement that came out of the 1998-99 lockout, the cut to players will fall short, sources with the NBA and the National Basketball Players Association confirmed.
When a final audit is completed later this month, the players will have been paid less than 57 percent of BRI and will be due the entire $160 million. It's the first time the players will have the full escrow returned, a union spokesman said.
That cash could ease or delay the point at which some players begin to feel financial hardship from the lockout. Based on the "average" NBA salary of $5.7 million, the escrow rebate would be worth $456,000. A minimum-salaried player ($473,604) would be due $37,888 while a $16 million superstar could expect $1.28 million coming back.
A majority of NBA players are paid from November through April, while those on a 12-month payment plan receive checks through the summer for the just-completed season. A check for 8 percent of their annual salary could put off any money pinch they eventually feel.
Traditionally, the annual July audit is the time when BRI is defined, along with the salary-cap and minimum payroll figures.
The NBA imposed the fourth lockout in its history on July 1 after negotiations of a new collective bargaining agreement failed and the old deal expired June 30. Only one of the previous three -- in 1998-99 -- caused the league to cancel games; that 204-day lockout resulted in a shortened 50-game season.
This time, the league's owners -- estimating losses by 22 of its 30 teams in 2010-11 for a combined $300 million -- have been seeking a reduction in the 57/43 split of BRI, along with changes in the definition of BRI. Also, the owners have proposed a hard salary cap -- or, in a recent revision, "flex" salary cap -- as opposed to the "soft" salary cap previously in use. The soft cap led to a disparity in payrolls from the Los Angeles Lakers' $110 million in salary and luxury-tax obligations to the Sacramento Kings' $45 million. The owners cite competitive balance, along with profitability across all 30 teams, as reasons for their targeted changes.
The players have shifted the onus for profitability onto the owners, urging more aggressive sharing of revenues among the teams. They rejected a proposal from the owners that would have guaranteed them at least $2 billion in annual compensation over a 10-year deal -- the 2010-11 figure is $2.17 billion -- because it would have represented both a pay cut and an exclusion from much of the league's anticipated growth over that time.
Instead the players have offered a reduction in their cut of BRI to 54.3 percent, which they contend would reduce salaries by a total of $500 million over a five-year CBA.
In other league labor news:
-- The NBA declined to comment after the players' union amended its National Labor Relations Board claim against the league to include the cancellation of summer leagues in Las Vegas and Orlando. The NBPA in May had accused the league of failing to bargain in good faith toward a new CBA. The NBA has maintained that there is no merit to the charge. Summer leagues are not believed to covered under the just-expired CBA.
-- No negotiating session has been scheduled yet or, at least, announced publicly by either side. After the June 30 meeting in New York, both sides penciled in this week, July 11-15, as a likely time to resume discussions.
In the last lockout, the owners and players went 45 days -- from June 22 to Aug. 6 -- between negotiating sessions. That time frame is believed to have led to the eventual cancellation of 464 regular-season games, the 50-game schedule and the loss of the 1999 All-Star Game.
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