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Steve Aschburner

Labor standoff all about hard cap vs. soft cap

Posted Sep 13 2011 8:35PM

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Talks turn grim after Tuesday's negotiations | Labor Central

NEW YORK -- It is strictly first-day-of-the-semester stuff -- page 1, chapter 1 -- from Negotiating 101: When someone says it's not about the money, it is about the money.

Except, maybe, in the NBA's ongoing labor dispute, where the curtain was pulled back enough Tuesday on a conflict that is less about how much money goes to player compensation than about how it gets distributed.

Hard salary cap vs. soft salary cap, to be specific.

This is the Celtics vs. Lakers-like blood feud of the lockout, it is the Bill Russell vs. Wilt Chamberlain rivalry, debate and matter of taste. It is the philosophical difference that most separates the warring factions, that cut short the bargaining session Tuesday afternoon and that pushed the negotiations to their starkest place since the lockout was imposed 75 days earlier.

How stark? The opening of training camps on Oct. 3 and the NBA preseason are on the clock now more than ever. Both sides will meet separately Thursday -- the owners in a Board of Governors meeting in Dallas, the players in Las Vegas -- but no "next" bargaining session is scheduled.

And to think, both the owners and the union acknowledged Tuesday a willingness to move on the crucial split of basketball-related income (which, in any final version, is headed down from the 57/43 cut that favored the players in the most recent collective bargaining agreement). With economics identified by both sides as one of the two major issues in the league's shutdown, the players' willingness to initiate further givebacks seemed like a step toward compromise.

"We were prepared to make a significant move," said Billy Hunter, executive director of the National Basketball Players Association.

Said NBA commissioner David Stern: "We know how to negotiate over dollars when the time comes."

But Tuesday wasn't that time, in the league's view, because the union's money move was linked to demands that would maintain the soft salary cap in place since the NBA embraced the system in 1984-85. The "soft" part refers to various exceptions that allow teams to exceed the payroll target ($58 million last season), enabling players to land long-term guaranteed contracts and large-market teams to spend two or three times what franchises in smaller markets dedicate to payroll.

That is the system, too, that the owners claim has led to more than $1.5 billion in losses over the past five seasons. And now, in the wake of the Miami Heat's Big 3 collection of superstars, jeopardizes the notion that most of the NBA's 30 teams begin each season with a legitimate shot at a championship.

Hard cap vs. soft cap. Your 2011 labor lockout in a nutshell.

The day had begun with no small amount of optimism. It marked the return to large-group negotiations, with most key members in attendance from both the union's executive board and the owners' labor-relations committee. The idea, Hunter had said, was to get "momentum and traction" from the tighter groups that had met three times since Aug. 31. laying the groundwork for, if not measurable progress, at least a foundation for same.

But tripling the number of people in the room didn't multiply the success. Despite the players' apparent willingness to move again on salaries -- they had suggested a 54.3 percent cut of BRI back in June -- their determination to never accept a hard salary cap stopped the negotiations in their tracks.

The owners spent more time (about three hours) huddling amongst themselves than they did in actual bargaining with the union.

Afterwards, the players' executive board -- union president Derek Fisher, vice presidents Keyon Dooling, Eton Thomas, Theo Ratliff, Maurice Evans, James Jones, Matt Bonner and Roger Mason Jr. -- along with Hunter and attorneys Jeffrey Kessler and Ron Klempner sat shoulder to shoulder in a conference room. They all had similar grim expressions as they met with reporters.

"In preparation for this moment, we've told our players that they should expect, in all probability, not to start the season on time," Hunter said. "We've prepared them [by] saying, they may have to sit out as much as half of the season before we get a deal done."

When Stern and deputy commissioner Adam Silver represented the owners' side later, they seemed more exasperated than glum. They characterized the players' refusal to work under a hard salary cap as an "emotional attachment."

"We went into the [CBA negotiations] with two goals," Silver said. "One was an economic goal, but the second and equally as important is the ability for all 30 teams to compete for championships. ... Frankly we're having trouble understanding why the label of a 'hard cap' is what's breaking apart these negotiations right now."

The players disagree with the claim that a hard cap -- in which every franchise would have a fixed ceiling for payroll costs, without exceptions -- would improve competitive balance. And Hunter did refer to it Tuesday as a "blood issue."

Said Silver: "That makes the point. You don't hear us using words like 'blood issue' and 'non-negotiable.' Frankly, we don't understand why an individual team hard cap should be a 'blood issue' when a macro hard cap at 57 percent, which is what we have now, is not."

Compensation is a zero-sum game for NBA players. Under the set percentage of BRI, approximately 450 players were paid a total of $2.17 billion in 2010-11. Whether distributed through 30 teams paying $70 million each, or some combination of big spenders and penny-pinchers, the aggregate is a fixed amount.

The owners' stance is that a hard cap would level the playing field, rather than favoring those franchises that can afford -- through deeper pockets or more lucrative local markets -- to pay the existing "luxury tax" penalties and disregard the soft cap. They see it as the equivalent of table-stakes poker, where a few competitors can't just keep reaching for their wallets.

"A GM that is given $100 million to spend, as opposed to a GM that is given $50 million to spend, is at a huge competitive advantage," Silver said. "And that's something we want to fix in this deal."

The players believe that a hard cap would increase the gap between "have" and "have-not" players. Only a few stars would get guaranteed contracts so that a team's roster could more easily be refreshed rather than burdened, without recourse, by role players' deals.

Also, the loss of cap mechanisms such as the "mid-level exception" would strip away one route by which a good-but-not-great player could land what players refer to as a "career" contract. In theory, without the long-term security that exists now, players might take fewer chances on the court, play with less abandon, and focus more on their individual statistics at the expense of teamwork.

Thus the union wants to keep the status quo, in terms of system, even as it negotiates and initiates givebacks. "With us, if we give on one, we have to have the other," Hunter said.

"It can't be total capitulation."

Meanwhile, Stern and Silver get agitated when Hunter talks of a hard cap suppressing salaries. After all, the league's "average" salary ($5.15 million last season) is based on a pot of money guaranteed to a fixed number of players. They don't share the union's concerns about how a hard cap might impact individuals -- but they know that a soft cap has led to the current "broken system" in which 22 of 30 teams lost money last season, running $300 million into the red.

"This is not about suppressing salaries," Stern said. "This is about distributing salaries and talent in a different way than we currently do that. And that's what our proposals have been about."

Said Fisher: "This is a moment we expected to find ourselves in, starting over two years ago. So that's the message we'll carry into Thursday. We expected to be here, we anticipated that. ... The way it looks now, we will not start on time."

Steve Aschburner has written about the NBA for 25 years. You can e-mail him here and follow him on twitter.

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