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Steve Aschburner

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Shift away from hard cap could pave path to labor deal


Posted Sep 28 2011 11:24AM

NEW YORK -- A second day of collective bargaining talks was being portrayed by some as pivotal Wednesday as the NBA's labor dispute nears the end of its third month, based on Internet media reports of an alleged shift in position by the league's owners.

Several Web sites -- including Yahoo! Sports, CBSSports.com and ESPN.com -- cited unnamed sources familiar with the negotiations as saying that the owners were willing to back off their demands for a hard salary-cap system. NBA commissioner David Stern had indicated two weeks ago in Dallas that a hard cap, along with "everything" else on the table for the owners, was negotiable.

But it wasn't until Tuesday, according to the reports, that details of an alternative approach were presented to union president Derek Fisher and National Basketball Players Association executive director Billy Hunter when the two sides met Tuesday in a Manhattan hotel.

A hard salary cap -- a payroll ceiling for all teams that could not be exceeded -- has been labeled by Fisher and Hunter as a "blood issue" for the players because it would, in practice, lead to fewer and shorter guaranteed contracts. That could most affect the earnings of NBA role players, with teams trying to maintain roster flexibility around two or three stars (or near-stars).

Rather than imposing a hard cap, the league potentially could retain the current "soft cap" system but toughen the luxury tax imposed on clubs that exceed it (from a dollar-for-dollar penalty to perhaps 2-for-1 or 3-for-1 tariffs). Also, it could tighten or shed some of the current mechanisms such as the Larry Bird exception (which allows teams to re-sign their players after a certain period of service) and the mid-level exception (to sign free agents, starting at the league's "average" salary).

What wasn't clear, despite some language in said reports, was whether the owners truly had "abandoned" their hard-cap ambitions or if Stern and NBA deputy commissioner Adam Silver offered the move as a possible scenario among many.

Backing off the hard cap presumably would necessitate a more favorable split, for the owners, of basketball-related income. In the recently completed contract, players got 57 percent of BRI (about $2.17 billion in compensation in 2010-11) to the owners' 43 percent. The league reportedly is seeking to move the players' cut below 50 percent.

The NBA imposed the lockout on July 1 when negotiations of a new collective bargaining agreement broke down during and after The Finals. Citing a collective loss of $300 million -- with 22 of the 30 franchises losing money last season -- the league is seeking to reduce player costs as a way to improve profitability. It also has touted a hard salary cap as a way to achieve competitive balance; the soft cap allowed the Los Angeles Lakers to carry a $110 million payroll while the Sacramento Kings spent $45 million.

Stern and Silver have said that a team-by-team hard cap shouldn't be onerous to the union since the league's deal for years, in the aggregate, is a hard cap anyway. In the last CBA, the players got no more and no less than 57 percent of the money.

The players have countered that, because of the overall upper limit on pay, the team-by-team hard cap isn't needed. They argue that competitive balance can most be achieved through revenue-sharing from the NBA's "have" franchises to its "have-nots," and a more aggressive luxury tax could generate more money to be transferred among the teams.

The owners have been tackling revenue sharing as a separate issue, with Stern saying that he hopes to see the financial pool at least triple from its previous level of about $60 million. He has said that a new plan would be announced concurrently with a new CBA with the players. But the league has reminded the union repeatedly that, if the entire NBA is losing $300 million, there is no way to spread that around for profitability.

There are other factors in play, too: The National Labor Relations Board is said to be making progress (however incrementally) toward decisions on the complaints filed by both sides that the other has not bargained in good faith. Lawsuits have been filed over the union's ability to decertify, a tactic being urged by some players' agents as a way to shift leverage to the players.

Fisher recently sent two emails to union members, before and after a meeting in Las Vegas, stressing unity and suggesting that a divide within the owners' ranks could soon work in the players' favor. Stern has quashed reports of splinters within management's side, acknowledging differences of ideas and opinions -- but nothing serious enough to muster the votes needed to alter the owners' overall stance.

The meeting Tuesday lasted about two hours, one of the briefest so far, as both sides retreated to their respective offices after exiting. The Wednesday session was scheduled to begin in the morning, earlier than usual, either to allow for more time overall or to wrap up in anticipation of Rosh Hashanah, which begins at sundown.

Due to the religious holiday, it was unclear whether additional bargaining sessions could be scheduled this week. Silver said after Tuesday's meeting that the owners' labor relations committee would be prepared to return to the table this week if necessary.

"They stand ready to come to New York, or wherever else, if there's a reason to continue on Friday," he said. "So the groups may expand."

The amount of progress and momentum in the room figures to have something to do with the chance for late-week meetings, too.

Last Friday, the NBA postponed the start of training camps from their original date (Oct. 3) and canceled preseason games for the week of Oct. 9-15. With each week that passes without a new labor deal, more cancellations are expected.

The start of the NBA regular season is scheduled for Nov. 1, allowing only another week or two of negotiations before real games are likely canceled for the second time in league history. The 1998-99 lockout lasted six months and shortened that season to 50 games, inflicting damage on both the league's popularity and revenues.

Asked if the time had arrived for around-the-clock negotiations similar to what the NFL demonstrated near the end of its lockout this summer, Stern said Tuesday: "In Month 4 they had 'round-the-clock meetings."

The NBA dispute begins its fourth month Saturday.

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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