Riding the wave of fan interest in so-called “super teams” and a reservoir of television money that has helped both owners and players, the NBA and the National Basketball Players Association reached a tentative seven-year deal Wednesday on a new Collective Bargaining Agreement. The tentative deal, which can be opted out after six years, has to be approved by both sides’ respective constituents, so the Thursday deadline for each side to be able to opt out of the existing 10-year CBA will be extended—but only to allow each side to formally ratify the deal.
The agreement was the culmination of months of work between NBA Commissioner Adam Silver and NBPA Executive Director Michele Roberts, whose comity toward each other set the tone for the discussions.
If neither side opts out of the deal early, the 13-year stretch between the last lockout in 2011 and then will be one of the longest sustained periods of games without a labor stoppage in recent history. The league imposed a brief lockout in 1996 that didn’t lead to any lost games, but the 1998 lockout led to the cancellation of 32 games before a last-minute agreement in January, 1999 salvaged a 50-game season. In 2011, the season was shorten to a 66 games.
Among the key points in the new agreement:
- The new deal will keep in place the existing “band” of the players’ share of Basketball Related Income between 49 and 51 percent. The union was willing to accept this because BRI has risen from $4 billion to an estimated $8 billion in the next couple of years, in part due to the $24 billion television contract that has commenced between the league and its national partners, ABC/ESPN and Turner (Turner Sports operates NBA.com). NBA players will also get a larger percentage of revenue streams such as arena signage, according to sources.
- Significant increases across the board in player contracts, including maximum salaried players. Minimum salaries for veterans with 10 or more years of service, players with five or more years’ service, rookie players on their rookie scale contracts and salaries of players who sign under the mid-level exception will all increase.
The bi-annual exception will also increase. The expected maximum salary in 2017-18 for a player with 10 or more year’s service—including many of the game’s superstars, like LeBron James, Kevin Durant and Chris Paul, each of whom can become an unrestricted free agent next summer, will be $36 million, allowing a player to sign a five-year deal with his existing team for around $210 million.
The maximum salary for players with between seven and nine years experience is projected to be $31 million. All of the contracts will be tied to the salary cap, which is different from the previous CBA. Such huge deals for vets with that much service time have been next to impossible to create in recent years because of the so-called “Over 36” rule, which was put in place to keep teams from signing older players to long contracts they would never reach the end of in order to ease the financial burden on the team.
The current rules takes the salary of a player 36 or older and applies it to previous seasons’ salary caps—in essence, forcing the team to pay for those over 36 years before they occur. The new CBA, however, will turn “Over 36” contracts into “Over 38” contracts, allowing teams to sign older players to longer deals.
- Creation of “two-way” contracts that will pay players who shuttle between their parent teams and Development League teams depending on where they’re playing. There will be additional roster spots on NBA teams as well to accommodate the two-way players. Players on those contracts will receive more money if they go to the D League, with the hope of keeping them from taking deals overseas.
- A new “designated veteran player exception” has been created, adding a sixth year for players on veteran contracts who meet certain criteria.
- The current “one and done” rule allowing college players to declare for the NBA Draft once they’ve completed a year of college or have been out of high school for a year, will remain in place. The league has sought to increase the age limit to 20; the union has resisted that and would prefer no limit or a rule similar to that of Major League Baseball. MLB allows high school players to declare for its draft but prohibits players who opt to attend college from declaring until after their junior year in college. The union sought a so-called “zero and two” compromise that would allow high schoolers in the NBA Draft but keep college players from declaring until after their sophomore season in college.
- Health care packages for retired players, and increased benefits for current players, including a tuition reimbursement fund, will be co-funded by the union and by the league.
- A shorter preseason, with no more than six exhibition games before the start of the regular season and an earlier start to the regular season, which should further reduce both back to back games and stretches of four games in five nights.
Discussions between the league and union were held in relative quiet over the past several months, with almost none of the rancor between the sides that had impeded progress in previous CBA talks. To be fair, former Commissioner David Stern and former NBPA Executive Director Billy Hunter never had the financial winds at their backs as Silver and Roberts do; it’s a lot easier to split a pie of this size.
The union claims that franchise valuations have increased by an average of 240 percent since the end of the 2011 lockout, while player salaries have increased by just nine percent. Television ratings for The Finals between Golden State and Cleveland were the highest in almost 20 years, since Michael Jordan’s last championship with the Bulls in 1998. And Forbes Magazine estimated the average franchise value of NBA teams to be more than $1 billion this year.
“Would the personalities be different, would the tone and attitudes be different, if we were in that (previous) economic climate? It’s hard to say,” said one source with knowledge of the discussions between the sides. “She (Roberts) can be very tough, but at the same time, she can also be very reasonable. And he, likewise. I’ve seen all sides of Adam. But he’s definitely, he’s made every effort to appear to be reasonable and open.”
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