CBA Agreement Announcement
Posted Jun 22 2005 12:18PM
Tuesday, June 21, 2005
COMMISSIONER DAVID STERN: We're pleased to be able to announce this afternoon that the NBA and the National Basketball Players Association have reached an agreement in principle on the key terms of a new six year Collective Bargaining Agreement.
Once the deal is finalized, the NBA and its players will be able to focus on those additional opportunities that we ratified that we were able to reach an arrangement with the union to avoid a work stoppage. And with that, I'd like to turn it over to Billy.
BILLY HUNTER: As David has indicated, I'm extremely pleased to be here, as I look out in the audience and see a lot of the faces that were in Detroit just several days ago, and at that time we indicated that we were attempting to reach a fair deal, I think we struck a deal that's going to be extremely good for our players. We'll be extremely well taken care of over the next six years or so and it will also help enhance the overall stability and growth of this league. We are glad that we reached the deal that we struck with the NBA. We spent a lot of time negotiating back and forth with the commissioner and the owners. We've got our president of the union, Michael Curry, who is here, who is actively engaged all along, and with Michael's guidance and assistance and other members of our executive committee who participated in these negotiations, we were able to reach the deal that we had presented today.
Just sort of as an aside, this deal includes an increase, on behalf of the players, an increase of the salary cap; a lessening of the impact of the luxury tax; an increase in the escrow of holdings over the term of the deal, eight percent, and a guarantee that the players will receive no less than 50 percent of all league revenues, the same percentage paid to players the last two seasons; the maximum length of a player's contract will be reduced from seven years to the current six; and maximum increase will be reduced from 12.5 to 10 percent with teams resigning their own players, and from 10.5 to eight percent to teams signing free agents.
COMMISSIONER DAVID STERN: I would just add that that's 57 percent, not 50 percent that the league is guaranteeing. I wish it were 50 percent. (Laughter).
On non economic matters, the minimum entry age will be increased from 18 to 19 years. Teams will have the ability to assign players with less than two years of experience to the NBA development league, and the number of random drug tests as well as the penalties for violations will be increased.
In addition, the league will guarantee that on average, our rosters will be increased to 14 players per team, and that players who are suspended for a period of greater than 12 games for on court misconduct will be able to challenge that suspension before a neutral arbitrator.
I would just add that there's an outline of the key terms of the agreement on release, and its attachments that are being distributed, and just say that while the agreement is being reduced to definitive writing, the moratorium on free agent signings that is presently scheduled to expire on July 14 will be extended to July 22. During this period, summer leagues may be conducted, rookies may be signed, and free agents will be able to negotiate, but no new contracts will be signed under those circumstances.
And obviously, this agreement from our perspective is subject to the League board of governors and from Billy's perspective, by members of the Players Association. Be happy to answer any questions.
Q. Commissioner, with the 14 player roster, does that mean now, does the injured list situation change or no, you can have 14 active?
COMMISSIONER DAVID STERN: We are going to change the injured list situation to a point where every team can have up to 15 players on its roster the roster will be expanded to 15, 12 active.
Q. This is for both of you. You're both in a situation that seemed so dire six days ago, Billy, when you spoke in Detroit to get to this point. What happened and what happened so quickly to get to an agreement?
BILLY HUNTER: Well, we have been negotiating rather intently for a period of time, I guess the two of us needed to ratchet up the rhetoric and we decided it was time to back away from the abyss and decide if we could really do a deal.
What we did, we ended up spending about 14 hours together last Friday, and we said, if we're going to be able to do it, now is the time. Otherwise, we know what the end result is going to be. So our President Curry came in, along with Antonio Davis and Pat Garritty from the players' side. We sat there along with David and 40 owners and staff, and after about 14 hours, we kind of moved closer and closer until we thought we had a framework for the deal.
COMMISSIONER DAVID STERN: Russ Granik who is our key negotiator was in New York City this morning doing what he does best, negotiating with the union, and we completed that, really, at about one o'clock this afternoon.
BILLY HUNTER: There were outstanding issues that had to be resolved as of this morning so our respective staffs stayed there. I flew in and the understanding was that we get the word, either go ahead with the press conference or not and everything got resolved.
Q. A quick follow up, what changed, what were the issues that were the hold up in the last two or three days?
BILLY HUNTER: Well, for us it was the issue of the super tax, for one thing, or the outlier tax that David refers to, as I indicated before, basically the structure, I was concerned with many of the concessions that the NBA was seeking and that I didn't want to create a really restrictive system. I thought it would impair the ability of players to negotiate their individual contracts, and we were able to get some relief in that direction, and in turn, we granted some concessions to the NBA that that they were after.
Q. For both of you, what was the difference in the negotiations this time that prevented a lockout whereas last time you went into a lockout and wound up missing so many games?
COMMISSIONER DAVID STERN: I would say that I won't speak for Billy, but I will to say that we agreed almost all the way along the line, that this business would suffer greatly from a lockout, and that as the deal reflects, this is a I'd call it a 50/50 deal. Half of it went our way, half of it went their way, and the central economics really remain the same. We knew that that's what we had to get to. I think that the question about what happened the in the last week, I think Russ at my press conference got the owners to thinking that maybe we were crazy enough to do it. Billy's press conference got the players thinking the same thing, and so we both got encouraged to sit down and try to avoid the Apocolypse that we were each describing.
Q. Drug testing, is that going to be year round and what are some of the other details of that?
Q. You were both in front of Congress, I'm just curious how you think this improved plan will be received by the law making?
COMMISSIONER DAVID STERN: I'd like to say that I at least was very much interested and directed by what the Congress had to say and their concerns. I feel as though this agreement is very much directed to meet virtually every concern that was expressed to us.
BILLY HUNTER: I would add that I'm still of the opinion that there's no need for Congress to be involved in the business of regulating professional sports when it when it comes to drug testing. I agree, as David indicated, I think the agreement that we have proposed goes far enough that there's no need for any kind of Congress intervention or oversight. I hope that they will see it accordingly.
Q. For both Billy and David, in order to prevent this Apocolypse, you said the economic factors would be devastating, but how much of this was also based on image and trying to make sure that people knew that this league would not go in for a lockout?
BILLY HUNTER: I think there was a lot of that, when you either overt or subliminal in the sense that I knew whenever I was negotiating, I'm always concerned about the image, and for whatever reason, image seems to rear it's head every time we get in collective bargaining.
I think it's a chance for us to get up front, to gain some good will with the consequence of having reached this agreement, particularly when you look at what's happening in other aspects of sports, professional sports. And I'm hoping that we benefit from that. The fans understand that what we are trying to do, we tried to reach, as I indicated, an agreement, I think is not only fair to the owners and the players, but works well for the fans and enables us to keep this game going and to do everything we can now, as David has indicated in the past, to grow the game, and that's what we really have to do. We have to focus on doing whatever is necessary to really make this the No. 1 sport, and globally and I think it's on its way to being that.
COMMISSIONER DAVID STERN: My response is I would add that our image to the fans is important, but we also very much want to be viewed as a reliable partner. And for those who have expressed confidence in us as marketing partners on a global basis, it was important for us to demonstrate our reliability. For those who are our licensing partners who, again, involved with NBA Branded products, for the TV partners on a global basis, both the U.S. and the world, to be able to say that, yes, the product will be continuing, for the cities that will be discussing our 2006 2007 exhibition games with, and I really, I guess for Argentina, Italy, South Africa, China, we'll be having clinics there this summer that will turn to what we can do respectively rather than what will happen in September. For all of those reasons, the image in the broadest sense of being a reliable partner was very important to us.
Q. Could you go into any details about the last item on the key points about the pension benefits and whether or not that will deal with all of those guys in the pre 65 group?
COMMISSIONER DAVID STERN: Actually, we have set up a fund of a certain amount, and we are collectively and we need to be able to get some advice from our actuaries, who are crunching numbers and our lawyers who are looking at legalities to see how exactly that is going to be dispersed, if at all, and we believe it will, amongst current, retired and pre 65 players. But we are not able at this moment to quantify it, because we've got to do all of the work on it.
Q. For David and Billy, could you explain the rationale and the mechanics of the development league and relationship to the NBA and the member in this cases?
COMMISSIONER DAVID STERN: The rationale is that we would like to have a full fledged Minor League very much in partnership with our players where the kinds of skills that can be dealt with are not only basketball skills, but life skills, and it's something that we've talked about, to make it a very meaningful Minor League experience.
We'd also like to have a place where our players who are not ready for the NBA can develop their skills on an ongoing basis to make our product better on the court, and this was an item that the owners thought was important and pushed for hard in the course of these negotiations. We had some philosophical differences with the union on the point, but at the end, rather than the 20 we asked for, we got a 19, and that was a concession from the union to us on this point.
I think it's fair to say that we have now five new cities in the development league, which will be operating with eight teams this coming year, and it's my goal by the following year to have it up to 15 so that each of the NBA development league teams will be affiliated with two NBA teams. And players who are in their first two years of their NBA career can, under the appropriate circumstances, be assigned for further development of their skill to the team that they are with, that their sort of parent club is affiliated with.
And I would guess, although actually I would not guess, I would say that we will the current age of the development league, NBA development league, the minimum age is 20, but we will be lowering that to 18 so that players will have an option of going to college, playing in Europe, playing in NBA Development League or any other Minor League they would like to.
BILLY HUNTER: We were having discussions earlier this afternoon about the NBA DL and how it would work and it's obviously something that's going to take greater thought and a little bit more time. Ironically, Michael, who we were going through the negotiations, at least from our perspective, Michael Curry had worked out a rather comprehensive proposal with regard to how he thought the NB DL should function and how the players would transition between the respective leagues, so that's something we would like to present and plan to present to Commissioner Stern and the NBA owners as this process continues.
Q. Will there be any change in the menu of drugs that you test for, and is there any provision for increasing that menu as new performance enhancing drugs might be discovered?
BILLY HUNTER: We've always had in place a review panel of three physicians, and as various drugs are identified as being performance enhancing or illicit, they are presented and submitted to that panel, and in if the panel agrees they fall in that category, we generally incorporate them into that prohibited group.
Q. One question for each of you. Billy, you had said last week that reducing the max contracts by the year would cost players, I believe you said a billion dollars. Does the escrow reduction make up for that in some way?
BILLY HUNTER: Well, it's a combination. I think what I said was that when you start talking about reducing contracts by two years, I would think over the term of the deal that it could be as great as a savings to the owners as much as a billion dollars.
When you look at the escrow distribution, which teams are now going to receive, that in conjunction with some of the other things that are in place, I think it's a fair trade off.
Q. For David, the age limit, how does that encompass players that post high school go to some prep school, academy for a year, Dorrell Wright, guys like that that end up getting drafted?
COMMISSIONER DAVID STERN: That was a subject of negotiation this morning, and I believe, although I'm not certain, that it's a year, it's 19 or a year post high school and that would count as a year of post high school.
Q. David characterized this deal, this situation; how do you see it?
BILLY HUNTER: I see it the same way. My read was our players, collectively, our players are going to be extremely well taken care of the next six years. We made some trade offs but I think they balance one another so that we are pretty much going to have economically the same deal in place that we are coming out of, and you're aware that I've said from time to time, I was prepared to extend the current deal. So what we've had is the modification with regards to a non economic issue. And relative to the economic issue, we've had what I would consider equal exchanges.
Q. When do you think you'll have a deal signed and typed up? And David, why did you hedge on the summer league?
COMMISSIONER DAVID STERN: I don't think I hedged on summer league.
Q. You said may have a summer league.
COMMISSIONER DAVID STERN: Well, may, meaning permissible to go forward with the summer league. We have teams that are planning to have summer leagues, and the answer is, they may have them.
I didn't mean to suggest that it wasn't a done deal.
For us, our goal here is as soon as possible, but you can tell, we don't think it will be done by July 14th. That's why we extended it to July 22 and that's the current target date.
You know, we just expect to kill all the lawyers. (Laughter).
Q. I just want to clarify two things, from what you said, there's no guarantee per se for the pre 65, it's still to be negotiated or worked out, and also regarding the development league, would you said the No. 1 pick in the draft, that player could be sent down to anybody? And for you David, the third thing; the ownership, going into negotiations, a lot of talk about trying to end these $100 million type deals that have hamstrung some franchises and players have abandoned deals making 20 million. It sounds like six years and five, those deals are still possible, is that a disappointment to you and the ownership?
COMMISSIONER DAVID STERN: No. I think it's a fact of life, and in assessing what was possible to get, as against the consequences of doing everything necessary to get it, the better trade off was to avoid the lockout and to accept a one year shortening of contract together with a reduction of the average annual increase, which we'll reduce by some significant number the amount of the largest maximum contract because it will now go up at ten and a half percent, rather than 12.5 percent and it will be six years instead of seven years. You make certain judgments like that, and we made the judgment looking at all of the ramifications of the deal, of getting those two, of what I call getting the non economic terms, was a trade off worth making.
With respect to the pre 65ers and the like, I would say that there will be changes to all of the pensions. We just are not prepared to quantify them yet, because we have to decide what we can do with the pot of money that's available.
That was two. Is that two out of the three, Sam? Was there a third?
Q. No. 1 pick could go down to the Development League.
COMMISSIONER DAVID STERN: Yes, the No. 1 pick, any player can be assigned to the NBA Development League.
BILLY HUNTER: Up to two years.
Q. Given our litigious society, do you anticipate a challenge to the age limit, given it has been changed and do you feel you're on good grounds since it's collectively bargained? And also, David, you said that your goal was to get NBA general managers, scouts, out of high school gyms; does changing by one year really alter that aspect of it?
COMMISSIONER DAVID STERN: The answer to the second question is yes.
The answer to the first question, I'll answer it, give you an opinion on our position, if it is bargained terms and conditions of employment like terms and entry into the draft, it has been held up over time from legal attack, most recently in the Claret decision in the NFL. But in keeping the general managers and the scouts out of the gym is going to be accomplished by a directive from the league, and I feel very comfortable that in light of this agreement, that directive is justified and it will be forthcoming.
Q. Backed up by a fine?
COMMISSIONER DAVID STERN: Well, if that's all you want me to do. (Laughter).
Q. You said you knew a lockout would be bad for business. How much of that was influenced by what happened to your friend, Gary Bettman, in the NHL this year?
COMMISSIONER DAVID STERN: Well, you certainly know that it's better to be operating than not be operating. You know, I don't mean to make light of it, and it was we were certainly aware, Billy and I have discussed the NHL a lot, but we have discussed our own prospects, and we know from our own somewhat bittersweet experience seven years ago what could happen to our business. As we sat down and talked about it with Michael Curry, players, Billy, Russ and I, and the owners, we knew that at the end of the day, it would be very bad for the NBA, just as the NBA, and we determined that we would do anything we could within reason to cause that not to happen, and that's what we did.
Q. For each of you, I'm wondering if there's one concession that you made for both sides that maybe you had to labor over the most, if you could just pinpoint one that really you went to the 11th hour on and struggled with the most?
COMMISSIONER DAVID STERN: Go ahead, Billy. (Laughter).
BILLY HUNTER: I think we struggled over all of them. I know that Michael and I every five minutes along with the others who were in the room, we were always caucusing, trying to decide what we were inclined, willing to give and where we could move.
Probably the one, and it's ironic, it's economic but non economic, probably agreeing to the before season drug test was probably most difficult for me. I don't know why, but it's funny, when I woke up Saturday morning, it's always a day after, it's like a hangover, you know, and we didn't break until 11:00 Friday night. When I woke up Saturday morning, the first thing on my mind was four in season random drug testings. I couldn't extricate it for some reason.
COMMISSIONER DAVID STERN: I would say that from the owners' perspective, the outlier tax, which we thought was a competitive issue that would be helpful on was something that we held on to in terms of our game plan until we understood that if we wanted to make a deal before July 1, was our judgment that that was a subject that we had to give on; and we gave.
Q. Commissioner, is it fair to assume by its absence here that the rookie contract schedule remains as it is, and may I ask why the ability to assign a player to the NB DL is limited to the first two years?
COMMISSIONER DAVID STERN: The rookie contract, it's now going to be a two year contract with two one year options rather than a three year contract with a one year option which is about the same.
We thought that the D League should be an issue of development for players who might not be ready for the NBA, and we on the NBA side were sensitive to the potential abuse that players would be sent down because for some other reason. For us, it was either two years or three years was fine with us. This is about using the development league to demonstrate that we could, in fact, help a player's career if his team thought that would be helpful and two years was certainly enough for us. We were not looking to develop this complete Minor League system, a la baseball where you have the right to keep someone down for three times or long durations. It was about truly development for us.
Q. Do either of you anticipate having to do any selling or hard selling to your respective memberships on route to ratification?
BILLY HUNTER: I don't anticipate that we will do much hard selling. We had just come off the road, we had been traveling the country for a week and a half leading up to these negotiations, and we have had some systematic calls and discussions with our players and then guys like Michael and the other members of the executive committee had been interfacing with the players, as well.
As part of our negotiating committee, we actually had members of the executive committee participating, so once the executive committee signed off on it, and they have all signed off on this proposed deal, it's just an issue now of somebody submitting it to the players.
I don't anticipate we'll be able to satisfy everybody, but we have struck a deal and one that avoids a lockout and the significant economic damage, not only to individual players, but as well as the league. Having done that, I think in the process, we have reached a fair deal and I think that's all the players were demanding, so I don't anticipate a problem.
COMMISSIONER DAVID STERN: From my perspective, the timing is fortuitous. We're able, even though we did not have a deal back at the owners' meeting in April, we were able to describe to the owners where the deal wasn't and what needed to be done for the players if we wanted to get a deal done, and we've been able to keep in touch with the owners on a very regular basis, as I sit here today all 30 teams have been briefed by either Russ Granik or Joel Litvin or Rick Buchanan or Dan Rube or me, and I think it's fair to say that we don't have unanimous agreement on every aspect of the deal, but I think we have a near unanimous agreement that the overall deal should be approved and that anything that's wrong with it can later be blamed on the negotiating committee.
Q. I'm just kind of curious, in light of what happened with Vin Baker a couple of years ago, is there any talk at all about dealing with the very hazy issue about alcohol abuse and structuring something along those lines?
BILLY HUNTER: We haven't specifically dealt with it, but there are still some minor issues that have to be addressed that we characterize as B list issues. The NBA in the process, at least one or two owners have raised the issue that you're referring to, so I anticipate it will come up. But what we generally argue, as least from the union's perspective is that the Collective Bargaining Agreement will control, but we are not prepared to see individual restrictions or prohibitions such like that placed in contracts.
COMMISSIONER DAVID STERN: I think it's fair to say that there remains to be a solid list of issues that remain to be negotiated, except we made the judgment that they can all be dealt with the give and take that is reflected in where we are and that it would be rise to announce this deal and return in the same fashion to the table and knock off those issues, and that's one of those issues.
Q. One other thing, Sam Smith asked me to ask this, so don't blame me, was there any talk of delaying this fortuitous announcement until after The Finals were concluded?
BILLY HUNTER: No, I don't think so. I think that we thought that this was the best time to make the announcement if we could reach an agreement; that it was better to do it beforehand. I can't think of any other circumstance where we would have all you folks here.
COMMISSIONER DAVID STERN: I would say that the circumstances were such, given our gap of time, that we were able to spend a full day on Friday in New York City, and we were pretty near a deal. In order to call our teams and do everything that had to get done, it was pretty clear to us that we were not going to hold it and as a result, when we had the deal, we should go with it and we're there.
So it would have been artificial for us to walk around not acknowledging the deal when we made it. I don't think that I aimed it specifically for today, but once it happened on Friday, and we were compelled to deal with all 30 of our teams and give them the briefing and then have more negotiations, it was clear to us we were going to be a yes or a no at noontime this morning, and I'm not sure what else we would have done with it if we didn't announce it now. So this seemed to be the most direct way to do it.
Q. Billy, what was the attraction from the players' side in revising the rookie salary scale so that it only comprises four years?
BILLY HUNTER: It really wasn't from our perspective. I think that the league was looking for some relief, and in that instance where they felt that a player was a problem, we felt that two years was ample for any team to be able to make an evaluation in whether or not they should or should not keep a player beyond two years. So they were looking for that kind of relief so we did, he decided it had to be pegged with the rookie scale. So they have two years to get a two year guarantee, as opposed to a three, and at the end of that two, they should be able to make a determination as to whether or not they could deep keep the player, and along with the right of first refusal for a fifth year, if they deem him worthy of being in the NBA. But what they basically wanted was some relief from those players who they contend are players who end up getting guarantees but really don't deserve them.
Q. Second question is, has the issue of being able to re sign your own second round picks, has that been address, and if so, how?
BILLY HUNTER: Yes. I think that's the Gilbert Arenas situation.
COMMISSIONER DAVID STERN: Yes, that if a player if a team has its mid level, recognize I'm a little bit beyond my supply line, Russ is back in New York, but let me just say that if a player if a player is on the team, a second round pick and that team wishes to retain that player by matching another offer, it must have its mid level exception available. If it does, the first year of any offer by another team to such a second round draft pick must begin with a mid level exception number and then can proceed to the full free agent contract, which gives a team the ability to match its own free agent even if it is a second round, even if he is a second round draft pick.
Q. The use of two option years in the rookie contract, would those be at the club's disposal or would one be at the club's disposal?
BILLY HUNTER: No, they are both at the club's disposal.
Q. And second question, reports said that after four consecutive days, I heard y'all broke off on Friday but did y'all still talk Saturday and Sunday?
BILLY HUNTER: We had some discussions we had some small group discussions on Sunday and then we had them again yesterday and then this morning.
Q. At the end of two years for the player who is set down or reassigned, if he is still not ready or is a head case or whatever the case is (laughter).
COMMISSIONER DAVID STERN: We don't have any of those players.
BILLY HUNTER: They cannot keep them.
Q. They cannot? What happens?
COMMISSIONER DAVID STERN: I guess the player when a player is drafted, he signs his contract and he's a member of a 15 man roster of the team. And the team can either, you know, it can keep him as a practice player under our current rule. In other words, we're going to eliminate the notion that there's, in quotes, injured list. This is going to be called the honest list. (Laughter).
And so a team can have 15 players, including an injured player or not, and if you have such a player and you want to send a player down and he's waiting two years, you can do that. Failing that he's got a guaranteed contract, he's on your roster, either you practice him, play him or you cut him. And if he's it's a guaranteed contract he gets his money. That's the way it is.
Q. Was there more player angst this time around than the last time, were players more involved, issues more tangible, was it more of a rallying cry then or was it a little before did I fuse?
BILLY HUNTER: It was kind of bifurcated in that we had close to 200 players that are currently under contract so obviously they have an interest, they want to go and play, they don't want to necessarily run the gamut of missing a paycheck.
On the other hand you have an additional 200 or so players coupled with rookies coming in, players who are not under contract and so consequently they feel that they may have less to lose in the sense that they want to ensure that whatever system is put in place is one that's going to enable them to get the kinds of deals that either mirror or closely resemble the deals that their veteran players on the teams have gotten.
And so we have to kind of maintain keeping them and keep these competing forces together, and there by extracting, we extracted a commitment by players under contract that in the event it came down a lockout, that they would have to hang with everybody else, and they had committed to doing that. But it was difficult. I'm sure there was a lot more angst. There was more angst because the players are earning a lot more today than they earned back in 1998 when we went through the first lockout and as you are aware back then, we had many, many more players who were making minimum salary. The one thing that we were able one concession we were able to get back in 1998 was the mid level exception which was really a blessing, a boom for NBA players. That being the case, yeah, I think there was more angst this time than before.