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NBA Collective Bargaining
Agreement Ratified and Signed

NEW YORK, July 30 – The National Basketball Association and the National Basketball Players Association today announced that a new six-year collective bargaining agreement has been ratified and signed.

As part of the agreement, the NBA also announced that the Salary Cap for the 2005-06 season is $49.5 million. The mid-level exception for the upcoming season is $5.0 million.

The new Cap goes into effect at noon EDT on Tuesday, August 2, when the league’s “moratorium period” ends and teams can begin signing free agents and making trades.

For the first time, NBA teams will know the tax level in advance for the upcoming season. For the 2005-06 season, that level has been set at $61.7 million. The 2005-06 minimum team salary, which is set at 75% of the Salary Cap, is $37.125 million.

As part of their expansion agreement, the second-year Charlotte Bobcats will have a Salary Cap and minimum team salary equal to three-quarters of the Salary Cap and minimum salary that applies to the rest of the league. The Bobcats’ Salary Cap for the upcoming season is $37.125 million and their minimum salary is $27.84 million.

The new collective bargaining agreement includes an increase in the salary cap, a lessening of the impact of the luxury tax, a decrease in the escrow withholding over the term of the deal (to 8%), and a guarantee by the league that the players will receive no less than 57% of basketball-related income (a percentage that will increase as revenue increases). The maximum length of player contracts is six years (previously seven years), and maximum annual increases in salaries have been reduced from 12½ to 10½ percent for teams re-signing their own players and from 10% to 8% for teams signing free agents.

Other key non-economic points of the deal are below:

  • The minimum age requirement has been increased from 18 to 19 years of age. United States players must be at least one year removed from high school AND 19 years of age (by the end of that calendar year) before entering the draft. International players must turn 19 during the calendar year of that draft.
  • NBA teams have the ability to assign players to the NBA Development League during their first two years in the NBA.
  • Players are subject to four (4) random drug tests per season and penalties for use of performance-enhancing drugs have been increased.
  • Players suspended for more than 12 games for on-court misconduct will be able to challenge the suspension before a neutral arbitrator.