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Steve Aschbruner

New CBA spreads gains, pains to both sides

Posted Nov 26 2011 9:04PM

It doesn't take long in this 24/7, eye-blink media world for big news -- in this case, end of the NBA lockout -- to run the gamut from surprise to curiosity to shrugs to, quickly enough, a full dose of snark. That life cycle used to take a full day at least; now it gets compressed into a matter of minutes.

Within moments of the tentative labor agreement between NBA players and owners being announced in the wee hours Saturday, a skeptic got busy on social media: "What if the only thing that happens is, the owners get more money and the players have shorter contracts?"

Well, if that's "all" that happens, it easily could be framed as a win-win.

Getting more money -- as a way to stem annual losses of $300 million or more -- was a primary goal for NBA ownership in this labor dispute. And nothing, frankly, to apologize for. Same with the system changes sought, driven by a higher ideal than strong anchor franchises and fat TV ratings for The Finals.

Antitrust laws and charges of monopolistic practices aside, a league has to be both competitive and cooperative, with an understanding that in many ways it only is as strong as its weakest links. If certain teams can't compete fully for talent, they will remain a permanent underclass, hurting both the markets in which they're based and the strong markets trying to sell tickets to compelling games when those clubs come to town.

It isn't intellectually honest to say that some teams, by virtue of their revenue potential, should get to spend double on payroll what other teams spend. No one who espouses that would even join a fantasy league under similar imbalanced circumstances. And even the lofty economic models using hindsight to correlate payrolls with W-L records are stuck applying a new standard to an old system. Because the new one hasn't been tried yet.

So if "the only thing that happens is, the owners get more money" with this deal, the NBA might be stronger, with greater stability in the small-revenue markets. Not a bad outcome at all.

As for the players ending up with shorter contracts, that can be a good thing too -- at least for players who continue to produce, stay healthy, lead, create wins. Those guys will be on the market sooner and more often, able to cash in with teams that will be more capable of competing in terms of payroll.

Shorter contracts won't help players who chronically get hurt, don't produce or stop working hard. That's true. But many of those guys still will have pocketed plenty for however many years of underperformance. They get snickered at already and, hey, the new tentative collective bargaining agreement is going to have money for continuing education (i.e., next job) and for annuities beginning as soon as age 35. Any grumble about that is a non-starter with the working men and women among NBA fans.

Clearly, there were more, and more incendiary, clauses in the new deal that those cited above. There is no guarantee that the owners' way -- and this deal tilts dramatically in the owners' favor, something everyone has known from the start of CBA talks more than two years ago -- will fix all of the NBA's ills. It might, in fact, create some new unintended ones.

But getting the deal in time to save a 66-game regular season and begin play on Christmas Day is a laudable attempt to adjust the system. It showed compromise, regardless of how much arm-twisting and how many bruised egos went down over the lockout's 149 days.

There are owners who still don't think the players were squeezed hard and long enough; there are players and agents on the opposite side angry at the size and number of the concessions made. There are lawyers who probably wish their billable hours had reached into the triple- or even quadruple-digits before the antitrust litigation gambit got abandoned.

But there likely aren't any real NBA fans who wish the warring sides had held out for a 50-game season or, worse, a zero-gamer. This way, billionaires will continue as billionaires, millionaires will be able to add to their piles, too, and fellows on both sides will be able to live their dreams, pocket some dough and enjoy all those "psychic benefits" of NBA participation. It gets kind of hollow -- existentially adrift, even -- to be an NBA player or, for that matter, an NBA owner when there is no NBA.

Most important, though, regular folks who look to pro basketball for entertainment, day job or moonlighting income, competition, distraction or inspiration will be back in business. Because the business of basketball finally yielded the spotlight and the courts to what matters most.

So we're going win-win-win on the tentative agreement as it winds its way through the formalization and ratification process. Compared to the alternative, as the little guy at last June's draft might say, what's not to like?

That said, here is a rundown of major provisions in the proposed CBA, with comparisons to past practices or to the owner's last official proposal from Nov. 10. That's the one, after all, that brought on the union's dissolution, the escalation into federal court and some very real fears that a 2011-12 season might never happen.

Economic split

Building off a set point of 50-50 in how the owners and players will divvy up approximately $4 billion in basketball, the agreement will use a "band" from 49 percent to 51 percent for the players' share, depending on meeting and beating growth projections.

Comment: A move by the owners to make 51 percent more reachable seems to have scratched the itch, and egos, of many players convinced that the talent of the NBA -- because it is the product, essentially -- is entitled to more than the owners. That might seem petty to some -- fighting amongst themselves over more, while flushing hundreds of millions of dollars down the drain with that fight -- but it's a principle thing that needed to be addressed.

Oh, and let's not forget that the players as a group are taking a 10-12 percent pay cut from the last CBA and shifting an estimated $3 billion to the owners over the 10-year lift of the CBA (if it runs that long). It's true that the old deal was dead and everything needed to be negotiated anew, but that 57 percent figure -- which had protected the players through the 2008 recession in the six-year agreement that ended this summer -- still resonated in the union's mind and rhetoric.

Contract terms

Deals in the new CBA generally would be for up to five years for a team re-signing its own players and four years when signing an outside free agent. The maximum annual raises would be 7.5 percent and 4.5 percent, respectively.

Comment: The raises got bumped up from 6.5 percent and 3.5 percent in the owners' previous offer. It still doesn't seem like a big enough "hometown" advantage for teams holding a players' "Bird" rights but it is somewhat improved that way from the 2.5 percent spread in raises and one-year differential in the old CBA.

Salary cap

Despite the players' agreement to drop from 57 percent of BRI in the old deal to 49-to-51 percent in the new one, the salary cap will be maintained at $58 million for 2011-12 and 2012-13. That will allow time, and cap room, for existing individual contracts to clear the system before the new standards take full effect. Similarly rookie contracts and minimum salaries also will be held at current levels for two seasons.

Comment: A big concern in slashing overall compensation by 12 percent but not extracting any of the savings from current contracts (via rollbacks), from max deals or from the rookie/minimum pay was that free agents this offseason and next would feel an extra-harsh pinch. A guy like New Orleans' David West still might not like the offers tossed his way in a couple weeks but holding some of the numbers where they're at should alleviate some of the pain.

This one requires a more complete breakdown:

The new mid-level exception for most teams (those below the luxury-tax threshold) can be for a maximum of four years, starting at a $5 million salary.

The "mini" mid-level exception for taxpaying teams -- more accurately, for those who will be at least $4 million into tax territory -- will be limited to a $3 million salary and length of three years.

A new "room" exception starting at $2.5 million for up to two years will be available to teams that are below the salary cap. Previously, teams under the cap had only their available salary up to that cap to spend on free agents and had no MLE. Now they will have their cap space and this "room" exception.

Comment: Restricting the flow of solid free-agent role players to the biggest-spending teams was a core value of the owners' "competitive balance" claims. They were determined to, and have been able to, maintain that with the "mini" MLE. Players still can sign with the Lakers, the Heat, the Mavericks or other tax teams but they'll have to sacrifice some salary to play and live where they choose. Kind of like most U.S. workers, except for the string of fat playoff checks that follow on tax teams.

Salary cap "floor"

For the first two years of the new deal, teams will be required to spend at least 85 percent of the cap figure on payroll. Beginning in Year 3, the minimum will go up to 90 percent. Previously, teams had to spend 75 percent of the cap amount each season.

Comment: The idea is to get the players' share of BRI into the system more evenly across the 30 franchises, based on a more even distribution of talent. The concern is that, even if the talent doesn't gravitate to Indiana, Sacramento, Milwaukee, etc., those teams will have to pay more money to whoever they have.

"Throwing money" at existing players became a problem in the NHL when it imposed stricter "floors" out of its lost 2004-05 season, because clubs that operated frugally at $28 million suddenly had to spend $44 million. And one of the basics of general managing is that paying someone $2 million extra doesn't make a $3 million player into a $5 million player. Except on the books.

Rookie deal escalator

The game's best young players will have an opportunity to earn fatter contracts sooner. Someone like Chicago's Derrick Rose will be able to sign for 30 percent of his team's cap figure rather than 25 percent if he meets one of three criteria: 1) winning the league's MVP award, 2) making all-NBA teams (first, second or third) at least two times, or 3) being voted as an All-Star starter twice.

Comment: This deal is only available as an extension, to be signed with his current team. It has the possible impact of a "franchise player" designation, within the NBA's rules, encouraging/coercing top young talent to stay where it's been drafted.

Sign-and-trade deals

In the first two years, sign-and-trades will continue as is. Beginning in Year 3, teams can only participate in sign-and-trades if the amount of salary they take back in such a deal would leave them less than $4 million above the luxury-tax threshold.

Comment: The owners' desire to further restrict tax teams beginning in Year 3 was a major point of contention for many players and agents. The league moved from its previous proposal.

Extend-and-trade deals

A player may sign an extension for up to three years in length and get traded during the season. The owners' previous offer prohibited these by imposing a six-month buffer between the time of a trade and the signing of an extension.

Comment: Now the drama that played out with Denver's Carmelo Anthony last season, and whatever damage it inflicted on the Nuggets and their fans, can play out with Orlando's Dwight Howard, New Orleans' Chris Paul and New Jersey's Deron Williams, among others. Another move by the owners.

Trade rules

Salary-matching requirements for trades have been loosened. Now non-taxpaying teams can take back salaries worth up to 140 percent, plus $100,000, of what they're sending out. Taxpaying teams are limited to 125 percent plus $100,000.

Comment: Anything that generates more trade activity, a traditional boost to fan interest, seems to be a good thing. It also enhances trades as a tool for recasting a team, in addition to drafts and free agency.

Escrow money

Players will have 10 percent of their salaries withheld in escrow, up from 8 percent in the previous deal, as a way for owners to adjust the amount actually spent on compensation with the correct BRI split.

Comment: The owners had been seeking not just a bump to 10 percent but a "true up" mechanism to take any additional overpayments to players out of retirement benefits or other funds. The players fended this off, though technically it all is a zero-sum game. Fifty (or 49 or 51) percent of BRI equals 50 percent (or 49 or 51), no matter how or when it is paid or rebated. But it was another hot button with the players.

Luxury-tax "repeater" levies

When a team is subject to the luxury tax for excessive spending in four of any five seasons, it faces an increased penalty as discouragement. The players had sought only an additional 50 cents, on top of the existing tax, at each $5 million break point for the spenders. The owners wanted and got a bonus tax of $1 at each $5 million level.

Comment: In the old CBA, teams paid a $1-for-$1 luxury tax. Adding a $3 million player would, in effect, cost a tax-paying team $6 million for his services. Now the initial tax is tougher -- and progressive, from $1.50-for-$1 just over the threshold on up to $3.25-for-$1. Then there is the "repeater" levy that adds another $1 multiplier. So a $3 million player might feel like paying $15-$16 million if the acquiring team's payroll is high enough.

Restricted free agency

Teams will have three days to match a rival's offer to its restricted free agent, down from the old 7-day waiting period.

Comment: This helps all concerned. Players aren't stuck in limbo and a team's free agent money gets freed up more quickly for other shopping if the current team intends to match.

Amnesty clause

On a one-time basis, each team will be permitted to waive one player currently under contract and have his salary not count for cap and tax purposes.

Comment: There had been talk of making amnesty available annually but that might have been excessive, fueling the perception that GMs make chronic spending mistakes.

Stretch provision

For new contracts, the salary of a waived player can be "stretched" so that his remaining compensation gets paid out, and counts against the cap, over a period of twice the remaining contracts years plus one.

Comment: Unproductive player still gets his money, spread out a little longer, and becomes free to sign again elsewhere rather than sitting on the bench in a suit. The team reduces the cap pinch and removes a daily reminder of a bad working arrangement.

Term of tentative agreement

The next CBA will be a 10-year deal with an opt-out available to either side after six years.

Comment: It is likely that one side or the other will be displeased -- or overly pleased -- with the ramifications of this deal, so it essentially is a six-year contract. Still, it figures to be the last one hammered out by NBA commissioner David Stern or soon-to-be-reformed union boss Billy Hunter. Not that anyone is about to get wistful over the process.

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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