Analysis: The Deal On The Table
After Tuesday’s meeting among each team’s representatives to the National Basketball Players’ Association (NBPA) we know the Players will not take the deal the Owners have put on the table as currently written. However, they do want to negotiate a little bit from the offer, choosing to ignore the NBA’s Wednesday afternoon deadline as an expiration of the offer.
It’s now on the NBA and the Owners to decide if they really do want to tear up this offer and go to an alternate, more restrictive one, or if they are willing to swallow their pride and also ignore the deadline in favor of more negotiations.
Actually, the negotiations will happen…where they lead is still a question.
Let’s take a look at the deal on the table, how it differs from the previous CBA, and where the Players would like to see changes.
The Luxury Tax
The offer has some elements specific to teams in luxury tax territory. One of those is restrictions on player movement, meaning a tax paying team could not participate in a sign-and-trade deal of one of their own free agents and they would not have the Bi-Annual Exception (BAE) available. In addition, their Mid-Level Exception (MLE) would be reduced, limited to a two-year deal starting at $2.5 million with a 3% raise for Year Two. The old CBA had no restrictions on luxury tax teams.
The tax itself will be more prohibitive. Instead of a dollar-for-dollar tax, the amount of tax would increase for each $5 million over the luxury tax amount a team reaches. The first $5 million is taxed at $1.50 per dollar, the next $5 million at $1.75 per dollar, the next $5 million at $2.25 per dollar, and anything over that at $3 per dollar. In addition, there will a further penalty on teams who are repeated tax payers. The Owners proposed $1.50 per dollar, the Players $.50.
The Players are receptive to these new items to a point. They would prefer the sign-and-trade and exception restrictions go away because they have the potential to restrict player movement, and they don’t want the luxury tax to be prohibitive to the point of effectively creating a hard cap, which includes items like the repeater tax.
The offer on the table allows for a MLE starting at $5 million with a 3% raise. (Note: This is in addition to the luxury tax restrictions noted above.) It could be offered for three or four years, alternating annually. The old CBA has a MLE set at $5.765 million last season with 8% raises, for up to five years.
The BAE, valued at two years starting at $2.08 million with an 8% raise in 2010-11, would still be for two years at a lower starting point with a 3% raise.
This seems to be acceptable, though the more dollars and years the players can get the better.
With the deal on the table there will no allowance of “extend and trade” deals, which will become commonly known as the Carmelo Anthony Provision. Maximum contract lengths will be five years for players with “Bird rights” and four years for non-Bird free agents. Raises will be limited to 5.5% for Bird players and 3.5% for non-Bird players.
The old deal allowed for the extend and trade, allowed contract lengths of six (Bird) and five (non-Bird) years, and allowed raises of 10.5% (Bird) and 8% (non-Bird).
As with the exceptions the players would prefer longer contracts with higher raises, but these are workable.
But that’s not all. In the offer the Owners have proposed 10% of every contract go into escrow. Under the old deal the amount was 8%. This is a protection for the owners against the final distribution of Basketball-Related Income (BRI) for a season. That was set at 57% to the Players in the old deal and the current offer of a banded amount between 49% and 51%, based on where total actual Income falls. If BRI falls short of the agreed amount, the escrow money goes to the owners (enough to make up the amount), and if it comes out ahead, the players get that money as a rebate check (in a sense, considering it’s the money they were promised in the first place).
This is workable, but it’s not ideal. The end result is players will be getting smaller, shorter contracts and having more money automatically deducted from their checks which they may never see.
One final item to note for the contracts: options. The deal on the table prohibits Team, Player and Early Termination options except on rookie scale deals (for first-round picks). Players, if they agree to a fully non-guaranteed final year of their deal, could have the option of opting out.
This one may not be a huge deal. Players like to have control, but if we ran the numbers over the past ten years it’s likely we would find the majority of options have been exercised (David West a notable exception from this past June).
The Amnesty Provision
The offer also includes an amnesty provision where a team could choose to waive one player and have 100% of his salary not count against the cap or towards the luxury tax. The player would be paid the full amount he is owed and become an unrestricted free agent, free to sign with any team except the one who just let him go.
Generally the Players are okay with this because the player in question will receive his full contract amount, but they have one request – don’t count the contracts of Amnestied players towards the Players’ division of BRI. For example, if the Portland Trail Blazers chose to Amnesty Brandon Roy, the $69.5 million check he receives would not count towards the players’ percentage of BRI. Instead, it wouldn’t factor into the equation at all.
All of these are what are regarded as “system” issues, which are the balance to the more highly publicized BRI split. The Owners don’t want to give up a 50% of BRI while the Players don’t want to go that low. Both are willing to negotiate that number based on the give and take in system issues, but finding that balance between the two agreeable to both sides is the sticking point in the entire process.
The outcome of the Players’ meeting on Tuesday had one interesting point, made by Los Angeles Lakers guard and NBPA President Derek Fisher:
“We’re open to discussions, open to negotiation. We’re open-minded about potential compromises on our number, but there are things in the system that are not up for discussion that we have to have in order to able to get this season going.”
But then union chief Billy Hunter said he believes the Owners will give the Players a 50-50 split on BRI. Therein lays the problem, because of the aforementioned balance in these negotiations between systems issues and BRI. The deal on the table is roughly a 50-50 split, but the Players want systems changes. Fisher indicated compromise is available on the number, so which is it?
This is a hard road for the Players, coming off a system they benefited from greatly with 57% of BRI, but they can no longer have it all. At this point, they simply will not earn a 50-50 split if they ask for systems changes – presumably to their benefit – to the offer on the table. At this point the offer on the table IS the best combination of BRI and systems issue they can hope for.
However, it doesn’t seem like that is a realization that will be forthcoming quickly enough to get a deal done.