Letter to Union, Stern Details NBA’s Offer
The N.B.A.’s current proposal to the players includes a soft salary cap, a 50 percent share of revenues for players and these features: Salary-cap and luxury-tax levels in Years 1 and 2 of the new agreement will be no less than they were in 2010-11. By Year 3, they will be adjusted downward to conform to the new system.
- Sign-and-trade deals and the biannual exception will be available only to nontaxpaying teams.
- Extend-and-trade deals, such as the one signed by Carmelo Anthony last season, will be prohibited.
- The midlevel exception will be set at $5 million for nontaxpaying teams, with a maximum length between three and four years (alternating annually). The value of the exception will grow by 3 percent annually, starting in Year 3.
- The midlevel exception will be set at $2.5 million for taxpaying teams, with a maximum length of two years, and cannot be used in consecutive years. Its value will also grow at 3 percent annually.
- A 10 percent escrow tax will be withheld from player salaries, to ensure that player earnings do not exceed 50 percent of league revenues. An additional withholding will be applied in Year 1 “to account for business uncertainty” stemming from the lockout.
- Maximum contract lengths will be five years for “Bird” free agents and four years for others.
- Annual contract increases will be 5.5 percent for “Bird” players and 3.5 percent for others.
- Players will be paid a prorated share of their 2011-12 salaries, based on the number of games played once the season starts.
- Team and player contract options will be prohibited in new contracts, other than rookie deals. But a player can opt out of the final year of a contract if he agrees to zero salary protection (i.e., if it is nonguaranteed).
The “reset” proposal features a flex-cap system that contains an absolute salary ceiling — to be set $5 million above the average team salary. In addition, the N.B.A. would roll back existing contracts “in proportion to system changes in order to ensure sufficient market for free agents.”
The other major differences in the “reset” proposal are:
- The midlevel exception would be set at $3 million in Year 1, with a maximum length of three years, and would grow at 3 percent annually.
- Maximum salaries would be reduced.
- Sign-and-trade rules would remain consistent with the 2005 labor deal.
- Contracts would be limited to four years for “Bird” free agents and three years for others, but each team could give a five-year deal to one designated player.
- Raises would be limited to 4.5 percent for “Bird” players and 3.5 percent for others.
- Changes requested by the union on restricted free agency rules and salary-cap holds would not be included.
Both proposals include an “amnesty” provision that will allow every team to waive one player and have 100 percent of his salary removed from the cap.