NBA AM: The Moment Of Truth In The NBA
The Moment of Truth: We have finally arrived at what insiders are calling “Deal Day” in the NBA. All of the posturing and all the negotiating have come down to this weekend. The NBA and its Players will gather in New York today to try and hammer out a labor deal that if reached would allow the NBA’s 2011-2012 season to start as expected. Failing to reach a deal by Sunday could result in the outright cancellation of the season according to some reports.
Both sides of the labor fight have committed to meeting all weekend to reach a deal and plan to stay in the room as long as progress is being made.
ESPN’s Marc Stein revealed some of the details from the owners last “offer” although neither side will agree on what is an “offer” and what are discussion points, but here are some of the systemic changes the owners are said to be asking for in exchange for dropping their hard cap demands.
The biggest idea is the institution of a “Supertax” that would charge NBA teams $2 in luxury tax for every dollar over $70 million in payroll. The tax would increase to $3 for every dollar over $75 million in payroll and increase yet again to $4 for every dollar for teams with payrolls above $80 million.
There are just four teams with a 2011-2012 payroll currently committed to over $70 million right now and that’s the Lakers ($91.3 million), The Magic ($74.81 million), The Spurs ($73.18 million) and Celtics ($72.47 million) – so the number of teams impacted by such a harsh tax system is small. However the Players view the tax system proposed as a hard cap by another name and that’s considered a deal breaker for their side.
To give you a sense of what that means; The Lakers $91.3 million payroll would incur $10 million in tax for being over $70 million. They would also incur $15 million in tax for being over $75 million and $45.2 million for being $11.3 million over $80 million for a grand total of $70.2 million in tax. Add $70.2 million in tax to their $91.3 million payroll for a 2011-2012 player cost of $161.5 million.
An Amnesty provision is indeed on the table. This would allow for teams to shed a contract in order to meet the new economic model. There has been some debate on whether this Amnesty provision would be for a singular contract or allow for multiple contracts to be shed up to a fixed dollar amount.
The released player would still be paid 100% of his contract value; it simply would not count against the cap or the tax computation.
The NBA Owners proposed this provision not only as a means for their side to meet a new lowered cap and tax environment, but also to reduce what’s paid out to player in percentage of the Basketball Related Revenue. Amnestied contracts would not count in the BRI computation reducing the double whammy effect a lower BRI payout would have on the 8% escrow system that would remain in place.
It also seems that shortening of guaranteed contracts to a maximum of three years for players that leave their home team and four years for players that stays is what’s being proposed.
This is a logical step as the last years of long terms deals tend to be the years that fail to line up with production.
Most players seek an “opt-out” in their contract negotiations anyway. Sources close to several Players say this concession is not a slam dunk as players want long term injury protection, but this concession seems like an easier fight.
Stein is also reporting that there is a provision that would change the Larry Bird rights process. Under the old system teams could exceed the salary cap to re-sign their own player. The change would allow only one player per team, per season to be re-signed using this provision.
This new provision might be problematic for the Miami HEAT in a few years, but by and large most teams don’t have enough “star” players whose deals end at the same time for this to be a huge detriment, but it will require teams to do a little more long-term planning.
The offer on the table now is also said to include a reduction in the annual mid-level exception. The Midlevel was valued at $5.8 million last season. The proposed change would reduce it down to roughly $3 million annually and limit mid-level contracts to a maximum of two or three seasons in length.
This provision may not sit well with the Players, but it’s the logical change in this provision. Some of the worst free agent deals have come from mid-level deals in which there are several teams are vying for a singular mid-level talent and the bidding gets silly and bad decisions are made.
A three-year $16 million deal is still a decent contract. The compromise here would be allowing two of these exceptions per season.
The Owners offer is also said to remove the concept of sign-and-trades and the outright elimination of the bi-annual exception worth almost $2 million per season.
This will be interesting, because some of the Players in the room this weekend including Miami’s LeBron James have either used this provision to land where they wanted to be or in Chris Paul’s case would want to use it when he hits free agency next year, and they may push back.
There is no doubting that sign-and-trade deals have been a key mechanism in driving up player salaries, so eliminating them makes sense for the teams. It will be interesting to see if the Players Association goes for it.
The Owners proposal includes significant reductions in maximum salaries and annual raises and there is a 5 percent rollback on current contracts.
The raises issue is not a major one for the Players, however the reduction in maximum salaries would be an issue and the 5% rollback will be a deal breaker.
Stein is also reporting that a new provision being dubbed the “Carmelo Rule” was introduced that would prevent teams from using a Bird exception to sign or extend a player acquired in trade unless they are acquired before July 1 of the final season of the player’s contract.
This is interesting on two fronts. Teams tend to deal with the season at hand and try not to deal with next seasons’ problems this season. This rule would absolutely push the decision window back a full year.
In Orlando’s case they would not be able to wait until the trade deadline to deal Dwight Howard as the acquiring team would not be able to re-sign or extend him using Bird Rights. This means Orlando would have to make a decision on Dwight now, or at least when the lockout is lifted.
It removes the circus environment indecision from the player has created, such as the chaos the Denver Nuggets had to endure with Carmelo Anthony or the Cavaliers with LeBron James.
The net result is teams and players will have to deal with trade rumors and trade scenarios a full year before contracts end and the final year of a star player’s contract now means even less.
It will be interesting to see how this shakes out, and what parts of the owners offer gets agreed to.
The proposal as defined above is not a terrible one; some tough negotiating and some give and take could yield a decent deal for both sides.
As defined it’s a little one sided for the Owners, but that’s what the next few days will be about – hammering through concepts and trying to find a middle ground.
No Deal Yet For Kobe, Yet: There have been reports suggesting that Lakers’ star Kobe Bryant was closing in or has agreed to a deal to play in Italy if the lockout continues. However sources close to his camp warn that there is no concrete deal in place and that things are not nearly where they are being reported to be.
Virtus Bologna president Claudio Sabatini was quoted recently saying he felt a deal was 95% done, however Bryant’s camp wouldn’t classify it that way.
According to Sabatini, “There’s still some things to arrange but at this point I’m very optimistic. I would say it’s 95 percent done… We have reached an economic deal.”
Word is the deal for Bryant would pay him $3 million for the first 40 days of the Italian league season.
Sabatini was also quoted by Sportnando as saying“The agreement is for ten games. We don’t have money also for the 11th one. I hope that today in the NBA they won’t find the agreement to start the season” “We also wish that in the morning in Los Angeles they will send us the contract’s draft. I want to thank Kobe Bryant’s agent. The negotiation with him was great and very professional” Sabatini said he hopes to have Bryant for the 1st round of Serie A against Virtus Roma on October 9th. “We are already planning the event. It is not easy because today he will be in the States and he has to go to our embassy to get the visa, he needs the letter of clearance from the NBA which allows him to sign with us and then be back to Italy to have medical tests. We have to send his contract to Legabasket by next Friday”
It sounds like Bryant has an agreed offer pending the outcome of this weekend’s labor talks. If the labor talks implode this weekend, it does seem Bryant has a palatable offer.
His camp has warned that nothing is done, but it seems awfully close.
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