NBA AM: Still Not There On Labor Deal
Still Not There: Labor deals in sports are a game of inches.
To believe these things can be achieved in a single sitting is not only naive, it’s impractical.
Time is the virtue that creates progress. It’s the time lost. The time between deadlines; the time to rethink ones position that creates movement in this process.
That time is also painful and arduous, but it is necessary to motivate those that have to ultimately live with the decisions made for what could be the next decade of NBA basketball.
Labor deals are not fun, especially a labor deal that for all intents and purposes will shrink the NBA economy, not expand it.
Remember, the NBA is asking its players to reduce their share of the pie by more than 7%. Every time in this process that the Players have pushed away from the table and said “No”, the next offer was slightly better. Hence why another Monday will pass without a deal in the NBA.
However all is not lost.
Despite what was more of a process of time keeping than punitive reaction. The NBA had to cancel more games last week, because that was the next item on the calendar in this process.
The cancellation of more games was a given.
The NBA needs 30 days to get a final labor contract written and ratified by both sides of the deal. They need time to get the mechanical parts of free agency, training camps and a small amount of pre-season games together.
Even if a deal had been reached last Friday, there were not going to be games in November anyway. So NBA Commissioner David Stern’s decision to announce game cancellation through November 30th was a given. It was already factored into the equation.
It’s the next wave of cancellations that will be damaging, hence why both sides are expected to meet again this week to see if time, and the impending collapse of December games in the NBA can move this process the final few inches necessary to reach a deal.
To be clear, both sides still are close enough to punch this through if they really wanted, but there remains a battle going on where both sides are really fighting over principals of movement.
The NBA Players’ Associations feels it’s given the NBA a ton… they have moved from their original 57% of BRI split, down to 52%. The Players never believed they’d get 57% any more than the owners who original proposed 45% of BRI, expected to the Players to be in the 40’s.
Both sides knew when this started that the magic number would fall somewhere between 51% and 52%. The question is who puts their principals in their pocket to reach a deal?
Keep in mind that a couple of unexpected things happened this year that have empowered the Players.
First the flurry of 2010 free agents and the sheer number of teams that dropped long lingering salaries reduced the Players’ share of BRI last year below the agreed percentage.
Teams also have been planning for a new NBA economy and larger long-term deals never happened meaning the Players found themselves with a windfall in the form of Escrow Refunds.
Every player in the NBA received an 8% refund of their 2010 salary in last August. This windfall for some players has provided a war chest of sorts for the rank and file to fight this fight of principal.
As one insider explained it, the NBA Players are fighting the NBA with the NBA’s money.
Typically Escrow is paid out to the teams to reduce the BRI share to 57%, and most players forget that this fund is there and that they could get some of those dollars back.
The Escrow money was worth about $160 million, or said another way about the value of the first two weeks of the NBA season.
The NBA Players were prepared to lose a couple of pay checks when they started this so for now; there is a resolve to fight the good fight.
That stance will change soon.
There are not many NBA Players other than those immediately involved in this process that understand why they are not playing basketball. Much like the fans that scratch their heads in dismay, Players around the country are growing impatient with a process they really don’t care about.
Why? Because most don’t believe the drop from 57% to even the NBA’s 50% will affect them, because the truth of it is good players will still be paid more than they can spend anyway.
Both sides of the situation are expected to meet again this week, after cooling off this weekend.
Both sides continue to say there is nothing personal and they are eager to meet again.
If you look at the progress made from meeting to meeting, the inches needed to reach a deal have started to close and it’s possible that one more meeting could be all it takes to close the gaps enough to say both sides have a deal.
For fans of the NBA this has been a brutally long process, but keep in mind the first regular season games haven’t officially been missed yet, that happens this week and that’s when it will start to become very real for all of those involved.
Pieces of a Deal: David Stern is fond of saying that neither side has agreed on anything until they agree on everything.
That’s his way of deflecting commentary on progress in the room and according to Howard Beck of The New York Times and Sam Amick of SI.com, more than a little progress was made last week as both sides of the labor fight settled in on system issues and apparently made some agreements on form and function of a new salary cap system.
Here are some of the notable items you can mark off the to-do list.
There will be a Luxury Tax system.
Both sides seem to have agreed on the framework of a multi-tiered system that would penalize NBA teams based on the amount over the tax line they end up.
Last year the Tax line was just over $70 million. So far for the 2011-2012 NBA season there are just four teams with more than $70 million in salary commitments – the L.A. Lakers, the Orlando Magic, the Portland Trail Blazers and the San Antonio Spurs.
According to Howard Beck, the system will work something like this:
Teams will be charged $1.50 per $1 spent beyond a threshold, replacing the previous dollar-for-dollar tax.
To further discourage spending, the tax will increase for every $5 million spent beyond the threshold: to $1.75 after $5 million, $2.25 after $10 million and $3 after $15 million.
Under this system, the Los Angeles Lakers would have paid $42.5 million in taxes last season, compared with $20 million under the old formula. (The rates could still change based on other tradeoffs.)
Both sides seem to have reached a compromise on the length of NBA contracts. The NBA had been pushing for three year deals for players leaving their existing teams and four year deals for players who stay with their existing teams.
According to Sam Amick:
Contracts will be shortened from six years to five years for players who have “Bird” rights (which allow teams to exceed the salary cap to re-sign their own free agents) and from five years to four years for non-Bird contracts.
There appears to be something of a concession on annual increases built into contracts, with both sides conceding that the current 10.5% increases some players were receiving outpaced NBA income growth.
According to Howard Beck:
Annual raises will be reduced by several percentage points, possibly as low as 5 percent for Bird players and 3.5 percent for non-Bird players. The prior deal allowed raises as high as 10.5 percent (Bird) and 8 percent.
There will be a Mid-Level salary cap exception. The value of this exception will drop from the $5.8 million value teams could offer last season to roughly $5 million going forward. There are still some open items on this exception, notable on whether over the Luxury Tax teams will be eligible to use them.
The NBA wants to remove all exceptions from teams over the Luxury Tax; the NBA Players feel those tools help keep an open and flexible marketplace.
According to Sam Amick, this issue is still very much open for further debate:
The value of the mid-level, which allows teams to sign players even when they’re over the salary cap, will be reduced from $5.8 million to $5 million. The NBPA has offered to shorten the length of the contracts from five years to four years, while the league is still pushing for a maximum of three years. There is also disagreement regarding luxury tax-paying teams and their ability to sign players using the mid-level.
There will be an Amnesty provision in the next labor deal, but the interesting part of this idea is that NBA teams will have the ability to defer using the Amnesty cut for the life of the agreement.
In 2005 when the NBA first introduced the Amnesty provision to help teams get under the luxury tax line, teams had basically two weeks to decide who to use the provision on.
This new clause, would give teams time to choose the right salary to trim.
The only major catch is that only contracts signed before July 1st, 2011 would be eligible.
According to Howard Beck:
Each team will be permitted to waive one player, with pay — anytime during the life of the C.B.A. — and have his salary be exempt from the cap and the luxury tax. Its use will be limited to players already under contract as of July 1, 2011.
There will also be a provision in the next labor deal that allows teams to exit deals and stretch out the payment owned. It seems that this option would be available every season, so if a team wanted to part ways with an underperforming or problematic player that could stretch out the payments.
This would have been useful for the Indiana Pacers in the case of Jamaal Tinsley, who was being paid for two seasons despite not being on the team.
According to Sam Amick, the provision would function like this:
This exception would allow teams to waive a player and stretch his pay (and salary cap hit) over an extended period of time. The agreed-upon formula is as such: double the number of years left on the player’s deal, plus one (so Player X who has two seasons remaining on his deal would be paid over five seasons). It’s unclear how often this would be available to teams, but it’s likely to be at least once per season.
It’s unclear how the “Stretch” provision would impact Luxury tax and Salary cap, however sources close to the process indicated it would be based on what a player is actually paid that year.
So in the case of Orlando’s Gilbert Arenas who is owed $62.44 million over the next three seasons, he could be “Stretched” to count for $8.91 million over seven seasons.
On the surface this seems like an interesting tool for injured players, but there is a deferment mentality that could catch up with some teams who do not manage this provision well.
The sides still have not reached agreement on age limit, with the NBA pushing for an age-20, two years removed from high school rule.
The NBA Players seem open to the idea assuming it is part of a system that allows high production rookie like Derrick Rose and Blake Griffin the ability to hit their first big contract earlier than the current four years in place.
Under the expired Collective Bargaining Agreement, rookie contracts had two guaranteed years and two team option years. The Players Association would like to see long-term extension be eligible after the second year on over producing rookie deals.
The sides have not reached an agreement on drug testing and disciplinary action.
The NBA Players would like to see a better grievance system, especially with regards to the power the NBA Commissioner holds on suspensions and fines.
Overall the broad strokes of a labor deal seem to be in place, so it seems that the commentary coming from both sides that they simply need to “punch it in” is real. They simply need another set of meetings to hammer out the loose ends.
And don’t overlook the leaking of these details as a means to test the water before both sides try and hammer in the final drive.
More Twitter: Make sure you are following all of our guys on Twitter to insure you are getting the very latest from our team: @stevekylerNBA, @AlexKennedyNBA, @jfleminghoops, @TheRocketGuy, @EricPincus, @joelbrigham, @alexraskinNBA, @TommyBeer and @YannisHW.
NBA Chats: There are three NBA Chats scheduled for today starting with HOOPSWORLD’s Bill Ingram at 11am. Bill’s chats do fill up fast so getting in early is always wise. HOOPSWORLD’s Anthony Macri will host his weekly NBA Chat at 3pm EST. Coach Macri works with NBA Players year round in developing their game, so drop in your questions for Coach Macri now. HOOPSWORLD editor Jason Fleming rounds out the day with his weekly NBA chat at 8pm EST. You can always find the next NBA Chat here: http://www.hoopsworld.com/upcoming-chats/ and if you are looking for Previous Chats try here: http://www.hoopsworld.com/previous-chats/