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NBA Side-Steps Forward in Offer to Players
Posted By Eric Pincus On November 11, 2011 @ 12:00 pm In All,NBA | No Comments
As detailed by HOOPSWORLD’s Alex Kennedy, the NBA and the NBPA broke off talks Thursday night after the owners made a new proposal to the players.
The union will take some time to deliberate internally on whether or not it’s a deal worth taking, with a decision to be announced by Tuesday.
NBA Commissioner David Stern intimated this is as good an offer as the players will get.
NBPA Executive Director Billy Hunter said it’s “not the greatest proposal in the world,” but by now, isn’t that a given?
When this is done, be it in a week, a month or a year . . . the union is going to be yielding a sizable piece of Basketball Related Income (BRI). It’s an inevitability already conceded by the players.
What’s to come over the weekend will likely be a storm of negativity and frustration from the players, their agents and, to a certain extent, the fans.
The difficult reality is that the last Collective Bargaining Agreement (CBA) that originated in 1999 and was extended/modified in 2005, proved to be a great deal for the union.
At the time, Hunter took a lot of flak for giving up too much to the owners but in retrospect he did quite well. The economy was booming back before 9/11 and the true economic downturn wasn’t until 2007/2008.
For the last three or four years, the players have been sheltered from some harsh economic realities. As teams battled a shrinking economy, doubling their efforts and expenditure to bring in the same dollar, the talent was still locked into a 57% share of the gross (many making raises of 8%-10.5% a year).
If it cost 40 cents to bring in a dollar early in the decade, in recent years teams were spending 50 cents to bring in the same level of income (roughly $4 billion).
Last year the math worked out to be roughly $2.3 billion to the players and about $2 billion in operating expenses to the owners . . . $300 million in the red.
Don’t buy the owners’ numbers? Even Hunter has acknowledged the NBA lost $150 million last year. Because owners are very wealthy, that’s a loss they’re supposed to willingly accept?
What the players are going through is a market correction. It may be painful to be treated like a commodity but this is the ugly side of business.
There will be no winning here, only compromise. It’s not about righteousness but salvation.
The league has already cancelled a month of the season and in the owner’s newest proposal two more weeks will pass before the season starts up on December 15th (with a 72-game season).
For the fan following every twist and turn of the lockout, better have a strong stomach because you’re watching the butcher make the sausage.
Protecting the Middle Class
The details of the new proposal have not fully leaked yet but the players have reluctantly begun to accept that the final BRI split will be 50/50.
The battle has been over system, specifically how it relates to teams in the luxury tax.
In the owners’ previous proposal, tax teams would get half of the Mid-Level Exception (MLE) at $2.5 million with a maximum length of two years . . . and they’d only have it every other year.
Clubs past the threshold would also be prevented from participating in sign and trades.
By limiting what the most-willing spenders can pay out (the Los Angeles Lakers, Orlando Magic, Dallas Mavericks, etc.), the league is taking away some of power of free agency.
The biggest stars are going to get the bulk of the money. The rookies are on a set wage. It’s those in-between, the middle class and rank-and-file, who need some sort of leverage in free agency.
If a player has no other viable suitor, why would their existing teams present any sort of lucrative offer?
Back in 1999, Dennis Rodman misjudged the economics of the new CBA and by the time he looked to sign with a team, no one had any significant amount of money left to offer. Coming off of a championship season with the Chicago Bulls, he went to the Lakers for peanuts (relatively speaking).
The union is fighting to make sure the bulk of their members don’t end up in a similar position by default over what could be a 10-year deal.
Owners Took Steps Forward, Albeit Side-Steps
The NBA has since raised the MLE for tax teams to $3 million starting and three years in length. They’ve also reportedly restored the ability to sign and trade.
[UPDATE: According to ESPN's Chris Broussard, the owners' offer only allows for S&T for the first two years of the deal.]
The union might be willing to begrudgingly accept the lower dollar MLE but they want it every year. Or even the full amount instead, if there’s going to be a restriction on consecutive seasons. This is the primary area that will be contested before a final deal is struck.
[UPDATE: Broussard also wrote the owners are indeed offering MLE every year at $3 million.]
While those are both concessions on the owners’ side, a new issue arose in determining who is considered a tax team.
The players expected the offer to view any franchise under the threshold as MLE eligible, even if the signing would put them into the tax.
The owners instead have insisted that the MLE be restricted for teams under the threshold if it would in turn position them over.
Given that the cap/tax numbers are expected to be held at the same level as last year ($58/70.3 million, respectively), who then would be eligible to spend their full MLE?
It’s not available for teams under the cap, so the MLE would only work for teams with salary between $58 and $65.3 million. Anything more and it’s a $3 million exception available every other year.
If an agreement does not get done next week, this distinction may be the reason why.
New Enticing Exception?
As reported by Zach Lowe of SI.com, the league has come up with an entirely new exception for teams that start under the salary cap.
If they use their available space, they would be granted an additional $2.5 million exception.
That would, in a sense, raise the cap across the board, providing additional compensation for the rank-and-file players (keeping in mind they make up the majority of the players’ union).
Additionally it would appeal to the teams with tighter budgets. They have greater spending power to $60.5 million without worry of nearing the tax at $70.3 million.
The details remain sketchy but this could be a solid overture by the owners given the concerns of the middle class.
Also according to Lowe, the NBA has met the players’ demand for a CBA opt-out after six seasons instead of seven (on the 10-year proposed deal).
Of course, given how one-sided this negotiation has been, how quickly does the NBPA want to get back into lockout-land?
Options for Union
The players don’t have to accept this proposal. It’s another artificial deadline set by the owners with a vague threat of a 47%/hard cap deal on the other side.
What the league wants is basketball before Christmas. Once games televised nationally on ABC are cancelled, the NBA is looking at a serious refund to the network and an unsustainable loss of income.
That’s a true deadline; one the players can try to use as leverage. Then again, they too lose for every game that’s cancelled. Every dollar of BRI that doesn’t come in – half is from the players’ (shallower) pockets.
What they should and probably will do is come back with a counter-proposal, notably on the MLE for taxpayer issue.
Both sides have to resolve 30-something secondary issues like age limits, draft rules, drug testing and conduct guidelines. There’s still room for negotiation within the progress both sides have already made.
It may not feel like progress but they’re closer than they’ve been to a deal since this process began.
A large contingent of players was open to taking the owners’ last proposal.
Said one player in a private text message, “Take the deal boss, I just wanna play.”
By carrying on the fight, President Derek Fisher and Hunter have gotten a little more blood from the stone.
If they are willing to take it further, the players can decertify or disclaim the union.
Decertification is a lengthy process that would still allow for further negotiation and even resolution before ever coming to a vote.
The players are waiting on the NLRB to make a decision on their claim of “bad faith” against the owners. That open issue may actually get in the way of decertification, but it’s not the actual act the players need but the threat to gain leverage.
If Hunter filed a disclaimer of interest, the players would be able to file anti-trust suit(s) against the NBA more quickly but that too isn’t a clear path.
The deal on the table may be ugly but is it that far off from what the union is willing to accept?
Once collective bargaining is scuttled, the power shift from the owners and players to a third party in the courts. Does either side want to leave this in the hands of a judge?
How much would be lost in the process with appeal after appeal?
The players will almost certainly file decertification papers and give the appearance of a delay to endanger Christmas but the simple truth is both sides need to compromise and they need to do it next week.
Neither side will entirely get what they want, even if the owners are getting most of what they set out to do. The smaller market teams are fighting for some level of parity and reportedly are against the deal as offered but overall it would appear the new CBA will be a one-sided victory for ownership.
Blame Hunter and Fisher for the job they’ve done but it was a no-win situation from the start. Would anyone else have fared any better?
Given the economic realities of the past few years, the union isn’t going to garner much sympathy for locking in half of a $cont4+ billion pie.
It’s time to move on from what is fair and get to what is a practical and livable solution.
[UPDATE: Broussard also noted the league minimum salary would climb from the 85% previously proposed, to 85% for the first two years and then 90% for the remainder of the deal.]
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