New CBA: What Changes?
With the early Saturday morning news that the NBA and the Players had reached a handshake deal on a new collective bargaining agreement the entire NBA world heaved a huge sigh of relief. Fans can get back to cheering their team, media can get back to covering games and storylines, stadium workers can get back to earning paychecks, and the players can get back to doing what they do best.
We’ve talked a lot on this site – as have all NBA media outlets since even before the lockout began – about the various points of contention in the labor negotiations, so with an agreement on the table waiting to be finalized and ratified let’s hit the key topics (the A-list, if you will) and note how they change with this new deal.
Basketball Related Income (BRI)
Old Deal: BRI was split in favor of the Players, 57%-43%.
New Deal: Players will receive between 49% and 51% of BRI.
Clearly this is a win for the Owners. Coming into this deal the Players knew they would have to give a bit and while some Owners wanted more, this essentially becomes a 50-50 split. A target for BRI will be defined at the beginning of the season (and the Players target is 50% of that) and depending on where the actual number hits the Players will receive the upper end should BRI be higher than projected (60.5% of each dollar over the target) or the lower end if BRI comes in lower. Both sides had to give from what they initially wanted and while it hurts the Players, it’s generally considered reasonable.
Old Deal: Team could waive one player, paying his full salary, and not have that amount count towards the luxury tax. Choice had to be made in a two-week window after previous CBA agreed upon. Not Stretch Provision existed.
New Deal: Team can waive one player – at any point during the lifetime of the CBA – and 100% of the value comes off the cap and 100% of it comes off the luxury tax. The Stretch Provision will apply only to new deals signed under the new CBA. A team may waive a player and stretch out the cap hit at twice the years left on the contract plus one (if a player is owed $5 million over two years, that then becomes a $1 million cap hit for five seasons).
The Amnesty clause in the previous CBA was nice for a team that was over the cap, but gave a team zero break on their cap status. With a 100% break in this CBA more team may find fit to use the provision for a bad deal, instead of just ridding themselves of a stagnant deal at the end of the bench. If they are convinced they can replace the player for less than they are paying him, look for them to make that move.
The Stretch Provision is new and allows a team to lessen the cap hit for a given waiver should they choose to do so. They can still elect to not use the provision and take the cap hit all at once if they like.
Restricted Free Agency
Old Deal: When a restricted free agent signed an offer sheet with another team, their former team had seven days to match or decline the offer. Qualifying Offers are set at three times the fourth season salary for rookie scale players.
New Deal: The timeframe shortens significantly to three days. Starting in 2012-13 players defined as “starters” – starting 41 games or more over the previous two seasons, or playing 2,000 minutes on average over two seasons – will receive higher Qualifying Offers. First-round picks will earn the higher of their defined QO or the QO made to the ninth pick in the draft. Second-round picks will receive a QO equal to the 21st pick. A first-round pick (1-14) not defined as a “starter” will receive a QO equal to the 15th pick.
Teams didn’t like the length of the window because while the former team was pondering the offer sheet their money was tied up. If the team then chose to match after waiting almost the full length of time, the offering team may have missed out on other talent to add. Players likewise didn’t like hanging in the wind while teams waited to the last minute to make a decision. Considering teams know very quickly whether or not they will match an offer sheet, three days is more than enough time. The QO rule changes better set the market value in restricted free agency for players like Greg Oden or Hasheem Thabeet versus ones like Landry Fields.
Old Deal: Every team received a Mid-Level Exception every year (up to five years starting at $5.8 million last year) and a Bi-Annual Exception (up to two years starting at $2.1 million last year) every other year.
New Deal: The MLE is now four years and will start at $5 million. Teams near or over the luxury tax line will be limited in the amount they can spend, being restricted to only adding a MLE deal up to $74 million in total salary (in the first year). A team with $69.5 million in commitments, for example, is limited to $4.5 million for the MLE. Teams over that amount can offer a mini MLE of three years starting at $3 million. The Bi-Annual Exception remains. A new exception worth $2.5 million is available to teams who use all their cap space to sign free agents.
The Players wanted the MLE to remain unchanged for luxury tax teams. However, from the Owners original demands of no ability to use the MLE for tax teams as well as wanting to restrict the length of the deals to alternating between three and four years each season at their last offer, it’s a win for the Players. Scaling the tax starting at $69 million in cap commitments from $5 million down to $3 million was an excellent idea and means teams with a lot of committed money can still add a free agent. Call the new exception the Miami Exception.
Old Deal: Teams paid a dollar for dollar tax for each dollar spent over the defined luxury tax level ($70.3 million in 2010-11).
New Deal: The luxury tax will be raised for each $5 million over the defined luxury tax level starting in 2013-14. The first $5 million will be 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 starting at $15 million over each dollar is taxed at $3 per. For the next two seasons the tax will remain the same, one dollar for each dollar spent over. Teams who pay the tax n four out of five years will be hit with an additional dollar tax for each dollar over the tax level (the clock for this starts with 2011-12).
This will hit some teams much harder than others, but the point is to reduce the amount of tax paying teams. The end result of this is within a few years almost no team will be paying the tax, which is exactly what the Owners were going for. Even those who do will rarely push into the second tier of tax payments, let alone the third or fourth tiers.
Also, those not paying the tax will split 50% of the amount of tax paid. The other 50% goes to the NBA.
Old Deal: 8% of a player’s paycheck was placed into an escrow system to help ensure that at the end of the season the Players did receive 57% of BRI. If Player salaries exceeded 57% of BRI, the money went to the Owners. If it did not, the money went to the Players.
New Deal: The amount will change to 10%.
The Players won’t like getting 2% smaller paychecks – who would? – but they did get a small win here. Initially Owners wanted this money to go into a fund that would roll over every year, allowing the Owners to hold the money regardless of where BRI hit as a hedge against the following seasons. Under the agreed upon CBA the escrow fund will only apply to the given season.
Old Deal: All teams over the cap had to match salaries within 125% + $100,000 to be allowed. Teams were allowed to include up to $3 million in cash per trade as incentive (did not count towards the 125%).
New Deal: The percentage changes to 150%, unless a team is in luxury tax territory. Those teams are limited to the previous 125% number. Teams are now limited to spending $3 million in cash in trades for an entire season.
One thing Owners and Players wanted was to loosen the trade rules a bit, which they have done. Keeping the old rule for luxury tax teams is a restriction, but it’s not any different than last year. Teams active in using cash to buy picks on Draft Day may have to re-think their strategy.
Minimum Team Salary
Old Deal: A team had to have a cap figure of at least 75% of the cap to share in luxury tax payments.
New Deal: That amount moves up to 85% this season and next, then will move to 90% thereafter.
By moving up the salary floor, along with the new revenue sharing plan agreed upon by the Owners, it ensures all teams should have the ability to spend the minimum, keep their own free agents, and also compete for other free agents.
It’s a solid deal and represents a great deal of compromise on both sides. Yes, the Players gave up the most when you look at the about 7% cut in BRI, but they were stuck in a no-win scenario where all they could hope to do was mitigate the damage the Owners wanted to inflict. Considering some of the items the Owners wanted initially, they did just that.