Salary Cap Chat With Larry Coon 11/16/11

Larry Coon the noted author of the CBAFAQ, will answer your Salary Cap and Collective Bargaining Agreement questions. Larry will answers your questions about the Salary Cap, NBA trades and the ongoing CBA talks at 3:00pm

  1. James Farner

    Were the players hoping that the disclaimer would give them a little more leverage to get the 4, 5, or 6 small concessions they need at 50/50 of BRI, or were they planning on blowing it up completely? Regardless of their intent, will there be an opportunity to go back to the table, and if they do, do they indeed have a little more leverage now?

    • Larry Coon

      If they were just looking for more negotiating leverage they would have filed a petition to decertify, rather than disclaim interest. Decertification had more going for it: 1) It would be less likely to be attacked as a “sham,” 2) It would have side-stepped the league’s federal lawsuit, and perhaps most importantly 3) It would give the players a 45-or-so day window for further negotiation, during which they would have gained leverage.

      It’s clear that they players really do want to use the additional leverage from being in the antitrust arena to try to negotiate a better settlement for themselves. That said, they preferred to negotiate toward a settlement, and dissolved the union only when the league ended negotiations. (The league blames the players, but when you say, “There comes a time when you are done negotiating, and we are,” then how else are you supposed to interpret it?)

  2. Dave, SLC

    What, if any, are the scenarios that could bring a quick end to the lockout, however unlikely?

    • Larry Coon

      Here’s one scenario — not saying this will happen, but it is one scenario.

      1) The “doves” among the owners scream, “what did you just do?” to the league office. They will be joined by the moderates (the guys who were on the fence before) and the ex-Hawks (like Dan Gilbert claimed to be).

      2) This group of owners (who are in the majority) direct the league office to to approach Kessler with overtures toward a compromise.

      3) Kessler & the league hammer out a compromise agreement, which will be somewhere between their latest 50-50 offer an the players’ previous 53 percent offer, with some of the system issues the players were fighting over. They may even get 50-50 if they give the players more of the system.

      4) After settling with Kessler, the players vote to accept the agreement, re-constitute their union, and ratify the new CBA.

      I doubt this would happen right away (I think we’ll see an initial court skirmish or two and this will happen closer to the season-cancellation date in January).

      One additional thing that would be unresolved — when the NFL did this, they managed to avoid missing any paychecks. This is not the case with the NBA — because the union decertified PRIOR to the first pay date (which was yesterday), their missed paychecks become part of the antitrust claim. Even if the two sides came to an agreement today, the antitrust claim for those damages could still be outstanding.

      I imagine that the players dropping their suit(s) would be part of the agreement, but I don’t think they agree to do so (and give up the potentially treble antitrust damages from those missed paychecks) without being compensated in some way. This will complicate matters.

  3. David Galin

    Has there been any decision on how to do the draft lotto for 2012 if there’s no 2011-12 season? Also, has there been any decision for if this year’s cap figures will carry over or will they disappear and move on to 2012-13 like this season really happened should 2011-12 never happen?

    • Larry Coon

      I already answered your first question.

      For your second question, it sounds like you’re really asking whether the clock stops and 2011-12 salaries become effective in 2012-13, or 2011-12 is lost, and the players 2012-13 salaries are effective in 2012-13. The answer is the latter — if the 2011-12 season is cancelled, then those salaries are “lost,” and anyone whose contract expires in 2012 will be a free agent.

      That said, the two sides could mutually decide otherwise in the next CBA.

  4. Norman Volsky

    How do you think the NBA draft order will be decided if there is no season? It seems very unfair to teams like toronto and cleveland to average the last 3-5 years records and determine the lottery that way. Isn’t accomplishing competitive balance a priority for owners and wouldn’t determining the draft this way be counterproductive?

    • Larry Coon

      At the risk of being overly pithy, it’ll be whatever they decide.

      The NHL was in this situation in 2004. They came up with a solution that included a weighted lottery with all 30 teams. The weighting was based on playoff appearances over the previous three seasons and first overall picks over the previous four seasons.

      They won’t just repeat the 2011 draft order — that’d be “rewarding” franchises twice for the same bad season.

  5. Dave

    Hey Larry.. How come the experts seem to be leaning towards the owners winning in court? I learned of a court case where Macy’s, Bloomingdales, and Lord & Taylor were all owned by the same company. They were forced to sell Lord & Taylor because they owned too much of the market. When the NBA purchased the ABA they consolidated the entire market and are now using this monopoly to institute price fixing. Why is this not clear cut?

    • Larry Coon

      According to my antitrust guy, he favors the players, who have a better case on the facts and the law — but says it’s far from a certainty.

      But the players need to score some early victories — they don’t have the resources or the stamina for a long fight. If this gets tied up in infighting, then the advantage shifts to the owners.

      For this reason, two outstanding lawsuits may be bad for the players. There will be a venue fight, and this just doubled it. In addition, there will likely be a hearing over whether to consolidate the two suits.

  6. Russ Nelson

    I read through the owner’s latest proposal and it sounds like a team can only have one max designated player..is that true or did I misunderstand that portion?

    • Larry Coon

      The reference in the proposal was in the section on contract lengths. It said, “Maximum of 4 new years for rookie extensions (except maximum of 5 new years for a maximum-salary Designated Player rookie extension — team can have only 1 Designated Player on its roster at any time).”

      So…yeah. it sounds like they’re creating a new category of player called a “Designated Player” who:

      * Is coming off his rookie contract.

      * Is eligible for a 5-year extension.

      * Receives the maximum salary.

      * Can be the only so-designated player on the roster. If a team already has a Designated Player on its roster, then it cannot have another.

  7. Christian Goodman

    With the sides so close and only off by a few system issues, is there really a chance either side would be so proud and stubborn that they wouldn’t get a deal done in the next few days? It just seems impossible to me that they’re not playing by late December, considering how close they are.

  8. Josh

    Larry,

    I have been following the lockout the whole way but now confused. So what are the next steps I was thinking 1 of 3 things 1)while there has been a lawsuit now filed the league and players can still negotiate and come to an agreement. 2)the judge basically tells the players to settle because they wont like what happens if he gets involved. 3) there is a long drawn out legal process that begins in Feb that will cancel all of the season. Am I correct in thinking this is where things stand or am I way off?

    • Larry Coon

      1) Yes, the “sides” can now continue to negotiate, but one “side” isn’t really there any more — the players union no longer exists as a negotiating unit for the players. At this point Jeffrey Kessler would probably be the point person for the players, and in order to have a new CBA the players would essentially have to agree to whatever Kessler gets for them, re-form the union (with league approval, which would be granted since the league needs the union in order to have a CBA), and ratify the agreement.

      2) The judge doesn’t need to tell the sides to settle — any lawyer knows the worst outcome for both sides is a drawn-out litigation, and both sides would rather settle than let the process run its course. One option the judge may order is non-binding arbitration — i.e., both sides would be required to participate, but aren’t forced to live with the result.

      3) I imagine there will be a push to resolve their issues between now and the Feb 29 trial date. It might go differently this time, now that the stakes are higher (both in terms of time and in terms of repercussions), and the players have more leverage.

  9. Bryan

    As a fan I would prefer to see a situation where the Memphis’ of the league are on the same playing field as the Lakers’ of the league as far as salaries and players are concerned. I understand the NBAPA middle class looking out for themselves, but I don’t like their position of allowing cap teams to continually acquire talent while small-market teams can’t attract a free agent. What are your thoughts, am I missing something?

    • Larry Coon

      It’s a careful balance. As Adam Silver said, “In order for us to have the competitive balance we want, it restricts player movement to a certain degree.” It’s one of those freedom vs. responsibility things, where changing one also changes the other. In this case, fixing the economics means further restricting player movement, and fixing competitive balance means restricting the spending ability of small market teams at the expense of big market teams. That’s why the system issues related to taxpaying teams were so important to the league.

  10. Vale

    So are the players at 50/50 now or was the 50/50 concession only going to be made on the proper system?

    • Larry Coon

      I imagine that if the sides continue talking, the players will move their offer back up.

  11. John

    Larry: With all that’s happened this week, is it now impossible for ALL players to vote on the owners’ last offer? Simple majority and it would pass, right? Why wasn’t this done Monday? Did Hunter, Fisher, Kessler, et al, know a majority of the players would have accepted the 50-50 proposal?

    • Larry Coon

      No, it’s no longer possible for all players to vote on the latest offer. There’s no longer a union, and even if all 400 players individually said “yes” to it, it’d now be an illegal restraint of trade under the antitrust laws.

      It wasn’t done Monday because the union is there to provide an educated analysis of proposals and decide if one is right before putting it to all players for a vote. Just like you & I don’t vote on every law — we have elected representatives whose job it is to analyze proposed laws for us and make educated decisions.

      And I think it may not be true that a majority of players would have accepted the offer.

  12. matt

    Can a majority of players reform a new union and collectively bargain with the nba? If this is possible and a deal was theoretically struck, what would happen to the pending lawsuits involving players unlikely to be part of this new union?

    • Larry Coon

      Well, yes. The NFL players re-formed a union in order to strike a deal with the NFL, for example.

      And while there are lots of people out there saying the NBA players wanted to take the deal — and I’m sure there were some who did — it’s probably hype to think that this represented the majority of the players. All player reps (and many additional players who were there Monday) voted unanimously. The reps were supposedly talking to their players — I know some say they hadn’t heard from their reps, but I think this represents the exception rather than the rule. There were reportedly over 200 signatures collected on a decertification petition.

      The idea that the players who wanted the union to take the deal represented the majority, and that they will now want to form a rogue union to settle with the league, is wrong.

  13. Mike

    From latest NBA’s offer: “A maximum of 50% of Tax payments in any season can be directed exclusively to non-taxpayers.”
    What would happen with the other 50%?
    Would it return to tax payers?

    • Larry Coon

      This was aimed at the “cliff” that exists when a team is under vs. over the tax threshold. If you’re a dollar under, then you don’t pay any tax, and you also get a tax distribution — 1/30 of the tax money from all the taxpaying teams. If you go a dollar over, then in addition to owing $1 in tax, you also give up that tax distribution — which was about $2.5 million last season.

      The players considered this to be an added disincentive to teams spending money — and it was. They wanted the tax money to go to all 30 teams — i.e., to eliminate the cliff altogether. The league’s proposal split the difference — they took half the money (but reserved the right for it to be less) to give just to the non-taxpayers, and the other half would go to all 30 teams. So there would still be a cliff, but it would be a lower one.

  14. James

    No matter what system these owners create players are still going to go where they want. I dont understand why these owners dont get that. which leads me to believe this is a money grab and not an issue of parity, what do you think?

    • Larry Coon

      Well….yeah. They can improve parity to a certain extent, but: 1) As you said, players are going to go where they want to go anyway; and 2) The league is at its most popular when there’s NOT parity.

      The league wants to control the growth in spending, and one of the ways to do that is to limit player movement. That’s the REAL issue.