In a surprise to many (including myself), the NBA and National Basketball Players Association (NBPA) are close to finalizing a new collective bargaining agreement (CBA) well in advance of the current CBA’s December 15 opt-out date. Reports suggest that a completed deal will be finalized in the “coming weeks.” UPDATE: The CBA is expected to be completed “just after Thanksgiving.” (per Kevin O’Connor of The Ringer).
Much of the pessimism surrounding the timely completion of a new deal is due to the uncertain negotiation dynamics between the parties, each of which boasts a new face at the head of the negotiation table. For the NBPA, Michele Roberts, a high-powered labor lawyer, took over as Executive Director in July 2014. She came out swinging, immediately taking a strong stance against raising the NBA age limit and blasting the “ridiculous” length of the NBA’s 82-game schedule. Roberts even called the idea of not opting out of the current CBA “really wishful thinking.” On the other hand, NBA Commissioner Adam Silver, who was heavily involved in negotiating the 2011 CBA as the right hand man to then NBA Commissioner David Stern, remained –at least publicly – optimistic that a lockout would be avoided throughout the process.
Never say never, but the sides appear to have pushed past any initial pessimism, a welcomed sight to all after the 2011 lockout forced the league to cancel 240 games. The league’s current financial boon, headlined by a $24 billion media rights-deal with ESPN and Turner, is undoubtedly a major reason the negotiations have progressed ahead of schedule. Franchise values are at an all-time high; player contracts are skyrocketing. Why risk messing it up?
Roberts: “The formula has been: after a few months when the checks don’t come, the players cave.”
But that is not the end of it. Roberts is no dummy, she knows the negotiation dynamics of a potential lockout from the players perspective. Roberts told the Atlantic: “The formula has been: after a few months when the checks don’t come, the players cave.” Simply put, the owners have the financial wherewithal to wait the players out during a hypothetical lockout.
During the parties’ negotiations over the past few months, the media has leaked numerous details of the new CBA. Although none of these are set in stone, they all come from reliable sources (cited where applicable) and will more likely than not end up in the final agreement. The following is what we know so far:
- The new CBA will be a seven-year deal (running through 2023-24) with a mutual opt-out after 6 years. (per Adrian Wojnarowski of The Vertical). The current CBA, signed in 2011, was a 10-year deal with a mutual opt after six-years (December 15, 2016). It is uncertain whether the new deal will be styled as an amendment to the existing CBA or as a completely new CBA. If it is an amendment, it could take effect immediately, potentially impacting player contracts (particularly player extensions) this season. On the other hand, a completely new CBA would not begin until July 2017.
- The parties’ 49 to 51 percent split of Basketball Related Income (BRI) will remain intact. The BRI split was expected to be a major point of contention after the players took a significant decrease in their share of the BRI (57 percent under the 2005 CBA) during the 2011 negotiations. (per Adrian Wojnarowski of The Vertical). Early statements from Roberts corroborated this notion. She stated that she “absolutely will not go to [her] grave until” she corrects the narrative that owners “take all of the risk and barely make a dollar”, and that ex-NBPA head Billy Hunter “clearly failed” negotiating the money split. Despite this original position, the split will reportedly remain the same. However, the way BRI is calculated could change. Currently BRI includes any income related to basketball operations of the NBA and its subsidiaries such as ticket sales, broadcasting rights, concession sales, parking, proceeds from team sponsorships and promotions, 40% of arena signage, 40% of luxury suites, and 50% of arena naming rights. Under the new deal, the BRI calculation could reflect changes in technology such as proceeds derived from streaming content. (per Michael McCann of Sports Illustrated). It will be interesting to see if the sides leave the door open to later amend the BRI definition to include revenue derived from legalized sports betting, a movement Silver has endorsed in the past, that could become a new significant stream of revenue during the life of the agreement.
- Rookie-scale, veteran minimum and free agent exception deals (such as the mid-level exception) will rise as much as 50 percent. (per Adrian Wojnarowski of The Vertical). The mid-level exception will increase from $5.6M to $8M annually. (per Marc Stein of ESPN). Since the value of these contracts under the current CBA were not tied to a percentage of the salary cap, they remained static when the salary cap exploded due to the new TV deal, dramatically increasing the value of other contracts. Boosting them in the new CBA attempts to make up for this discrepancy.
- Under the current CBA, the max salary for a player with 0-6 years experience is 25% of the cap, 7-9 year is 30% of the cap, and 10+ years is 35% of the cap. The new CBA will lower the number of years required to reach a greater percentage of the cap. (per Brian Windhorst of ESPN).
- The “one-and-done” rule, prohibiting high school players making the jump straight to the NBA, will remain unchanged. (per Adrian Wojnarowski of The Vertical). Silver has publically expressed his desire to raise the minimum age from 19 to 20, effectively creating a two-and-done rule. Roberts is “adamantly opposed” to any minimum. Keeping the rule represents a compromise.
- The “36-and-over rule” that prohibits players from signing a five-year max contract if the player’s birthday falls within the life of the deal will be changed to a “38-and-over rule.” (per Adrian Wojnarowski of The Vertical). Chris Paul, Lebron James, and Carmelo Anthony are all members of the NBPA’s Executive Committee and may all benefit from this rule. Put two and two together.
- The new CBA will include additional medical and educational benefits for retired player. (per John Krawczynski and Tim Reynolds of the Associated Press).
- NBA teams will be able retain rights to two NBA Developmental League players on “two-way contracts.” Teams would pay players based on whether or not they were in the D-League or on the NBA team. NBA roster limits will go from a maximum of 15 players under the old CBA, to 17 players. (per Adrian Wojnarowski of The Vertical). This is the parties’ attempt to keep players from foregoing the D-League to sign more lucrative contracts overseas. UPDATE: NBA D-League salaries will rise from $19-16K to $50-75K. (per Marc Stein of ESPN).
- There will be no amnesty clause, a provision included in the 2011 CBA that allows a team to terminate the contract of one player without it counting against the salary cap (the player still receives the money). (per Brian Windhorst of ESPN).
- Players can sign contract extensions after two years after the date of their original signing instead of having to wait three years. (per Brian Windhorst of ESPN). One of the overriding themes of many of the proposed changes, including this one, is to halt the current trend of superteams in the NBA. In theory, this will give teams a competitive advantage in keeping their star players for a longer duration.
- Restricted free agents will be able to sign offers sheets on the first day of free agency, July 1, instead of having to wait until the end of the moratorium, July 7. The time for teams to match offer sheets will be reduced from 72 hours to 48 hours. Teams will no longer be able to pull qualifying offers, making them unrestricted free agents (the Dion Waiters Rule). (per Brian Windhorst of ESPN). Under the old system, restricted free agents essentially had to wait until unrestricted free agents signed before negotiating with teams, drastically reducing their options. These changes will put restricted free agents on a more level playing field with their unrestricted counterparts.
- There will be a percentage limit on the amount the salary cap can rise in a given year to prevent giant spikes in the salary cap similar to what we saw this past summer. (per Larry Coon and Nate Duncan on Dunc’d On Podcast). This concept, also known as “smoothing”, was floated by the NBA, and rejected by the NBPA, prior to 2016 free agency.
- Cap holds for free agents could jump from 200 and 250 percent of their prior salaries, to 250 and 300 percent, depending on the type of the player’s previous contract. (per Zach Lowe of ESPN). Although a minor increase, this will disincentive teams from coming to informal agreements with prospective max free agents (like we saw with Kawhi Lenard and Andre Drummond), while utilizing their low cap hold to first sign other players.
- The new CBA will contain a domestic violence policy. (per Kevin O’Connor of The Ringer). Unlike the NFL and MLB, the NBA does not have a formal policy governing discipline for domestic violence incidents. The NBA has, however, on two recent occasions suspended players who pleaded guilty to misdemeanor domestic violence charges. Notably, the new policy will focus on “counseling, support services, intervention, outreach, and providing resources behind the scenes to help” in addition to player discipline.
- The preseason schedule will be shortened and the regular season may start sooner. (per Kevin O’Connor of The Ringer). This would stretch out the regular season and presumably reduce the number of back-to-back games and four games in five nights on the schedule.
[This article will be updated as more details leak]
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