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A deal is much closer than appears
Source: Howard Beck, New York Times
SI.com reporting a few different details:
The new N.B.A. labor deal is practically done. You wouldn’t know it from the headlines, the dour news conferences or the apocalyptic rhetoric spilling from league officials. But the deal, in practical terms, is about 95 percent complete.
The N.B.A. and the players union have agreed on contract lengths and luxury-tax rates, trade rules and cap exceptions, and a host of oddly named provisions offering “amnesty” and “stretch payments” and less onerous “base-year” rules.
All of these pieces — some favoring the players, most of them favoring the owners — have fallen into place in recent weeks, even as talks collapsed and restarted and collapsed again. The checklist has been reduced to a few items.
But it is the last 5 percent that is ruining the prospects for labor peace and gradually eroding the N.B.A. season.
The N.B.A. and the players union have agreed on contract lengths and luxury-tax rates, trade rules and cap exceptions, and a host of oddly named provisions offering “amnesty” and “stretch payments” and less onerous “base-year” rules.
All of these pieces — some favoring the players, most of them favoring the owners — have fallen into place in recent weeks, even as talks collapsed and restarted and collapsed again. The checklist has been reduced to a few items.
But it is the last 5 percent that is ruining the prospects for labor peace and gradually eroding the N.B.A. season.
Tentative agreements are already in place on the following major items:
¶ Luxury-tax rate: Teams will be charged $1.50 per $1 spent beyond a threshold, replacing the previous dollar-for-dollar tax, according to people who have seen the plan.
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.)
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.)
¶ Contract lengths: Players with “Bird” rights will be eligible for five-year deals, while others will be limited to four. The previous C.B.A. allowed for six-year (Bird) and five-year deals. The 1999 C.B.A. allowed for seven-year (Bird) and six-year deals.
¶ Raises: 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.
¶ Midlevel exception: It will start at $5 million, a decrease of $800,000. The contract length and annual raises attached to the exception remain under discussion.
¶ Amnesty clause: 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.
¶ Stretch exception: Teams will be permitted to stretch out payments to waived players, spreading out the cap hit, over several seasons. The payment schedule will be set by doubling the years left on the contract and adding one. (Thus a team waiving a player with two years left could pay him over five years.)
There are a few critical issues still under debate. The N.B.A. wants to further punish tax-paying teams by denying them use of the midlevel exception and sign-and-trade deals, and wants additional penalties for “repeat offenders.” The union opposes those measures.
Nearly all of the new provisions will benefit the owners. In return, the players will gain an easing of trade rules and relaxed regulations on restricted free agents.
So the broad parameters of an agreement are in place. The gap on the revenue split is significant, but manageable. As N.B.A. officials have said many times, both sides know where the deal is — they just have to get there.
Nearly all of the new provisions will benefit the owners. In return, the players will gain an easing of trade rules and relaxed regulations on restricted free agents.
So the broad parameters of an agreement are in place. The gap on the revenue split is significant, but manageable. As N.B.A. officials have said many times, both sides know where the deal is — they just have to get there.
SI.com reporting a few different details:
Resolved
• Player contract length: 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.
• Amnesty clause: Each team will be able to waive one player with a previously existing contract without it counting against the salary cap, but it will be available only once per team during the life of the new CBA. While the player will still be paid his full salary, this would allow teams to get rid of a contract that is weighing them down.
Teams will want to use this sooner rather than later since it cannot be used on new contracts that are signed. It can be used during any year of the player's deal, but must be announced at the start of the season.
Mostly Resolved
• Luxury tax: The previous agreement penalized teams on a dollar-for-dollar basis when they went above the luxury tax threshold ($70.3 million last season), but the owners have been adamant about wanting a new system in which the highest-spending teams are reined in. The league's latest proposal on this issue looks like this and has been agreed to by the players:
Teams are penalized $1.50 for every dollar they spend in the first $5 million above the tax level; $1.75 for every dollar spent between $5 million and $10 million above; $2.50 for every dollar spent between $10 million to $15 million above; and $3.25 for every dollar spent $15 million and above.
There is still haggling to be done here, though, as the league is still pushing for additional penalties for teams that repeatedly pay the tax.
• Mid-level exception: 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.
• Escrow: In the previous deal, the escrow tax (a percentage of players' salaries that is put into interest-bearing accounts by the league) was 8 percent. The NBPA has offered to raise it to 10 percent. The owners have been pushing for an unlimited escrow that would provide them with more cost certainty while also rendering the true value of a player's contract undefined on a yearly basis. While this issue is not settled, it's likely to land at the 10 percent mark.
• "Stretch" exception: 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.
Unresolved
• Basketball-related income split: Players received 57 percent of BRI in the previous deal and have offered to reduce their share to 52.5 percent, while the owners are seeking a 50-50 split. Each percentage point of BRI is worth about $40 million, so the NBPA has agreed to transfer $180 million annually from the players to the owners, or a minimum of $1.08 billion over the course of a six-year agreement.
• Annual increases: Previously, Bird players were given 10.5 percent annual raises while non-Bird players were given 8 percent raises. The NBPA has proposed annual increases of 7.5 percent and 6 percent, while the NBA is proposing annual increases of 5.5 percent and 3.5 percent.
• Early termination options: These options are negotiated into player contracts on an individual basis and allow them to opt out of their deals after an agreed-upon year(s). The NBA, however, has proposed eliminating ETOs, as well as player options that essentially serve the same purpose by giving the player a choice on whether to opt-in to a particular year of his deal or become a free agent.
• Sign-and-trades: The sign-and-trade was previously an option for all teams, but the NBA is pushing to prohibit tax-paying teams from being able to do so in the new deal. What's more, sign-and-trade contracts will likely be for no more than four years.
• CBA length: The NBA is proposing a 10-year agreement with an option to terminate after the seventh year. The NPBA has accepted the 10-year term, so long as the players have an option to terminate the agreement following Year No. 6 and No. 8.
Read more: http://sportsillustrated.cnn.com/201...#ixzz1cGnbZwiL
• Player contract length: 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.
• Amnesty clause: Each team will be able to waive one player with a previously existing contract without it counting against the salary cap, but it will be available only once per team during the life of the new CBA. While the player will still be paid his full salary, this would allow teams to get rid of a contract that is weighing them down.
Teams will want to use this sooner rather than later since it cannot be used on new contracts that are signed. It can be used during any year of the player's deal, but must be announced at the start of the season.
Mostly Resolved
• Luxury tax: The previous agreement penalized teams on a dollar-for-dollar basis when they went above the luxury tax threshold ($70.3 million last season), but the owners have been adamant about wanting a new system in which the highest-spending teams are reined in. The league's latest proposal on this issue looks like this and has been agreed to by the players:
Teams are penalized $1.50 for every dollar they spend in the first $5 million above the tax level; $1.75 for every dollar spent between $5 million and $10 million above; $2.50 for every dollar spent between $10 million to $15 million above; and $3.25 for every dollar spent $15 million and above.
There is still haggling to be done here, though, as the league is still pushing for additional penalties for teams that repeatedly pay the tax.
• Mid-level exception: 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.
• Escrow: In the previous deal, the escrow tax (a percentage of players' salaries that is put into interest-bearing accounts by the league) was 8 percent. The NBPA has offered to raise it to 10 percent. The owners have been pushing for an unlimited escrow that would provide them with more cost certainty while also rendering the true value of a player's contract undefined on a yearly basis. While this issue is not settled, it's likely to land at the 10 percent mark.
• "Stretch" exception: 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.
Unresolved
• Basketball-related income split: Players received 57 percent of BRI in the previous deal and have offered to reduce their share to 52.5 percent, while the owners are seeking a 50-50 split. Each percentage point of BRI is worth about $40 million, so the NBPA has agreed to transfer $180 million annually from the players to the owners, or a minimum of $1.08 billion over the course of a six-year agreement.
• Annual increases: Previously, Bird players were given 10.5 percent annual raises while non-Bird players were given 8 percent raises. The NBPA has proposed annual increases of 7.5 percent and 6 percent, while the NBA is proposing annual increases of 5.5 percent and 3.5 percent.
• Early termination options: These options are negotiated into player contracts on an individual basis and allow them to opt out of their deals after an agreed-upon year(s). The NBA, however, has proposed eliminating ETOs, as well as player options that essentially serve the same purpose by giving the player a choice on whether to opt-in to a particular year of his deal or become a free agent.
• Sign-and-trades: The sign-and-trade was previously an option for all teams, but the NBA is pushing to prohibit tax-paying teams from being able to do so in the new deal. What's more, sign-and-trade contracts will likely be for no more than four years.
• CBA length: The NBA is proposing a 10-year agreement with an option to terminate after the seventh year. The NPBA has accepted the 10-year term, so long as the players have an option to terminate the agreement following Year No. 6 and No. 8.
Read more: http://sportsillustrated.cnn.com/201...#ixzz1cGnbZwiL
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