NEW YORK — It is Black Friday, and the players are going bargain(ing) hunting at today’s NBA lockout negotiations.
If commissioner David Stern is willing mark down a few pieces of merchandise, there will be something under the tree for everyone on Christmas Day.
There is a deal to be done today, or later this weekend, if the owners are in a giving mood, but the players had better realize that they are not going to get everything on their wish list. That became apparent to them two weeks ago at the last formal bargaining session when they couldn’t squeeze very much out of the owners, whose failed to get an endorsement out of Billy Hunter, leading us to the place we are today.
The anti-trust suit filed by the players on Monday in Minnesota has given them some additional bargaining leverage — although exactly how much is open to debate. Technically, today’s talks will be settlement discussions, because the players’ union no longer exists as a formal entity. The New York Times is reporting that the sides have agreed in advance that nothing in these talks would impact the litigation or be used to prove either side’s case in court.
There will be new lawyers in the room, and there will be an understanding that the calendar is impacting everyone’s position. We are 30 days away from Christmas, and commissioner David Stern has said it will take 30 days from the time a handshake agreement is reached until the season can start.
So here is a look at what is on the players’ wish list. Remember, when the players offered to do a 50-50 split, they did so with the caveat that they’d need five or six key system changes to drop to that number. Thus far, they haven’t gotten enough of those changes.
_ The mid-level exception: The sides have already agreed on the max salary for mid-level free agents — a $5 million starting salary– who sign with teams that are beneath the luxury tax threshold. The owners want teams to be limited to offering a four-year mid-level contract one year, then a three-year mid-level the next, then back to four, then three, etc. In numerals, it is 4-3-4-3-4-3. If the owners go to 4-4-4-4-4-4, one item is off the table.
_ The mini mid-level: This is the exception that would be available to teams above the luxury tax threshold, and the owners have already moved from a max of $5 million spread over two years to allow taxpaying teams to offer three-year deals. The small-market owners are pretty hard-core on this one, because they do not want system in which the highest earning teams (i.e. the Lakers) can compete on a level playing field in the mid-level free agent market. That is also the reason why owners want taxpaying teams to be excluded from executing sign-and-trade deals.
_ The escrow system:I wrote about this yesterday, describing it as the most contentious of the remaining disputed issues. Escrow funds are withheld from players’ paychecks to ensure that total salaries do not exceed a pre-determined percentage. The players are willing to have 10 percent withheld, but there is a question of what will happen if those funds do not reduce the players’ share to 50 percent of BRI. Does the shortage carry over into the next season? Do the players have to dip into a different pool of money (pension benefits, group licensing revenues) to make up the difference? This will be a tough nut to crack.
_ The split: It has become common to say that the sides have agreed to a 50-50 split of basketball related income, but it actually is little more complicated. The owners have proposed a split in which the players would receive between 49 and 51 percent of designated revenues, but the players have complained that the realistic ceiling is 50.2 percent. If they do not get all the system changes they are seeking, they want the rules loosened so that a 51 percent ceiling (or a 50.4 percent or 50.6 percent share) becomes more achievable.
_ The pay-for-performance issue: When Derrick Rose becomes an unrestricted free agent, he will be eligible for a max salary equal to 25 percent of the salary cap. Veterans with 7-9 years of service can get 30 percent, and players with 10 or more years in the league can get 35 percent. The sides have discussed instituting a system under which certain young players would be eligible for a 30 percent max contract if they achieve certain benchmarks while playing under the rookie scale. In Rose’s case, winning the MVP award last season would push him into 30 percent eligibility territory. The question for today is what other types of benchmarks can be set that would put other young players into the 30 percent eligibility category.
_ Restricted free agency: The sides have already agreed that the matching period for teams at risk of losing a restricted free agent will be cut from 7 days to 3. Still unresolved is the size of the qualifying offers that must be made to restricted free agents in order for teams to retain matching rights. The players want big increases in the size of qualifying offers in order to make restricted free agency even less restrictive.
_ The Carmelo Anthony rule: Owners want to prohibit the type of extend-and-trade deal that Anthony wrangled out of the Denver Nuggets last season when he forced his old team to trade him to the New York Knicks. This system issue could have an immediate impact on Dwight Howard and Deron Williams (and to a lesser degree, Chris Paul, because his team is owned by the league office). If the prohibition stays, Williams and Howard are going to lose a lot of leverage if they plan to force their way out of New Jersey/Brooklyn and Orlando, respectively. They could still be traded during the upcoming season, but their new teams would have to re-sign them as unrestricted free agents in the summer of 2012.
I simply cannot believe any of these issues are what’s preventing both sides from consumating a deal. This has to be the dumbest labour dispute ever. All involved parties should be ashamed of the damage they’ve done to this league over such minor issues…
Rather than garbage the entire CBA up with mechanisms that might allow non glamour teams to keep their superstar, why can’t we just have a franchise tag and be done with it?
Not an NFL franchise tag. A new NBA version. That can be used by any team on one player after his rookie deal is up. The tag would give the player a fully guaranteed four year contract at a $20 million dollar a year salary for a total of $80 million.
Let’s compare how this would look for say Derrick Rose. Under the CBA framework being discussed, Rose now has two contract options:
a) Re-sign with the Bulls for a five year deal starting at about $13 million a year with 6.5% annual raises. This would give him a guaranteed $73.5 million or $14.7 million on average.
b) SIgn with another team (assuming no S&T’s or full five year deals with S&T’s) for four years, starting at $13 million a year with 3.5% raises for a total of $54.7 million or $13.6mm a year on average.
Now, compare that to my franchise tag option where Rose receives 4-year/$80 million.
Rose then gets:
a) The largest yearly average salary under the franchise tag ($20mm versus $14.7 with Bird rights deal versus $13.6 other team deal)
b) The largest total amount of money ($80mm versus $73.5mm versus $54.7 million)
c) After four years he can go out and earn another contract. You can allow the franchise tag to be used again or simply limit it to one time use if the players balk too much.
This would only affect about 15-20 guys in the league. And they’d be paid handsomely for their “servitude”. Let them then negotiate their next deal based off the $20 million annual salary they were being paid as a bonus.
This provision completely pacifies all the small and mid market owners who are fearful of losing their superstar. Improves competitive balance. Fans win. Owners win. Star rookies get a ton more money then they would otherwise. And maybe the NBA then loosens up their mid level restrictions for the middle class in exchange.
Isn’t fear over easy star movement the single biggest thing going right now? I’m stunned the owners make this system issue priority #1.
Here’s an even easier mechanism. No maximum salaries, and no sign-and-trades, with a restrictive luxury tax (or even better, a hard cap).
The existence of the Bird Exception and no sign and trades would mean that for a superstar player to get the 30-40 million they might command, they would need to go to a team with massive cap space (and there will only be a few of these each year, probably in undesirable markets for the most part) or re-sign with their own team. They can always take a pay-cut to go wherever they want, of course. This prevents another Miami Heat, encourages players to re-sign with their teams, and still gives the players freedom of movement.
Of course, the middle and lower class players will never let that happen, but that’s my dream system.
Only downside is I could see this being used in the wrong way. Would the Wolves use it on K-Love in a desperate attempt to keep him? Or Blake G by the Clippers(but he might be worth it, his style of play is a good draw).
Otherwise I like the idea of younger players being able to command a high salary like this if they have proven themselves during their rookie contract. It makes more sense; if performance is to be reflected by salary you would think players in their prime years should be capable of making more money than those who are towards the end of their career. Plus the difference in salary is enough that star players are less likely to be stockpiled, which I think is the best way to create parity.
That’s why you don’t have the unlimited max salary. You’d always have a dumb team desperate and they’d way overpay.
Dan-you don’ t need to worry about “Miami” with my franchise tag. Cleveland would have tagged LeBron and Toronto would have tagged Bosh. Utah for Deron. Denver for Melo.
Problems solved without needing to involve accountants and attorneys.
Absolutely – but the players are already trying to attack the restricted free agency system – why on earth do you think they would accept a system where they can’t take that QO and hit free agency? The “franchise” tag is a death knell for player movement – and freedom of player movement is the banner the players have been rallying behind here.
Dan, I don’t think the players like any of these changes. But that hasn’t stopped the owners from trying to implement them.
In a new CBA, the franchise tag would affect at most about 8-10 players total. 95% of the rank and file have no such worries or concerns. Can Chris Paul really get 420 of his fellow union members to vote against a CBA they’d like just to satisfy Paul’s desire to play in New York?
Why we do need to cater to this small subset of players? Of the four major sports, the NBA is the one where the superstar player has the greatest impact, outside the QB position in the NFL. If you want true competitive balance and to prevent the ridiculous multi-year sideshow of the 6-8 big markets always lusting after superstar rookie players, you want a franchise player tag.
Let’s face it, the entire league was royally disrupted for two full years with teams trying to position themselves to get the superstar FA’s in 2010. That wasn’t good for the league, the teams nor the fans (other than the Heat, Knicks and Bulls crew)
Really all these other player movement issues are small potatoes compared to this. It is the elephant in the room both sides ignore.
Well, the limit on extend and trades will affect maybe 2 or 3 players. The limit on S+T’s would limit less than one player a year, based on recent history. The limit on tax team MLE would impact only 7-8 players each year. And yet the players oppose all of those things. So I don’t see how that argument holds up – logically, yes, but considering the reality of the players’ stance thus far?
I believe a no-max or high-max solution would have the same effect – with less resistance from the players. The players opposed the introduction of max salaries, so maybe they would be okay with increasing or removing them. If a max contract guy can make 50% of the cap instead of 25-35%, it makes it so much harder for those players to move.
And I think it is important for those players to have the choice to move around – that is the main thing players fight for. They make money hand over fist doing this pretty much no matter what the BRI split ends up at. The things that impacts most of them directly is the choice of where to play. If players want to take big pay cuts to band up, more power to them. But the pay cuts have to be big for it to mean anything.
Hey, in the end, a franchise tag might be the perfect solution. I just think it would be the last thing the union would ever agree to – I fully expect they would accept a hard cap before a franchise tag. Giving the team unilateral control over a player goes against everything the players have fought for over the years, ever since the inception of the union.
Dan, you are a CBA genius.
But time to retire that skill set. Let’s go with just a hard cap/franchise tag and be done with it.
No attorneys, accountants, agents. No loopholes. Pure and easy like the NFL !
Actually Rose has only one option. Resign with the Bulls. He is restricted and they will match any offer given to him.
His real options are sign for 3, 4 or 5 years.
Also, owners would never be in favor of this because they want to limit and restrict max salaries. Recall the last cba in 1999 was all about that. I can’t see the owners in anyway being in favor of such a drastic increase in max salaries considering their 1998-99 stance
Eliminating extend and trades seems to be stupid for both sides. The soon to be free agent player like Dwight Howard or Chris Paul is most likely going to leave regardless. Do these owners really think they can force them to stay? They will leave as free agents for a little less money and one less year. And if you say their teams could just trade them without an extension, they would get much less in return than if the receiving team could extend the player. Who wants to empty the bank for a guy that might not re-sign? The Nets excluded…can’t wait to see them get burned.
I think we find out if the players have any remorse in not taking the offer from ten days ago.
Or I guess we could find out if the owners only care about dollars and do not care about any competitive balance issues.
This situation doesn’t seem like it will resolve this weekend though. Too many issues unresolved.
Should be interesting to see where these talks end. Do players speak up and say they are unwilling to miss their career earnings on principle? Do the owners value a season enough to ease up on smaller system issues?
I see major disconnect between the general area of the BRI split and the player’s proposals for system changes.
1.) A 10% escrow system will not guarantee a 50-50 split.
2.) The players are agreeing to the 50/50 split, but at the same time want higher max contracts, higher qualifying offers, and have accepted the amnesty clause which will lead to more owner spending in these intial years of a new CBA (to the detrminenet of the player BRI share). All three of these “system changes” would lead to a higher BRI for the players. Problem is, the players are agreeing to a 7% drop in the BRI.
The players either need to accept a system that will enforce a 50/50 BRI (which also means being realistic about all these raises they want) or either reject the 50/50 split.
I still am 100% behind the players in these negotiations, but they need to be honest with themselves if they are going to agree to a 50/50 split.
The way I see it, the 10% escrow comes pretty close to guaranteeing the 50/50 split unless GMs go buck wild and spend out the ying yang. Baffles me that that these business men need training wheels for everything.
This year player’s salaries didn’t even make it to the 57% BRI, I think they were closer to 53% of BRI this season with the players getting all the escrow funds and then some. But there were a lot big name contracts recently signed so it is conceivable that the players salaries will exceed 54.4% of BRI in a few years. 54.4% is the cut off for salary protection with the 10% escrow.
Sounds like the easy solution is making the escrow a slightly higher number say 12-15% for the first few years then lax it back down to 10% once the older CBA contracts have gone away.
I botched the math, 56.3% BRI last season. So I can see why owners would want a higher escrow; 10% won’t cut it for the next few years at getting a 50/50 split. A 15% probably would, which can bring down players salaries as high as 57.6% back down to 50%.
The problem is this is just a synonym for salary rollbacks, which the players rejected and the owners supposedly conceded months ago. I’m sure both groups know the math, and the only reason it’s such a big issue is because real money is at stake.
I didn’t read the article but wanted to voice my opinion on the topic
Personally, I could care less what the NBA or or the players want. I am not related to any of them and none of them give me me financial support.
As a fan I am interested in live NBA games,the stats and stories that come from those live games as well as other NBA related stories once a new CBA is signed.
cheers
..and you took time to say that??? ok…here’s the coverage of today’s games:
…..get it, sparky? That’s kinda how the news business works….can’t report on stuff that isn’t happening.
If you “could care less”, that means you actually care, if you want all the folks hanging on your every word to get your scintillating, pithy point, the expression you want is “I couldn’t care less”.
Here’s a question: why not go to a 35% escrow system, with no overage protection? That way if the owners overspend ridiculously, the players get a bonus to pay.
Most players receive paychecks during the season. Some receive deferred pay throughout the year, but many want to be paid in full during the season. Going to a 35% escrow would effectively simply spread that pay out over the entire year – they receive two-thirds of their usual paycheck at the time they usually do, during the season, and the other third in the summer (probably July 8th, after the true value of BRI is calculated). Even with the drop to 50% BRI split, the owners would be covered if the cap system doesn’t contain spending, and the players still get paid in a format some players already choose.
If the owners can get that escrow system, they might accede to all the system changes. If they make that offer, can the players really say no?
If you were getting millions per year though, I would imagine you would want as much of it as possible for your own investment and growth, rather than having over a third of it sitting in the owners escrow account doing nothing for you. I would imagine that could really add up over time.
Well, since the escrow is run by a separate entity, and pays interest on the withheld funds to whoever receives them at the end of the year, I doubt the average 4 months in which their pay sits there would have a big impact.
Consider this: the average salary is roughly 5 million. We’ll say 6 to be conservative. Then the amount in escrow would be 2 million on average. It would sit in the escrow account for 4 months (on average). That means for each annual interest point difference between the players’ investments and the escrow agent’s investments, the dollars lost for the player would be roughly $6,675. And that’s if the players invest their money better than the agent hired by the league to invest the money (and the owners want to get good interest on the escrow – remember, they usually get most of it back, and will still get a lot back under my system).
As a player, does this really matter to you? As a union (or trade association), looking at your players’ spending habits, do you really oppose a move like this?