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NBA owners propose hard cap, paycut for players

Posted on: February 5, 2010 2:10 pm
Edited on: February 6, 2010 8:24 am
NEW YORK-- Launching a grim opening salvo in what is expected to be a contentious labor negotiation, NBA owners have sent their initial proposal to the players association and are pushing for some elements of a "hard" salary cap as well as a drastic reduction in player salaries, has learned.

The proposal, sent to the union earlier this week, seeks a reduction in the players' share of basketball-related income from 57 percent to well below 50 percent, according to a person familiar with the document. Owners also are seeking some elements of a hard cap -- a departure from the current luxury-tax system -- and a reduction in the length and amount of max contracts.

Owners and players will meet in Dallas during All-Star weekend for their first face-to-face bargaining session as they try to reach an agreement before the current deal expires in 2011. The talks coincide with the NFL's labor negotiation, in which owners have proposed an 18 percent pay cut for players.

Billy Hunter, executive director of the players association, did not return calls seeking comment on the proposal, which is sure to set a serious tone in talks aimed at averting the league's first lockout since the 1998-99 season. NBA spokesman Tim Frank said league officials would have no comment.

Owners are seeking significant changes to the league's financial structure as many of them face massive losses in the wake of the global economic crisis. In addition to lowering the players' overall share of basketball-related income (BRI), owners are pushing for some elements of a hard cap to replace the current luxury tax system, in which teams with payrolls above the tax line subsidize those staying below the limit, which was set at $69.9 million this season.

But players already are facing a reduction in salaries next season, when the cap is expected to decline from the current level of $57.7 million to between $50 million and $54 million. Most team executives working on financial projections for next season are predicting a $52 million cap.

Union president Derek Fisher, speaking Sunday before the Lakers played the Celtics in Boston, predicted that the owners would "overreach" with their initial proposal and said the players would strongly oppose a dramatic reduction their share of BRI.

One prominent player agent, speaking to about the impending labor talks, called a hard cap "untenable," but said the owners' financial losses a similar request for pay cuts by NFL owners create a double-whammy of leverage.

"The players will talk tough, but I'm not sure they have a whole lot to hang their hat on," the agent said. "If the NFL is cutting salaries, I think you can expect something similar in the NBA."

If the owners succeed in implementing some version of a hard cap, management sources predict it would drive player salaries down precipitously. The players likely will argue that the luxury tax system is working as a payroll impediment. Only a handful of the highest-revenue teams pay luxury tax in a given year, and a flurry of trades prior to the Feb. 18 deadline will illustrate the union's point. The majority of trades that will be consummated will be driven by teams trying to pare salary to avoid clipping the luxury tax line.

"An NFL-style hard cap is going to blow the minimum-salary and mid-level players completely out of the water," one person familiar with the owners' proposal said. "In any hard-cap system, the owners are going to pay the stars. If there are no exceptions and no ways to exceed the cap, everybody else is going to be left with the scraps."

Perhaps that is why the owners want to go farther than changing the rules; they want the league's highest-paid players to take a haircut, as well. Owners are seeking to reduce the maximum length of contracts to five years for players re-signing with their current teams and to four years for players signing with new teams. Under the current collective bargaining agreement, in effect since 2005, players re-signing with their current teams can be under contract for a maximum of six years. Other free agents can sign for a maximum of five. This would be a way to avoid star players' salaries remaining high while the second- and third-tier players bear the brunt of the overall payroll reduction.

As reported Jan. 29, a segment of ownership believes that reducing the length and amount of max contracts would wipe out the owners' collective financial losses by itself. But by pushing for a significant reduction in maximum salaries, the owners would be alienating the players who produce the vast majority of revenue for their teams; fans pay to see LeBron James and Dwyane Wade, not Daniel Gibson and Dorell Wright.

“If they don’t like the new max contracts, LeBron can play football, where he will make less than the new max,” one team executive told last week. “Wade can be a fashion model or whatever. They won’t make squat and no one will remember who they are in a few years.”

The negotiations also have implications that are much more immediate than a potential lockout to start the 2011-12 season. Numerous marquee stars, such as James, Wade, Chris Bosh, Amar'e Stoudemire and Joe Johnson, have the ability to opt out of their contracts July 1 and become free agents. Most of those players and their agents already were expecting a less favorable CBA in 2011. But if a drastic cut in max contracts becomes inevitable as part of a new labor agreement, such players might be even more motivated to opt out and sign long-term deals under the current deal. Just another wrinkle that could make what is expected to be the biggest free agency period in NBA history even bigger.


Since: Oct 19, 2008
Posted on: February 5, 2010 9:44 pm

NBA owners propose hard cap, paycut for players


Since: Jul 9, 2009
Posted on: February 5, 2010 8:12 pm

NBA owners propose hard cap, paycut for players

I like your line of thinking, but one has to consider that all the risk is assumed by theowners, not the players, they invest the money to buy the team, if players had to put up some money as a gauruntee, then yeah, like the board of Directors  for Berkshire, Buffet isn't stupid, he demands his board ahve a significant investment in the company, this allows him the comfort in knowing every body has a stake in the comany doing well.  What good is it to the owners if their star gets a huge endorsement deal?  A few more jersey sales?  Im sure the player gets a cut of that too.

Hard cap seems to be workign inthe NHL... parity exists, adn it's cometetive.  I thouht it was  going to be a huge bust at first but, meh... it reaally has no impact on me, I don't hate the wealthy, but seriously, arguing in favor of the players seems silly.  The owners employ in many cases hundrteds of people, a player, may pay his cousins in his entourage.

Since: Oct 10, 2006
Posted on: February 5, 2010 7:07 pm

NBA owners propose hard cap, paycut for players

Lets not kid ourselves here...The players want as much as they can get, so do the owners, and fans want to pay the least amount for tickets and concessions.

So really it just needs to be divided 3 ways; 45% for players, 45% for the owners and the remaining 10% of the BRI pays for reduction in ticket and concession cost to the fans.

Since: May 2, 2008
Posted on: February 5, 2010 6:13 pm

NBA owners propose hard cap, paycut for players

If a hard cap and reduced salaries will result in lower ticket and concession prices for the fans, they I'm all for it.
You may as well walk away now because the owners are about making as much money as possible for themselves. If NBAPA capitulates to the demands of the owners, any payroll savings will go straight to the profitability of the franchises not giving the ticket buyers a price break. True, the average (non-premium) seat price declined by 2.3% this year but that was the first decline since 2000-2001 season. As the economic recovery strengthens, ticket prices will resume their upward trend and the owners will reap the rewards while the players will be stuck because they gave up too much in concessions.

Since: Mar 23, 2009
Posted on: February 5, 2010 5:17 pm

NBA owners propose hard cap, paycut for players

Where does the money from reduced salaries go? If a hard cap and reduced salaries will result in lower ticket and concession prices for the fans, they I'm all for it. I'm in favor of owners making a FAIR profit and players recieving reasonable salarlies (no, I don't think 20 mil is resonable for anyone including LeBron), but if this is just going to result in huge profits for owners with little or no price relief for fans then I don't care at all about what kind of agreement the two sides come up with. I'll just continue to stay home and catch a game or two on TV. I haven't been to a live NBA game in over 15 years - not because I couldn't afford it once in while, but because I don't want to afford it. I can get more entertainment value for my money esewhere.

Since: Aug 5, 2008
Posted on: February 5, 2010 5:13 pm

NBA owners propose hard cap, paycut for players

If the owners don't want to pay the big salaries then don't offer them. If all the owners would agree that they will only have a cap at a certain point then that's the cap. If the owners are public with their cap then the players can't complain about colusion since they are honest and say this is what we are going to spend. The owners make money but as business owners they should if your boss wasn't making money they would sell or close the doors. Everyone thinks because the owners are rich they shouldn't expect some return on their money that is what made them rich. I think everyone makes too much money there is no need for a 7 footer to get 5 mil a year for a 2 pt avg and play 4 minutes.

Since: Nov 29, 2007
Posted on: February 5, 2010 5:06 pm

NBA owners propose hard cap, paycut for players

NBA related income moron, that includes TV.  The players make more than the owner, ownign a basketball franchise is not a money making venture, it is a very expensive hobby.

Since: Dec 10, 2006
Posted on: February 5, 2010 4:53 pm

NBA owners propose hard cap, paycut for players

What is missing from this discussion is cost to the fans. Salary cuts are a good thing; players are highly paid and the whole pay scale has gotten crazy. No one is worth 20+ million per year. Mediocre players are not worth 5 million per year. This does not mean we go back to the day when players did not get rich- they have short careers and deserve to be highly paid- maybe the elite at 10- 12 million per year down to a minumum that is proportionally smaller.

Some of the cuts should go to cutting losses for the owners but some of it should go to reducing ticket prices. A middle class family should be able to take in a few games without taking out a second mortgage.

BTW what are prices like now for decent seats in your area? Kind of curious how they compare around the league.

Since: Jan 9, 2008
Posted on: February 5, 2010 3:34 pm

NBA owners propose hard cap, paycut for players

Would love to see more of a hard cap introduced in the NBA. The luxury-tax system is a joke, they should just call it the big market system. If you're one of the few teams in the prime markets, we will just go ahead and give you an extra 30 million on top of the cap that no one else can work with.

Since: Dec 17, 2007
Posted on: February 5, 2010 3:03 pm
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