Blog Entry

Sources: Owners drop insistence on hard cap

Posted on: September 27, 2011 10:11 pm
Edited on: September 27, 2011 11:10 pm
NEW YORK -- Owners have indicated a willingness to drop their insistence on a hard team salary cap in exchange for adjustments to the luxury tax system and key spending exceptions, two people with knowledge of the negotiations told Tuesday night.

The offer by league negotiators came Tuesday in a brief, two-hour bargaining session that set the stage for what one source described as "an important day" on Wednesday.

"It's put up or shut up time," said the person, who is connected to the talks but spoke on condition of anonymity due to the sensitivity of the negotiations.

The flexibility in the owners' longstanding insistence on a hard team-by-team cap, first reported by Yahoo Sports, comes with significant strings attached. Among the many concepts league negotiators proposed Tuesday were a more punitive luxury tax and adjustments to two key spending exceptions that teams had under previous agreements: the Larry Bird exception and the mid-level exception. Both would have been eliminated under the owners' original proposal from two years ago, with many of those dramatic systemic changes living on in subsequent proposals until Tuesday.

There is a feeling among two people who have been briefed on the talks that the owners will come forward Wednesday with an enhanced version of the concepts proposed Tuesday. According to the sources, among the additions could be a proposed 50-50 revenue split, which to this point the league has not reached in terms of the players' average share over the life of a new CBA in its previous proposals.

As for the system changes the owners proposed Tuesday in exchange for relaxing their stance on the hard team salary cap, one of the people briefed on the talks said union officials regarded them as "alarming."

Billy Hunter, executive director of the National Basketball Players Association, has often referred to a hard team salary cap as a "blood issue." Union president Derek Fisher scoffed at the owners' June proposal of a "flex cap" with a spending midpoint and a range as being, for all intents and purposes, a hard cap. Paramount in the players' opposition to a hard team cap is that the NBA already has a spending cap in the aggregate; under the previous CBA, the players were limited to 57 percent of basketball-related income (BRI), with an escrow system in place to guarantee they'd get no more and no less.

Even if the owners improved their economic proposal to 50-50 on Wednesday -- up from the 46 percent average share sources said they offered last week -- it seems unlikely that union officials would accept that without significant pushback on the system adjustments that are tied to it. And it is even less likely that Hunter and Fisher, under pressure from powerful agents pushing to dissolve the union through decertification or a disclaimer of interest, would be able to garner support for such a deal in the face of such opposition.

"We already have a hard salary cap," one person connected to the talks told Tuesday night. "That train left the station in the last collective bargaining. If you accept that as an important victory point, then we've been bamboozled."

Whether viewed as a meaningful concession or not, the revelation from the owners Tuesday set the stage for an absolutely critical day of negotiating on Wednesday. With more preseason games on the chopping block next week and with an on-time start to the regular season unlikely if there's no deal, this is the moment of truth these negotiations began inching toward last week when league negotiators made a specific proposal on the BRI split for the first time since they offered a flat $2 billion-a-year over the first eight years of a 10-year deal back in June.

Though a person with knowledge of the talks said the union deemed the owners' 46 percent offer "unacceptable," Hunter and Fisher believed it was the starting point in the real negotiations to save the season. 

In another wrinkle that could be key to the talks, the NBPA's unfair labor practices charge against the league has been transferred from the National Labor Relations Board's regional office in New York to the general counsel in Washington, D.C., a person with knowledge of the situation told The case file includes the regional director's recommendation about whether a complaint should be issued against the NBA, but the file is sealed, the person said.

After what is expected to be an exhaustive review of the case by the NLRB's Washington-based legal staff, a decision will be rendered on whether a complaint should be filed. Though Hunter is feeling pressure from agents who are pushing for the union to decertify -- a tactic that the NFLPA used, to little effect, in its bargaining talks with the NFL -- a person with knowledge of his thinking said Hunter is determined to keep the union together until the NLRB rules. A favorable ruling for the NBPA could result in a federal injunction lifting the lockout, thus shifting significant leverage to the players.

The NBA subsequently filed its own unfair labor practices charge against the NBPA, and it is possible that the NLRB may not rule on either case in time for the two sides to negotiate a settlement that would save the season.

Amid the divided opinions on decertification, Fisher sent a second letter to union members this week in which he again urged unity and tried to reassure players that he and Hunter would not sell them out just to get a deal. Fisher reiterated the union's resistance to a hard team salary cap and promised to fight for players to share fairly in the league's revenue growth -- which is expected to continue rising at a 4 percent-a-year clip, plus the possibility of massive gains in the NBA's broadcast rights deals when they expire after the 2015-16 season.

"We’ve been clear from Day 1 of this process that we cannot sign off on a deal that attempts in any way to include a hard salary cap for our teams. That has not changed,” Fisher said in the letter. “Unless you, the group we represent, tell us otherwise, we are prepared to hold the line for as long as it takes to preserve the system we’ve worked so hard to build.”

After Tuesday's meeting, Fisher emerged in a far more upbeat mood than he and commissioner David Stern had exhibited following last week's meeting. The two sides broke off talks about three hours shy of a typical session and said they needed to retreat to their own offices for private meetings before reconvening on Wednesday.

"We’ve talked extensively about ideas and concepts," Fisher said. "These are things that, if we could get into the range or get into the zone, maybe we can put a deal together."

Time, and new ideas, are running short.

Since: Sep 13, 2011
Posted on: September 28, 2011 9:59 am

Sources: Owners drop insistence on hard cap

No hard cap means we can see more epic failures such as the "heatles". The season had so much interest last year, pretty unpredictable in my opinion. I had no idea the grizzlies would make a run like they did, it appears they are on the rise. I love basketball and I love either having the pro, or college games to go to during the week. I hope that progress is made today and this ends real soon.

Since: Oct 9, 2010
Posted on: September 28, 2011 9:39 am

Sources: Owners drop insistence on hard cap

No hardcap then basketball will become baseball.  A few good teams that compete every year, then 25 suck teams with no talent.  What was the point of the lockout if you weren't going to hold the line on the cap?  The owners are crumbling because players are threatening to play overseas.  So what? Let them.  It's not like they wont come back when the lockout ends.  The reason the NFL destroys the other leagues is because they have created a system where every team is on a level playing field which brings 32 fan bases into a frenzy every year with a shot at a championship.  Hold the line owners, most players aren't going overseas and even more can't go a season without making money.  Keep the current system or implement a duct tape revenue sharing solution, and the NBA will see teams moving every other year or even worse just closing the doors and folding.

Since: Sep 20, 2006
Posted on: September 28, 2011 8:46 am

Sources: Owners drop insistence on hard cap

"If you don't learn from history, you are doomed to repeat it".

It's fix it, stupid. This isn't a fix. It looks more like a ponzi scheme.   

The NBA is EXPECTING 4% revenue growth ?? The only things growing at 4% or better in this country are crack sales, unemployment and Government bailouts. Descretionary income has been going down for years.  

I'm shocked that billionaire owners that manage Fortune 500 businesses outside the NBA, lack the intelligence to keep from getting duped out of hundreds of millions of dollars, by a union representing employees that 75% of it's members couldn't pass a legitimate High School Equivilency Test, or make a fraction of what the owners already pay them, anywhere else. What other business even considers giving the riskless employees more of the revenue than the owners and investors who are at finacial risk ? 

They all didn't inherit their money, did they ? 

"A fool and his money are soon parted".  

It's going to be tough to share revenue from 5 teams with 25 others that lose money...or to keep a job as the 10th man on a roster where 3 players make 90% of the budget....and when the NBA folds, the players can stay in college and get an education to make 10% of what they make now.... or go to Europe and play for 25%. If that's too much math for you, ask your agent or union rep for help.    

Since: Aug 25, 2011
Posted on: September 28, 2011 8:37 am

Sources: Owners drop insistence on hard cap

Greetings !!   And, when does the fan get a seat at the negotiating table...

Oh wait, we do not deserve one because even though we ultimately pay for anything and everything connected to the league, we are un-important.   &nbs
p;  GO D-LEAGUE !!!!!!!!!!!!!!!!!!!

Since: Jun 5, 2009
Posted on: September 28, 2011 7:50 am

Sources: Owners drop insistence on hard cap

This really doesn't do much as far as the deal itself, but it's a good way to start off by making a "concession" that the players find important... This is a bad thing. The NBA needs a lockout. The product is majorly flawed, and it needs to be fixed. Damnit, owners! Don't give in to anything!

Since: Aug 31, 2006
Posted on: September 28, 2011 6:43 am

Sources: Owners drop insistence on hard cap

I have a great understanding of why the owners are in the lockout in the first place and let me assure you this article does nothing to address it. This is an incentive for the richer owners not the owners that are struggling. The owners are going to need the ability to share local revenues or this cap thing is coming way down.

Since: May 29, 2010
Posted on: September 28, 2011 6:38 am

Sources: Owners drop insistence on hard cap

I think you are right.  This looks like it may get done.  This is the solution I would like:  50-50 split on the BRI, revenue-sharing, and enhanced luxury tax.  This helps to preserve roster flexibility.  I like the mid-level and Larry Bird exceptions.  I like the soft cap.  As a fan, I like teams to have ability to make roster moves, to sign free agents.  If they have to put a hard cap in place, I hope they follow the NFL model where teams can use signing bonuses that do not count against the cap.  The team can sign the player to a reasonable base salary and enhance it with a signing bonus.  Maintaining roster flexibility and player movement is key to maintaining fan interest year round.

Since: Dec 23, 2007
Posted on: September 28, 2011 5:53 am

Sources: Owners drop insistence on hard cap

This means that bad nba players will continue to rape the fans and make millions.. the players reject this then the league is finished forever..

Since: Sep 28, 2011
Posted on: September 28, 2011 3:34 am

Sources: Owners drop insistence on hard cap

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Since: Dec 5, 2006
Posted on: September 28, 2011 12:36 am

Figuring the bottom line

OK. so the players got their number one issue. Now, having received a substantial change from the owners (remember that the players fear of a hard cap is loss of guaranteed contracts), Will the players follow by giving in on an essential position to the owners? The likelihood that this happens seems higher this week than last. Which position can the players yield that will provoke a further thaw in the negotiations?

Since the owners already have specified their next demand (the Bird and mid-level exceptions) can the players even accept the offered hard cap capitulation? The sparring around these issues and nearly all the rest are jockeying for position on the elephant in the room - the BRI split. Media folks try to tell us the owners are aiming for a 50-50 split. I am not buying this because they actually do need 45% to provide each team with an opportunity to earn a return on investment. The more likely split acceptable to the owners is 47% which basically allows them to break even as a league. At this rate it would be essential for the Knicks and the Lakers and, perhaps another few teams to surrender nearly all of their local broadcast revenue into a commonly shared pot. The chances of that happening are remote.

What the players can do is to demand to sweeten the opportunity to move between teams. They will refuse any sort of franchising and want to eliminate restricted free agency, making all players unrestricted after four years. They may also seek a new exception to replace the Bird and mid-level exceptions. Something on the order of allowing exceptions to 120% of cap. The process is rolling and despite what we read on a day-to-day basis (remember the recent NFL negotiations) it should be wrapped up by October 15th. Finally it looks like a season is possible.

The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or