Blog Entry

What's in the deal and how it got done

Posted on: November 26, 2011 6:54 pm
NEW YORK -- After weeks of stubbornness, posturing, white-knuckle negotiating tactics and finally lawsuits, the NBA labor dispute finally came down to something that had been sorely lacking.


Imagine that.

Instead of losing an entire season and immersing the sport in a debilitating legal battle that would've squandered all its momentum, the NBA is back with a deal that neither side loves, but both sides can live with. In other words, the best kind of deal -- one that both sides walk away from a little disappointed. Based on conversations with officials from both sides, here are the broad strokes of the agreement, with emphasis on elements that had been unresolved when the National Basketball Players Association rejected the owners' latest offer, dissolved and filed antitrust lawsuits that soon will be withdrawn:

* BRI: The players will receive between 49-51 percent of basketball-related income based on the extent of revenue growth. But whereas under the owners' prior proposals, the players felt it would've been nearly impossible to achieve the 51 percent ceiling, sources said they'll have a realistic chance of hitting it by the fifth or sixth year of the deal with robust revenue growth. The players will receive 60.5 percent of incremental revenues beyond projections each season, up to 51 percent in aggregate. Previously, the owners were offering only 57 percent of marginal revenues up to a total of 51.

* Mid-level exception: For non-tax-paying teams, they're four-year deals starting at $5 million in the first two years, with the starting point increasing by 3 percent in subsequent years. Owners had been pushing for alternating 3- and 4-year deals for non-taxpayers. For tax-payers, the so-called "mini" mid-level will be for three years starting at $3 million in the first two years, with the starting point increasing 3 percent in subsequent years. This is an enhancement of the owners' previous offer of a two-year "mini" mid-level starting at $2.5 million.

* Room exception: Teams under the cap get an additional two-year exception starting at $2.5 million (same as previous offer).

* Luxury tax rates: The same dollar-for-dollar as in the previous CBA for the first two years. Starting in Year 3, the rates increase to $1.50 for the first $5 million over; $1.75 for $5-$10 million over; $2.50 for $10-$15 million over; $3.25 for $15-$25 million over; and an additional 50 cents for each additional $5 million (same as previous proposal).

* Repeater Tax: A dollar-for-dollar additional tax for teams that are above the tax line for a fourth time in five years (same as previous proposal). Owners at one time had been pushing for a $1.50 repeater rate, while the players wanted 50 cents. Voila, compromise.

* Sign-and-trades: Available to all teams in the first two years of the agreement. Starting in Year 3, teams that are close to the tax line would only be able to acquire a free agent via a sign-and-trade transaction to the extent that it put the team no more than $4 million over the tax. The maximum length of such contracts will be four years with 4.5 percent annual increases. Previously, the owners had been seeking to eliminate sign-and-trades for all tax teams or teams that would exceed the tax after the transaction. This was a key issue for the players, and the more player-friendly definition of a tax-paying team also applies to use of the mid-level exception. So, if a team is $500,000 under the tax, it could use $4.5 million of the full mid-level. If a team already is over the tax, it would be restricted to the "mini" mid-level.

* Extend-and-trades: With the so-called Carmelo Anthony rule, owners were trying to take away a player's ability to force a trade to a team and sign an extension. The compromise is that teams can acquire player via an extend-and-trade but can only offer a three-year deal (including whatever is left on the player's contract) with 4.5 percent increases.

* Qualifying offers: The players feel they made significant gains here for restricted free agents. Qualifying offers will be guaranteed with the potential to be significantly enhanced based on performance. So for example, a first-round pick between picks 10-30 would be eligible to receive a qualifying offer as high as the ninth pick's if he's a starter for half the regular season games or 2,000 minutes. Second-round picks and undrafted players could be eligible for QO’s as high as the 21st pick based on the same criteria. Similarly, picks 1-14 could have their qualifying offers reduced if they don't meet the criteria. It's a nice compromise that provides opportunities for players who perform and gives owners protection against having to overpay players who don't.

* Escrow: Withholding from player paychecks to account for a potential overage in their BRI share is capped at 10 percent. Owners dropped their demand for an escrow carryover from season to season.

* New player benefits pool: One percent of BRI will be used for annuities and welfare benefits (such as health, life and disability insurance, long-term care and education expenses for themselves and their children). In the unlikely event that 10 percent doesn't cover the players' BRI overage, up to 1 percent of the pool could be used to account for that.

* Contract lengths: All the same as in the previous proposal. Bird free agents can get five-year deals with their own teams, with other deals being capped at four years. Each team can designate one player eligible for a five-year extension of his rookie contract with his own team. A team can have only one player so designated on the roster at a time. The owners had been pushing for four- and three-year contract lengths until recently.

* Annual increases: 7.5 percent for Bird players, 4.5 percent for others. This is up from 6.5 percent and 3.5 percent, respectively, in the owners' prior proposal.

* Minimum salaries and rookie scale: Frozen for the first two years and then will begin growing consistent with BRI growth. Previously, owners were seeking to cut both by 12 percent -- another win for the players.

* Maximum salaries: Same formula as in the previous CBA, with this exception in the players' favor: Star players who outperform their rookie contracts will be eligible to extend with their teams at 30 percent of the cap -- up from 25 percent. A player would be eligible by satisfying any of the following criteria: 1) winning MVP; 2) being named first-, second- or third-team all-NBA twice; or being voted as an All-Star starter twice. The Bulls' Derrick Rose, for example, would be eligible.

* Player options: Same as in the previous CBA. Owners had been seeking to eliminate player options for players who make more than the league average.

* Stretch and amnesty provisions: Same as in the prior proposal.

* The luxury tax cliff: Same as most recent proposal. Owners have agreed that a tax-paying team will only lose half the tax money it otherwise would've received by remaining under the tax.

* Minimum team payroll: It's set at 85 percent of the cap in the first two years, and 90 percent thereafter. The cap ($58 million) and tax ($70 million) levels can be no lower than last season's levels in the first two years.

* Deal length: 10 years, with each side able to opt out after Year 6. (Same as previous proposal.)

Since: Mar 6, 2010
Posted on: November 27, 2011 10:48 am

What's in the deal and how it got done

We all know what all of this meant.  That if they did not compromise and get the deal done, no one

was going to get paid for a long time!  As usual the money talks and the bs walks.  Have fun NBA trying

to get back the money that you have already loss and the huge losses that are coming in the future.   

Since: Sep 14, 2008
Posted on: November 27, 2011 10:38 am

What's in the deal and how it got done

EZmover2020.....If you think college basketball is more exciting than watching the NBA you're a fool.

Since: Jun 2, 2009
Posted on: November 27, 2011 10:17 am

What's in the deal and how it got done

The deal got done once all those Idiots that live pay check to pay check ran out of money.

Since: Jun 5, 2011
Posted on: November 27, 2011 10:08 am

What's in the deal and how it got done

Too many players were getting calls from "posse" members wondering where all of the good times had gone, so they told their representation that approximately 50 percent of revenues doesn't look like "slave wages" after all.  At least the strip club employees in NBA towns can start being happy again.  It's tough having to rely on WWE performers once a month for extravagant tips.  
Now, the strippers all see "rain" in the forecast, and they are happy. 

Since: Jan 24, 2007
Posted on: November 27, 2011 9:56 am

What's in the deal and how it got done

I'm white but that is well said

Since: May 29, 2010
Posted on: November 27, 2011 9:53 am

What's in the deal and how it got done

Long Live The NBA!  Even if it is too black for all you bashers.

Since: Jul 23, 2011
Posted on: November 27, 2011 9:51 am

What's in the deal and how it got done

Good luck to the NBA owners and players with their new labor contract.  Despite the dysfunctional way they went about the negotiations and the lack of willingness to try to intelligently discuss issues one by one in order to strengthen the long-term viability of the league, let's hope that what they have come up with works well over at least the next six years if not ten.  There was too much posturing throughout the process, led by David "Call Me Napoleon" Stern and the flavor of the day NBA super star who rolled in for a session and rode away in luxury.  There seems to be a lack of appreciation for how fortunate they all are with the NBA.  People are making millions because of the ability to put a round ball through a round metal hoop.  How this helps society and is worth countless times more than producing something on an assembly line, teaching in a school, collecting the garbage, etc., is really hard to rationally explain.  It was probably wise for both parties to fast track a conclusion to their disagreement because had we had a year without the NBA it might have become habit forming.  Most amusing to me is the perceived importance of opening on Christmas Day. Apparently no one has told the NBA that this year Christmas Day is Week 16 of the NFL.  Plenty of TVs will be turned on, and they will be watching the rush for pigskin playoff spots, not the openers for six teams that have had less than three weeks to prepare.  Let the hamstring injuries begin!

Since: Jul 24, 2011
Posted on: November 27, 2011 8:56 am

What's in the deal and how it got done

The NBA needed to lose the entire season. Few, if any, people care.

Since: Oct 10, 2006
Posted on: November 27, 2011 8:45 am

What's in the deal and how it got done

Its sad, but I would rather that the NBA fold.  I have no interest whatsoever in this league.  No longer is it one of the 4 major sports in the US.  UFC has overtaken the NBA, as far as I'm concerned.  I don't watch hockey, either (grew up in San Diego), but at least it is entertaining.  The only redeeming quality I can see for the NBA is, here in Charlotte,  for local businesses surrounding the arenas that will get spillover from the games where people will spend money for dinner, drinks etc.  But even that is not all that much.

Since: Aug 24, 2006
Posted on: November 27, 2011 8:43 am

What's in the deal and how it got done

College basketball is much more exciting than the NBA.These guys play their heart's out in hope's of joining the millionaire's club in the NBA.Too many NBA players have long term multi-million dollar contracts.Staying healthy is their first priority & winning game's take a back seat.I wouldn't attend an NBA game if the tickets were free & they let me play power forward.

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