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Players Association rejected the owners' latest offer, dissolved and filed antitrust lawsuits that soon will be withdrawn: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: Dec 19, 2006
Posted on: November 27, 2011 1:59 am

What's in the deal and how it got done

except you don't have to watch.

Since: Dec 19, 2006
Posted on: November 27, 2011 1:57 am

What's in the deal and how it got done

Don't forget about movie stars who work 2-3 months on a fake set and walk away with 10-20 million.
What sacrifice to they make nothing they grow a beard or get fat or in shape for a movie
All entertainment industries in America are like this, everyone is overpaid.
Guys like AROD in baseball are making 25-30 million a year.
At least in the NBA the max contract is just 5 yrs now compared to baseball.
Look at boxing a guy fights a few minutes sumtimes and comes away with a couple of million.

Since: Aug 20, 2009
Posted on: November 27, 2011 1:33 am

What's in the deal and how it got done

I wanna Puke, I cannot believe there is going to be a season!!

Since: Oct 21, 2011
Posted on: November 27, 2011 12:55 am

What's in the deal and how it got done

Why do you care if they smOke a little pot? No biggie! What's it you? Relax, Bro

Since: Mar 3, 2008
Posted on: November 27, 2011 12:51 am

What's in the deal and how it got done

 The NBA has nothing on the NFL in terms of fan loyalty. I can't belive that they went this long before reaching a deal after seeing the fan outrage in the length of time that it took. And they didn't miss any games.
 The NBA is going to take a big hit on this one, I think. I'm not going make watching a partial seasona priority. Especially since these greedy bastards weren't taking the fan base into consideration at all when draggin this thing out.

Since: Mar 2, 2009
Posted on: November 27, 2011 12:30 am

What's in the deal and how it got done

I agree with you Macodi.  These so-called super players make more money in one game than most people make in 5-10 years of dedicated employment.  The majority of the players may have a FAKE College degree but an IQ less than my dog.  The fraud begins back in college.  NO athlete is worth this kind of money in any sport.  Our teachers should be making more money than any basketball player but, people keep paying the high ticket prices and concessions and don't have anything left over to financially support the things that are really mportant.  As long as the fans pay, this mis-use of money will never end. 

Since: Jan 7, 2010
Posted on: November 27, 2011 12:30 am

What's in the deal and how it got done

I just want to see testing for marijuana!

Since: Oct 7, 2006
Posted on: November 27, 2011 12:23 am

What's in the deal and how it got done

Your argument makes no sense and it would be pointless to explain to you all the reasons why your logic fails.  Occupy and the NBA have nothing in common.  Occupy protesting the NBA would be like fish protesting bicycles.

Since: Oct 7, 2006
Posted on: November 27, 2011 12:20 am

What's in the deal and how it got done

You don't appear to be much of a fan anyway.  Also no one cares.

Since: Mar 29, 2008
Posted on: November 27, 2011 12:08 am

What's in the deal and how it got done


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