Blog Entry

Breaking down the progress on the new CBA

Posted on: October 24, 2011 11:59 am
Edited on: October 24, 2011 12:00 pm
By Matt Moore

So we know that talks crashed and burned last week, that the two sides have not met since, are not scheduled to meet at this point, and that we're facing more cancelations, as early as Monday afternoon. But over the weekend, details have started to slip about the progress that has been made regarding some of the surrounding details. These don't indicate a deal, in fact, given the gulf on the primary issues (the luxury tax that is to serve as the "hard cap" and of course, BRI, the split of the money), it's likely some of these will wind up getting revised or yanked off the table by one side or the other by the time this is through. Nevertheless, we have some interesting elements which indicate what the future of the CBA will look like. 

Let's take a look at the reports and what they mean.

Chris Sheridan has the most complete set, which covers a wide variety of topics. Everything from the length and size of the mid-level exception to the structure of raises within contracts is covered.  In the interest of brevity (for once), I'll cut this down to just the tastier bits. 

Restricted Free Agency:
Restricted free agency: The union went into these talks asking that the waiting time for a team to match an offer to a restricted free agent be reduced from 7 days. The owners have acquiesced, and the window for matching will be reduced to 3 or 4 days. The union also is asking that restricted free agency be removed for players coming off their rookie scale contracts, which would allow first-round picks to become unrestricted after four years instead of five, which is the case for second-round picks.
via NBA lockout update: Where the sides stand on financial and system issues.

The first point would lead to a lot more movement and brash decisions based off not having as much time to determine what you want to do with a player. You'd think that teams would have contingencies mapped out regarding keeping a player depending on what offer they received. You would be wrong. Teams will often go into RFA with no clear idea of what that player will receive. It's a reason why so many teams jump at the chance to re-sign players to keep them out of RFA. It's not going to lead to massive changes, but it will shift the balance somewhat.

The second point is a doozy. The players are asking for the most valuable commodity in the NBA, star young players, to be able to leave as they will sooner. The RFA is a powerful mechanism in keeping players put for the first eight years of their careers. This would shift a lot more. You'd still have the majority re-sign, due to the benefit of re-signing, for the stars. But if you have a player who is unhappy with his role, who has been mishandled by coaching or management, this would free them to head elsewhere. This isn't the bitterest pill for the league to swallow, but it's not going to go down so smooth. It also makes building a young core over more than four years very difficult. 
Trade rules: Under the old system, the salaries of players being traded had to be within 125 percent of each other (if both trading teams were over the salary cap). This rule will be loosened considerably, although a final formula has not been agreed to. The players want the percentage to rise to 225 percent (whereby, for instance, a player making $1 million could be traded for a player making $2.25 million), while the owners have indicated a willingness to allow the percentage to rise to 140 or 150 percent — although teams paying the luxury tax would have a tighter restraint.
Hello, trade deadline. This is one where you have to track the various elements inside the union. Teams with big payrolls are going to love the idea of looser structures, allowing them to add players when they're willing to pay the tax (if Isiah Thomas ever gets back in the league, this rule could make him even more of a nefarious legend than he already is). Teams with smaller payrolls won't fight it as much, since it increases the package they could get back for a star, and because the control for trading the player still lies with them. For example, the Nuggets could have pulled in even more with Melo under a similar structure.  This is a big one in terms of what it could mean for fans. 

Sheridan also confirmed this fascinating new concept discussed by the New York Times Friday night:  
There will be a “stretch” exception, available every year, allowing teams to waive players and stretch out their remaining salary over a number of seasons, thus reducing the annual salary-cap hit.
via With N.B.A. Talks Halted, Sides Predict a Meeting Next Week -

This is huge for a number of reasons. The biggest is this: One of the owners' many intentions in this lockout is to pursue changes to the system to prevent themselves from making horrific mistakes in terms of signings and overpaying for players. The stretch exception doesn't prevent them making those decisions, but it does restructure their mistakes and allow them to recover. There's the cap perspective and the salary perspective. From the salary perspective, in most cases, this is going to lower the number of buyouts we see. Players will allege that if the team wants to get rid of them , they can simply use the stretch exception. That way the player still gets his money but the team gets the cap space reconfigured. In essence, this would work a lot like an interest free credit-card for players. You don't want to pay that $20 million to get rid of the veteran who no longer contributes to your rebuilding process? Get the cap space now, pay for it later. It's more justfiable to add a few million every season to payroll rather than swallowing huge chunks at once. It allows for more space to add players through trade.

Where this would be useful? Take Rip Hamilton last season in Detroit. The Pistons want him gone, but he'll only go for the full buyout. This would allow them to waive him and pay out his salary over time. It's not known whether the two sides can work out an adjusted figure for the stretch exception (i.e. if Hamilton were agree to take half his remaining money and pay that out over three years or if it has to be the full amount).

There are other elements at play. The max contract structure reportedly will stay the same, and the base-year compensation rule (a complex rule which restricts player movement via trade) will be eliminated. But this gives us an idea of where things are headed. Or at least, where they were headed before Thursday's meltdown. For all we know at this point we're back to square one.

That's not depressing at all, is it?

Since: Feb 8, 2008
Posted on: October 25, 2011 1:49 pm

Breaking down the progress on the new CBA

The max contract structure reportedly will stay the same

This seems to be the most telling sign of how far away things really are from getting done.  The current max contract structure is one of the reasons why the league is in this mess.  6 yrs for 129 million guaranteed is ridiculous.  The fact that NBA Owners have given this contract to Rashard Lewis and Joe Johnson (and a slightly smaller deal to Gilbert Arenas) shows how incompetent these guys really are.

If they are really keen on keeping it the same, I think a good compromise could be an opt out for teams after 3 years and front load the contract so the players get say 60% of the deal in the first 3 years.  Therefore a guy getting the max would get 77.4 million of that in his first 3 years and then the team can still decide to retain, restructure or cut him after that 3 years.

Since: Oct 24, 2011
Posted on: October 24, 2011 3:32 pm

Breaking down the progress on the new CBA

I just wonder if it's true that they have a secret schedule for an 82 game season starting Dec 1st.  I like all of the above mentioned changes to the league because it allows you to rebound from a mistake a lot quicker.

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