It's been five months since the NBA players' union submitted its initial proposal to the owners, and the silent response has been deafening. While discussion has continued in a couple of full-fledged bargaining sessions followed by smaller, more detailed meetings, the owners' efforts to avoid a lockout seem to have mirrored the condition of the players' proposal: dead on arrival.
About a week ago, union chief Billy Hunter distributed a podcast and written mailing to all 450 NBA players detailing the players' proposal and explaining the National Basketball Players Association's position on why the sport's basic economic system doesn't need dramatic change.
"Our proposal set forth a series of changes to the current system that we believe address many of the concerns the owners have raised while at the same time meet many of the players' needs," Hunter wrote to the players in the mailing.
|Hunter's prediction is even more ominous in light of new developments. (Getty Images)|
But rather than move the negotiations forward in a significant way, those olive branches have been brushed off by owners who seem increasingly entrenched in their desire to impose sweeping changes in the league's economic system and use a lockout, if necessary, to achieve their goals, according to sources on both sides of the debate.
"I don't think it's so much about what the players propose," one management source told CBSSports.com this week, upon being informed of the details of the players' proposal. "It's about what they're willing to accept. How much pain are they willing to accept?"
While sources say some members of the owners' labor relations committee were impressed with the players' willingness to address their concerns in this proposal, the comment above is a fair reflection of the hard-line owners' position: The league's problem isn't revenues, it's expenses, and those expenses need to be reduced -- even at the cost of losing a significant number of games to a work stoppage.
The union leadership is especially troubled by the lack of movement by the owners in response to their most significant effort to address that concern: an offer to negotiate a reduction in the 57 percent of league revenues the players are guaranteed under the current system, the basics of which were adopted after the 1998-99 lockout. The lack of traction achieved by this offer is what prompted Hunter to say publicly last month that he is "99 percent sure" a lockout will happen when the current CBA expires on June 30, 2011.
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Further frustrating the union leadership are assertions by key members of the league's negotiating team that the two-year slide in negotiated salaries is insignificant because owners have to make up the difference due to the 57 percent guarantee prescribed by the current system. Under the current system, 8 percent of player salaries are withheld in an escrow fund, and if salaries and benefits exceed 57 percent of basketball-related income (BRI), the difference is returned to the owners. If there is no overage, the players get the money back.
The offer to negotiate a reduction in the 57 percent guarantee was significant because it would give owners discretion to pull back on spending based on economic or competitive conditions without having to make up the difference up to 57 percent of BRI. That is what owners have tried to do during the crippling global recession, as negotiated salaries have fallen for two straight years and are expected to fall again this season -- while the league is projected to achieve record revenues for a second straight season. Those efforts are muted by the 57 percent guarantee, and the players believe lowering it would incentivize struggling teams to reduce payroll while still permitting successful teams to spend.
The league maintains that when BRI goes up, player compensation goes up -- which is true, but wouldn't be true under the players' proposal to reduce the 57 percent guarantee. Players could still receive 57 percent under their proposal if the owners chose to spend it.
NBA executives declined to comment on the details of the players' proposal. But sources say the owners' unenthusiastic response to the players' offer is rooted in the fact that the NBPA has proposed leaving the basics of the current system in place -- a soft salary cap with various exceptions -- while also proposing various tweaks that would facilitate player movement through trades or free agency. The players view many of those tweaks as revenue-neutral and believe they would help teams become competitive more quickly after poor contractual decisions -- a provision some owners have privately signaled they favor. But the majority of the changes, detailed here for the first time, have been met with strong resistance from the hard-line owners and league negotiators, such as:
• Loosening trade restrictions in ways that would "bring about enhanced trade and signing flexibility and improve the game," according to the podcast from Hunter delivered to all NBA players. These would include eliminating base-year compensation, which makes it difficult for teams to complete trades involving players who recently received large pay increases; and increasing the threshold for matching salaries in a trade from 125 percent to 250 percent. This would make it easier for teams to unload bad contracts, rather than remain stuck with an inflexible cap position.
• Eliminating the biannual exception, which this season starts at about $2.1 million, and replacing it with a second mid-level exception, which this season starts at $5.8 million. In return, the NBPA offered to reduce the maximum length of mid-level deals from five years to four.
• Loosening restrictions on restricted free agents, starting with significantly shortening the time period teams have to match offer sheets. Currently, teams have seven days to match, which often causes a quagmire for the free agent and for the teams involved.
Such changes would "allow players to move to win-win situations where the player is more wanted and the team is better served," Hunter said on the podcast.
But according to management sources familiar with the owners' bargaining position, league negotiators do not view these proposed changes as revenue-neutral or conducive to addressing their concerns about expenses. Owners are seeking to eliminate all cap exceptions by imposing a hard-cap system, but by far the exception they are targeting most aggressively is the mid-level, which often is the vehicle that gets teams in the most trouble. Despite their tendency to misuse it -- or maybe because of that -- the last thing owners want is two mid-level exceptions.
As for enhancing player movement by increasing the 125 percent rule -- teams that are over the cap can trade players whose salaries are no farther apart than 125 percent plus $100,000 -- sources say league negotiators view that as a Band-Aid rather than a solution to their expense problem. In some cases, one management source said, such a change might actually perpetuate frivolous spending because teams know it will be easier to dump contracts.
"The more player movement, the more expensive a league is," a management source said. "Football has very little player movement, and it's less expensive. Baseball has a lot of player movement, and it's very, very expensive."
The players also have proposed changes that are not directly related to the cap system but would "improve the game" and "benefit both our players and the league," according to Hunter's podcast, such as:
• Returning the age limit to 18, while working with the league and NCAA to incentivize players to stay in school longer. Currently, players must be 19 and one year removed from high school to be eligible for the NBA Draft.
• Enhancing pension benefits for retired players, which would be paid for, in part, by a so-called exit tax on owners who sell their teams and earn capital appreciation far beyond historic levels.
• Negotiating a BRI reduction or credit for teams that invested in new arenas or arena renovations where the expenditures were designed to enhance revenue generation. • Providing a neutral arbitrator for on-court discipline in which suspensions total 12 or fewer games. Currently, players receive arbitration only for suspensions of more than 12 games.
Beyond the offer to reduce the 57 percent guarantee, by far the most constructive effort is one that addresses the most broken aspect of the league's current system: revenue sharing. The players proposed an NFL-style model in which gate receipts and local revenues are shared; currently, NBA teams share only national broadcast revenue -- though various percentages of local revenues such as arena naming rights and signage as well as concessions, suites and parking are included in BRI.
In addition to expanding the revenues that are shared, the NBPA also wants the details of the model to be negotiated -- or at least for the union to be notified of the details -- as part of the bargaining process. More than 10 months after making their initial proposal to the players, the owners remain entrenched in their belief that revenue sharing is an ownership issue to be dealt with concurrently with bargaining, but not to be included in the CBA.
And both sides remain where they’ve been for nearly two years of negotiation: at a stalemate.