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The Lockout & the Raptors: Players approve CBA, Owners too! (1944)

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  • I'm not longer angry with the owners after reading this. Keep them locked out as long as necessary.

    There are some really good points in here: mainly there already is a hard cap in place - 57% BRI. I've never really thought of it like that but there really is already a hard cap in place. This was the first year when owners actually gave back the 8%.

    This lockout is all about the Derek Fishers and Maurice Evans continuing to get overpaid and for players not actually having to earn their contract - typical of many unions anyways (especially government unions).

    When Billy Hunter says give us 65% of BRI and we'll give you a hard cap, that means he wants a hard cap of $86M. That does not solve the problem of smaller markets being able to compete.

    This rundown by Eric Pincus is long and worth the read, in my opinion.

    Listening long and hard to their positions, Stern was better able to communicate the owners’ stance. Hunter denounced the notion of a hard cap but never clearly explained why the proposed “supertax” version would have a negative impact on the players.

    Close on Split of Revenues

    “The system made no sense for the owners,” said Stern of the now-expired Collective Bargaining Agreement (CBA).

    The NBA had chosen to opt out of the deal and the resulting lockout represents the league trying to get in the black economically.

    “We have the opportunity to correct the system,” said Stern. “For reasons that I’m having difficulty understanding, the union is the one that’s been intransigent.”

    There’s been debate between Stern and Hunter on the amount of true losses. Is it 20 teams or eight teams losing money? Is the number $300 million or, as Hunter noted, half that at $150 million?

    Is $150 million an acceptable amount for the owners to be losing, taking into account their (theoretically) appreciating franchise stakes?

    The absolute truth is immaterial at this point where compromise is the only way to move up and out of this mess. The division of Basketball Related Income (BRI), the $4+ billion the NBA takes in annually, is the mechanism to even the scales and a range has been set.

    “I think it’s fair to say that the split, which we’ve put aside the last two days . . . because we have a sense that when one side is at 53% and the other is 47%,” said Stern. “You have an idea where that might be going.”

    Whether it’s 50/50, 51/49 or some variation, with each point worth about $40 million in the first year . . . it’s not an excessive gap.

    “We’re within the zone,” acknowledged Hunter. “We’re struggling with the system.”

    Already a Hard Cap in Place?

    Where Stern makes a major point, one that isn’t clearly explained away by Hunter (who, to be fair, did his interview a day before the commissioner), is that the league already has a harp cap in place.

    “We now have the so-called hard cap at 57%. We have a system that delivers 57%,” said Stern. “Indeed, when fans say well you’re in trouble NBA because of the crazy contracts you give out, the fact is that with all of those crazy contracts this year we fell short of 57% and we gave a check to the union. The money is guaranteed.”

    The old CBA had a provision for an 8% escrow to be withheld from player salaries in case the league spent beyond the 57% mark. In most years a portion of that money was retained by the league, but as Stern noted, this past season it was returned to the players because of shortfall.

    The BRI is functionally a hard cap but the players have taken exception to the proposed system on how individual teams can spend that money, calling a franchise-by-franchise hard cap a “blood issue.”

    Stern doesn’t comprehend why it should matter.

    “Once you agree upon a split, and this is something that’s not easily understood, sometimes I have to scratch my own head,” continued Stern. “We’re guaranteeing the players the percentage that we guarantee them. The system is not going to cause them to earn less. They’re going to get whatever they get.”

    There’s some inherent truth there. If the players get half of $4 billion, the owners are going to fork over $2 billion regardless of how that $2 billion is divided amongst the players.

    Parity

    What the league would like is an attempt to even the playing field so that some level of parity can be reached.

    “The question is, can we have a system that makes 30 teams more competitive than they have been?” asked Stern. “[Should] the Lakers should be able to have a payroll of $110 million (which interestingly enough, Derek Fisher thinks they should), and whether Sacramento has $45 million which is what their payroll is [approximately]?”

    Can parity be legislated or controlled economically? That may be up for debate but the NFL, with a lucrative revenue sharing policy, has had success on that front.

    “We should have a revenue sharing system like they have in the NFL,” said Hunter. “There’s got to be some way to come up with a better distribution of revenue in the NBA.”

    Stern noted that the owners have a comprehensive plan in place that they are prepared to present to the union.

    “We’re going to have much more robust revenue sharing so Sacramento is not going to say ‘I don’t have the money,’” said Stern but then noted that that sharing isn’t enough on its own which is why the owners have pushed for a hard cap.

    Hunter has a point in that the players have already moved from 57% to 53%. If they go further, they will be yielding in the neighborhood of $200-250 million (in the first year) to the league.

    That additional money in the pool along with aggressive revenue sharing would already be a major step towards parity compared to the expired system.

    “We proposed to the players that every team have the same amount available,” said Stern. “That’s what the NFL has.”

    The NBA has a handful of “wealthy” teams but by and large, the majority has pushed for parity.

    “If you live in a market where you have a perception as a fan that it’s only open to the rich teams to have the best players then you’re starting out in a bad way,” said Stern. “That’s not how the way they feel in Green Bay or New Orleans or Indianapolis but they might feel that way in certain NBA cities that will go unmentioned.”

    Regardless of how far the players have come to date, the union is going to have to accept some level of restriction and/or disincentive when it comes to individual team spending.

    Stern noted that all of his owners are on board with revenue sharing, even the bigger markets (Knicks, Lakers, Rockets, Celtics, Bulls, etc.) that probably won’t do as well in this new deal as they would otherwise. The hope is that improved competitiveness across the league will bring a bigger audience.

    Hard Cap to Flex Cap to Supertax

    Generally speaking, NBA contracts are guaranteed. That’s a non-starter for the union, which explains their initial resistance to a hard cap.

    “Once you have a hard cap, you’ve got to eliminate guaranteed contracts because there’s got to be flexibility in the system,” said Hunter.

    In other words, if a team is right at the cap and the following year salaries go up (with raises and incoming draft picks), it would be mandatory for a team to cut from the payroll to get below the maximum.

    “Hard cap is a deal-breaker for union,” said Hunter, more than once on KFAN.

    The owners eventually backed off the idea.

    “How about the flex cap that the NHL has where you agree upon a band that a team can stay between $52-68 million because you can compress the difference?” asked Stern.

    The union refused, saying it was a hard cap at the high end. Some guaranteed salaries still might have to be trimmed.

    “‘Why don’t you propose a punitive tax?’” asked the union, according to Stern. “We said ‘OK, we’ll propose a punitive tax’ and we did.”

    That’s where negotiations stalled out.

    “They’ve agreed over the last month to a soft cap, but it had to be with an egregious tax, 2-1, 3-1, 4-1, etc.,” said Hunter. “The hard cap is off but it’s not in a sense that if you make the tax hard enough, then the tax will work as a hard cap . . . they’re not going to go three for one.”

    That’s where the logic gets fuzzy.

    Is it about making sure contracts stay guaranteed? That’s already the case with the supertax.

    Or is it about making sure the wealthier teams continue to spend beyond the majority?


    “The big issue is the competitiveness,” said Stern. “If a team is a taxpayer for example we don’t think that they should be able to go out and spend an additional $5 mil to take away someone else’s free agent. The union does.”

    “They’re calling for a compression of salaries,” said Hunter. “I offered, ‘Give me 65%. I’ll give you a hard cap.’”

    The union views the supertax proposal as a de facto hard cap.

    “I don’t want a hard cap at 53% because I don’t think it’s fair to have a hard cap at 53%,” continued Hunter.

    What’s confusing is that the compression of salaries has everything to do with the shrinking BRI percentage, not the hard cap.

    On radio, Hunter worried about big market teams not spending on players because of tax but the league will be obligated to pay whatever the agreed split of revenue works out to be.

    “We’d really like the teams to not be taxpayers after a certain number of years,” said Stern. “If they’re not they have to drop off.”

    The league proposed a restriction on Bird Rights for habitual tax-payers, but that, understandably failed the smell-test for the union.

    “OK, so let’s propose some crazy penalty for them in lieu of dropping out,” said Stern.

    That’s where the tax gets so high that it essentially operates as a hard cap, but contracts remain guaranteed. A team might have to trade away a player or two to reduce their cap number, but that’s a lateral move economically. The players still get compensated.

    Again, contracts remain guaranteed.

    Protecting the Middle Class

    “You’re not getting the players’ market as is. There are some players who deserve and are worth a lot more,” said Hunter. “I think Kobe Bryant and others deserve what they earn.”

    The NBA is a star-driven league and given the pool of BRI, the number of teams and roster spots that need to be filled, it’s the superstars that have taken the biggest hit for the good of the union dating back to the 1999 CBA.

    In a free market, compensation to franchise players would climb to epic proportions.

    Dwyane Wade told Yahoo! Sports in late September (as written by Adrian Wojnarowski), “I’m sure it would get to $50 million.”

    As the salary cap hardens, the biggest names are giving up the most financially over the life of the deal.

    Hunter was adamant that the league has always planned to lock out the players and lose games to get their way.

    “Yes, they want a hard cap,” said Hunter. “They want to roll back the revenues. They want to eliminate guaranteed contracts cause they always talk about pay for performance. They probably want to pay the marquee players on the team and everyone else would be expendable.”

    Yet the rank and file far out-number the superstars.

    The concern, which Hunter didn’t clearly state on WFAN, is that the middle class will get squeezed out with a quasi-hard cap. The money will go to stars and rookies on lengthy, structured contracts.

    Whatever is left over will be fought over by the shrinking middle class.

    The union is against it but wouldn’t less money on shorter deals to players like Eddy Curry, Hedo Turkoglu, Marvin Williams and Charlie Villanueva mean more for others?

    Is there something inherently wrong with “pay for play?”


    The Mid-Level Exception (MLE) is the tool used by teams (who are over the cap) to add salary. It’s based on the league’s average salary which last year worked out to be $5.765 million.

    According to David Aldridge’s NBA.com report, both sides have neared an agreement on a shorter mid-level.

    One thing to note, Steve Aschburner, also with NBA.com, wrote recently that the “median salary” based on the 2009/10 season was actually $2.33 million. The larger, star contracts push the mean up to over twice that amount, but most players earn far less than the “average.”

    The middle class has already been feeling the crunch as teams became more and more reluctant to use their full MLEs each year.

    Will a supertax really bring down the median from the $2.33 mark?

    Given the BRI split, the money will be spent on players regardless. The owners want to loosen up money bogged down in players who aren’t carrying their weight.

    If a non-star can still contribute at a high level, there are going to be even more suitors under the owners’ plan.

    Length of Contracts/Raises

    The remaining issues, outside of BRI split and cap/tax mechanism, would be length of contract and size of raises.

    Naturally, both sides have failed to see eye-to-eye.

    “We came up with a staggered system,” said Hunter. “In the discussions they had raised the issue of a possible designated player. They wanted to have five years for a designated player . . . They were talking of annual increases of two or three percent. We said were coming off of eight and 10, so we would come up with a 10 for a guy who if he’s eligible for a five-year deal under their proposal, if he decided to take a two-year deal then you would give him a greater increase because he’s taking a shorter contract. It would incentivize it to take a shorter deal.”

    Stern addressed the subject as well.

    “We said we’d like contracts at four and three years, four for your own player – three for someone else’s player and five we offered for a designated player, sort of a Super Bird,” said Stern. “We think that’s better for the players. We think that’s a benefit because the very good players will keep getting raises with new contracts and the money that becomes available by the expiration of the four and three year contracts will be available to the performers. That’s what we call play for performance. The union is not in accord with our view. They want longer contracts.”

    How many teams have a couple of contracts on their books that just eat up space with almost zero production? Sometimes it’s age, injury or effort . . . but every team has ‘em.

    A quicker rollover makes a lot of sense. It also makes as much sense for the union to resist that.

    Why would they support shorter contracts, even if it’s better for the overall game?

    Odds and Ends

    A number of additional interesting items came out of the radio interviews:

    - The owners are asking for a 10-year deal with dual opt-outs after seven while the players want outs after years six and eight.

    - One option discussed is to allow teams to cut under-performing players who will instead get their money spread out over twice the length of their deals. The salary would still hit the cap but at the reduced, yearly rate. “One of the things we’ve come up in the negotiations is a stretch provision. A stretch would allow a team to stretch the money over a long period of time,” said Hunter. “So if they decide to cut a guy, they can pay him over 10 or 12 years instead of one lump sum.”

    - The players are open to reducing roster size down to 12 with additional spots for NBDL candidate. “We talked about split contracts where [players] can be with the team and be sent down to the minor league,” said Hunter.

    - The union is open to having a higher age limit if the additional year(s) spent in school come off of the rookie scale contract, which owners have proposed get extended to six years.

    http://www.hoopsworld.com/stern-hunt...or-resolution/
    EDIT:

    I forgot about the last bolded section: the players are willing to move roster sizes down to 12. What does this tell me? That the middle of the union are the ones in charge. The 13-15 players are the minimum or 2nd round draft pick contracts. The Derek Fishers of the league are trying to keep their extra few million acting as parasites to the stars and at the expense of the Sonny Weems, Joey Dorsey, or Solomon Alabi of the league.
    Last edited by mcHAPPY; Fri Oct 14, 2011, 03:55 PM.

    Comment


    • Eric Pincus, author of above, on Twitter discussing above:

      EricPincus: That's my point - if players get a set amount via % - why is it bad to spread the talent around the league? Hunter didn't explain it to


      EricPincus: A lot of people trying to explain to me why the players should be against a hard cap - but how come Hunter didn't explain it on WFAN?
      More:

      what's wrong with trying to create parity in the NBA http://bit.ly/qzRoXn or at least attempt to? Hunter didn't really say


      EricPincus Eric Pincus
      Yeah, they're ready to fight, yeah the owners are trying to gouge them but what's wrong with pay for play? bit.ly/qzRoXn



      EricPincus Eric Pincus
      and yet 45 minutes on @MikeFrancesaYES with Hunter and I don't really understand players' position bit.ly/qzRoXn


      EricPincus Eric Pincus
      bottom line - spin or not I got owners argument from 30 minutes of Stern on @MikeFrancesaYES bit.ly/qzRoXn
      Edit 2:

      Don't take my tweets today as a pro-owner - I'm just trying to understand why Hunter hasn't explained things to me clearly in 45 min.
      Last edited by mcHAPPY; Fri Oct 14, 2011, 03:52 PM.

      Comment


      • tbihis wrote: View Post
        Well didnt the owners offer 50/50 and they still didnt want to take it?
        Even if the owners want 53, i think theyre still entitled to it.
        Yes but what you were saying before is "that they are already making millions, and now they want to make more", and thats simply not the case.
        The case is that they don't feel they deserve any LESS than what they are currently getting.
        And for over 10 years, the owners didn't disagree with them on this.

        And yet, despite this feeling of entitlement, they have still offered to come down by 4%.
        Not completely unreasonable if you ask me.

        Comment


        • Eric Pincus wrote:
          There’s some inherent truth there. If the players get half of $4 billion, the owners are going to fork over $2 billion regardless of how that $2 billion is divided amongst the players.

          and

          but the league will be obligated to pay whatever the agreed split of revenue works out to be.
          These are actually incorrect. As I already pointed out in an above post.
          Unless Larry Coon is mistaken. Which I am certain he is not.

          The owners are not on the line for the difference. The owners don't have to pay any more money than is owed in contracts. And I can't imagine the owners insisted on giving bigger contracts to guys, just to satisfy the BRI split. It doesn't work like that.

          The only money that is being given at the end of the season is the 8% of that contract, the players have already earned, that was being withheld from them.
          Last edited by Joey; Fri Oct 14, 2011, 04:02 PM.

          Comment


          • joey_hesketh wrote: View Post
            These are actually incorrect. As I already pointed out in an above post.
            Unless Larry Coon is mistaken. Which I am certain he is not.

            The owners are not on the line for the difference. The owners don't have to pay any more money than is owed in contracts. And I can't imagine the owners insisted on giving bigger contracts to guys, just to satisfy the BRI split. It doesn't work like that.

            The only money that is being given at the end of the season is the 8% of that contract, the players have already earned, that was being withheld from them.
            So the CBA makes a provision that the hard cap will be, say, $70M. $70M x 30 teams is $2.1B. Lets say the league's payroll comes in at $1.9B, then the owners have to write a cheque for $200M which is then distributed evenly to players based on the value of their contracts.

            Problem solved.

            BRing in the hard cap already.

            Comment


            • ... No they do not Matt.

              Go to my post above. Click the link to Larry Coons page. Question 15. Second Chart down Example A.


              The % that is agreed upon is the MAXIMUM the players, as a group, can earn.
              It is not the MINIMUM of what they MUST earn.

              If the players come in under the agreed upon %, they simply get to KEEP THEIR OWN MONEY. NOT GET MORE.

              If they come in over the agreed upon %, the money that is being withheld from every paycheck (Just like EI) is used to cover the overage, to make sure they DON'T make more than the agreed split.
              Last edited by Joey; Fri Oct 14, 2011, 04:11 PM.

              Comment


              • can we all agree to call him Larry C., as to not kill me due to heart attack caused by uncontrollable laughter?

                Comment


                • joey_hesketh wrote: View Post
                  ... No they do not Matt.

                  Go to my post above. Click the link to Larry Coons page. Question 15. Second Chart down Example A.


                  The % that is agreed upon is the MAXIMUM the players, as a group, can earn.
                  It is not the MINIMUM of what they MUST earn.
                  I thought I had acknowledged you are correct by starting my post with 'So'. However, if it was not clear: Joey you are correct on this.

                  My post was a resolution in a NEW agreement: the players are guaranteed their percentage of BRI - but nothing more. So by my example the maximum they can earn is 50 or 53% of BRI and that full percentage is guaranteed. It is almost the opposite of what is done with the 8% escrow now, instead of players giving back, the owners would give back to the players.

                  Comment


                  • Matt52 wrote: View Post
                    I thought I had acknowledged you are correct by starting my post with 'So'. However, if it was not clear: Joey you are correct on this.

                    My post was a resolution in a NEW agreement: the players are guaranteed their percentage of BRI - but nothing more. So by my example the maximum they can earn is 50 or 53% of BRI and that full percentage is guaranteed. It is almost the opposite of what is done with the 8% escrow now, instead of players giving back, the owners would give back to the players.
                    Ah, sorry. Misunderstood what you were saying there. Apologies. :S

                    In this case, I agree with what you are saying. I was surprised there wasn't already something like this in place.

                    The thing I was wondering though, is how would that pot be split up? Because right now, the players just get back what they put into the pot. In this situation there is no pot to begin with. It would have to be weighted depending on pay scale or something along the lines.

                    Comment


                    • joey_hesketh wrote: View Post
                      Ah, sorry. Misunderstood what you were saying there. Apologies. :S

                      In this case, I agree with what you are saying. I was surprised there wasn't already something like this in place.

                      The thing I was wondering though, is how would that pot be split up? Because right now, the players just get back what they put into the pot. In this situation there is no pot to begin with. It would have to be weighted depending on pay scale or something along the lines.
                      You would have to add up all the salaries and divide each player salary by that total. It would give you a percentage then multiply that by, keeping with my previous example, $200M.

                      So lets say Garnett makes $20M next year (I know it is $21 but work with me!).

                      20M/2B = 1% x $200M = $2M

                      (I think those numbers are right.... a lot of zeroes in there!)

                      Comment


                      • Matt52 wrote: View Post
                        You would have to add up all the salaries and divide each player salary by that total. It would give you a percentage then multiply that by, keeping with my previous example, $200M.

                        So lets say Garnett makes $20M next year (I know it is $21 but work with me!).

                        20M/2B = 1% x $200M = $2M

                        (I think those numbers are right.... a lot of zeroes in there!)
                        Interesting. Seems to work out.
                        Not sure if something like this has been discussed, but it would certainly be an incentive to consider it.

                        I also know that in the last CBA there was an agreement that if the BRI exceeded that of the Signing year by 30%, then the split went up by .5%. And if it exceeded it by 60%, then it goes up by 1%. Could work something like that into the deal, where if the economy turns around, they could up it by 1% or 2%...

                        Comment


                        • joey_hesketh wrote: View Post
                          Interesting. Seems to work out.
                          Not sure if something like this has been discussed, but it would certainly be an incentive to consider it.

                          I also know that in the last CBA there was an agreement that if the BRI exceeded that of the Signing year by 30%, then the split went up by .5%. And if it exceeded it by 60%, then it goes up by 1%. Could work something like that into the deal, where if the economy turns around, they could up it by 1% or 2%...
                          There are a lot of ways around it. I don't think the problem is the amount of money - it is the allocation throughout the league.

                          The same amount of dollars dispersed unevenly (union) or evenly (owners).

                          Comment


                          • Lockout: What do you think is fair?

                            Propose your solution to the lockout here and hope Billy Hunter and David Stern are RR faithful.

                            Comment


                            • Here is mine, assuming BRI is $4 Billion:

                              Players get a guaranteed 50% of BRI and owners get a quasi-hardcap. This creates a salary cap for each team of $66.7M.

                              There are only 2 exemptions (which is why quasi):

                              1) the first two years of guaranteed contracts of first round draft pick salaries do not count towards the cap, however, the option for years 3 and 4 do. Also, only the team that signs the player to the rookie contract can claim the exemption - so draft night trades are still good but once a player is signed and then traded, the rookie deal no longer exempt from the cap. This would benefit bottom feeder teams in 2 ways: more money under the salary cap and it will add trade value to a first round draft pick. This would add $111,147,300 (based on numbers here) to the league player payroll meaning the players are actually getting 52.7% of BRI.

                              2) each team is permitted to have 2 minimum contract players not count towards the salary cap (i.e. they can round out their roster from the bargain bin). This means that the players are getting another 1.3% of BRI.

                              This means the players share of BRI is 54% of which 50% is guaranteed. Any money below the 50% BRI that is not spent on player salaries is returned to the players as a payout at the end of the season and it is divided up proportionately to a players salary minus the rookies and 2 designated roster 'fillers'.

                              This means the highest payroll a team could possible have is $77.6M (cap of $66.7M + 2 consecutive number one draft picks + 2 minimum contracts of $854K).

                              Lower minimum roster spots to 12.

                              The NBA brings in whatever revenue sharing plan it currently has.

                              All contracts are guaranteed with 'franchise player' getting 5 year deal, re-signing players getting 4 year contracts, and poached free agents getting 3 year contracts.

                              All contract values are guaranteed unless BRI shrinks from one year to the next. Then every contract will shrink by that percentage. BRI goes down 1.2%, every contract goes down 1.2%.

                              Keep max contracts the same.

                              Keep rules for injured players not counting towards the cap the same.

                              Allow each team up to 2 amnesty cuts (players paid in full).

                              Implement Carmelo Anthony rule: extensions must be signed before July 1st of final season of contract i.e. no sign and trades.


                              The only thing I am unsure of is how to implement the new 'cap' for the Lakers, Spurs, and Boston. Every other team would be fine.

                              EDIT:

                              Good deal for owners because teams cannot out spend another team to win. 20 of 30 teams spent over $64M in 2010/11 and 29 of 30 spent over $50M. It places a limit on what a team can pay and helps fix costs. Bad contracts off the books sooner.

                              Good deal for players as the salary cap goes from $58M to $66.7M creating an additional $157.9M per season to be spent on player salaries ($261M minus the $103.1M spent above $66.7M and the luxury tax). More money going towards players who deserve it.
                              Last edited by mcHAPPY; Sun Oct 16, 2011, 09:29 AM.

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                              • JaVale McGee shows why despite all his athletic ability he doesn't grasp defense

                                Not the sharpest knife in the drawer.

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