Blog Entry

NBA relaxes stance on hard cap

Posted on: June 21, 2011 5:55 pm
Edited on: June 21, 2011 11:29 pm

NEW YORK – Negotiations between NBA owners and players reached a critical juncture Tuesday when commissioner David Stern went public with the league’s offer to relax its stance on a hard salary cap and guarantee the players $2 billion a year in compensation as part of a 10-year collective bargaining proposal.

“We think this is virtually the best shot we think we have to both demonstrate to the players our good faith (and) our desire to go as far as we can to avoid a lockout,” Stern said after a 3 1-2 hour bargaining session among members of the owners’ labor relations committee and the players’ executive committee.

Stern stopped short of saying this was the owners’ final offer, but added, "The cupboard is getting barer and barer." The two sides agreed to meet again Friday in Manhattan.

“We wanted to make sure that we laid it all out there,” Stern said. “It’s all out there. The owners, to a person, feel that this is what we have to give and since we’re getting very close to June 30 – the last time I looked, it was about eight days away – that it was time.”

Billy Hunter, the executive director of the National Basketball Players Association, union president Derek Fisher of the Lakers, and executive committee member Chris Paul of the Hornets, however, minimized the owners’ gesture as simply another version of a hard cap – which Hunter reiterated was a “blood issue” for the union.

“We agreed that we would come back on Friday and present them with a response to what they presented us with,” Hunter said. “We want to go back, crunch some numbers, look at the system, and then we’ll respond on Friday. … We have an obligation to respond to what they gave us today.”

The essence of the system described by Stern was an NHL-style cap system with a targeted salary of $62 million per team and a to-be-negotiated range from a minimum to an amount above $62 million that teams could spend up to through various exceptions currently in place – such as the Larry Bird exception and mid-level exception. An escrow-like system would be used to adjust for teams coming in below and above the $62 million target. Unlike the current escrow system, through which 8 percent of players’ salaries is withheld and paid back if negotiated salaries fall short of 57 percent of revenues, Stern said owners would keep the escrow under the new system – making this, in effect, an 8 percent pay cut for the players in Year One.

In terms of the owners’ initial proposal of a $45 million hard cap, the latest offer from the league amounts to a $650 million move from their initial position. The basic structure of a 50-50 split of revenues – based on a modified formula with about $900 million in expenses deducted before sharing with the players – remains intact. The luxury tax would be eliminated under the owners' proposal.

NBA Labor
UPDATE: In another fire-and-brimstone analogy, Hunter dismissed the owners’ offer last Friday to relax their insistence on banning fully guaranteed contracts, essentially accusing them of burglary.

“We’ve had guaranteed contracts for almost 40 years,” Hunter said. “It’s almost like somebody walks into your house and they take something that belongs to you and then they want to sell it back. And you say, ‘Well, hell, it was mine from the get-go, so why the hell should I pay for it? And I didn’t authorize you to take it. And I never said it was available for you to take or use or abuse.”

A day that Stern had billed as an important moment in these labor negotiations began with the “modest” $500 million salary reduction proposal from the players. In addition to reducing their share of BRI from from 57 percent to 54.3, the players also enhanced their proposed formula for the revenue split on future revenue increases. The players previously proposed giving the owners more than 50 percent of revenues beyond the 2010-11 level of approximately $3.8 billion, and on Tuesday raised the ante and agreed to a more owner-favorable split on additional revenues.

Upon receiving that offer, the owners convened for a lengthy private meeting during which Stern said they agreed to put forth “what we think is a very significant offer to the players in order to avoid a work stoppage.” The new system, Stern said, would result in an average salary in the NBA of $5 million.

“Since we had one more move to make, we thought we would make it and let them know where we were prepared to go,” Stern said. “… I think that the players know where we are. The owners have decided to give what they possibly could.”

The committee was unanimous, Stern said, including members who were not present but gave their approval – Glen Taylor (Timberwolves), Mark Cuban (Mavericks), Clay Bennett (Thunder), and Wyc Grousbeck (Celtics). The members present were Robert Sarver (Suns), Dan Gilbert (Cavaliers), James Dolan (Knicks), Jeanie Buss (Lakers), Larry Miller (Trail Blazers), Bob Vander Weide (Magic), and committee chairman Peter Holt (Spurs).

In addition to the players’ executive committee members in attendance, also on hand were Tony Parker (Spurs), Al Horford and Zaza Pachulia (Hawks), and Sebastian Telfair (Timberwolves).

Deputy commissioner Adam Silver denied a report that there were different agendas and priorities among owners based on market size and revenue. But the flex cap offer made by the owners Tuesday seemed to be a victory for high-revenue owners and the trend of forming superteams. Both would’ve been reined in by the original (and highly unrealistic) $45 million hard-cap system that owners initially proposed in January 2010.

The sliding salary band for teams, which essentially sets a league-wide cap with flexibility to deviate on a team-by-team basis above and below the $62 million target, also would put the onus on teams that have been reluctant to spend much above the current minimum payroll to spend in the hopes of enhancing their ability to compete.

“We believe as a league that there’s no question the data shows a correlation between salaries and success on the court,” Silver said. “And what we’ve said to them is we want a league in which all 30 teams can compete for championships. As another byproduct of that, it will raise more revenue, because greater competition will mean better business, for us and the players.”

But the players clearly view the owners’ latest proposal as little more than nuanced hard cap, which they adamantly oppose.

“It’s been characterized in different ways, but essentially they want to create a hard salary cap in our game, and we just don’t see it,” Fisher said.

Asked if there can be a deal with a hard cap, Fisher said, “No.”

It will be interesting to see if the players come back with a counterproposal within the flex-cap framework. Don’t bet on it. But for the sake of argument, while it may be intuitive to think the players would want a wide salary range, a smaller range actually would be better for players – because more teams would be willing to exceed the target than exceed the minimum. That’s the part of the problem that changing the cap formula won’t address without more revenue sharing, which owners have thus far refused to collectively bargain.

In order for there to be a deal by June 30, Hunter said, “Someone someone has to make a big move.”

Otherwise, the room will go dark again and the next move will be a lockout.

Since: Jun 9, 2011
Posted on: June 30, 2011 10:34 pm

Hard cap, Soft cap . . . who cares?

NBA team owners are entitled to a return on investment, an equity position (up OR down), and the prestige/thrill of ownership. Players are entitled to TONS and TONS of $$$ . . . not! I hate all this greed. There are only so many pennies in a dollar, why can't you guys grow up, SHARE (like Mama once said) according to a fair formula, and get on with it. This insanity WILL drive away fans who pay hard-earned money (in the middle of a protracted recession - did anyone notice?) to watch the players, owners, and now the league . . . WHINE! Want some Cheese with that? Maybe us NBA fans should take our talents to, uh . . . oh hell with it, let's just leave, whadda ya say? . . . Juss_Sayin' . . .

Since: Jun 25, 2009
Posted on: June 22, 2011 12:16 pm

NBA relaxes stance on hard cap

If you are injured playing the game, it seems to me that something similar to workman's compensation should kick in and the player should get something. 

SOMETHING? I'm cool with the players getting SOMETHING if they get hurt.... what I'm not ok with is the players getting the exact same compensation they would have received for the remainder of their contract if they hadn't been hurt.....  that doesn't happen anywhere else on the planet in any industry.  There is always compensation but in the NBA they get 100 percent of what they're owed... big difference. 

You said performance bonuses don't work because a coach could mysteriously bench a player without good reason? Why are you looking at the flip side of that?  What about a player that fakes an injury? What about a player that doesn't work hard during rehabilitation because they get their full wage and aren't in a hurry to come back?  On a different note what about the player that performed well enough to earn 50 million dollar guaranteed contract extension but suddenly loses his passion for the game since he's now financially set for life?

There is only one solution and that is for the players to be REAL PARTNERS.  That means if the NBA profits overall, the players prosper. If the NBA doesn't profit but loses money, the players make much less.  As long as the game improves and grows the players are guaranteed raises year after year.  If not, they don't..... it's that simple in my mind..... 

Since: Mar 19, 2008
Posted on: June 22, 2011 11:50 am

NBA relaxes stance on hard cap

You mean they haven't locked out yet? Dang! Seriously though, while there are hard core NBA fans, the vast majority of this country could give a rats @$$ if the NBA is locked out for a year(s). NFL is king, with College Football close behind. If the NBA locks out, you will find far less people clamoring for it to be resolved than the current number trying to force the NFL and NFLPA into ending it's lockout.

Since: Jul 21, 2008
Posted on: June 22, 2011 10:33 am

NBA relaxes stance on hard cap

I did request that instead of a raise, I be given a lump sum performance based bonus.  I felt it would allow me to be more competitive for future job bids.  I did not want to price myself out of being a competitive option.  It is on an extremely smaller scale than what we are looking at here.  The hidden danger for a player in a performance based contract is that the player only controls their individual performance when on the court and when utilized on the court.  They do not control their access to getting into the game.  A player could be sat down late in the season for mysterious reasons and not be able to achieve those performance based incentives despite performing to that level all season.  In professional sports you are not paid necessarily for future performance.  You are paid based on your recent performance, the belief that you will continue that performance, and the perceived cost of replacing you with someone who could achieve that performance.  In other words, your worth is based on the market cost to replace you. If you are injured playing the game, it seems to me that something similar to workman's compensation should kick in and the player should get something.

Since: Jun 25, 2009
Posted on: June 22, 2011 10:18 am

NBA relaxes stance on hard cap

If I hear one more person say that sports players are over-paid, I will crack. People are jealous and hypocritical. They would act no different if they were in their shoes and it's depressing. This whole world is nothing but a bunch of whining hypocrits lately. 

The only thing that bothers me is the greed. If there is going to be a soft cap, than there shouldn't be guaranteed contracts. Pay to play. Much like golf stars and for the most part NFL stars. Yes there are guarantees in contracts in the NFL, but if you miss games you miss pay. 

I have no problem with professional athletes getting every penny they can... BUT..... their salaries need to be directly tied to the profits/losses of the owners.  It can't be that when times are good players get raises, but when times are bad they don't give anything back. That's a union type mentality that doesn't work in today's world anymore... those days are gone.... sports unions constantly talk about being "partners" in agreements with their respective leagues yet are never willing to take any of the financial risk owners take...

Until that day comes, I will always back in the owners position in all sports.  The NHL is the closest thing to fair as it gets... actually it has become more then fair since the lockout.  There is a hard cap.  The cap goes up as revenues increase and the players are at risk if it doesn't.  Team caps started at 39 million dollars a few years ago and are now going to be around 64 million dollars... once again based on an increase on revenues and not a union leader bumping his head and just getting automatic increases for no particular reason.  Owners can also protect themselves against long term contracts and some of the failures associated with those deals by buying out a player for what's most of the time 2/3's of the remaining money in their existing contract.... it's paid over 2 times the remaining length of the deal. Why is that fair? Because if a player is hurt or not performing midway through his deal, why shouldn't an owner be able to get out of it???  It doesn't matter how a player got hurt... the bottom line is if you can't perform you should earn less.....  you want full pay for getting hurt? There are insurance companies out there for that... pay the premium and get that guarantee....

The NBA desperately needs an NHL like hard cap with similar rules attached to it...... Look at the last 20 or 25 years in the NBA.... it's the same teams over and over again that won championships... that's why there are 22 teams losing money.... nobody wants to buy tickets or even watch a team on tv if they know they'll never have a chance to win it all....  great organizations will still contend for championships with a hard cap just like the Wings and Pens have in hockey.... ones that depended solely on buying players will not win...

Since: Oct 13, 2006
Posted on: June 22, 2011 9:51 am

NBA relaxes stance on hard cap

These players played to a level that earned them these contracts. The fact that they are injured (usually injured playing this game), should have no bearing on their salary. Take eddie curry for instance, he was and is good. Just because Dantoni says he is no good doesn't make it so. He led the league in field goal pct twice and averaged over 19 points at a high pct. He just doesn't rebound well. New orleans thought that tyson chandler was washed up. Good thing dallas didn't think so. The fact that people trade people for cap space is what keeps the game competitive. Beasley was given away for a song and he averaged 19 points. It's all a guessing game and these guys are only young for so long. They deserve to get as much as they can. Oh... you would probably refuse a raise if you didn't feel that you were pulling your weight.

Since: Jun 21, 2008
Posted on: June 22, 2011 8:26 am

NBA relaxes stance on hard cap

I'm tired of hearing the argument that atheletes are over-paid... Grow up and look at the facts. Sports bring in BILLIONS in revenue for a town, and the players deserve to see a fair share of that. Just like an employee of a company would see a bonus or whatever other equivilant if their company performed outstanding.

If I hear one more person say that sports players are over-paid, I will crack. People are jealous and hypocritical. They would act no different if they were in their shoes and it's depressing. This whole world is nothing but a bunch of whining hypocrits lately.

The only thing that bothers me is the greed. If there is going to be a soft cap, than there shouldn't be guaranteed contracts. Pay to play. Much like golf stars and for the most part NFL stars. Yes there are guarantees in contracts in the NFL, but if you miss games you miss pay.

Since: Aug 20, 2006
Posted on: June 22, 2011 7:06 am

NBA relaxes stance on hard cap

After reading this article in my opinion there will be a lockout and possibly no NBA season.  From what I've read previously it does appear to be a broken system that is losing a lot of owners money and paying some undeserving players millions to not play (Eddie Curry for example). We all know it takes talent to win in the NBA so teams overpay to keep their talent (Joe Johnson for example) because if they don't their teams will be marginally worse than before.  The players don't sound like they want to give back (long guaranteed contracts, flexible salary cap) things that they have had.  I understand why the players don't want to particularly because they are the product and why the NBA is popular.  You take the superstars out of the league and its the NBDL, both sides know this.

Since: Jun 29, 2008
Posted on: June 22, 2011 4:23 am

NBA relaxes stance on hard cap

NBA players are the most over-paid of all major professional athletes and guaranteed contracts for any athlete are a joke.  Look at how many trades in the NBA are done so that teams can rid themselves of bad contracts for players that either are injured constantly or suck consistantly.  The NFL players complain about non-guaranteed contracts, but if you don't perform you don't get paid.  It should be the same way in all pro sports.

Since: Jul 26, 2009
Posted on: June 22, 2011 1:50 am

NBA relaxes stance on hard cap

The players are getting greedy here. This seems to be a fair proposal. The owners need to have a profit or why own the team. I see this squarely in the players court. One thing I hope is included is the ability to void one contract. Bye Bye Brandon Roy.

The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or