The NBA players association has thrown the gauntlet back to the owners, kind of. With David Stern’s ultimatum looming, the players association declined to call a vote on the owners’ proposed deal. Billy Hunter and David Stern indicated the players union is willing to accept the proposed BRI split, but will need certain system modifications to make a deal.
Hunter called Stern’s bluff — if it is a bluff — saying he felt the league’s 50-50 offer would remain on the table past the Wednesday deadline. He also pointed out the main system issues blocking a deal — namely, sign-and-trade deals, the mid-level exception, the tax cliff and the escrow. Importantly, the players union indicated a willingness to settle on a 50-50 BRI split, as long as the league makes a few system changes.
Based on the David Stern letter that outlined the league’s proposal, obtained by the New York Times, assume the changes the union wants amount to this:
The owners favor a mid-level exception for non-taxpaying teams starting at $5 million, with a maximum length of three to four years, which will grow annually by three percent. Considering the slight differences from the prior CBA’s mid-level exception, assume the players are okay with this aspect of the proposal.
Where the players likely want improvements regarding the mid-level exception is the league’s proposed structure for taxpayers. The league wants taxpayers limited to a $2.5 million mid-level exception, with a maximum length of two years, which will grow annually by three percent, but cannot be used in consecutive years. Expect the players to push for all teams, even taxpayers, to be able to use the mid-level every season. Also expect teams to push for taxpayers to be allowed to spend more money on the mid-level.
I’m not sure whether the players union really cares about the NBA’s proposed sign-and-trade modifications, which would limit sign-and-trades and biannual exceptions to non-taxpayers. If they do care, they shouldn’t: According to Ken Berger’s count, only five sign-and-trades among taxpayers have occurred in the last six years. And none of them had much affect on the NBA landscape. The Mavericks acquiring a washed-up Shawn Marion probably had the most impact on the league.
Based on one of Fisher’s comments in the press conference, when he said something to the effect of, “Players want to have a say where they play,” the league wants to eliminate the proposed “Carmelo Anthony Rule,” which would keep teams from making extend-and-trades like the one that landed Anthony in New York last season. But that rule shouldn’t be a huge sticking point — it only affects stars, and more specifically, it only affects stars who want to hold their current teams hostage long enough to force a trade.
There is something that sounds wrong about the rule, but in my opinion, it’s the league that should be more concerned: If extend-and-trade deals are excluded from the new CBA, trading stars before their contracts expire will become almost impossible, and teams would run the risk of losing more stars with little or no compensation. (See: Lebron James, Chris Bosh.)
The league wants a 10% escrow tax to be withheld from players’ contracts during the season, to be repaid at year’s end if player salaries do not exceed the players’ agreed-upon BRI share. A similar escrow amount (either 9% or 10%, depending on whether you believe Chris Sheridan or Larry Coon) was withheld from the recently-expired CBA, so I imagine that’s not the sticking point.
Probably the issue? The league wants “an additional withholding will be applied in Year 1 ‘to account for business uncertainty’ stemming from the lockout.” Yeah, and I want Billy Hunter to buy me an ice cream cone. That doesn’t seem fair, either.
Stern’s letter did not include the proposed luxury tax, but the league must have taken a step back from Oct. 29, when the New York Times reported that a luxury tax system had been tentatively agreed on:
Luxury-tax rate: Teams will be charged $1.50 per $1 spent beyond a threshold, replacing the previous dollar-for-dollar tax, according to people who have seen the plan.
To further discourage spending, the tax will increase for every $5 million spent beyond the threshold: to $1.75 after $5 million, $2.50 after $10 million and $3.25 after $15 million.
Under this system, the Los Angeles Lakers would have paid $45 million in taxes last season, compared with $20 million under the old formula. (The rates could still change based on other tradeoffs.)
Either the league took that offer off the table, there’s an updated report somewhere that I didn’t see (or that I forget), or the agreement never happened in the first place.
Considering the amount of salary some teams (a la the Lakers) pay compared to others (a la the Charlotte Hornets), a different tax system makes sense. A hard salary cap will not necessarily lead to more competitive balance, but restricting the gigantic payroll differences between teams still represents part of the solution. Even if NBA success mostly boils down to draft choices, as Tom Haberstroh explained on TrueHoop, the playing field is nonetheless inherently unequal between teams with big pockets and those without. A steepened luxury tax penalty won’t entirely solve that issue, but it would provide a stiffer penalty to teams looking to add payroll, thereby (theoretically) making things more even between the big spenders and the conservative spenders.
Of course, that also adds more restrictions to the salary free agents can obtain, which is why the players want a less taxing (literally) pay structure. I assume this could be the most difficult part of the deal to iron out, if only because the league seems intent to make it tougher for big-market teams to spend so liberally.
What it all means
The players union basically told the NBA it would meet at a 50-50 BRI split, as long as the league makes changes. Though the league essentially issued an ultimatum that expires on Wednesday, reports say David Stern is ready to offer the players limited changes to the proposal.
Are Stern and the owners okay with making the aforementioned changes? I’m not sure. But if I were in charge, I would not find the desired changes substantial enough to extend the lockout any further. Sadly enough, the 2011-12 NBA season might depend on whether the owners agree with my stance.