The clock is ticking, the NBA is headed to deadline day, with perhaps one last chance to avoid a lockout.
Negotiators for owners and players will meet on Thursday, about 12 hours before the expiration of the collective bargaining agreement and seemingly nowhere close to a deal.
The sides remain far apart on just about every major issue, from salaries to the salary cap, revenues to revenue sharing.
After meeting twice a week for most of the month, this is the only session scheduled this week. The two sides could continue bargaining past the deadline, but that probably requires owners to see evidence of the gap narrowing Thursday.
Otherwise, they could lock out the players for the first time since the 1998-99 season was reduced to 50 games, though commissioner David Stern has refused to say what would happen if a deal is not done Thursday.
“We’re not going to negotiate in the media,” he said Tuesday after meeting with owners. “We haven’t before, we’re not going to do it now. We’re looking forward to having our discussion with the players.”
With that, here is a summary of the recent proposals and issues for each side in this negotiation that appears to be going nowhere.
• “Flex cap” of $62 million: This would raise the cap from the current $58 million, thus allowing teams to exceed the cap subject to certain (undefined) restrictions. The exact levels of the salary floor and ceiling, as well as which exceptions would be part of the new system, have not been detailed. However, the basic idea is that the flex cap is similar to the current system but incorporates a firm upper limit (and thereby eliminates the luxury tax).
• $2 billion-a-year guarantee: Owners are proposing to guarantee players $2 billion a year in salary and benefits for the duration of a proposed 10-year CBA. This represents a modest decline from the current $2.17 billion but allows owners to capture most of the gains from a growth in income expected over the course of the next 10 years, especially when new television rights deals are signed in the next five years. This would net the players a declining share of basketball-related income (BRI), estimated (by the players) to go from the current level of 57 percent to about 40 percent in 10 years.
• Keep escrow money: Owners want to keep 8 percent of 2010-11 salaries that has been escrowed in case the players’ BRI share went over the 57 percent limit. Players view this as unreasonable, since they consider it money already earned.
• Reduced contract length: Owners are proposing a maximum contract length of three years for players signing with new teams (reduced from five today) and four years for players remaining with their current teams (down from six today). This might be more palatable to the players now that the owners have backed off their demand for unguaranteed deals; the deals will be less crippling with fewer years.
• Removal of sign-and-trades: This is another measure aimed at keeping players on their current teams. Presently, players can take advantage of “Bird rights” by signing with their current team and leveraging a trade, allowing them to receive the six-year deal with 10.5 percent increase from their current team.
Furthermore, the team losing the player usually receives some sort of compensation.
• Reducing rookie contracts: This is a lower priority for the owners and certainly not the issue that it has become in the NFL. Owners will seek lower rookie contracts, most notably for first-round picks, but probably not push this too hard.
• The expense of franchise acquisition costs in teams’ operating budgets: The dispute over the fundamental state of the league is principally over how much of the league’s claimed $380 million loss is a result of acquisition costs, debt service, etc.
• Length of the agreement: The owners want a 10-year deal, while the players want only five — which would coincide with the league’s new TV deals.
• $500 million pay cut: Players are proposing a reduction of their income by $100 million a year for the next five years. They have made this concession to reduce the percentage of BRI that is guaranteed to them. However, they do not want change to the fundamental features of the current system: a soft cap, long contracts and fully guaranteed deals.
• Enhanced revenue sharing: The players believe the owners’ concerns about competitive balance can be addressed by reforming the revenue-sharing system. This is the age-old issue in labor disputes: Players believe that looking within, not at themselves, can solve a lot of the owners’ issues.
Currently, big-market teams (such as the Knicks and Lakers) keep all the revenue from their ticket sales and local broadcast deals. The gap between the big and small markets is so large that players believe it undermines the stability of the league and the competitiveness of many of the teams.
• Enhance sign-trade flexibility: Currently, teams over the cap can trade players only when their salaries are within 125 percent and $100,000 of each other. Players want this amended to a range of 250 percent to make player movement easier. To ease this transition, the players are proposing a change to base-year compensation (BYC), a designation awarded to players who receive large raises after their rookie deals. BYC players’ value in trades is halved, which makes trading them more difficult. As with the 125 percent rule, players are pushing to eliminate this rule because it impedes trades.
• Reduce the age limit to 18: Players want to revert back to the pre-2005 rules, where players only had to be 18 years old to declare for the draft. As of now, they must be 19 years old and one year removed from high school graduation.
• Restructure restricted free agency (RFA): Teams currently have one week to decide whether to match RFA offer sheets. Players believe this length paralyzes bidders during a frenzied free-agency period and provides disincentives to pursuing RFAs.
• Change/create exceptions: Players will not support a hard cap, but they are willing to make changes to various exceptions. They will shorten the length of the mid-level exception (MLE), the source of many misguided deals, from five years to four, in exchange for adding a second MLE for each team.
• Deduct arena/construction expenses from BRI pool: This is another concession by the players, who agree that they should take some part in the expenses of building and maintaining state-of-the-art arenas. This is also a key issue in the NFL labor negotiations.
• Provide a neutral arbitrator for all on-court discipline matters: Currently, players can appeal to a neutral arbitrator only when they have received suspensions longer than 12 games.
There you have it. It’s appears to be a lockout can’t avoided unless both sides do their best to prevent a work stoppage. I guess we all have to wait and see.