HANG TIME HEADQUARTERS — We’ve known all along that some sort of compromise was the only way to solve the NBA’s labor issue in time for the regular season to begin on time.
But all we’ve heard for weeks is that the sides were so far apart that an on-time start was little more than a pipe dream. Well, dream on folks. If the rumblings from Tuesday’s meetings in New York have any table scrap of truth to them, significant progress could be on the horizon.
We’ll temper our optimism with the full knowledge that nearly every sign of progress throughout this saga has been followed up with an equally devastating setback of some sort. But as the clock continues to tick away on the season, the fact that both sides have something to talk about is good enough for us … (especially with talks scheduled to resume today):
Sources: Owners Ease Up On Hard Cap Demand
Ken Berger of CBSSports.com: Owners have indicated a willingness to drop their insistence on a hard team salary cap in exchange for adjustments to the luxury tax system and key spending exceptions, two people with knowledge of the negotiations told CBSSports.com Tuesday night.
The offer by league negotiators came Tuesday in a brief, two-hour bargaining session that set the stage for what one source described as “an important day” on Wednesday.
“It’s put up or shut up time,” said the person, who is connected to the talks but spoke on condition of anonymity due to the sensitivity of the negotiations.
The flexibility in the owners’ longstanding insistence on a hard team-by-team cap, first reported by Yahoo Sports, comes with significant strings attached. Among the many concepts league negotiators proposed Tuesday were a more punitive luxury tax and adjustments to two key spending exceptions that teams had under previous agreements: the Larry Bird exception and the mid-level exception. Both would have been eliminated under the owners’ original proposal from two years ago, with many of those dramatic systemic changes living on in subsequent proposals until Tuesday.
There is a feeling among two people who have been briefed on the talks that the owners will come forward Wednesday with an enhanced version of the concepts proposed Tuesday. According to the sources, among the additions could be a proposed 50-50 revenue split, which to this point the league has not reached in terms of the players’ average share over the life of a new CBA in its previous proposals.
As for the system changes the owners proposed Tuesday in exchange for relaxing their stance on the hard team salary cap, one of the people briefed on the talks said union officials regarded them as “alarming.”
Still A Hard Cap … ?
Players Association executive director Billy Hunter has called the hard cap a “blood issue” for the union, and insisted the players would never agree to it.
The owners’ proposal on Tuesday “would still have the affects of a hard cap,” one source with knowledge of the talks said.
The owners didn’t budge on a desire to change the basketball-related income percentage (BRI) to a split that takes the players from 57 percent to the mid 40s, sources said. The players had offered to drop from a 57-43 split to 54-46 at a meeting last week in New York.
The two sides met for a little less than two hours on Tuesday on Manhattan’s East Side, and planned to meet again on Wednesday morning. The Players Association’s economist, Kevin Murphy, didn’t attend Tuesday’s meeting, but was traveling to New York to take part in Wednesday’s session. While the owners’ proposal was a slight upgrade, it is unlikely to move union leadership.
The owners and union both strongly suggested that Wednesday’s meeting would tell the direction of the talks. After the NBA canceled the first two weeks of training camp and preseason games last week, sources said league officials would likely suspend the last two weeks of October games by the end of this week if the two sides hadn’t made significant progress in negotiations. The NBA’s regular season starts on Nov. 1, and it’s almost certain games will soon start to be canceled without the framework of a new labor agreement.
Relax The Cap, But Only Under These Circumstances
Rich Bucher of ESPN The Magazine: NBA commissioner David Stern offered a new proposal to the players’ union in Tuesday’s labor talks that modestly budged from the owners’ long-held position on establishing a hard cap, according to league sources familiar with the negotiations.
Sources told ESPN The Magazine’s Ric Bucher that the owners did not offer players a finite annual team limit on salaries but as of Tuesday night were willing to relax the cap only if the following conditions are met:
•The “Larry Bird exception,” which allows teams to exceed the cap to retain their own free agents regardless of their other committed salaries, is limited to one player per team per season.
•The mid-level exception, which the league valued at $7.4 million last season and could be extended by as many as five years, is reduced in length and size.
•The current luxury tax, the $1-for-$1 penalty a team must pay to the league for the amount it exceeds the salary cap, is to be severely increased.
In last week’s negotiating session, the owners proposed that the players’ share of basketball-related income, or BRI, be sliced from 57 percent to 46 percent, and a source told ESPN.com’s Chris Broussard that the players were offered 48 percent of BRI on Tuesday. The owners also want a five-percent reduction on all existing salaries for this season, a 7.5 percent reduction of all 2012-13 salaries and 10 percent reduction of 2013-14 salaries, a source said.
Even before Tuesday’s session, several agents expected that the owners would relent on the hard cap but dubbed it a negotiating ruse. One prominent agent, who requested anonymity, said the players already were effectively working under a hard cap in the last deal because of the existing escrow system, whereby owners were allowed to hold and keep eight percent of each player’s salary if total salary expenditures exceeded 57 percent. Although it was not outlined in Tuesday’s proposal, presumably the same escrow system would be in place, only with the threshold being 46 percent of BRI.
Concepts: The Devil Is In The Details
I tweeted back on June 30 that there was probably a deal to be done at 52/48 in terms of the split in revenue (the players dropping from 57 percent of revenues to 52), and I think that remains the case. But if union director Billy Hunter brings forward a 50/50 split or even a 51/49 split, there would be a strong possibility that the deal would fail to be ratified by the union membership, which would put the sides back at Square One (and put Hunter out of a job).
One of the concepts the players have resented most during these negotiations is that the sides are assuming 4 percent annual growth per season, but the players would not get any of those additional revenues because the owners were asking them to accept an offer that flatlined player salaries at $2 billion over the first seven seasons of the proposed 10-year deal.
That helps explain this line from union president Derek Fisher in the memo he recently sent to players:
“Our game has never been more popular and we’re poised to see tremendous revenue growth over the next 5 to 6 years. … We must share fairly in the continued growth of our business. Any deal that decouples us from a fair share of the revenue growth in the years ahead is a deal we cannot accept. Period!”
As for the players’ resistance to a hard salary cap, there is a middle ground that would likely be palatable to both sides: Keep the luxury tax, but make it more punitive — something like $2 in tax for every $1 spent over the threshold, rather than the current dollar-for-dollar tax. That would provide more revenue sharing money, in addition to the tripling of revenue sharing from income such as gate receipts and local television dollars that commissioner David Stern has promised.
“There are a number of team owners that will not lose the season over the hard cap system. We’ve been clear from Day 1 of this process that we cannot sign off on a deal that attempts in any way to include a hard salary cap for our teams. That has not changed,” Fisher wrote in his memo.
Again, I must stress that this is a financial negotiation much more than it is a systemic negotiation, and when there is a deal on how many aggregate dollars are devoted to player salaries, the rest of the agreement will fall into place over the course of 2-3 days.
Hope But No Deal, Yet
Mitch Lawrence of the New York Daily News: It sure sounds as if NBA owners made a new proposal to players Tuesday when the two sides met for two hours in Manhattan, but whether it can lead to a deal is still to be determined.
Emerging from an upper East Side hotel in the mid-afternoon, commissioner David Stern would only say that the two sides talked about “concepts” and agreed to resume talks Wednesday as the lockout reaches its 90th day.
But NBA Players Association executive director Billy Hunter left the meeting saying, “we’re going back to our office to crunch some numbers,” indicating that owners had given players some new figures to consider.
Sources say the two sides were about $2 billion apart on a new deal when the session started, but the new proposal could help bridge that gap. When asked whether what was discussed Tuesday could lead to the foundation of a new collective bargaining agreement, Stern said, “We will know more after (Wednesday’s) session.”
With time running out to get a deal done so that the season starts on time on Nov. 1, it’s imperative that the two sides soon find a way to split $4.3 billion in revenue. The start of training camps and 43 preseason games have already been canceled, with the rest of the preseason schedule in jeopardy of being scuttled in the next few days if a deal is not reached.
“There are things that if we could get into the range or get into the zone, maybe we can put a deal together,” said Derek Fisher, president of the NBAPA.