Owners' CBA proposal detailed: $45 million hard cap

[Roy H.]

The NBA’s initial proposal for a new collective-bargaining deal called for a $45 million per team hard salary cap along with non-guaranteed player contracts and significant cuts in annual salary increases.

The details, spelled out in an April 26 memo issued by National Basketball Players Association Executive Director Billy Hunter, marks the league’s push for a major overhaul of the NBA’s economic model and emphasizes to players an aggressive bid to significantly slash costs and shorten contracts.

Hunter said in the memo that the NBA projects the $45 million hard cap number with a team’s total salary not to exceed the cap for any reason. The proposed hard cap as outlined by Hunter also would eliminate the current luxury tax provision, which penalizes teams with a dollar-for-dollar tax for the amount spent on player payroll exceeding the salary cap.

Hunter also alerts players to the league’s effort to alter the structure of current contracts while detailing the owners’ proposal that no player contract be guaranteed for more than 50 percent for the first $8 million in salary and 25 percent for any amount above $8 million.

The league also strikes directly at a team’s cap room to re-sign players at a maximum salary, known as the “Bird” exception, after hall of famer Larry Bird. Annual contract increases would be no greater than 3 percent for players meeting the Bird rule, down significantly from the current 10.5 percent increase, according to the memo. Owners also proposed that the Bird rule contract length be cut to four years from the current six-year length.

Link.

Wow.  I knew the owners were going to be aggressive, but I didn't think they'd be *that* aggressive.  I can't imagine a scenario where the players agree to anything close to that without a long lockout.

To recap what we know of the proposal thus far:

1.  $45 million hard cap, which couldn't be exceeded for any reason;

2.  The hard cap would be phased in over three years; (Link)

3.  Contracts could be a maximum of four years, with 3% raises (and perhaps shorter / smaller for non-Bird deals);

4.  Only 50% of the first $8 million of a contract is guaranteed, with only 25% guaranteed for amounts over $8 million;

5.  "Rollbacks" of existing deals by 15% to 25%;

6.  A strange version of a franchise tag, which essentially confers "Super Bird" rights on one player per team (Link);

7.  A reduction in roster size (?) (Link).

8.  Elimination of sign-and-trades;

9.  An "amnesty" provision, where teams could waive one player with no cap penalty (but would be responsible for his salary)

[Who]

That is pretty ridiculous.

[Chris]

Wasn't there a second proposal about a week ago?  Or was that this one?

[Roy H.]

Wasn't there a second proposal about a week ago?  Or was that this one?

This is the one.  Apparently, the big "concession" of the recent proposal was phasing in the hard cap over three years. 

I understand going in low with an offer, but let's be realistic.  All this does is galvanize the union.

[Evantime34]

You have to love it when negotiations are opened with a lowball offer. Normally the procedure if one side starts negotiations with a lowball offer is for the other side to counter with an equally ludicrous offer. Not really sure how the players could even come up with as crazy an offer. Each players owns a % of each team? Players are payed pensions at the rate of their highest paid salary? No drug test at all? Marijuana and prostitutes provided for every player by their teams?

Seriously though if this is not just a bad offer to start proceedings but what the owners actually expect we are in for an extremely long lockout.

[Chris]

Wasn't there a second proposal about a week ago?  Or was that this one?

This is the one.  Apparently, the big "concession" of the recent proposal was phasing in the hard cap over three years. 

I understand going in low with an offer, but let's be realistic.  All this does is galvanize the union.

Wow.  

Honestly, I like a lot of the ideas in it, and am a fan of the hard cap.  I just am not sure about the $45 million cap.  I refuse to believe that they were losing so much money that they need to go that low on the hard cap.  

I love the 50% guarantees, love the shorter contract lengths, and think the "franchise tag" has promise.

I just hate the fact that, judging by this, we are not going to be getting any NBA basketball for a long time.

[BballTim]

  This might be foolishness on my part but what's the point of Bird rights for a player when there's a hard cap that you can't exceed? Is it to pay more than a max salary to a player?

[Fafnir]

No wonder the players have reacted so harshly to the bargaining sessions.

[KungPoweChicken]

I like everything in the proposal, but I doubt everything in it will get done. A hard cap would make the league so much better.

[the_Bird]

Well, all of my enthusiasm for trying to solve the C's problems is gone.  What's the over-under on the duration of the lockout?  Eighteen months?  Holy crap, that's an aggressive proposal.

EDIT: I'm a supporter of a hard-cap as well, but give me a break - $45M?  How many teams had total payrolls less than $45M last year?  There's no way that the union agrees to anything even close to that.  

EDIT 2:  One team.  One ****' team, Sacramento, at $44M. 

http://hoopshype.com/salaries.htm

[Roy H.]

Well, all of my enthusiasm for trying to solve the C's problems is gone.  What's the over-under on the duration of the lockout?  Eighteen months?  Holy crap, that's an aggressive proposal.

The last time we saw something like this it wiped out the NHL's entire season, so I'm going with one year.

[Brendan]

I fluctuate between seeing the NBA and its teams as one organization, versus seeing them as competing organizations. The first view leads me to think this is a fine starting point, and the second view leads me to think this ridiculous.

A hard cap would mean you don't need all the player holds etc, right?

[wahz]

Hmmm, I'll bet what we eventually see is something close to

1.a "hard" cap of around 62 now but it goes up some small % into implementation.
2.Birds rights allow you to exceed it, with limited percentage increases a year and an "absolute" max cap of 72 with a similar implementation period.
3.Implemented over 4 years
4.Some % of contracts are no longer guaranteed
5.Long strike which not a lot of sports fans will be too worked about

[Brendan]

So what does a team like Miami do? They have > 45 million in Wade, LBJ, Bosh tied up for next 5 years. Would they just have to sign minimum guys? Or would they get rolled back?

You can see why someone like KG may be thinking this is it.

[fairweatherfan]

That's a pretty ludicrous offer by the league.  Not surprising as they played hardball last time too.  Hope the players are saving their checks. 

The things in there that I like are:

- Partially guaranteed contracts, but I think they should be tiered out where later years are guaranteed for a smaller % than the first year or two.  This systematizes the buyout process, and helps with some of the issues with contract length.  Teams have the option to lock up key players long-term, with an out to get rid of them if necessary.

- The sign-and-trade policy, though I'd narrow it to "no use of Bird rights to increase salary" in a sign-and-trade.  Teams can still use signed players as assets but it takes away the player's incentive to do it just for a bigger salary like LeBron and Bosh.

- Knocking down the Bird rights "bonus" increase in salary.  There still should be an incentive to stay with your team but shrinking it a bit would help. 

I think a hard cap is OK for competitive balance purposes, but if the league has an interest in having good teams in big markets, it'll hurt them.  I'd like some tightening, like making the MLE every other season, but if teams want to invest more in their talent they should have some ability to do it.  And any cap should be much higher than $45 million.