NBA CBA - Contraction, 750 million salary cuts, non guaranteed deals, oh my!

Plenty of interesting tidbits from Ken Berger latest article on the CBA.

"What we told our players initially is that
we'd like to get profitable and we'd like to have a return on our
investment," Stern said. "And there's a swing of somewhere in the
neighborhood of between $750 [million] and $800 million that we
would like to change. That's our story and we're sticking with
it."

In another staggering development, CBSSports.com
learned that salaries may not be the only area cut as the NBA
tries to gets its financial books up to speed with the explosion
in popularity the league will experience this season. A person
with knowledge of the owners' discussions said the league "will
continue to be open to contraction" as a possible mechanism for
restoring the league to profitability.

After two days of meetings with the full Board of Governors, Stern
pulled no punches in quantifying just how much salaries would need to be
reduced to stem losses that NBA officials pegged at $380 million
last season. Deputy commissioner Adam Silver, who is spearheading
the labor negotiations, revealed Thursday that the league
currently is projecting between $340 million and $350 million in
losses for the upcoming season -- despite robust season-ticket
renewals and record new season-ticket sales generated by the
historic summer of free-agent movement that landed LeBron James
and Chris Bosh in Miami with Dwyane Wade, plus Carlos Boozer in
Chicago and Amar'e Stoudemire in New York.

Stern conceded that "business is good," and pointed
out that as revenues rise, player salaries rise with them. "It's a
sliding scale," the commissioner said after his session with the
media was over.

But more than that, the point league
officials have made to owners -- both during bargaining sessions
with the labor committee and to the full Board of Governors on
Thursday -- is that significant savings could be achieved by
changing the NBA's economic model without forcing the players to
take such a big cut. League negotiators believe a hard cap,
shorter contracts, less guaranteed money and a revamped revenue-sharing
system with what Stern called "modest performance standards" would
go a long way toward improving competitive balance and satisfying
Stern's goal of assuring "all teams will have an opportunity to
be profitable."

In all of that, you've got three or four basic points:

1: The league wants to trim salaries by 750 million in total.  That represents basically a third of player salaries.   The players will not be real amped about that.

2: Contraction is thrown out there as a scare tactic.  I don't believe there's any viable way the league can contract teams.  They'd need to pay out a crapload of money to the owners of the contracted teams while the players would lose a crapload of jobs.  It's a lose / lose for everyone really.

3: The league is really aiming at non guaranteed salaries and shorter contracts.  They know they're not going to get a 33% cut in player salaries, so what they're starting the negotiation off in an unreasonable place to hope they can win the concessions they really want.  Most likely something like 4 year partially guaranteed deals.

I'm not sure where the league's numbers come from, but if you look at the estimate from Forbes they paint quite a different picture of NBA accounting.  It makes you wonder if the league is throwing a bunch of phony numbers around to make their point.  I know they've said they've handed over tax documents, but those frequently have a bunch of accounting tricks to lower the real money involved. 

At any rate, it will be interesting to see where this goes next summer.  Some of the contracts recently negotiated could end up looking pretty bad if the new salary structure changes things around considerably, including Joakim Noah's.

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  • Wow!!! It just goes to show what I have been saying for the longest, and that's to make the majority of these no talented players who are stars in high school and college but can't get a grasp on the NBA level to earn their moneys worth and stop paying them for potential. I've never heard of a player that averaged 10 points a game and getting paid 30 to 40 million dollars not until after K.G. entered the league straight out of high school and that opened the flood gates for a bunch of no talented players from that point on. Not all were busts but the majority of them were. Kwame Brown foe example comes to mind, and lets not forget about Eddie Curry either.

  • In reply to Reese1:

    It is like the stock market/housing market correction happening in the last few years. Hey, if you are a Harvard Grad but not good at work....you will probably easily land a job because of potential. That's how it worked. But all professional sports seem to pay on potential. NBA is better than the NFL. I don't think(with a little variation of non-guarantees) the rookie contracts are so bad. It is the mid level players salary in a league were the talent level makes a big difference. Ex: LBJ Vs Rudy Gay, Boozer Vs Gooden..

  • In reply to schaumburgfan:

    It may be like the stock/housing market but at least the owners/teams will be able to get some of their money back from players that don't live up to their potential.

  • In reply to schaumburgfan:

    Things will probably be very similar to the way things are now - because the system is generally working. The owners' main problem is the lack of value once large contracts are signed. There will probably be a provision shortening the term of contracts guaranteed in full. Example - the max guaranteed contract may be perhaps 4 years.

    I dont see radical changes to the CBA other than the length of guaranteed deals.

  • In reply to bulls6:

    Agree. As I wrote in my previous comment, an example is LBJ Vs Rudy Gay. I think they will get some provision for injuries, games missed while shortening the guaranteed contracts.

    But that said, I think there will be something for the smaller markets or to get some semblance of parity like a franchise tag for the best player. It is devastating for Cleveland, Minneapolis to lose their best player and be screwed for the next 20 years.

  • In reply to bulls6:

    A bit off topic, I hate that the Bulls are being called the Utah Jazz east but it's kind of true. ESPN has come out with their rankings for the season and some of their reporters are calling the Bulls the Jazz east. I hope they don't end up being this in the long run. The Bulls brass should see that they don't end up being a team that can't quite win the big games like the original Utah Jazz.

  • In reply to Reese1:

    It is not a bad thing. The only team the Jazz really had issues were with Lakers and once with the Spurs. They had no one really to control the paint defensively. If they had Noah(in his current level) on the same teams, they would be a lot better.
    That said, I wouldn't give a rat's ass to what most ESPN's analysts say. Maybe a couple of them are ok...but most of them like Sheridan have no credibility in analysis.

  • In reply to Reese1:

    I wouldn't worry about that too much. Once the season starts the Bulls will earn their own reputation. Either they'll live up to it or define themselves otherwise. Reporters lack imagination and always need to compare things to something or someone else (i.e. "the NEXT Jordan").

  • In reply to Reese1:

    So the owners are soooo stupid, the only way they can avoid losing money is to cut salaries. Who put the contract in front of the player to sign. The league isn't losing money. Who are they kidding? Why don't they open their books?

  • In reply to schaumburgfan:

    so what does this mean for our bulls? any thoughts guys? rose, taj future draft picks noah? anyone? thanks in advance............

  • Yeah, but there's a MUCH larger and longer sample size for college than high school. Even before the age restriction was imposed you had to fairly special to make the leap straight from high school. A few busters snuck in, but you can't really compare that with decades of college players.

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