Until reading this article from Larry Coon, I hadn’t realized the players hold a real hammer in negotiations:
The real trump card in the players’ hands might be union
decertification. Many of the league’s practices, such as the salary cap
and draft, may violate antitrust laws, had they not been agreed to via
collective bargaining. These practices are exempt from the antitrust
laws only so long as they are part of the CBA. This exemption continues
even after the CBA expires, as long as a “labor relationship” continues
to exist. But this relationship would end if the union were decertified,
because the players would be abandoning their collective bargaining
rights and turning the players union into a non-union trade association.
Decertification would quickly be followed by an antitrust suit against
the league, challenging its restraints against player movement and
salaries. The salary cap, luxury tax, maximum salaries, limits on free
agency, age limits and draft would all be under attack. Even the
league’s ability to stage a lockout would be challenged, and existing
player contracts would likely become enforceable. “The league does not
have a weapon in its arsenal that matches the potential threat of
decertification and an antitrust suit,” Feldman said.
Interestingly enough, if the players decertified the union and went to individual contracts and won the anti-trust law suit (which they almost certainly would), then the top line players would make an utter crapload more money.
Throw out the salary cap, the max contract, the luxury tax, the trading rules, the draft, how much money do the Knicks offer LeBron James this summer? On the other hand, the league would absolutely be destroyed. The Knicks and Lakers would spend 150 million a season on salary and unlike MLB, if you get the top 2-3 players in the league, you’re typically going to win.
It would create a system with only 4-5 teams having any shot at the title. Ever. Seriously, if your team wasn’t able to spend over 100 million it would never win the title. There is no team who’s got a brilliant enough farm system or scouting department to win without simply outspending if there is no salary cap.
Ultimately, such a system would be the death of the NBA as there would be zero incentive to ever go see a game in 20+ NBA cities which would never have a chance to win under that system.
The owners can use a lockout as a nuclear war card. A huge amount of NBA players live paycheck to paycheck, and within 5 years of retirement 65% are bankrupt. The reasons are plentiful (depreciating assets, child support, hangers on, keeping up with the LeBrons, etc.. ), but the reality is that many players will feel a financial pinch in a lockout fairly quickly. None of the owners will feel the financial pinch, and several of them will actually be saving money in a lockout.
Given those circumstances, I thought the players would fold like a cheap suit. However, I didn’t know the union had nuclear options as well, and if they play theirs then it’s game over for everyone. The league would be (or at least should be) begging for the union to reform so they could end the anti-trust suit and get a CBA back.
With the players having more power than I originally expected, I don’t know how this negotiation is going to shape up. I’ve written about it several times, but here’s what I think would be good for the league.
What do the owners get?
Hard salary cap
The salary cap is a hard cap, and it’s set at whatever estimates of it’s
use come closest to the projected BRI the players get. Whether the
cap is hard or soft is irrelevant now because the players as a whole are
guaranteed the same X amount of money. What a hard cap will do is
force all teams to spend closer to the same X and thus create a more
competitive league. Under a hard cap, salary matching in trades also goes away, as there’s
no need since teams can’t exceed the cap. The only rule on trades is
everyone has to be under the cap when it’s over.
For teams presently over the cap, they don’t need to cut players, but they will operate in a limited fashion. They can only sign players to the minimum salary or the rookie salary until they are under the cap and can’t extend their own FAs to more than the minimum salary. When trading they must have the same or less salary than prior to the trade on the books in both present and all future years. Under this plan, it would not take long for all teams over the cap to go under it again.
Contracts now have a non-guaranteed percentage on them
First year: 100%, Second: 75%, Third: 50%, Fourth 25%. If a player signs with his own team, he can add a 5th year on at 100% guaranteed rate to the front of the deal. Players do get paid 100% if they’re waived while not medically cleared to play by a league and NBPA certified third party medical group (only for injuries that happen on the court). In the event a player is waived (while cleared or not) the team gets back the cap space of the scale. The players are now protected in the event of major injury on their contract, but they aren’t protected for going out and sucking. The league needs the non-guaranteed contracts in order to play under a hard cap which then helps competitive balance.
The NBA draft has an increased year of eligibility
I know it’s
unfair to the kids in school, but none of them are at the negotiating
table, and the rule makes sense for everyone else who is. Owners get a
more certain draft, and they are less likely to pay worthless projects
and pick complete busts who’ve only had two years of experience.
veterans won’t have their jobs pushed out for worthless projects either
and will be able to stay in the league an extra year. It’s a win/win
for current players and team owners with the only losers being the guys
who have to wait another year.
What do the Players get?
Players get X percentage of BRI
I’m not sure where X is, but probably fairly similar to where it is
now. Guarantee the players an exact split of the revenue based on
BRI. If BRI is unexpectedly high then everyone gets a raise. If it’s
low then everyone gets a paycut. The advantage of this plan is that
once the players, as a whole, have the same total pool to work with, how
you divy up that pool should be less of an important factor.
Give players better pension benefits
It’s a relatively low cost for the league, but so many players end
up bankrupt, and their pension are generally protected in bankruptcy
court. This is the one lifeline to keep players from experiencing
incredibly difficult times in the future. It’s the one card that could
really protect a lot of players from themselves.
The end of the maximum salary
With a hard cap in place, there’s no need to limit the maximum salary. If the cap is 70 million and someone wants to pay LeBron 50 million then let them. Not only will this create a far more fair pay scale for everyone, but it will also create a far more competitive league as teams with superstars will have a harder time putting together casts, and teams with lots of depth will have a fair shot at them.
Restricted free agency is weakened
Teams now only have 1 day to match a restricted free agents offer. Also, they can’t use exceptions to go over the cap to do so. In this case, player movement out of rookie deals will become much easier for players as teams will no longer be scared to make a tender offer and lock up their money, and they can make offers the original team can’t match if they are close to the cap. At the same time, the original team still has the extra fully guaranteed year to entice FAs, and they still do have some basic matching capability.
The primary goal is to create a system where all teams can compete. The hard salary cap does that. The total amount of money going to players remaining flat no matter what means that players always get a fair piece of the pie, but doing so with non guaranteed contracts means that pie is always more fairly distributed than it is now. There’s easier player movement and better benefits for the players who need to file for bankruptcy later which are big gains for the players as well.
The owners get cost certainty and lower market teams will no longer have to worry about spending 90-100 million in salary to win a title, and teams can more easily recover from mistakes allowing them to always have something to sell their fans on. This is particularly important for teams in smaller markets which will really languish when their franchise is two or three years away from even making the playoffs.
Obviously, I doubt an agreement this sensible will be made. Players will fight the hard cap and non guaranteed deals to the death even if the total amount of money going to players is guaranteed to be the same. Meanwhile, owners will balk at removing the maximum salary and weakening restricted free agency in a fear of stars all fleeing the small market teams even though these things combined with the first two will keep all teams competitive.
I expect the new agreement to be strikingly similar to the old agreement, we’ll have to wait and see, but the owners are going to have a hard time claiming poor after this summer, and the interest in the NBA is off the charts right now due to the 2010 summer madness. Neither side should want to play the nuclear option right now. Not when business is good in a bad economy.