December 5, 2011

NBA back for the Holidays

Filed under: National Basketball Association — Giorgio Varlaro @ 8:01 pm

Supplied via Google Images

The past six months for sports enthusiasts has been demanding with the NFL and NBA discussing labor negotiations. Both leagues had pressing issues with the downfall of the recent economy. Teams were not making projected revenues thus causing a serious change in shared revenues between owners and players. With increasing costs for both parties, each wanted more to secure their respective future.

In regards to the NBA, which released its Christmas Day television line-up last Friday, players’ shares decreased from 57 percent to 51.15 percent this season, and could drop to 49 percent if revenue falls short of projections. The six percent decrease is expected to make up the reported $300 million the NBA lost last season.

Other important labor changes occurred with the amnesty clause, a punitive luxury tax, rookie extensions, and contract length.

The amnesty clause will allow teams to release one bad contract (the player must still be paid), but none of his salary will count toward the salary cap or luxury tax thresholds. The contract must be in place at the start of the new CBA, but the team does not have to play the amnesty card immediately. The clause can be used one time during the length of the new CBA.

Furthermore, players released in this manner will go through a modified waiver process in which teams under the cap can make offers to assume some of the player’s remaining contract, with the remainder paid by the team that released him.

The punitive luxury tax is the NBA’s way of trying to instill a hard salary cap. Small-market teams did not get the hard salary cap they sought, but some have argued that the punitive nature of the new luxury tax is just like a hard cap.

The previous luxury tax was $1 for each $1 a team was over the luxury tax threshold. Now there will be a sliding scale based on how much over the cap a team is. That tax could reach as high as $4.75-to-$1 or more if a team was more than $25 million over the cap in four of any five seasons beginning in 2011-12.

In regards to rookie extensions, each team can designate one player to be eligible for five seasons at the maximum salary of up to 30 percent of the salary cap, provided he has been named the NBA MVP or an All-Star starter twice or a first, second, or third-team NBA player twice (Derrick Rose). All other will abide by the former four-year rookie scale.

This new provision could help small-market teams retain their young stars by allowing them to cash in quicker, but whether that will be enough to keep them with their original teams remains to be seen.

Finally, the maximum contract length for a sign-and-trade is four years with maximum 4.5 percent salary increases, and the maximum length of an extend-and-trade contract is three seasons.

Starting in 2013-14, teams are prohibited from acquiring a free agent in a sign-and-trade if their team salary post-transaction would exceed the tax level by more than $4 million. This is expected to keep players with their small market teams, but the possibility of it actually working still needs to be seen.


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