What’ll Be in New Collective Bargaining Agreement?

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According to NBA Commissioner Adam Silver, negotiations with the NBA Players Association are “going very well,” and there’s “a great sense and spirit of cooperation across the table and a desire to move forward.”

The league’s 2011 Collective Bargaining Agreement (CBA) contains mutual opt-out clauses for both the owners and players, with a Dec. 15 deadline.  If neither side opts out, the existing deal will stay in force through the 2020-21 season.

While Silver wouldn’t put a “specific timetable” on negotiations, a hope remains that a revision to CBA can be agreed to prior to the mid-December date.

If either side chooses to opt out, without a new agreement in place, the current CBA will expire on June 30, followed by a lockout until a new deal is ratified.

On the heels of an historic $24.1 million jump in the league’s salary cap, due primarily to the NBA’s lucrative new national television deal, both the owners and players have incentive to avoid a stoppage in play.

Optimism from both Michelle Roberts, the NBPA’s Executive Director, and Silver suggests a new deal may indeed be reached at some point over the next two months.

If the NBA and the Players Association can lock in a deal by mid-December, teams will also have the advantage of understanding the financial landscape of the new deal as they approach the trade deadline and 2017 draft.

Without resolution, teams will be forced to operate in the dark.  Early resolution is the best case for all parties, guaranteeing an 82-game 2017-18 season sans lockout.

While details of the negotiation are being held closely between the two sides, what might a new CBA look like?  What issues will it need to address?

1. Revenue Split:

Always the big one, the battle over how much of the pie goes to the owners and how much goes to the players is the heart of the negotiation.  In 2011, the players accepted a decrease from 57 percent to band in the 49 to 51 percent range.  The formula is complex, but for the 2015-16 season, the players’ share was 50.83 percent of $5.3 billion, or $2.7 billion.  That number will climb significantly for 2016-17, with television money.

The owners’ argument is that the current CBA is yielding more to the players at roughly 51 percent, than the old system at 57 percent.  From the union’s perspective, they took a sizable hit in the last negotiation, team valuations are through the roof, and they deserve to be made whole.

Ultimately, rhetoric only goes so far.  At the bargaining table, both sides need to compromise.  Will the owners give back, or will the players accept cosmetic changes and status quo on revenue?

Whatever the answer, the NBA currently projects a $102 million salary cap for next season, but raising the player’s stake could translate into a $2 million jump per additional point of BRI – more if revenue climbs above the league’s current expectation.

That assumes the basic structure of a new deal is a basic modification of the existing agreement, and not a complete overhaul.

2. Proportional Scale Salaries

Maximum salaries are tied to revenue. A 10-year veteran’s max climbed from $23 million to $31 million with the jump to $94.1 million.  That’s great for players who can get a maximum contract, and it was helpful on a wider scale than usual this summer with most of the league armed with cap room.

In a typical offseason, however, most free agents are hoping to get paid via an exception (Mid-Level, Bi-Annual or Room) or, at worst, a minimum contract.  Each of those salaries are based on a set scale in the CBA that is not tied to revenue.

A 10-year veteran on a minimum deal in 2015-16 would have earned $1.5 million.  That number rose just $52,472 for the current year.  The Mid-Level climbed by only $164,000, despite the $24.1 million cap jump.

Additionally, rookie-scale contracts for first-round draft picks are based on a schedule devised in 2011, independent of revenue.

Top overall pick Ben Simmons was able to sign a contract with the Philadelphia 76ers starting at $5.9 million.  A year prior, Karl-Anthony Towns earned $5.7 million in his rookie season.

Look for this imbalance to be rectified in some fashion in a new agreement.

3. Fix Extensions

What worked in the current agreement was the rookie-scale extension.  Across the board, young stars like Kyrie Irving, Anthony Davis and Damian Lillard re-upped with their existing teams – which was the league’s goal in the 2011 negotiation.

One aspect was less successful.  The Rose Rule was a clever (perhaps too clever) reward for franchise-level players on rookie-scale extensions (with a bump to the second-level maximum).  The criteria to qualify included two trips to the All-NBA First, Second or Third Teams, or instead two All-Star starter selections by fan vote.  A single Most Valuable Player award would also do the trick.

Given that Zaza Pachulia was almost voted in as an All-Star does more than suggest a flawed system.  Davis did not qualify for his Rose Rule extension based on All-Star voting, costing him roughly $24 million.

Meanwhile, All-NBA Teams and MVP are voted on by the media, which is a good or a bad thing, depending on which scribe you ask.

When determining millions of dollars in salary, the requirements should be independent of the fans and media.

That quibble aside, the 2011 CBA killed veteran extensions.  With the salary cap jumping higher than the 7.5 percent raise allowed in extension, high-salaried players have had no incentive to sign contract extensions.

The Utah Jazz would presumably prefer for Gordon Hayward to opt out of his 2017-18 salary, and sign an extension at the maximum for next season – but the most he can ink for is a deal starting at $17.3 million.

Naturally, that doesn’t make a lot of sense for Hayward as he’ll be eligible for a maximum deal that could start at approximately $28.8 million (under the current CBA).

Rookie-scale extensions can indicate “max,” while veterans are stuck with a 7.5 percent bump.  Instead, Hayward is likely to opt out to become an unrestricted free agent.  Perhaps he re-signs in Utah, but he’ll have plenty of suitors from around the league.

4. Draft/Age Limit/D-League

Significant draft reform doesn’t appear to be on the docket, but change could come in an expanded NBA draft.

The NBA Development League has grown to 22 teams.  It won’t be long until each NBA franchise has their own affiliate.  The draft may expand to a third round, to help populate the talent pool.

A big issue for the D-League is budgeting, with salaries maxing out at approximately $25,000.  A new CBA will presumably help fund the NBA’s minor league, which may take the form of two-way contracts – that pay one rate when a player is in the NBA, and a lower amount in the D-League.

Additionally, Silver has made it well known that owners would prefer a higher age limit – with players entering the NBA two years removed from graduating high school.  The current CBA requires players to wait a year after high school.

The union may not like the idea, but if the league concedes in another area, the NBA entry age could change.

5. Numerous Additional Items

The actual list of topics for the owners and union is lengthy, from luxury tax computation to drug testing, escrow, amnesty, cap holds, international buy-outs, trade limitations, etc.

Typically, the biggest hurdle is revenue split, but the minutia can be overwhelming.  That an agreement may be hashed out without the duress of lockout should help the league and union attack the secondary and tertiary issues with clearer heads.