Smoothing out the wrinkles in the NBA salary cap

November 16, 2015

contract

By Afras Khattak – Thompson Rivers University 2L JD Student

The current National Basketball Association (NBA) collective bargaining agreement (CBA) is fixed to run through the 2020-2021 season. This however, is unlikely to happen as any time before December 15, 2016 either the NBA or the National Basketball Players Association (NBPA) can exercise an opt-out clause that would end the CBA on June 30th, 2017. The topic of controversy is understanding how the NBA’s immense nine-year, $24 billion contract with ESPN and Turner Sports (set to start in 2016) will affect the on-going negotiations to reach a new CBA. This infusion of money is going to increase the NBA salary cap from $63 million to approximately $90 million.

On the surface, players and fans would seem poised to celebrate a higher salary cap. There would be higher salaries for players, for whom teams would have more money to bid and in some cases might need to sign in order to satisfy the salary floor (90% of the total salary cap must be used). Along those lines, a higher salary cap would enable more teams to be “under the cap” and thus able to compete for free agents. Fans who feel as if their favorite teams are stuck in salary cap calamity would be granted a reprieve. However, assuming that either the NBA or NBPA opt-out and the two sides do not negotiate a new CBA before it expires in June 2017, it is likely that the NBA would be poised to lockout the players which would threaten the 2017-2018 season and potentially lead to antitrust litigation.

The issue for the NBA is that the NBPA does not seem poised to accept a proposal for ‘cap smoothing.’ Cap smoothing postulates that the salary cap be raised modestly and gradually over a several year span. The NBA believed that the NBPA would accept this term because players in multiple free agent classes would benefit from the surge in the salary cap. Additionally, the money from the players’ 51 percent of league revenue would still be split between all players so they still receive this payout. However, the NBPA has rejected this proposal.

NBPA chief Michelle Roberts explains: “The union should not have to police how much the owners spend. That’s not the job of the union. All of the caps that are on salaries now, the max deals and the shorter lengths and all of that, it’s all stuff that has been done to protect owners from themselves. [We have] been pretty strong on saying, hey, it’s not the job of the players to protect owners from other owners. Why should that fall on the players?”

Put simply, the NBPA is concerned that any form of cap smoothing would likely depress players’ salaries from rising as fast as they should or could under a more open system. This mode of reasoning likely stems from the players’ belief that they sacrificed a great deal in the last CBA, when the players’ share of league revenue fell from 57% to 51%. This will likely lead to a lack of cooperation as concessions will be expected and highly coveted in the next CBA negotiations.

The problem here lies in that the inability of the NBA to get a cap smoothing policy would lead to a disproportionately small number of benefiting players: those who are set to become free agents in 2016 and those whose salary negotiations are tied to available salary cap space. On the other hand, a cap smoothing structure would not reduce the amount of money received by the players; it would dictate how equitably and in what sequence the money is distributed.

The rejection of the smoothing proposal by and large means that the NBPA appears interested in negotiating policy changes within the framework of negotiations for a new CBA, rather than in piecemeal. Overall, the NBA may essentially have to accept the NBPA’s stance and make calculated tradeoffs to achieve their cap smoothing agenda because the longer it takes for both parties to agree on a strategy for incorporating the TV money, the clearer it becomes that there is a fraying relationship.

If one were to formulate a ratio for the likely labour dispute it would probably read: Fans who were irritated by the 2011 NBA labour dispute are going to despise the 2017 NBA labour crisis.

 

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