The new N.B.A. labor deal is practically done. You wouldn’t know it from the headlines, the dour news conferences or the apocalyptic rhetoric spilling from league officials. But the deal, in practical terms, is about 95 percent complete.
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N.B.A. Talks Stall and More Games Are Canceled (October 29, 2011)
The N.B.A. and the players union have agreed on contract lengths and luxury-tax rates, trade rules and cap exceptions, and a host of oddly named provisions offering “amnesty” and “stretch payments” and less onerous “base-year” rules.
All of these pieces — some favoring the players, most of them favoring the owners — have fallen into place in recent weeks, even as talks collapsed and restarted and collapsed again. The checklist has been reduced to a few items.
But it is the last 5 percent that is ruining the prospects for labor peace and gradually eroding the N.B.A. season.
Four weeks of games are gone, and more could fall, because owners and players are still fighting over how to split $4 billion in revenue. The league wants a 50-50 split. The players want 52.5 percent.
In real terms, they are separated by about $100 million a year — a hefty sum, but small in the context of these negotiations. They were once 20 percent and hundreds of millions apart.
The difficulty in closing the gap is psychological and financial.
The players, who last season earned 57 percent, have already made a $180 million concession. They have agreed to a harsher luxury tax, shorter contracts and smaller raises. They have made concessions on nearly every major item in the collective bargaining agreement — a tacit admission that the league’s economic woes are real and substantial and had to be addressed.
The final deal will, by any objective measure, heavily favor the owners when compared with the last two C.B.A.’s. Union leaders contend they have moved far enough.
The owners make the same claim. They initially demanded an absolute, hard salary cap, an $800 million rollback in salaries, elimination of guaranteed contracts and a 37 percent share for players. They have dropped all of those demands and are making the 50 percent offer over the objections of several small-market owners.
N.B.A. officials say the 50-50 split will barely get them to the break-even point, after losing $300 million last season. Moving beyond 50 percent would mean several more years of losses, they say, and small-market teams would remain handicapped, even with more revenue sharing.
If the union compromises further, it will agitate the high-powered agents, who could rally against ratification. If the N.B.A. compromises further, it risks a revolt from owners.
Neither side believes it can, or should, make another move. Their mutual intransigence has cost them a month of games and hundreds of millions in revenue.
Yet if the negotiating pattern holds — and the breakdown in talks is quickly followed by another last-gasp return to the table — it should not take long to complete the deal.
Tentative agreements are already in place on the following major items:
¶ Luxury-tax rate: Teams will be charged $1.50 per $1 spent beyond a threshold, replacing the previous dollar-for-dollar tax, according to people who have seen the plan.
To further discourage spending, the tax will increase for every $5 million spent beyond the threshold: to $1.75 after $5 million, $2.50 after $10 million and $3.25 after $15 million.
Under this system, the Los Angeles Lakers would have paid $45 million in taxes last season, compared with $20 million under the old formula. (The rates could still change based on other tradeoffs.)
¶ Contract lengths: Players with “Bird” rights will be eligible for five-year deals, while others will be limited to four. The previous C.B.A. allowed for six-year (Bird) and five-year deals. The 1999 C.B.A. allowed for seven-year (Bird) and six-year deals.
¶ Raises: Annual raises will be reduced by several percentage points, possibly as low as 5.5 percent for Bird players and 3.5 percent for non-Bird players. The prior deal allowed raises as high as 10.5 percent (Bird) and 8 percent.
¶ Midlevel exception: It will start at $5 million, a decrease of $800,000. The contract length and annual raises attached to the exception remain under discussion.
¶ Amnesty clause: Each team will be permitted to waive one player, with pay — anytime during the life of the C.B.A. — and have his salary be exempt from the cap and the luxury tax. Its use will be limited to players already under contract as of July 1, 2011.
¶ Stretch exception: Teams will be permitted to stretch out payments to waived players, spreading out the cap hit, over several seasons. The payment schedule will be set by doubling the years left on the contract and adding one. (Thus a team waiving a player with two years left could pay him over five years.)
There are a few critical issues still under debate. The N.B.A. wants to further punish tax-paying teams by denying them use of the midlevel exception and sign-and-trade deals, and wants additional penalties for “repeat offenders.” The union opposes those measures.
Nearly all of the new provisions will benefit the owners. In return, the players will gain an easing of trade rules and relaxed regulations on restricted free agents.
So the broad parameters of an agreement are in place. The gap on the revenue split is significant, but manageable. As N.B.A. officials have said many times, both sides know where the deal is — they just have to get there.
This article has been revised to reflect the following correction:
Correction: October 31, 2011
An earlier version of this article misstated how much the luxury-tax rate would increase to further discourage spending as $2.25 after $10 million and $3 after $15 million, and the amount the Lakers would have paid in taxes last season as $42.5 million. It also erroneously stated that annual raises might be as low as 5 percent for players with “Bird” rights.