Word continues to trickle out that the NBA and its players will be able to strike a deal soon on a new Collective Bargaining Agreement, prior to the December 15 deadline that allows either side to opt out of the current setup. Amid the unprecedented revenues that are enriching both owners and players alike, to a degree that never seemed possible only five or six years ago, neither side has shown any desire to kill the goose laying the golden eggs for all of them.
Nothing is set in stone yet, and the devil as always is in the details, but all reports have been saying that the changes being discussed are ones that will simply tweak the current system. The desire is to repair a few inequities that have arisen, or fix some problem areas, but otherwise leave things intact.
From what we have been able to glean, the discussion points and likely changes include the following:
- Fixed-number salaries specified in the prior CBA, such as MLE limits and rookie scale, will be increased to make them a more-representative proportion of the NBA salaries, as they have not kept up with the growth in revenues in recent years.
- More money will be allocated to address health coverage needs for retired players.
- There will be a revision of the setup regarding the Developmental League that will allow teams to utilize it more as a minor league setup, allowing an NBA team greater control of players it develops, and for a developing player’s salary to be automatically adjusted based on whether he is being used by his team at the NBA level or at the D-League level.
- In conjunction with the D-League revisions, NBA roster sizes will be increased (to 17?) and roster rules may be revised.
- The rules regarding extensions of veteran player contracts (not rookie contracts), which were made in the 2011 CBA in a way that ended almost all such extensions, will be revised to make such deals feasible again for both players and teams.
- “Max” salary limits will be revised, probably raised for players meeting certain qualifications, to make it harder for one team to employ multiple superstars.
- A provision will be added that will smooth out sizable league revenue increases in the future in a way that will prevent huge salary cap swings as have occurred in recent years.
- The “over-36” contract limitations will be adjusted to be an “over-38” limit of some sort.
- It will be a 7-year deal with a mutual opt-out opportunity for both sides after year six.
- Changing the NBA’s minimum age for players has been discussed but won’t happen.
- Allowing a salary amnesty for a designated player has been discussed but won’t happen.
- The overall general 50-50 revenue split between players and owners will be unchanged.
None of the items being discussed would appear to make a significant change to the NBA’s current way of doing business under the 2011 CBA. And that’s to be expected, as reports say both sides like the way things are working now, and just want to tweak it.
But we think there’s more to the story.
We preface these comments by saying that at this point, without a finished deal and without seeing the wording of the changes, it’s hard to offer a definitive analysis on where this CBA will take us. So the following notes come with that disclaimer.
That having been said, we believe that these minor tweaks, when taken in combination, will make an enormous change in the way the NBA operates for the next 6-7 seasons. Huge. HUGE. HUGE!!!
In what way? We see a likely return to the following NBA issues: very limited player movement in free agency, bad team-killing contracts, and so-called "Cap Hell'' that teams are forced to try to escape. Trades will be a big thing again, and free-agency acquisitions not so much.
Why? Because the new system will operate in ways that keep teams from having cap room each year. Consider the following changes that all create that result:
- Longer contracts and bigger contractual limits for almost everyone, even older players
- Fewer big cap jumps year-to-year (and perhaps a decrease in 2017)
- Easier extensions allowing teams the ability to keep their talent (and use up payroll)
- Therefore, fewer in-demand players getting to free agency
- Therefore, even more incentive for teams to offer extensions, with no summer “inventory” to depend on
- … and with no money in the summer, more incentive for the player to sign an extension beforehand
- A bigger MLE to allow over-cap teams to add an extra player or two , after extensions are done, and then removing more cap room for multiple years
On the other hand, unlike the prior era in the NBA when it operated in such a fashion (from about 2000-2011), this time there will be a punitive luxury tax awaiting the team that spends wildly and stupidly, and few teams with cap space to help an escape from cap misery. But the desire of owners to push the envelope for that extra “talent” will still be in play, so there will be certain market inequities that might be exploitable as teams try to walk the tightrope between hoarding talent and being pushed into cap misery. In addition, finding young talent with a high ceiling in the draft, to employ at a discount and keep forever, will be more crucial than ever, and the D-League’s extra latitude as a tool will open up added ways to turn raw talent into NBA-useful players, if a team is good enough to draft the right players in the first place.
Of course, all that having been said, there is no new CBA yet. And even if it all shakes out exactly as we have outlined, it will take a couple of seasons before the new “reality” comes into focus.
But as we await the new deal and its details, and hear that it’s all minor, keep in mind that from where we sit it looks very different. We think a new NBA world is looming.