The NBA’s All-Star Weekend is mostly just a 72 hour party with some “basketball” thrown in there to give everybody a break from partying, but some important business is conducted too. Perhaps the most important is the National Basketball Player’s Association (NBPA) meeting, which happens every All-Star weekend as it’s the time of the year with the most players in one place. Here are the two biggest pieces of news that came out of it.
The NBPA rejected the league’s cap smoothing proposal
While the massive new media deal the NBA signed with Turner and ESPN is undoubtedly a boon for the league, it does not come without complications. As part of the Collective Bargaining Agreement (CBA) the players signed with the league in 2011, between 49 and 51 percent of the league’s Basketball Related Income (BRI) is paid to players. The BRI also determines what the salary cap is, via the following (simplified) formula: 44.74% of BRI / 30 teams = salary cap.
Most years, the salary cap rises a few percentage points. This season’s 7.5% rise—it went from $58.7 million to $63.1 million—was unusually large, but it’ll be nothing compared to jump before the 2016-17 season, when the money from the new TV deal kicks in. Currently the national TV deal accounts for about $14 million of the $63.1 million salary cap, but under the new deal it will account for around $39 million. Next year the salary cap is projected to be $66.5 million, and then the year after it will skyrocket past $90 million, an increase in the neighborhood of 40%.
Where this really makes things tricky is with player salaries. For instance, the max contract that can be given to players in the league for fewer than seven years is 25% of the salary cap. (As Larry Coon explains here in footnote 2, for maximum contracts the formula used is technically a little bit different than what I have written above.)
This means that this summer, the first time that players from the draft class of 2011—Kyrie Irving, Klay Thompson—could sign an extension, the max they could sign for was around $17 million annually (ignoring some escalators). But next summer, when players from the draft class of 2012—Anthony Davis, Damian Lillard, Andre Drummond—can sign an extension, the max they will be able to sign for is around (this is a very rough estimation) $21.7 million annually.* The same drastic jump will apply to everybody signing a contract that begins in 2016, which is why LeBron James is going to opt out of his contract in 2016.
In an effort to avoid the havoc that a massive salary cap jump will wreak on long-term planning, the NBA proposed to the NBPA that they artificially “smooth” the salary cap. Instead of a huge jump in 2016, the TV deal money would be phased in more gradually, starting this summer and continuing for a couple of years past 2016. This wouldn’t change the total amount of money players are paid—remember, under the current CBA, they are guaranteed between 49 and 51 percent of all BRI—but it would change when they could get it.
But the NBPA representatives unanimously rejected the league’s cap smoothing proposal. As NBPA executive director Michele Roberts explained afterwards in a press conference, the union was concerned about the effect smoothing would have on players with a “limited shelf life.” For older players who are going to sign only one more contract, or fringe-to-okay players who will be out of the league in a couple of seasons, the massive salary cap jump gives them the chance to earn one last fat paycheck. Cap smoothing takes that away.
The union also didn’t like that cap smoothing prevents how rapidly contracts can escalate. Here’s Roberts, via Ball Don’t Lie:
“At some point, when you are no longer constrained by a contract, and you’re now available to negotiate a contract, if we smooth, the amount of money that you’ll be able to negotiate will be less than what would be available had there not been smoothing,” Roberts said. “In other words, players’ salaries do not increase as rapidly under smoothing as they would when there’s no smoothing proposal, and the amount of the contract you’re able to negotiate is going to be less.”
Importantly, Roberts didn’t totally rule out a cap smoothing proposal, just the specific one the NBA proposed. If the NBA really wants to make it happen, the owners will likely have to agree to sacrifice some revenue to the players. Agreeing to cap smoothing requires modifying the CBA, and if they’re already modifying the CBA, why not give the players between 50 and 52 percent of BRI instead of 49 to 51 percent, or whatever other number works out for both sides?
LeBron James elected NBPA first vice-president
The NBPA had an opening on its executive committee and elected LeBron James as first vice-president. (Somewhat confusingly, the NBPA has six vice-presidents, but only one first vice-president.) The top two players union representatives are now president Chris Paul and James, two of the best players in the game. This should both scare and excite the rank-and-file.
Many observers (including this one) think that the league and union are careening towards a lockout/strike after the 2016-17, the first time either side is allowed to opt out of the CBA, though this time there is a much greater chance that it is initiated by the players. The owners decisively won the 2011 lockout, getting huge BRI rollbacks (the players used to get 57% of BRI instead of the ~50% they get now, a loss of hundreds of millions of dollars a year), reducing the length of contracts, and other changes.
In 2011, the league claimed that a majority of its teams were losing money. It may or may not have been true—the NBPA objected to the claim, and (obviously) neither teams nor the league opened up their books to the public—but the league certainly wasn’t in the strongest financial position it has ever been. But now it is. Each time a team is on the market it basically sells for a new record price—headlined by Steve Ballmer’s whopping $2 billion acquisition of the Clippers—and the new TV deal is almost three times more lucrative than the last one. The business of basketball is booming, and the players want to claw back what they gave up the last time around.
Among the numerous problems with how the NBPA approached the last lockout, one of the biggest is that they were led by players nobody cared about. While public support for the union wouldn’t have guaranteed a more favorable outcome for the players, it certainly would’ve helped. But the stars of the league weren’t involved in negotiations or publicly until well into the lockout, leaving Derek Fisher, Roger Mason Jr., and Maurice Evans as the public faces of NBA players. I would be surprised if more than a handful of you could even name who Maurice Evans played for in 2011.
But if there is indeed a labor fight in 2017, the public is going to pay a lot more attention to Chris Paul and LeBron James. And with those two involved, there’s a much better chance of the rest of the league’s stars getting involved as well. The public may not care that they can’t watch Maurice Evans play basketball, but they certainly care that they can’t watch LeBron James, and that point is easier to get across with him helping lead the union’s efforts.
It’s not all sunshine and roses, however. One of the biggest tension within the NBPA is among the haves and the have-nots. Now, compared to you and I they’re all haves, but there is a huge gulf between what Jakarr Sampson ($845,059) and Kobe Bryant ($23.5 million) earn, and there are a lot more of the former than the latter. The fear is that, with Paul and James heading things up, they will focus more on the concerns of the superstars than those of the hundreds of bench players that make up the majority of union members.
There are two places where this issue would likely come to a head, both in the event of a labor stoppage. Sitting in their mansions filled with Scrooge McDuck money, James, Paul, and the rest of the superstars can afford to miss an entire season of basketball. They’ve got money in the bank, money from shoe deals, money from State Farm and Samsung, etc. But if minimum salary players like Jakarr Sampson don’t budget extremely well, they’re going to go broke during an extended labor stoppage. With influential superstars calling the shots, the union might be more willing to hold out for a better deal, which could have an immediate negative impact on the many players literally living NBA paycheck to paycheck.
Paul and James might also push the union to focus on issues that don’t matter to the majority of players, the biggest being the cap on max salaries. LeBron James made “only” $19 million last year, but he was “worth” an estimated $44.8 million to the Heat. If there were no caps on salaries for individual players, some team would have been paying LeBron James over $30 million for the last decade. The superstars would love to be able to earn tens of millions more than they currently do.
But the vast majority of NBA players benefit from the LeBron Jameses of the world being relatively underpaid, because it means more money for them! LeBron James getting $19 million instead of $45 million last season meant $26 million dollars went to other players who would not have gotten that money otherwise. Add up all the players whose salaries are artificially lowered by the cap, and that’s a whole lot of money being redistributed to the rest of the players in the NBA.
This is an inherent tension that always has and always will exist within the NBPA, and one of the many things that make it different than the other unions: while there may be differences in pay among machinists in the same union, there certainly aren’t differences of a factor of 25. LeBron James gives the NBPA more firepower and negotiating leverage on behalf of the rest of the players, but it might also make the NBPA aim at concessions they don’t care to win.
As always, Larry Coon’s CBA FAQ is the best resource for every CBA question you have, and another million questions that you didn’t know you have.
Photo via Christian Petersen/Getty