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Wednesday, September 28th, 2011 at 9:20 am  |  17 responses

NBA Team Owners Moving Slightly Off Hard Salary Cap Demand


At yesterday’s labor meeting, owners reportedly moved a bit off their stance that a hard salary cap must absolutely be implemented in the next Collective Bargaining Agreement. Of course, there’s more than one catch. From Yahoo! Sports and ESPN: “The owners proposed at Tuesday’s negotiating session an idea similar to the current system that allows teams to pay a luxury tax for going over the cap. Only, now there would be ultra-punitive measures against higher-spending teams. The current system has teams pay a dollar-for-dollar tax for exceeding the cap. Players Association executive director Billy Hunter has called the hard cap a ‘blood issue’ for the union, and insisted the players would never agree to it. The owners’ proposal on Tuesday ‘would still have the affects of a hard cap,’ one source with knowledge of the talks said.

“•The ‘Larry Bird exception,’ which allows teams to exceed the cap to retain their own free agents regardless of their other committed salaries, is limited to one player per team per season. •The mid-level exception, which the league valued at $7.4 million last season and could be extended by as many as five years, is reduced in length and size. •The current luxury tax, the $1-for-$1 penalty a team must pay to the league for the amount it exceeds the salary cap, is to be severely increased.”

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  • http://cnbc.com JTaylor21

    Sounds good to me, so…….what’s the hold up?

  • MikeC.

    Word

  • LA Huey

    I like all those proposals though I’d like more specifics on how much the luxury tax would be increased.

  • http://www.grantland.com/story/_/id/7021031/the-nets-nba-economics Allenp

    Unless this is coupled with serious revenue sharing, I don’t understand how it increases competitiveness. The rich teams can afford even punitive luxury tax if it means keeping talent, the smaller teams can’t afford even a little luxury tax to keep their existing talent. Thus, they are at a disadvantage.
    This might discourage more teams from spending money, the mid-level teams, but it won’t make it easier for small market teams to compete with big market teams for talent.

  • LA Huey

    I never believed it was about competition. It’s always been about money with these smaller team owners.

  • http://therurbangriot.com The NUPE

    This lockout is about money first and being a more competitive league is a secondary thing. I still don’t believe that (m/any) owners, even in small markets, lose money. The ‘team’ itself may not make money if you just look at team cost/expenses and team revenue. But many owners benefit from additional revenues generated by real estate, arena rental, parking, concessions, secondary television deals etc. Losing ten of millions on ‘just’ the team doesn’t mean they aren’t making hundreds of millions elsewhere “because of” the team. I would bet than non any owner reported a net loss on their income taxes last year. The overall accounting for a team and all team related revenue is difficult to calculate. If a team owner owns a parking lot or resturaunt or gas station etc in the area of the arena, and therefore this other business does exceedingly well on game days, IMO, this should not be considered team revenue. If the owner ‘owns’ or ‘leases’ the arena should concessions beconsidered part of team revenues. Or if the owner owns the catering company that operates the arena – but not the arena itself. Lots of variables to work out, but at the end of the day, it’s hard to believe the owner has a net loss on their income taxes.

  • jsmooth

    @ THE NUPE, CO_SIGN!!!!!!!!!!

  • Jacqueline Mitchell

    Will they please hurry up and get something done?! I’m tired of waiting,they’re really starting to be annoying.(The owners and the players).

  • http://bleacherreport.com/articles/670447-dwight-howard-and-andrew-bogut-a-tale-of-two-2011-all-nba-defensive-centers nbk

    Allen I read last night that the penalty will be soo strict that it is still basically a hard cap.

  • T-Money

    nbk: that’s journos extrapolating though. it’s prohibitive but it’s absolutely not a hard cap. put it like this: if prokhorov or arison or dolan want a guy, they’ll play the tax. there is no realistic dollar amount that could keep them from spending, only hard, binding regulations. players should agree to this with the quickness.

  • bike

    Rumor has it they will use a sliding scale where a team could get charged a ratio as high as 4 to 1. If the owners don’t quell the player’s fears about guaranteed contracts, this won’t go anywhere.

  • T-Money

    bike: they’ve already backed off on guaranteed contracts.

  • seriousblack

    T-Money: Have they? They don’t even want to honor existing contracts for THIS upcoming season. They want at at least a 5% decrease from each contract already signed. In 2013, they want even less money paid to players on pre-existing contracts. You really honestly believe that they backed off from their non-guaranteed contract stance?

  • vancityBball

    FINALLY something moving in the lockout buisness.. only forever late but still good

  • Assert

    Dey should reduce t ax for teams under .470

  • CubicleWorker

    @Nupe, stop forming your opinions based entirely on Malcolm Gladwell articles. NBA players have just as much of a right to open businesses/invest in real estate in the area surrounding the arenas as well. Instead of buying a Rolls Royce for $350k, adding another $150K in upgrades an NBA player could probably buy three houses close to the arena that would pay him a couple thousand a month for years to come. I can’t confirm this but I dont think all NBA owners own the buildings as well. The building owners would be entitled to the revenue from concessions etc. There must be owners who may own the team and arena and although those investments are related they are still independent of each other. An owner must be able to earn an acceptable return off of BOTH the arena and the team. Also NBA players could pool their money and invest in things like arenas as well. Let’s look at basketball issues only please and not some regurgitated recap of one economists analysis.

  • CubicleWorker

    and co-sign Allenp, unless the luxury tax actually goes directly to the small market teams nothing is accomplished by the luxury tax increase.

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