Contract Negotiation Headline Sports Business

NBA Close To First Work Stoppage Since 1998

The 2011 NBA Draft took place as scheduled on June 23, but a work stoppage still seems a real possibility as owners and players have a wide gap that needs to be narrowed.  Many believe that NBA owners and players are still almost $7 billion apart in their dealings over a new 10-year agreement.

Billy Hunter, the executive director of the National Basketball Players’ Association said the players would not even get back to where they stand now financially until the last year of a 10-year collective bargaining agreement.  The present agreement ends on June 30, so time is limited the parties hope to get a deal done prior to a likely lockout.

The NBA recently proposed something it calls a flex salary cap to the players.  But the players’ union said the flex salary cap is a hard cap, not a flexible one, and the union is not interested in it.  At the moment, the salary cap issue seems to be the biggest hurdling point towards reaching a new agreement.

NBA commissioner David Stern said the flex cap places a limit on spending, but teams would still be able to go over it up to a certain point.  However, the players say there is still a spending limit that eventually comes into play.  Stern added that the players would be guaranteed at least $2 billion every year of a 10-year agreement, which is a little less than what they made this year.

Stern said a player’s average wages would be approximately $5 million and the players and owners would eventually split revenues 50-50. Right now the players are raking in 57% of revenues, and the league wants to reduce that to 54.3% over the first five years of a new deal by reducing salaries by more than $500 million. This includes an 8% cut in pay in the first year of a new agreement.  Stern didn’t say this was the league’s final offer, but did admit it is getting close.

The NBA wants to introduce a salary cap of about $62 million, but allow teams to spend more than that before reaching a limit that they can’t go over.  At the moment, there is a soft salary cap in place and clubs can exceed it as long as they pay a luxury tax when exceeding the limit.  This year’s cap was set at $58 million, but some teams, such as the Dallas Mavericks, spent more than that (well over $70 million).

The league also wanted to introduce non-guaranteed contracts, but later dropped the issue and said it would leave things the way they are now.  But the players said they have had guaranteed contracts for 40 years, so the league is not really making any large concession by dropping the issue.

There is some light at the end of the tunnel, though, as Billy Hunter feels the owners are interested in coming to an agreement and is hoping the NBA will not see its first work stoppage since back in 1998.  But the union and the league said they are still far apart and more meetings will need to take place soon to get things done in time.

The two sides have exchanged a total of 10 proposals since negotiations began and there are likely to be a couple more before a new agreement is executed.

By Darren Heitner

Darren Heitner created Sports Agent Blog as a New Year's Resolution on December 31, 2005. Originally titled, "I Want To Be A Sports Agent," the website was founded with the intention of causing Heitner to learn more about the profession that he wanted to join, meet reputable individuals in the space and force himself to stay on top of the latest news and trends.

Heitner now runs Heitner Legal, P.L.L.C., which is a law firm with many practice areas, including sports law and contract law. Heitner has represented numerous athletes and sports agents as legal counsel. He has also served as an Adjunct Professor at Indiana University Bloomington from 2011-2014, where he created and taught a course titled, Sport Agency Management, which included subjects ranging from NCAA regulations to athlete agent certification and the rules governing the profession. Heitner serves as an Adjunct Professor at the University of Florida Levin College of Law, where he teaches a Sports Law class that includes case law surrounding athlete agents and the NCAA rules.