2005 CBA 2011 CBA Who benefits?

While it is encouraging to think that

we won't have to witness another
Length of the Seven years, with a league opt-out in 2011 Ten years, with a mutual opt-out lockout until 2022, in all likelihood
one side will invoke its option in
agreement (which the league invoked) (either side can opt out) in 2017 2017 to reopen labor negotiations.
Since right now this deal appears to
greatly favor the owners, it is
reasonable to think the players will
opt out -- especially since the
national TV contracts are up for
renewal in 2016, and the league
expects an injection of new revenue.
But this may not turn out to be the
case -- the 2005 CBA was thought to
favor the league, as well

Revenue split Players receive 57 percent of Basketball Players receive 51.15 percent of BRI in This is the biggest win for the owners
Related Income (BRI). 2011-12. In later seasons players in this agreement. After losing $370
receive 49 to 51 percent of BRI (50 million, $340 million and $300
percent, plus or minus 60.5 percent of million in the past three seasons
the amount by which BRI exceeds or under the previous CBA, the league
falls short of projections); 1 percent of entered negotiations looking for a
BRI (from the players' share) is used fundamental reset of the NBA's
economic system -- and got it. In
 to fund a new pool for post-career addition, players will lose
benefits. approximately 20 percent of their
2011-12 salaries -- a result of the
games missed due to the lockout

Escrow 8 percent (in 2010-11) withheld to ensure
players receive no more than the agreed-to
revenue split. If escrow withholding is
insufficient, salaries are reduced the
following season to compensate.
10 percent withheld in every season. If
the escrow withholding is insufficient,
the shortfall is taken out of the
players' post-career benefits pool.
Salaries are not adjusted the following
season.
The players win here by getting the
league to agree not to take any
shortfall from their salaries the
following season. Since there will be
no rollback of existing salaries, the
escrow system will likely be
stretched to its limits in the early
years of this agreement, and the
players' salary losses are capped at
10 percent no matter what happens.

As with the amnesty provision in the

2005 agreement, this provision
allows teams to kick one bad
Amnesty provision One player can be waived prior to the start One player can be waived prior to the
contract to the curb. The benefits to
of the 2005-06 season. The salary of the start of any season (only one player amnesty are greater now than they
waived player will not count toward the can be amnestied during the were in 2005 -- 100 percent of the
player's salary is removed for both
luxury tax agreement, and contracts signed
cap and tax purposes. The other big
under the new CBA are not eligible). change is that teams are allowed to
The salary of the waived player will pocket their amnesty card to use
later -- so teams that managed their
 not count toward the salary cap or
luxury tax. Teams with cap room can
submit competing offers to acquire an
amnestied player (at a reduced rate)
before he hits free agency and can sign
with any team.
Revenue sharing Some of the undistributed funds from the A new plan approximately triples the
luxury tax were given to teams in amount of money that is revenue-
competitively disadvantaged markets. shared. Details of this plan are yet to
be finalized.
cap well to this point benefit because
they don't have to use it or lose it.
Teams with cap room can benefit
greatly from the amnesty provision
by being able to submit a competing
offer to claim an amnestied player at
a reduced rate. For example, if
Cleveland uses its amnesty provision
on Baron Davis, a team that is $5
million below the salary cap can
submit a $5 million offer to acquire
Davis' contract. If that offer is the
highest, the team acquires Davis and
is responsible for $5 million of his
salary -- with Cleveland responsible
for the balance. This happens before
Davis becomes a free agent and can
sign on his own with a team like
Miami.
Small-market teams. Teams like the
Lakers, with their new $3 billion
local television contract, will be
perennial payers into this system,
and teams like Charlotte and
 Milwaukee will be perennial
beneficiaries.

The players. Although it was once

rare for teams to be below the salary
Minimum team Teams must spend at least 75 percent of Teams must spend at least 85 percent cap, it became more common in the
latter years of the 2005 agreement as
salary the salary cap. of the cap in 2011-12 and 2012-13, and teams struggled to cope with
at least 90 percent of the cap in later financial markets. For example, the
Sacramento Kings traded for
years of the agreement.
Marquis Daniels at the 2011 trade
deadline because their payroll was
below the 75 percent minimum. By
raising the salary floor, teams are
required to spend more money on
player salaries.

The higher salary floor could also

affect teams' amnesty decisions.
Teams might decide to hang on to
high-salaried players rather than
amnesty them in order to meet the
new minimum team salary
requirements.

Teams paid $1 for every $1 their salary was Teams pay $1 for every $1 their salary I'll tell you which teams don't benefit
above the luxury-tax threshold. is above the luxury-tax threshold in -- the perennial taxpayers, like the
2011-12 and 2012-13. Lakers and Mavericks. When the
Luxury tax Starting in 2012-13, teams pay an league was unable to negotiate a
 incremental tax that increases with
every $5 million above the tax
threshold ($1.50, $1.75, $2.50, $3.25,
etc.). Teams that are repeat offenders
(paying tax at least four out of the past
five seasons) have a tax that is higher
still -- $1 more at each increment
($2.50, $2.75, $3.50, $4.25, etc.).
hard cap, they settled for the next
best thing -- a more punitive luxury
tax that will make teams think twice
before committing to a higher
payroll. For example, the Lakers' tax
bill in 2011 (when the tax was dollar-
for-dollar) was about $19.9 million.
Under the new system, being that far
over the tax line would cost them
$44.68 million. If they were a repeat
offender (paying tax at least four of
the previous five years) they would
owe $64.58 million!

The previous tax system created a

"cliff" at the tax threshold -- a team
Distribution of Teams that did not pay tax each received No more than 50 percent of the tax that was $1 under the tax line
received a full tax distribution (about
luxury-tax funds 1/30th of the total tax fund. Taxpaying funds can go exclusively to teams that $2.4 million in 2011), but a team that
teams forfeited their tax distribution -- did not pay tax. was $1 over the tax line didn't receive
anything.
their money was used for "league
purposes" such as the revenue-sharing Because of this cliff, teams needed to
program. be very careful with their spending
when they were near the tax
threshold -- in fact, it looks like
Houston was burned in 2011 by
straying just $800,000 above the
limit. The new system softens the
blow for teams that exceed the tax

Additional limits for No additional limits for taxpaying teams.
taxpaying teams
Taxpaying teams have a smaller
midlevel exception, can acquire less
salary in trade, and cannot use the
biannual exception. Starting in 2013-
14, teams more than $4 million above
the tax level cannot receive a player in
a sign-and-trade transaction
line by just a little. For example,
under the new system, Houston
would have had to pay $800,000 in
tax, but may have been eligible for a
payout to offset their tax bill.
However, while the new agreement
stipulates that no more than 50
percent of the tax funds can go
exclusively to teams that did not pay
tax, it doesn't specify what happens
to the other 50 percent. It is possible
the remaining tax money will be
distributed to all teams in equal
shares, but it's also possible the NBA
will reserve this money for "league
purposes."
Throughout the labor dispute, the
league has tried to improve
competitive balance by installing a
very restrictive cap system -- first
asking for a hard cap, then a "flex"
cap, and then a highly punitive
luxury tax, before finally settling on
a luxury tax with more teeth. In
addition to an incremental tax
penalty, taxpaying teams now will
have less access to exceptions. This
will give small-market teams a

Stretch provision By mutual agreement, teams can alter the
payment schedule to waived players. The
remaining guaranteed salary is applied to
the team's salary cap across the remaining
years of the player's contract.
A cap hold of 150 percent to 300 percent
continues to count against the team's cap
for its free agents who have Bird rights or
Free agents and
were first-round picks. A team has seven
restricted free days to match an offer sheet to its
agency restricted free agent. Qualifying offers to
restricted free agents are based on the
player's draft position.
The player's remaining salary and his
cap hit may be stretched across twice
the number of seasons remaining on
the contract, plus one (for example,
the salary and cap hit for a player
waived with two seasons remaining
may be stretched across five seasons).
This is entirely at the team's
discretion, but it applies only to
contracts signed under the 2011 CBA.
Cap holds are reduced for most
players who have Bird rights or were
first-round picks, and now range from
150 percent to 250 percent. Teams
have three days to match an offer
sheet to its restricted free agent.
Players can qualify for a better
qualifying offer by meeting certain
criteria. High-drafted players might
receive a lower qualifying offer by
failing to meet the same criteria
competitive advantage -- for
example, instead of weighing equal
$5 million offers in Los Angeles and
Minnesota, a free agent might be
forced to choose between a $3
million offer in Los Angeles and a $5
million offer in Minnesota.
Teams with bad contracts. For
example, if a team has an
underperforming player with one
season remaining at $12 million, the
team can waive him and stretch his
salary across three seasons at $4
million per season. This will help
with cash flow and provide $8
million in cap relief for the current
season.
The reduction in cap holds provides
teams with additional cap room to
spend on other team's free agents --
giving players slightly higher salaries
and promoting player movement.
The reduction in the waiting period
from sevendays to three days is a big
win for restricted free agents --
teams are often very hesitant to
make offers to restricted free agents
because they don't want to tie up the

Six years with 10.5 percent raises for Bird
free agents; five years with 8 percent raises
for other players. Maximum salaries are
New contracts approximately 25, 30 or 35 percent of the
salary cap, depending on the player's years
of service.
Five years with 7.5 percent raises for
Bird free agents; four years with 4.5
percent raises for other players
(including all sign-and-trade
transactions). The maximum salaries
are the same as the 2005 CBA, except
players coming off their rookie scale
contracts qualify for the 30 percent
maximum if they meet certain
criteria. Minimum and rookie scale
salaries are frozen near their 2010-11
levels until revenues rise enough that
salary amount on their cap for an
entire week while the other team
makes up its mind whether to match.
The higher qualifying offers help
ensure that lower-drafted players
who become starters or regular
rotation players receive a salary that
is in line with their performance.
Conversely, the lower qualifying
offer for underperforming high draft
picks helps protect teams. For
instance, rather than submitting an
$8.8 million offer to retain the rights
to Greg Oden, Portland would be
able to offer much less. In fact, I fully
expect this to be nicknamed the
"Greg Oden Rule."
These changes provide the league
with more cost control. The
exception is the higher maximum
salary for fifth-year players who
meet certain league honors (MVP, an
all-NBA team member twice, or an
All-Star twice), which lets young
superstars (think Derrick Rose) cash
in with a bigger contract sooner.
The higher maximum salary for
fifth-year players can also benefit

Players coming off their rookie scale
contracts can extend for five additional
seasons. All other veterans can extend for
Contract extensions
five total seasons, which includes the
seasons remaining on their current
contracts.
the reduction is proportional to the 12 teams. In 2006 LeBron James,
percent reduction in the overall Dwyane Wade and Chris Bosh all
system.
Players coming off their rookie scale
contracts can extend for four
additional seasons, although the team
can designate one player who is
eligible for five seasons at the
maximum salary. A team can have
only one designated player on its
roster at any time. All other veterans
can extend for four total seasons,
which includes the seasons remaining
on their current contract. The
extension in an extend-and-trade
contract is limited to three total
signed shorter extensions (which
allowed them to become free agents
in three years) rather than signing
on for the maximum five years. The
three players timed their free agency
to follow their seventh season in the
league, when they became eligible
for the 30 percent maximum.
Allowing franchise players such as
these to sign for the higher
maximum sooner reduces the
temptation for these players to sign
shorter contracts, delaying their
eventual free agency.
The teams benefit here, just as they
do with shorter free-agent contracts
-- teams' future salary commitments
are reduced. In addition, limiting
extend-and-trade contracts to three
seasons (including the seasons
remaining on the player's current
contract) helps reduce situations like
the one the Nuggets were in last
season with Carmelo Anthony.
 seasons, which includes the seasons
remaining on the current contract.
Five years starting at the average salary For non-taxpaying teams, four years
($5.765 million in 2010-11), with 8 percent starting at $5 million (base salary
raises. grows by 3 percent annually
Midlevel exception beginning in 2013-14), with 4.5
percent raises. Taxpaying teams are
limited to three years, a $3 million
base salary (which grows by 3 percent
annually beginning in 2013-14) and
4.5 percent raises. Teams with cap
room (therefore losing their midlevel
exception) get a new midlevel that is
for two years and starts at $2.5
million (growing 3 percent annually).
Five years, starting at the lesser of half the One year, starting at the lesser of half This exception provides teams with
replaced player's salary or the average the replaced player's salary or the the ability to sign an emergency
salary, with 8 percent raises. non-taxpayer midlevel exception.
Disabled player
exception
Very few full midlevel contracts
handed out under the 2005 CBA
turned out to be good bargains in
their later years. Reducing the size
and length of the midlevel exception
will help teams rid themselves of bad
contracts.
The new exception for teams with
cap room will benefit teams that
clear cap room to sign free agents.
For example, in the summer of 2010
Miami gutted its roster in order to
obtain James and Bosh. This left the
Heat with a small amount of cap
room to sign players like Mike
Miller. But once they reached the
salary cap, they could offer only
minimum-salary contracts. Under
the new CBA, once they reach the
cap, they could still offer one or more
players a total of $2.5 million.
replacement for an injured player.
Under the previous CBA, the player
could be signed to a five-year
contract, meaning a permanent
replacement could be obtained. This

Teams over the cap can acquire no more
than 125 percent plus $100,000 of the
salaries they trade away. A team can
Trade rules
receive up to $3 million cash in any trade.
Taxpaying teams can acquire no more
than 125 percent plus $100,000 of the
salaries they trade away (same as
2005 CBA). Non-taxpaying teams
(based on their post-trade salary
level) can acquire up to the lesser of
150 percent plus $100,000, or 100
percent plus $5 million of the salaries
they trade away. The cash a team pays
or receives in trade is limited to $3
million annually.
also opened the door to situations
where the injured player returned to
the team while his replacement was
still on the roster. By reducing to one
year in the new CBA, this exception
will more closely match its intent --
to provide a short-term emergency
replacement for an injured player.
Teams will now have to fend for
themselves if the player's injury
keeps him out for more than a year.
The relaxation of the salary
matching requirements will
facilitate player movement. The
addition of the provision that allows
teams to acquire up to 100 percent
plus $5 million of the salaries of its
traded players will also reduce "trade
ballast" -- extra players thrown into
a deal merely to make a trade legal.
The number of crazy trades should
therefore be reduced.
The limitation of cash in trades (to
$3 million annually) will have a big
effect on draft-pick trades. It is now
common for first-round picks to be
sold for up to $3 million each prior
to the draft. By limiting teams to $3
million annually, these trades will be
reduced.
 Applies for six months (but no later than
June 30) after a player is re-signed with
Bird rights or receives an extension of his
Base year
rookie scale contract, and receives a raise
compensation greater than 20 percent. Base year
compensation limits the player's outgoing
salary for trade purposes.
If a player is traded and subsequently
waived by his new team, he cannot re-sign
with his original team for 30 days (during
Re-signing a traded
the season) or 20 days (during the
player offseason) following the trade
The criteria for determining whether
a player is subject to base year
compensation are the same. Players
subject to base year compensation
cannot be traded before Jan. 15,
except in a sign-and-trade. If the trade
is allowed, then base year
compensation is applied to the
player's outgoing salary only in a sign-
and-trade transaction.
If a player is traded and subsequently
waived by his new team, he cannot re-
sign with his original team for one
year following the trade or until July 1
after the last season of the player's
contract, whichever is earlier.
Base year compensation prevents
teams from re-signing players to
higher salaries in order to facilitate a
future trade. Preventing these
players from being traded at all
(except in a sign-and-trade) also
helps to reduce crazy trades, where
extra players are added to both sides
of the deal to make the salaries
match.
The tighter salary-matching rules in
the 2005 agreement often required
the addition of ballast (extra players
thrown in for salary matching
purposes) to make a trade legal.
These players were often unwanted
and unneeded once the trade was
complete, and were waived soon
after the trade was consummated --
often finding their way back to the
team that traded them after a short
vacation. For example, the Cavs sent
Zydrunas Ilgauskas to the Wizards
as part of their 2010 trade for
Antawn Jamison. The Wizards
waived him a week later, and he
subsequently re-signed with the
Cavs for the remainder of the season.
The relaxation of trade rules should
reduce -- but not eliminate -- the
need for trade ballast. When it does
occur, this rule change will prevent
the team from reacquiring the player
in the same season. This is a mixed
blessing. On one hand, it will
eliminate these wink-wink deals
where players are traded with the
full expectation of returning later.
On the other hand, it might create a
situation where an able-bodied
player is unable to work in the
league, because the only team that
has an available roster spot and is
willing to sign him is prevented from
signing him.