NBA Lockout: New CBA Tentative Deal Summary

(Photo by Hulton Archive/Getty Images)

The NBA owners and players reached a tentative new CBA deal over the weekend (and there was much rejoicing). Sports Illustrated obtained a copy of the tentative agreement, and while many of the "B-Issues" (B-Sides?) remain to be settled, we do have a more clear understanding of what the new CBA will entail.

Summary of Tentative Deal | Sports Illustrated

You can check out Amick's post at the link above to obtain your very own copy of the PDF. I attempt to summarize the main points of the new deal here as we do our end-of-lockout dance of joy.

If you would like to gain a better understanding of the differences between the 2005 CBA and the new proposal, be sure to read Larry Coon's analysis:

Breaking Down Changes in the New CBA | ESPN

Updated:

Final CBA FAQ

(My numbering corresponds with the Sports Illustrated document)

1. Basketball Related Income ("BRI") Split

Both sides settled on a 50%/50% split (novel concept, I know). Also, the players' cut is on a sliding scale based on league performance. If BRI exceeds projections, the players receive 60.5% of that incremental revenue. If BRI fails to meet projections, the players receive 60.5% less of the amount by which BRI falls short. The players' BRI range can never fall below 49% or go above 51%.

In Year 1, the number will be pegged at 51.15% of BRI.

2. Salary Cap/Tax System

The salary cap essentially remains the same as in the 2005 CBA, which means that it is still a soft cap, and the cap level will be calculated in the same manner. All cap exceptions remain intact except for the following:

  • The Non-Taxpayer Mid-Level Exception ("MLE") is set at $5 million in the first two years, then rises 3% annually. The max length is four years. (A taxpayer is a team that has exceeded the soft cap threshold and must pay the NBA a "tax" for exceeding such threshold)
  • The Taxpayer MLE is set at $3 million in the first year, grows 3% annually, and cannot exceed a three year term.
  • MLE for "Room Teams" is a new exception that defines a room team as one whose salary falls below the salary cap. The exception allows a Room Team to sign a free agent for up to two years, with the first year paying them up to $2.5 million. The exception grows 3% annually.

    If a team uses this exception, they forfeit their Non-Taxpayer MLE and Bi-Annual exceptions.
  • Bi-Annual Exception may only be used by Non-Taxpaying teams. In the first year, the amount is set at $1.9 million and grows 3% annually. The maximum term is two years, and teams cannot use the exception in two consecutive years.
  • Disabled Player Exception is set at the lesser of 50% of the player's salary or the amount of the Non-Taxpayer MLE. Contracts can only be for one year.
  • Traded Player Exception is increased for Non-Taxpayers such that the amount of cap space available must equal the lesser of either 150% of salaries being traded plus $100,000, or the salaries being traded plus $5 million.

    For Taxpaying teams, the threshold is reduced to 125% plus $100,000.

    Base Year Compensation is eliminated except in the case of sign-and-trade transactions.
  • The Minimum Team Salary is increased to 85% in the first two years and 90% in the third year.
  • In the first two years of the CBA, the tax rate remains as it was under the old CBA, where for every $1 dollar a team exceeded the cap, they had to pay a tax of $1. In the 3rd year, the tax rate for over-spenders increases incrementally:
    • $0M-$5M over = $1.50 tax for every $1 over
    • $5M-$10M over = $1.75 tax for every $1 over
    • $10M-$15M over = $2.50 tax for every $1 over
    • $15M-$20M over = $3.25 tax for every $1 over
  • Nontaxpaying Teams that use their MLE or the Bi-Annual exception are limited to spending up to $4 million above the tax level. See this SI story for greater analysis.

3. Guarantee/Escrow

The escrow, or money that players must turn over to the NBA in order to guarantee that the players' percentage of BRI remains assured, is capped at 10% of salaries. If the players receive less than their allotted BRI, then the appropriate escrow percentage is returned to the players (Go here to see what happened this past season). If the players make more than their BRI split, the escrow is kept by the league. If the 10% still does not reduce the players' percentage to the appropriate level, the difference gets paid from a new benefits pool (defined in #15).

4. Maximum Length of Contracts

  • Rookies - 4 years (except a max of 5 years for a max-salary designated player rookie extension).
  • Veterans - 4 years, except for extensions that are part of extension-and-trades, which will be capped at 3 years.
  • Regular free agents - 4 years.
  • Bird players - 5 years.

5. Annual Increases

  • Bird players - 7.5%
  • Everybody else - 4.5%

6. Minimum Salaries

Minimum salaries will remain the same as in the 2005 CBA until reduction in scale is proportional to the overall reduction (12% less) of the players' BRI. Growth scale remains TBD.

7. Maximum Salaries

Max salary calculation remains the same as in the old CBA, with one exception. Any player in his 5th year is eligible to receive a max contract from his team of up to 30% (up from 25%) of the overall salary cap as long as he has accomplished one of three things: 1) he's made an All-NBA team (any level) twice; OR, 2) he's been named league MVP (Derrick Rose); OR 3) he has been voted in as an All-Star starter twice.

This element looks to reward young players who greatly out-perform their rookie salary.

8. Salary Guarantees

Salaries remain guaranteed, just as under the old CBA.

9. Other Contract Rules

The "Stretch" option is introduced here. If a player is waived, teams can "stretch" the player's remaining contract over twice the remaining contract years, plus one. So if a player is waived with two years remaining on his contract, the team can stretch the hit that the salary applies to their books over five years.

All salaries this coming season will be pro-rated based on the planned number of regular season games; the number of games being discussed at this time is 66 in total.

10. Rookies

The rookie scale will remain about the same as in the 2005 CBA until reduction in scale is proportional to the overall reduction in the player's BRI (12%).

11. Free Agency

There are three primary changes in the new CBA:

  • Sign-and-Trades are not allowed if the acquiring team's post-transaction exceeds the tax level by more than $4 million.

    The maximum contract length for sign-and-trades is four years and annual increases are 4.5%.
  • For restricted free agents, prior teams now have three days to match an offer sheet, rather than seven.
  • Qualifying offers for free agents introduces another key term: "Starter Criteria," which becomes integral in the 2012-13 season. If a player is a first round pick and plays "Starter's minutes," i.e. starts an average of 41 games per season for two seasons OR averages more than 2,000 minutes per season, will receive the same qualifying offer as any player who was the 9th pick in his draft.

    If a player is a second round draft pick and satisfies the above criteria, he will receive the same qualifying offer as the 21st pick in the draft.

    Lastly, if any of the first 14 picks do NOT meet the starter criteria, they are limited to signing the same qualifying offer as the 15th pick.

12. Salary Cap Holds

A salary cap hold is an amount assigned to free agents which represents the theoretical amount of money that is charged to a team's salary cap by a free agent even though the player isn't technically under contract yet. The cap hold changes based on how much money a player made in the final year of their previous contract, and is represented as a percentage of that salary. If the player made less than the league average, his allocated percentage is higher, whereas if he made more than the league average, his allocated percentage is lower. The percentage difference has the effect of predicting whether the player's next contract is going to be proportionally higher or lower than his previous one, and consequently how it should impact the team's salary cap.

  • First round picks: Reduced from 300% to 250% (if his last year was less than the average salary), or 250% to 200% (if his last year was more than the average salary).
  • Bird players: Reduced from 200% to 190% (if his last year was less than the average salary), or remains the same at 150% if his last year was more than the average salary.

13. Trade Rules

Extension-and-trades are permitted, but the maximum length of any extended contract is three years and the annual increase is limited to 4.5%.

If a player signs an extension that exceeds this amount, the team may not trade that player for six months.

If a team acquires a player via trade, they may not sign the player to an extension for six months, and when they do sign him the extension may not exceed the contract term or dollar amount than what was permitted under the extension-and-trade clause.

14. Amnesty

Every team is permitted to waive one player prior to any season of the new CBA and have 100% of that salary removed from the team's salary. The player must be under contract at the inception of the new CBA in order to qualify.

15. Player Benefits

1% of the players' BRI is to be set aside to fund a new benefits pool. This pool is being created for post-career player annuity and welfare benefits.

16. Revenue Sharing

Details are still TBA.

17 Terms of Agreement

The term of this new CBA is 10 years, but this time around, BOTH players and the league have an opt-out after Year 6.

While this may make the potential for another lockout in six years more likely, hopefully the balance of power between parties will help them realize that it is in everybody's interest to not employ another work stoppage to keep things together.

***

That was fun, wasn't it? This guy is especially jazzed over the new CBA.

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