NBA Bargaining Agreement 2011 Analysis
Background
The NBA Collective Bargaining Agreement is the contract between the NBA team owners and the NBA Players Association that dictates the rules of player contracts, trades, revenue distribution and the salary cap. Since the previous CBA signed in 2005 was going to be expired before July 2011, the two parties, team owners and basketball players had to come up with a new CBA for the upcoming few seasons.
According to the CBA signed in 2005, a soft cap system (at $58 million) was adopted, meaning that the limit of total amount the NBA teams can pay the player has to be depend on a complex system of rules and exceptions. As for the relative basketball-related income(BRI), the players were guaranteed 57% of the BRI, while the 43% left belonged to the NBA owners.1 BRI includes revenue generated by ticket sales (regular season, exhibition and playoffs), television contracts (ESPN, TNT, etc.), concessions, parking and "temporary" Stadium advertising.
Negotiation progress
Negotiation for a new CBA started at early 2011. The two main issues to be negotiated were the salary cap system and the BRI split. The owners claimed that current economic terms only suit teams with larger markets, and in fact many of them, 22 out of 30 in the last season, were losing large amount of money due to the unequal distribution of BRI. Therefore, they made a first offer by requesting to adopt a hard cap of $45 million instead of a soft one and to change the 57-43 split into a 37-63 split. The players Association doubted the reality of these figures, saying that it was critical, and turned down to the offer immediately. They also took action by calling for a lockout.2
One day before the expiration of the old CBA, there was still a huge disparity within the BATNAS of both countries although concessions had already been made. Owners proposed to adopt a ‘flex cap’ system instead of a hard one3 and cut players’ salary by $2 billion over the six years, while players offered to cut
The NBA Collective Bargaining Agreement is the contract between the NBA team owners and the NBA Players Association that dictates the rules of player contracts, trades, revenue distribution and the salary cap. Since the previous CBA signed in 2005 was going to be expired before July 2011, the two parties, team owners and basketball players had to come up with a new CBA for the upcoming few seasons.
According to the CBA signed in 2005, a soft cap system (at $58 million) was adopted, meaning that the limit of total amount the NBA teams can pay the player has to be depend on a complex system of rules and exceptions. As for the relative basketball-related income(BRI), the players were guaranteed 57% of the BRI, while the 43% left belonged to the NBA owners.1 BRI includes revenue generated by ticket sales (regular season, exhibition and playoffs), television contracts (ESPN, TNT, etc.), concessions, parking and "temporary" Stadium advertising.
Negotiation progress
Negotiation for a new CBA started at early 2011. The two main issues to be negotiated were the salary cap system and the BRI split. The owners claimed that current economic terms only suit teams with larger markets, and in fact many of them, 22 out of 30 in the last season, were losing large amount of money due to the unequal distribution of BRI. Therefore, they made a first offer by requesting to adopt a hard cap of $45 million instead of a soft one and to change the 57-43 split into a 37-63 split. The players Association doubted the reality of these figures, saying that it was critical, and turned down to the offer immediately. They also took action by calling for a lockout.2
One day before the expiration of the old CBA, there was still a huge disparity within the BATNAS of both countries although concessions had already been made. Owners proposed to adopt a ‘flex cap’ system instead of a hard one3 and cut players’ salary by $2 billion over the six years, while players offered to cut