NBA owners rethinking 1999 deal

By Howard Beck

New York Times News Service

Published: Sunday, July 3 2011 12:00 a.m. MDT

In fact, the last four champions were luxury tax-payers — a troubling trend for a league in which many small-market teams struggle to remain competitive. (The league is also working on a new revenue-sharing plan.)

"We had predicted the tax would be more of a drag on salaries than it's turned out to be," said Adam Silver, the current deputy commissioner. "It became business as usual to pay the tax, and therefore it created a league of haves and have-nots, where you have the Lakers at $110 million and Sacramento at $45 million."

Silver was referring to the Lakers' total investment in salaries — a $90 million payroll, and $20 million in taxes — an outlay that is nearly double the current salary cap ($58 million). Seventeen teams were over the cap but below the tax threshold ($70 million). Only six teams were under the cap this season.

The soft-cap system is defined by numerous "exceptions," which allow teams to exceed the cap to re-sign their own players (Bird rights) and to add free agents (midlevel exception, veteran's exception). Teams that can afford to routinely use the exceptions do so, creating a market that sometimes skews player values.

Teams have made countless mistakes using the midlevel exception, which was designed to save the middle class. Perhaps the most infamous example was the Knicks' 2005 signing of Jerome James, a plodding backup center, to a full midlevel deal, worth $30 million over five years.

The Bird exception has also produced some comical transactions. In 2008, two retired players — Aaron McKie and Keith Van Horn — were signed to contracts just so they could be packaged in multiplayer trades. Neither one ever played.

Agents and players argue that it is not their responsibility to save the owners from themselves. Yet the collective bargaining agreement is largely a set of rules designed to do just that. When those rules fail, the owners push to tighten them, the better to avoid future mistakes.

A hard cap might serve as a bulwark against future Jerome James contracts. With the star players making most of the money, there might not be much left to overpay journeymen.

As far as the players are concerned, the current system does enough — capping the earnings of star players and rookies, slowing payroll growth and punishing the free spenders.

Far from being too generous to players, Tellem said the 1999 deal (which was renewed with minor changes in 2005) had been financially punitive.

"The vast majority of players have been hurt by this agreement," he said. "This agreement has served to benefit the bottom third of the union."

The league has generally prospered since the 1999 deal, with revenues more than doubling, to $4.3 billion. Franchise values have skyrocketed. But on a year-to-year basis, the league says it is losing money.

Everyone has complaints about the 1999 agreement. But it is instructive that the players generally want to retain the system, while the owners want a major overhaul.

So they are back at the bargaining table, pushing for shorter contracts, smaller raises, less guaranteed money and no cap-busting exceptions. They seem to be digging in for another long fight. It could be 1998 all over again, with one caveat: no lockout beard.

"No," Stern said, "I promise."

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