Players Seek End to NBA Salary Cap
The NBA’s salary cap has given its players a headache, prompting the players’ union to seek to shed the exotic headgear this spring in its negotiations with the league for a new collective bargaining agreement.
Free agency is the goal in this round of talks, according to the National Basketball Players Association (NBPA). The union wants to get rid of the salary cap, the club’s right of first refusal on a player’s contract and the college-entry draft.
But the club owners and league officials are adamant about retaining the elements of the contract which has brought about the NBA’s renaissance.
“None of the players are starving,” said Vince Boryla, president of the Denver Nuggets, who believes the league must retain the salary cap. “I’m a former player and I don’t begrudge them a good salary, but a long hard look should be taken by players and their representatives as far as salary caps are concerned. It (the cap) has helped this league turn around.”
The existing contract expires in June when the playoffs are over. The parties held their first negotiating session in February and another is expected to be held later this month, but the pace of the talks is not expected to pick up until late spring or early summer.
When the NBA and its players negotiated their last agreement in March 1983, reaching an accord about 48 hours before a strike deadline, the pact guaranteeing the players at least 53 percent of the league’s revenues was hailed as an innovative partnership between owners and players.
But within weeks, emphasis shifted from revenue-sharing to the pact’s creation of salary caps -- a limit on a team’s ability to spend on new players.
The 53 percent guarantee was tied to an attempt to even out the disparties among the 23 teams -- Utah, Indiana and Cleveland were on the verge of financial collapse -- by imposing maximum and minimum payrolls for the 12-man rosters.
“We were faced with losing a minimum of 36 jobs,” said Charles Grantham, NBPA executive vice president. “That’s over now. They’re (the league) now talking about expanding; television ratings are better, and teams are doing better in their local cable markets.”
Like Boryla, many attribute the league’s revival to the salary cap. The NBA is on its way to a fourth straight year of record attendance, has doubled its network television revenues and has at least six localities clamoring for an expansion team.
The cap is computed by multiplying the league’s revenues by 53 percent and then dividing by 23 teams. The league’s income is a combination of the clubs’ television, cable and radio revenues and their gate receipts (omitting the clubs’ concessions and parking and the league’s licensing income).
The first season the cap was in effect, 1984-85, the maximum team payroll was supposed to be $3.6 million; in 1985-86, $4.233 million, and this season the cap is $4.945 million.
But there are major loopholes in the cap. First, existing player contracts in five clubs pushed them over the cap so those teams -- the Los Angeles Lakers, the New York Knicks, Seattle SuperSonics, Philadelphia 76ers and New Jersey Nets -- were grandfathered in. Second, a team was allowed to re-sign any of its players for any price, regardless of the cap.
The problem comes when trying to sign a draft pick or a free agent from another team; if there isn’t room left under the cap, the team must pass on the player.
Leon Wood bumped up against the salary cap as a rookie. The guard from Cal State-Fullerton was drafted by Philadelphia in 1984, but the 76ers had no room left under their cap. The club offered him a one-year, $75,000 contract, the only option under the salary-cap rules, and indicated they would negotiate a long-term contract for more money when they could adjust their roster.
Wood balked and sued. While the case was wending its way through the federal courts, Wood eventually signed a four-year contract with the 76ers for slightly more than $1 million and later was traded. However, the courts, both at the district level and later an appeals panel, upheld the validity of the salary cap and the draft rules.
Another famous challenge to the cap was filed on behalf of Albert King of the Nets. King, a free-agent small forward, was given an offer sheet in October 1985 by the Knicks, who only had room under their cap to give King a $270,000 salary for 1985-86, $5,000 less than he earned the previous season with the Nets.
In a bit of creative contracting, the Knicks proposed paying King a $960,000 signing bonus and then a $75,000 salary for two years (until the current agreement establishing the salary cap expired), $700,000 in each of the two years following and $800,000 for the fifth year.