NEW YORK – The NBA Board of Governors has ratified a new 10-year collective bargaining agreement, enabling training camps and the free agency period for the 2011-12 season to begin on Fri., Dec. 9 at 2 p.m. ET. As previously announced, the NBA will begin its 66th season on Christmas Day.
“I am pleased to announce that we have concluded the collective bargaining process and have reached an agreement that addresses many significant issues that were challenges to our league,” said NBA Commissioner David Stern. “This collective bargaining agreement will help us move toward a better business model, a more competitive league and better alignment between compensation and performance.”
The agreement includes a 50-50 split of basketball-related income, a higher luxury tax with progressive tax rates and the retention of a soft salary cap system. The maximum length of player contracts will be five years (previously six) and maximum annual increases in salaries will be 7.5% for teams re-signing their own players and 4.5% for teams signing other teams’ free agents.
On non-economic issues, the league has bolstered its drug program to include offseason testing, increased penalties for violations involving performance-enhancing drugs, and blood testing for human growth hormone (HGH) once the test is validated by a neutral panel of scientific experts.
Beginning this season, teams can assign veteran players with their consent to the NBA Development League and, effective with the 2012-13 season, there will be no limit on the number of times players with three years or less of experience can be assigned to their team’s NBA D-League affiliate.
The NBA and NBPA have agreed to form a committee to discuss issues related to the NBA Draft and NBA D-League, including Draft eligibility rules, the Draft combine, the number of rounds in the Draft and rules related to the assignment of NBA players to the D-League.
The NBA Board of Governors also voted Thursday to approve a new revenue sharing plan that will quadruple the funds previously shared among NBA teams.
“The Board realized that it was imperative that our revenue sharing program be improved,” Stern said. “We have found a solution that should provide our league with better competitive balance.”
Team training camps and the free agent period will open tomorrow with a Salary Cap of $58.044 million, a tax level of $70.307 million and a minimum team salary of $46.435 million.
KEY AGREEMENT POINTS
The following are the key points agreed to by the NBA and the Players Association in their new 10-year collective bargaining agreement:
- Players and owners agreed to a 50/50 split of basketball-related income (BRI). However, depending on BRI, players can receive as high as 51% or as low as 49%.
- The Salary Cap will remain soft and has been set for the 2011-12 season at $58.044 million.
- The maximum length of a player contract will be reduced by one year, from six years for a team’s own players and five years for other players, to five years and four years, respectively.
- Salaries in new player contracts may increase by up to 7.5% per year for a team’s own players and 4.5% per year for other free agents.
- Three Mid-Level exceptions now exist:
- For non-taxpayers: Mid-Level exception set at $5 million in 2011-12 and 2012-13, growing 3% annually thereafter; maximum contract length is four years.
- For taxpayers: Mid-Level exception set at $3 million, growing 3% annually thereafter; maximum contract length of two years.
- For teams operating with salary cap room: Mid-Level exception set at $2.5 million, growing 3% annually thereafter; maximum contract length of two years.
- For the 2011-12 and 2012-13 seasons, the tax rate is $1 for every $1 in salary over the tax level.
- Beginning with the 2013-14 season, tax rates for incremental spending above the tax level will increase as follows
- $0-5 million over Tax level: $1.50 for $1
- $5-10 million over Tax level: $1.75 for $1
- $10-15 million over Tax level: $2.50 for $1
- $15-20 million over Tax level: $3.25 for $1
- Rates increase by $0.50 for each additional $5 million above Tax level.
- The amount of money that can be withheld from player salaries under the “escrow” system is 10%; if escrow funds are insufficient to reduce salaries and benefits to 50%, 1% benefit fund is available to make up shortfall.
- Traded Player Exception for non-taxpayers increased to the lesser of 150% of salaries of players being traded or the salaries of players being traded plus $5 million. For trades in which the salaries being traded exceed $20 million in total, the Traded Player Exception for non-taxpayers will be 125% of such salaries plus $100,000.
- Traded Player Exception for taxpayers remains at 125% of the salaries of players being traded plus $100,000.
- Except during the 2011-12 and 2012-13 seasons, teams are prohibited from using a sign-and-trade if their team salary post-transaction would exceed the tax level by more than $4 million. Sign-and-trade contracts will have a maximum length of four years and receive 4.5% annual increases.
- For the first five years of the CBA, each team will be permitted to waive one of its player contracts that was in effect prior to the 2011-12 season and have 100% of the player’s salary removed from the team’s salary for Salary Cap and Tax purposes. Each team may use this provision only once over the life of the agreement.
- The NBA’s drug testing program has been strengthened to include up to two offseason tests for performance-enhancing drugs per year, increased penalties for performance-enhancing drugs and blood testing for HGH once the test is validated by a neutral panel of scientific experts.
- Veteran NBA players can be assigned to their team’s NBA D-League affiliate for rehabilitation assignments with the players’ consent. Beginning in 2012-13, players in their first three seasons in the NBA may be assigned to the D-League an unlimited number of times each year.
- The NBA and NBPA will create a committee to discuss issues related to the NBA Draft and NBA D-League, including Draft eligibility rules and rules related to the assignment of NBA players to the D-League.
- Non-discrimination language was added into the agreement that protects players from discrimination, including based on sexual orientation.
- Term of the contract is 10 years, with both the NBA and NBPA holding the ability to opt out after the sixth year.