A little past 3 a.m. on Nov. 26, after 15 straight hours of negotiations, the NBA and its players finally resolved their differences and agreed on a new Collective Bargaining Agreement (CBA), thus ending the nearly five-month lockout.
The new agreement will allow teams to open training camps, sign and contact players, and make trades. There will be just two preseason games this year between geographically close teams such as the Los Angeles Lakers and Los Angeles Clippers with each team getting one home game. Finally, after the two preseason games the regular season will open with five games on Christmas Day.
The new CBA will make Big-Threes such as Lebron James, Dwyane Wade and Chris Bosh and Paul Pierce, Ray Allen and Kevin Garnett nearly impossible for teams to have. The new CBA has a salary cap of about $58 million and, while there is no hard cap preventing teams from spending above this cap, there is a punitive luxury tax system now in place.
In the previous CBA, for every dollar a team spent over the luxury tax, they paid $1; however, in the new CBA teams will pay an incremental luxury tax for every $5 million they spend over the luxury tax ($1.50, $1.75, $2.50, etc.) and teams that repeatedly spend over the luxury tax will face a harsher tax per dollar over ($2.50, $2.75, $3.50, etc.).
This new system will severely limit the abilities of teams such as the Knicks, Heat, Celtics, Lakers and Mavericks from attracting high-profile free agents and building super-teams. For example, according to Larry Coon of ESPN.com, the Lakers’ tax bill in 2011 was $19.9 million. Under the new CBA, being that far over the tax would cost them $44.68 million and if they repeatedly went over the tax (being over for four out of five years), they would owe $64.58 million.
This new system would make it almost impossible for the Miami Heat to maintain all three of their super-stars down the road. Similarly, it will make it extremely hard for the Knicks to keep their own Big Three of Chris Paul, Carmelo Anthony and Amare Stoudemire. Consider this, next year the Knicks will have roughly $40 million devoted to just Anthony and Stoudemire. That would leave them just $18 million to sign 13 players before going over the luxury tax, thus making it nearly impossible to sign another super-star such as Paul and still fill out their roster.
While the new system looks like it will allow small-market teams to compete with large-market teams in principle, this will probably not be the case. Major-market teams like the Lakers and Celtics have multi-billion dollar TV deals that will significantly lessen the financial impact that will result from being over the luxury tax.
Though the NBA may be back, the new CBA has an opt-out clause for both sides in 2017. As fans, we can enjoy the NBA for at least six years but, once the calendar hits 2017, prepare for labor war all over again. The NBA and players may say all the differences have been resolved, but this entire process was just one small battle in a giant labor war. This new CBA may look good on paper, but it will only result in business as usual, with big-market teams using the revenue from their TV deals to continue to outspend their small-market counterparts.
