Stern's letter to NBA players
Posted: Friday December 18, 1998 10:14 AM
Memo to: All NBA Players
From: David
J. Stern
Date: Dec. 16, 1998
Re.:
Collective Bargaining
As the 1998-99 season slips away from us, it is critical that I communicate
directly to you the owners' current collective bargaining proposals. I
recognize and respect your right to reject these proposals. However, it is
important that there be no doubt about the precise terms you consider to be
such a "bad deal" that you would prefer to lose the entire season.
I believe that the proposals now on the table reflect a good faith effort
by the owners to reach an agreement that is fair to all players, extremely
beneficial to the vast majority, and assures that the growth we have
achieved together will continue. They establish a system in which the
average salary is projected to rise to more than $4.5 million, ten-year
veterans will receive at least $1 million per year, a new middle class
exception will permit teams already over the salary cap to enter into
multi-million dollar contracts each year, and superstars will be able to
secure long-term contracts in excess of $100 million.
I have enclosed a complete summary of the owners' most recent economic
proposals, along with three charts that illustrate their benefits. In
reviewing these proposals, I urge you to focus on the extent of the
compromises the owners have made from their initial bargaining demands. The
proposals now on the table represent the following significant concessions
that were made in direct response to your union's forceful assertion of
your concerns:
There will not be a "hard" cap. The owners initially proposed
a system involving an NFL-style "hard" salary cap as the most effective way
to ensure that player salaries would not exceed the agreed-upon percentage.
They have moved away from the idea. The current proposal provides for a
"soft" salary cap, with a range of exceptions.
There will be a "Larry Bird" exception. The owners initially
proposed the elimination of the Bird exception. Under the current proposal,
the Bird exception would remain available to all players, subject to
limits on the high end.
Timing rules will remain to benefit the middle class. The
timing rules have an enormous economic cost to the owners. Nevertheless,
because of the importance of these rules to the middle class, your union
has been advised that the owners would be willing to modify their position
on this issue.
The escrow system will be limited. The cost certainty the
owners sought by year four was to be achieved by way of an unlimited
escrow. The owners' modified proposal now provides for a limited escrow and
a tax, which cannot guarantee certainty.
I hope you will review this memorandum and its attachments carefully. The
growth of our league over the past 20 years has resulted in continual and
spectacular growth of individual salaries and team values. The owners'
proposals would allow this growth to continue. If the season is lost, none
of the opportunities that the players and owners will undoubtedly pursue --
separately -- would come close to equalling what we have achieved together.
Thank you for taking the time to consider this memorandum.
DJS/aij
Enclosures
cc: Mr. William Hunter
NBA Proposals -- Principal Economic
Terms The following is a summary of the NBA's current proposals on the
principal economic terms of a new agreement:
1. Player Salary Growth
2. Maximum Player Salary
Greater of 105% of a player's prior salary, or: - 0-6 years of service:
25% of Cap
- 7-9 years of service: 30% of Cap
- 10 or more years of
service: 35% of Cap (but not less than $12 million)
3. Minimum Player Salary
- 0-2 years of service: $250,000 (increasing $5,000 each year of the
agreement)
- 3-5 years of service: $350,000 (increasing 10% each year of
the agreement)
- 6-9 years of service: additional $50,000 per year of
service
- 10 or more years of service: $1 million
Thus, for example, for the 1998-99 season, the minimums would be as
follows:
- 0-2 years of service: $250,000
- 3-5 years of service: $350,000
- 6 years of service: $400,000
- 7 years of service: $450,000
- 8
years of service: $500,000
- 9 years of service: $550,000
- 10 or more
years of service: $1 million
(These amounts are based upon a full 82-game season)
4. "Middle Class" Exception - $1.5 million in year
1
- $1.75 million in year 2
- $2.0 million in year 3
- average player
salary in years 4-6
This exception: - would be available to every team over the
Cap.
- could be used to sign a 1-, 2-, or 3-year contract.
- could be
used to re-sign a team's own free agent or another team's free agent.
5. Annual Salary Increases - 12.5% -- maximum
annual salary increase for players who sign "Bird" contracts
- 7.5% --
maximum annual salary increase for all other players
6. Contract Length - 7 years -- maximum contract
length for players who sign "Bird" contracts
- 6 years -- maximum
contract length for all other players
7. Rookie Scale - new first round picks would be
signed to a 3-year salary-protected "scale" contract, with a team option
for a fourth year
- team would have a right of first refusal if it
exercised its option
- additional option years would be added for each
year a player is under age 20 when drafted.
8. "Timing" We have withdrawn our original proposal on
"timing," which would have prevented teams from spending up to the Cap on
non-Bird players, then exceeding the Cap to sign its Bird players. We have
told your union that we are prepared to compromise on this issue by
increasing the amount at which free agents are included in their prior
team's Team Salary.
9. Escrow System
- We have withdrawn our original proposal that the NBA be permitted
to place in escrow an unlimited amount of player salaries in order to
arrive at the agreed-upon escrow percentage. However, we need to agree upon
the maximum percentage that may be placed in escrow as well as an
appropriate tax to be imposed upon teams if player costs exceed that
percentage.
10. Group License Agreement We have withdrawn our
original proposal that the players' 50% share of group license revenues be
paid in the form of increased player salaries instead of directly to the
Players Association. Our current proposal is that NBA Properties continue
to pay the players' 50% share to the union, but that we eliminate the
existing guarantee that the union receive $25 million each year regardless
of the level of revenues generated from the Group License.
11. Term of Agreement - 6-year term with NBA option
for 7th year
- first 3 years without escrow
- second 3 years with
escrow
- NBA option for 1 additional year with escrow
12. Other Salary Cap Rules The NBA has also proposed
changes in certain other Salary Cap rules, which we believe could be
resolved if we are able to agree upon the items listed above.
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