Tag Archives: 2011 tentative agreement

Official terms of NBA’s tentative agreement

Sports Illustrated has obtained a copy of the official 8-page “summary of principal deal terms” that is being circulated to NBA owners and players this weekend.  This is the deal the players will hold a ratification vote on.

Summary of principle deal terms.

It’s much the same as initially reported Saturday, with one concession to big spenders like the Lakers, Celtics and Spurs:   They get a reduced mid-level exception of $3 million to sign a free agent every year.  Previous proposals had limited the exception to $2.5 million, then $3 million, to be used every other year.

This fuels speculation that many of the new MLE rules had been constructed to level the playing field for the big spenders, not to improve competitive balance.  The owners did concede on the MLE rules for teams at the edge of the tax cliff.

The Mavs and Heat, for example, will be able to use the full MLE without paying the double penalty of  1) Losing the full MLE and having to resort to the $3m MLE, and, 2) Paying luxury tax.  Previous proposals by the owners would have treated all teams nudging into luxury tax land the same as the Lakers and Celtics, which could have cut a large share of team options and salary for middle class payers.

Under the tentative agreement, teams can use the full MLE, go into tax territory up to $4 million and be only penalized the luxury tax amount.

The new tax rates are steep.  The Lakers payroll in 2011-12 will be about $25 million above the tax theshold, making them the lone team in tax tier 4.  In this new incremental system, the Lakers would pay about $50 million in taxes above their $95-$100 million payroll.

But the Lakers get a break:  The tax rate for the next two years will be dollar-for-dollar, meaning the Lakers will pay an estimated $25-$30 million in taxes.  Even with a prorated 66-games, the Lakers will pay over $100 million in player salaries and tax to play the season.

The player payroll cost to the Bucks 2011-12 will be about $55 million.

Before the parties can vote, the players and owners will need to withdraw their respective lawsuits, and the players must reform their union.  If approved, the owners will lift the lockout, a training camp and free agency period will open and the league will play a 66-game season beginning Christmas Day.

The NBA could, of course, lift the lockout now, and could have lifted it at any point during the 149 days of negotiations that led to this point.