The details of the tentative agreement to settle the Carmelo Anthony vs. NBA lawsuit emerged late Saturday. NBA commissioner David Stern was confident that he could get the required 15 of the league’s 29 owners to accept the deal. The players would need to dismiss their lawsuit, reconstitute the union, and have a majority of the 430-plus NBA players approve the deal in order for training camps and free agent signings to begin on Dec. 9.
The players made the largest concession of moving down in basketball-related income from 57 percent to around 50 percent, giving the owners almost $3 billion over the 10-year agreement. But the owners also showed some flexibility from their previous stance of trying to restrict player movement and deliver harsher penalties to higher-spending teams. Both sides have a mutual opt-out after six years.
Now here is a breakdown of some of the major system and financial issues that the owners and players agreed upon and how they could affect the Wizards:
1. Basketball-related income split
Revenues will be split at a base of 50-50 between teams and players, but there will be a 49-51 “band” of basketball-related income for players that will be linked to revenue projections. In the first year, players will receive 51.2 percent of BRI.
Contracts will also be prorated so that players will receive 66/82 (about 80.5 percent) of their stated contract amounts. So based on an estimated $2 billion in player income, they’ve lost about $390 million because of the delayed start to the season. And, while Rashard Lewis is slated to earn nearly $22 million in the upcoming season, he will now receive about $17.7 million.
2. Mid-level exceptions
The mid-level exception has been divided up among non-taxpaying teams, taxpaying teams, and teams with salary cap space. Non-taxing paying teams that are over the salary cap can sign a player to a four-year deal, every year, with the first two years set at $5 million. Taxpaying teams can sign a player to a three-year deal set at $3 million in the first year. And teams with cap room, such as the Wizards, will have a new exception allows them to sign one or more free agents to a salary up to $2.5 million and two years in length. In the past, teams below the salary cap were limited to using only their available cap space, then signing minimum salary players to fill out their rosters.
3. Minimum team salary
Teams must come within 85 percent of the salary cap in the first two years of the deal and reach 90 percent for the remaining years of the deal.
4. Maximum contracts
Maximum contracts will be five years for players with Bird rights and four years for other free agents. Rookie extensions will be allowed for four seasons but teams can select one player rookie extension of up to five years. Those players would be referred to as a designated player and each team can select one. A player finishing his rookie scale contract will be eligible to receive a maximum salary of 30 percent of the cap if he re-signs with his team and either makes the all-NBA team two times, is an all-star starter twice or wins an MVP award. So, basically, this provision was created for Derrick Rose, who is eligible for an extension. Blake Griffin has already made an all-star team and could qualify with more success next season. John Wall has a chance to get the upgraded extension if he blossoms into a two-time all-star over the next three seasons. Wall could potentially add about $17 million to his first extension. Not a bad motivator to elevate his game.
NBA teams will withhold 10 percent of player salaries each season to make sure they don’t receive more than their share of basketball-related income.
6. Luxury tax penalties
In the first two years of the deal, the luxury tax will be $1 for every $1 over the tax threshold. But in the third year of the deal, the penalties will be much harsher for tax-paying teams. Teams will pay $1.50 for every $1 over the threshold up to $5 million; $1.75 for every $1 between $5 million and $10 million; $2.50 for every $1 between $10 million and $15 million; and $3.25 for every dollar between $15 million and $20 million. The tax rates will then increase by $.50 for each additional $5 million above the threshold.
Teams that pay the luxury tax in at least four out of five seasons will have the tax increase by $1 for every increment. So a team between $5 million and $10 million would pay $2.75 for every $1 instead of $1.75.
7. Qualifying offers / Offer sheets
JaVale McGee may benefit from a new provision that allows NBA starters — players with at least 41 starts or 2000 minutes, averaged over two seasons — to receive a higher qualifying offer in restricted free agency. McGee was the 18th pick of the 2008 draft and is set to receive a qualifying offer of $3.5 million. As the Wizards’ primary starter at center for another season, McGee could potentially receive the same qualifying offer as the player who was the ninth pick in the draft - or about $900,000 more at $4.4 million. Second-round or undrafted players who meet the qualifications of a starter can get a qualifying offer equal to the 21 pick of the draft. And if a player selected in the first 14 picks fails to meet the starter criteria, he will get a qualifier offer equal to the 15th pick in the draft. The new wrinkle will be implemented before the 2012-13 season, so the current crop of restricted free agents will not be affected.
Teams also have three days to match offer sheets signed by restricted free agents. Before, teams had seven days to decide whether or not to match. So, if Nick Young signs elsewhere, the Wizards won’t have much time to contemplate whether or not to keep him.
8. Annual salary increases
Salary increases will be set at 7.5 percent for Bird players and 4.5 percent for non-Bird players.
Owners had been pushing for a “Carmelo Anthony rule” to keep players from forcing a trade and immediately signing an extension with their new team. But that effort was dropped, as players can still sign extensions after getting traded. Players, though, will not be allowed to have the benefit of Bird rights: they won’t get the annual Bird increases or have the priviledge of an extra year on maximum contract length. Chris Paul or Dwight Howard could push for deals from their current teams but would stand to make less money with the moves.
10. The “apron”
Teams may go above the luxury tax threshold by up to $4 million in order to use the entire mid-level exception or acquire a player in a sign-and-trade deal. If a team is $1 million below the threshold, it could use the full $5 million mid-level, but if is $200,000 below the threshold, it could only use $4.2 million toward the mid-level.
11. Amnesty/stretch provision
Each team is allowed to waive one player prior to any season of the deal and have 100 percent of the salary removed for salary cap and tax purposes. The deal had to be signed before the new collective bargaining agreement. So, the Orlando Magic would be eligible to pay Gilbert Arenas the rest of his $116 million contract and let him leave and have that salary removed from the books. Speculation has swirled around Rashard Lewis, who is owed nearly $43 million over the next two years, but the Wizards aren’t expected to use the provision this season.
Teams would be allowed to waive players that sign new contracts under this deal and “stretch” the contract for twice the number of remaining years of the contract plus one more year.