Rules changes designed to reduce physical play and improve the flow of the game were approved yesterday by the NBA's Board of Governors.

The changes will be in place for the start of exhibition games Oct. 10 and regular season games Nov. 2.

The changes include tighter interpretation of foul rules, especially physical play away from the ball; prohibition on forearm checking, except below the free throw line; a five-second rule limiting the amount of time an offensive player with his back to the basket can control the ball below the free throw line; and resetting the shot clock to 14 seconds instead of 24 on certain stoppages of play, such as personal fouls not resulting in free throws.

MOVES: The Magic signed F Monty Williams, formerly of Potomac High in Prince George's County, and waived G Tim Legler, who was acquired in a trade with the Wizards this summer. Williams, 27, appeared in one game last season with the Nuggets before being waived. Legler, 32, averaged 4.0 points for the Wizards. . . . Rap music artist Master P was invited to training camp by the Raptors. Born Percy Miller, Master P was waived by the Hornets during training camp last season.

MERGER APPROVED: NBA owners unanimously approved the proposed merger of the business operations of the Nets and the baseball Yankees, a person familiar with the situation told Bloomberg News.

Major League Baseball officials, meantime, are studying the agreement between the clubs, which would create a closely held company called YankeeNets. Under the proposed merger, the first of its kind in North American professional sports, the teams would join ticket offices, promotions and marketing while maintaining autonomy in their sports operations.

SPURS AT A LOSS: The Spurs' first championship season was a loss financially. The Spurs absorbed a record $12 million loss last season, according to team officials.