Understanding the NBA's Lockout Terms

By Paul Grossinger
There are two main issues under discussion in the NBA basketball lockout: the split of basketball related income (BRI) and the system issues. Every article discusses the minute and, frankly, boring details constantly so the point of this piece is to provide readers with the basic guide to the remaining issues and how they can be resolved. It's the what you need to know guide. These two sides of the lockout are very different, and may not be solved at the same time, so let's take a moment to discuss each one and how the NBA and the union might resolve it:

At the end of each season, the NBA and the Players Union split all basketball related income. What BRI refers to is all the income that the NBA derives from basketball activities. This income totaled right around three billion dollars in 2010-2011 (the exact numbers are disputed). Under the previous agreement, the players received 57% of that income regardless of the profit-loss margins of the NBA's franchises. That distribution was thrown out the window from the outset of these negotiations. As it now stands, the players want 52.5% of revenues and the owners want a 50/50 split. In order to reach agreement, the two sides will have to bridge that gap, which adds up to approximately $100 million per year. So, can the NBA and its players each agree to move about 50 million dollars (give or take) to reach the median 51/49 split that could get the season started?

The second half of the dispute is over the "system issues." These issues primarily relate to how the salary cap will function, the role and amount of luxury tax abusive franchises will pay each year, and the different exceptions to the salary cap that will remain in place from the old system. To quickly summarize: the salary cap is the monetary amount each team can spend on salaries for the season and the tax is the amount of money they will pay for going over that number. The owners, whose small franchise, hard-line members outnumber the big spending elite, want a system with a lower salary cap ($55 million or less), a high tax penalty (perhaps $2 for every $1 spent over the cap), and very small (or non-existent) mid-level or biannual exceptions for teams to wiggle around the cap number. The players want a system as close to the old one as possible because the old system was leaky and promoted free spending. To get to an agreement, the owners will have to soften their stance on luxury tax penalties to convince players they don't face a disguised hard cap and keep some of the old rule exceptions on the books. Players particularly want Bird Rights, which would allow them to stay with their current team for more money, and a couple loopholes for veterans who want to join contending teams over the spending limit.

To end the lockout, NBA teams and owners will need to solve both of these issues. If they can compromise on both, there will be a season. If not, and even if they manage one but not the other, then the lockout will continue on indefinitely.

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