Jul 9, 2009, 2:44 pm
http://nba.fanhouse.com/2009/07/08/nba-p...-pay/#cont
A little-discussed clause of the NBA's collective bargaining agreement resulted in every player giving 9 percent of his salary back to his team last season.
The NBA's agreement with the union includes a league-wide cap on salaries and benefits paid to players. Only 57 percent of the league's "basketball-related income" (BRI) can be paid in player salary and benefits each season. Instead of the league billing players for any overages at the end of the season, an escrow system is in place to collect 9 percent of every player's salary right off the top.
If a player has a $5 million salary, for example, the team pays him $4.55 million and sends $450,000 (9 percent of $5 million) to the league to be held in escrow.
http://sports.espn.go.com/nba/news/story?id=4312837
The official league memorandum, obtained by ESPN.com, forecasts a dip in basketball-related income in the 2009-10 season of 2.5 percent to 5 percent, which threatens to take the 2010-11 cap down some $5 million to $8 million from last season's $58.7 million salary cap.
A significant drop for the luxury-tax threshold is also projected going into the summer of 2010. If basketball-related income drops by 2.5 percent in 2009-10, league officials are projecting a 2010-11 salary cap of $53.6 million and a luxury-tax line of $65 million.
If BRI, as it is referred to in the NBA, decreases by 5 percent, teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.
"Teams should be aware of this projected BRI decrease," reads the memo, "and plan accordingly."
One prominent general manager told ESPN.com on Wednesday that he expects the "panic for 2010 to start right away" and possibly curtail free-agent spending this off season even more than expected, now that the upper tier of names on the open market -- such as Hedo Turkoglu, Ron Artest and Ben Gordon -- has been snapped up.
The new figures for 2009-10 just announced by the league have set the salary cap at $57.7 million per team (down $1 million from $58.7 million from 2008-09) and the luxury-tax threshold at $69.9 million (down from $71.2 million).
Commissioner David Stern actually warned during the NBA Finals of a BRI shortfall of "maybe as much as 10 percent" from last season to next season, but Tuesday's projections were sufficiently dire for teams such as the New York Knicks that have been planning for months to make a significant free-agent splash next summer.
So in the best-case scenario outlined by the league office Tuesday night, New York would have roughly $10 million less in spending money next summer than it originally planned for, although the memo did include a disclaimer stressing that these were "early" projections that could "change based on economic conditions and as more information on league wide business performance becomes available."
In June, when asked by Stern to give a group of reporters some perspective on what a 10 percent drop (or thereabouts) in league wide revenues might do to free-agent spending in the 2010 off season, NBA president Joel Litvin said he'd anticipate a "significant impact" in terms of slicing into the amount of spending money many teams once expected to have.
The Knicks, for example, increasingly look as though they will be restricted to signing one maximum-salaried player that summer if the latest projections hold, which theoretically would only enhance the Cleveland Cavaliers' chances of retaining LeBron James, given the other holes in the Knicks' roster. New York's original plan to lure James was founded upon trying to sign James and a second marquee free agent in 2010.
Teams have been bracing for such significant reductions in the cap and luxury tax heading into the 2010-11 season, but seeing such numbers circulate was still jarring for many team officials.
"Real scary," one Western Conference executive said.
Said another from the West: "The figures for [2009-10] are better than I expected. It is [the summer of 2010] that will be scary."
A little-discussed clause of the NBA's collective bargaining agreement resulted in every player giving 9 percent of his salary back to his team last season.
The NBA's agreement with the union includes a league-wide cap on salaries and benefits paid to players. Only 57 percent of the league's "basketball-related income" (BRI) can be paid in player salary and benefits each season. Instead of the league billing players for any overages at the end of the season, an escrow system is in place to collect 9 percent of every player's salary right off the top.
If a player has a $5 million salary, for example, the team pays him $4.55 million and sends $450,000 (9 percent of $5 million) to the league to be held in escrow.
http://sports.espn.go.com/nba/news/story?id=4312837
The official league memorandum, obtained by ESPN.com, forecasts a dip in basketball-related income in the 2009-10 season of 2.5 percent to 5 percent, which threatens to take the 2010-11 cap down some $5 million to $8 million from last season's $58.7 million salary cap.
A significant drop for the luxury-tax threshold is also projected going into the summer of 2010. If basketball-related income drops by 2.5 percent in 2009-10, league officials are projecting a 2010-11 salary cap of $53.6 million and a luxury-tax line of $65 million.
If BRI, as it is referred to in the NBA, decreases by 5 percent, teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.
"Teams should be aware of this projected BRI decrease," reads the memo, "and plan accordingly."
One prominent general manager told ESPN.com on Wednesday that he expects the "panic for 2010 to start right away" and possibly curtail free-agent spending this off season even more than expected, now that the upper tier of names on the open market -- such as Hedo Turkoglu, Ron Artest and Ben Gordon -- has been snapped up.
The new figures for 2009-10 just announced by the league have set the salary cap at $57.7 million per team (down $1 million from $58.7 million from 2008-09) and the luxury-tax threshold at $69.9 million (down from $71.2 million).
Commissioner David Stern actually warned during the NBA Finals of a BRI shortfall of "maybe as much as 10 percent" from last season to next season, but Tuesday's projections were sufficiently dire for teams such as the New York Knicks that have been planning for months to make a significant free-agent splash next summer.
So in the best-case scenario outlined by the league office Tuesday night, New York would have roughly $10 million less in spending money next summer than it originally planned for, although the memo did include a disclaimer stressing that these were "early" projections that could "change based on economic conditions and as more information on league wide business performance becomes available."
In June, when asked by Stern to give a group of reporters some perspective on what a 10 percent drop (or thereabouts) in league wide revenues might do to free-agent spending in the 2010 off season, NBA president Joel Litvin said he'd anticipate a "significant impact" in terms of slicing into the amount of spending money many teams once expected to have.
The Knicks, for example, increasingly look as though they will be restricted to signing one maximum-salaried player that summer if the latest projections hold, which theoretically would only enhance the Cleveland Cavaliers' chances of retaining LeBron James, given the other holes in the Knicks' roster. New York's original plan to lure James was founded upon trying to sign James and a second marquee free agent in 2010.
Teams have been bracing for such significant reductions in the cap and luxury tax heading into the 2010-11 season, but seeing such numbers circulate was still jarring for many team officials.
"Real scary," one Western Conference executive said.
Said another from the West: "The figures for [2009-10] are better than I expected. It is [the summer of 2010] that will be scary."