What you need to know about the NBA’s new CBA agreement

The first thing you should know about the new collective bargaining agreement between the NBA and the National Basketball Players Association is that it doesn’t technically exist yet.

Yes, the league and the union representing its players reached a tentative agreement on a new CBA in the wee small hours of Saturday morning. But representatives for the two sides still need to finalize a term sheet detailing everything they’ve agreed on, get those terms ratified by their respective constituencies — for the NBA, the Board of Governors; for the union, the players who make up its membership — and, you know, actually write the new agreement before it can officially go on the books and supersede the existing 2017 CBA. (That document “checked in at around 600 pages containing nearly 5,000 paragraphs and 200,000 words,” according to The Associated Press; plenty of revisions and rewriting are in store.)

While we wait for the final I’s and T’s to get dotted and crossed, though, we can start to sift through the initial rounds of reporting on what’s going to show up on that term sheet, and what it all might mean for the state of play in the NBA over the next several years.

Ongoing labor peace means no missed games

The seven-year extension will begin with the 2023-24 season and reportedly includes an opt-out clause that either side could trigger after Year 6. Once ratified, then, the new deal would keep the league on track to continue humming along without missing any games through at least the end of the 2028-29 campaign.

“No missed games” probably sounds pretty good to anyone who remembers the 2011 NBA lockout. Back then, the league’s 30 owners — some of whom wanted to curtail the burgeoning “player empowerment” movement spawned by LeBron James’ Decision and the Big Three Heat, some of whom wanted to penalize high-spending big-market teams in pursuit of greater parity, all of whom wanted to decrease costs and increase profits — instituted a work stoppage that wound up spanning 161 days and erasing 16 games from the schedule.

It achieved the desired result. The owners wound up leveraging the players into agreeing to reduce their contractually guaranteed share of all basketball-related income (BRI) from 57% to a band of between 49% and 51% — a shearing that effectively transferred more than $3 billion from players to owners over the course of the agreement.

What the players get: The same slice, but a larger pie

That reduction in BRI share was a massive, massive loss for players; it won’t be reversed, or even adjusted, this time around. But while union leadership couldn’t claw back percentage points to give players a larger slice of the pie, it did succeed in making the pie itself at least a little bit bigger. The addition of team and league licensing revenue to the BRI pool for the first time will reportedly kick an estimated $160 million into the bottom line next season — resulting in another $80 million or so distributed among the player population — with that number “expected to grow annually with the salary cap” after that.

With that new revenue stream, plus a new broadcast media rights deal in 2025 projected to bring in somewhere between $50 billion and $75 billion, all about to hit a system in which the average player salary already sits north of $10 million — nearly twice what it was in 2011 — the NBPA seems to have had significant incentive to keep the trains running. And with NBA franchisevaluations skyrocketing to the point where commissioner Adam Silver and Co. are apparently poised to open the door to gigantic wellsprings of new investment, the league’s governors were evidently on the same page.

“I don't think a lockout benefits anyone,” NBPA executive director Tamika Tremaglio told reporters during All-Star Weekend.

All that new money doesn’t mean it’ll be 2016 all over again

Back in 2015, the union rejected a league proposal for “cap smoothing” — the term for a gradual multi-year phasing-in of the tidal wave of new revenue from the league’s last broadcast rights deal, rather than letting it all hit the system in one summer — on the grounds that artificially deflating the salary cap for any reason would result in “limiting a player's ability to realize as much income as they can.” As a result, the salary cap jumped from $70 million to $94.1 million in the summer of 2016 … which you might remember as the summer when the Warriors signed Kevin Durant, and a lot of other teams signed a lot of less successful deals.

That sort of mammoth spike won’t happen this time around: Keith Smith of Spotrac reports that the league and union have agreed to a smoothing proposal that would keep the cap from increasing by more than 10% in a given year, with any spillover getting tacked onto the next year. That, in theory, should help prevent another dramatic scenario like a 73-9 team suddenly being able to add one of the best players of all time. It also, in theory, should allow multiple free-agent classes to benefit from the rising tide of new money in the system, rather than only those who enter the market in the one summer that everything goes nuts.

Not just more money, then, but more money for more players … at least, in theory.

Adam finally got his tournament

Silver’s been talking about running some sort of club football-inspired in-season tournament for nearly a decadenow, since pretty much right after he succeeded David Stern. And now, on the heels of the success of the play-in tournament, he’s got one: a new creation, coming next season, that will count regular-season games as “pool play,” a la the WNBA’s Commissioner’s Cup, before depositing eight teams into a single-elimination tournament in December. The “final four” will be held at a neutral site — probably Las Vegas — and the two finalists will wind up playing an 83rd game.

Every member of the winning team gets a half-million bucks. Every member of the losing team … well, they got to play another game in a schedule already crammed to the gills with them for a prize of nebulous value?

I’ve long been skeptical of the idea that adding extra play and travel into a season that has seemed to be crying out for less of both, all for the purpose of hoisting a brand new trophy without any real history or tradition associated with it, will resonate all that much with players or fans. But I’ve also been wrong about stuff like this before; I didn’t think too much of the play-in tournament as a concept, but in practice it’s generated more entertaining basketball than we often see in the post-All-Star doldrums of late February and March. Maybe, once the players’ competitive juices start flowing and the chance to win whatever trophy happens to be in front of them starts to feel important, this will wind up providing more entertainment, too.

(If nothing else, a “Vegas Final Four” seems like another made-for-broadcast event that Silver and Co. can shop out to an interested streaming partner. Never stop raking in those rights fees.)

Still no hard cap, but some cost controls are coming

One other important aspect of the 2011 lockout? The league introduced a more punitive luxury tax system, headlined by the dreaded “repeater tax,” aimed at reining in governors who might choose to spend through the nose year after year in pursuit of a winner. It hasn’t totally dissuaded owners with cash burning a hole in their pockets, though — there’s only so much you can do to curb the enthusiasm of the likes of Joe Lacob and Steve Ballmer, it turns out — which might be why the new deal looks to even further wallop free-spending owners’ wallets.

The NBA’s floated pursuit of an “upper spending limit” to keep deep-pocketed franchises from running up massive tabs — which, based on how it was described, sounded an awful lot like a hard salary cap as rebranded by a focus group — was always going to be a non-starter for the union, which resists attempts to cap players’ earnings at every turn. (Some owners were apparently opposed to it, too.) The belt-tighteners among the ownership caucus did get a new measure of cost control, though, in the form of what ESPN’s Adrian Wojnarowski and others have called “a second salary cap apron.”

Under the current CBA, the “apron” is the point $6 million above the luxury tax line. Teams that spend past that point face certain restrictions in the tools they’re able to use to build out their rosters; they lose access to the bi-annual exception, have a smaller mid-level exception, can’t receive players in sign-and-trade deals, etc. Under the new CBA, the second apron will reportedly sit $17.5 million above the tax line, and crossing that threshold will take away even more tools: no more taxpayer MLE, no more sending cash out in trades, no more dealing first-round picks seven years out, no more signing players on the buyout market, no more ability to take on more money than you send out in a trade. Basically, it’s about to become much harder for the league’s biggest spenders to add rotation-bolstering veteran ballast.

Cost controls … but at what cost?

The league’s goal, as one source told Marc Stein, was to "make the high taxpayers feel the pain of losing roster flexibility," and its hope, Wojnarowski reports, is that “these measures will bring more parity to competition.” That sure seems like a specific shot across the bow of the defending champion Warriors and Clippers, both in line to write nine-figure luxury tax checks come season’s end in their pursuit of a championship. But while Lacob and Ballmer look like the intended targets of these measures, they’re not the only owners whose franchises might get squeezed in the new system:

It’s perhaps worth wondering whether the NBA needs to “bring more parity to competition” when two-thirds of the league makes the postseason in one form or another, when lower-spending teams like Sacramento, Memphis and Cleveland all have championship aspirations while Oklahoma City hangs in the play-in hunt, and, for that matter, when shelling out in and of itself doesn’t necessarily guarantee anything beyond tithing to the taxman. The highest-spending team has won the NBA championship justtwice in the past 11 seasons; the two teams atop this year’s leaderboard (the aforementioned Warriors and Clippers) are a combined six games over .500, with neither in line to have home-court advantage in the opening round of the playoffs.

It’s also worth considering the possibility that, as we’ve seen in Major League Baseball, the multi-billionaire owners spending at the top of the market aren’t as big a problem as the multi-billionaire owners who don’t, or won’t. That which seems to be where Draymond Green’s mind went as the tweets with news of the tentative agreement began to trickle out:

It’s unclear whether any particular mechanism will prompt smaller-market franchises like New Orleans and Charlotte, which have never paid the luxury tax, or major-market misers like Chicago into consistently ponying up to a degree that would allay fears like the ones Green raises — particularly when, by not exceeding the tax line, you wind up getting a slice of that sweet, sweet revenue sharing. With that in mind, the new agreement will reportedly feature some inducements aimed at spurring increased spending among those lower-payroll teams, including more lucrative MLE and room exceptions, a new “second-round pick exception” that would allow teams to sign rookies selected in Round 2 to multi-year deals for more than the league minimum salary without having to dip into their MLE or cap space to pay for it, and “a less punitive system for teams at the lower end of the luxury tax.” The specifics on that aren’t yet clear, but it could mean reduced tax rates for teams that go a little bit over the line in service of, y’know, trying to pay more good players to play for them.

Whatever impact these provisions wind up having on reducing massive payrolls, boosting lower ones, and influencing the future of parity, it seems clear that it’s going to be harder to add free-agent or trade talent on the margins around a high-priced core. Which, in turn, means it’s probably going to be more important to nail your draft picks (and maybe stop trading them away hand-over-fist for the next All-Star on the market?), to develop those complementary contributors in-house (time to put that new third two-way contract spot to good use!) and to retain the ones you do develop.

On that note:

The NBA seems to want to make it easier for teams to keep their own guys …

Under the current CBA, the most a team can offer a veteran player in an extension is 120% of his salary in the final year of his contract. One downstream effect of the increase in the salary cap in recent years, as John Hollinger of The Athletic noted last summer, is that such a starting salary typically pales in comparison to what that player would likely be able to earn on the open market in unrestricted free agency.

If the player has no incentive to sign a below-market extension, and the team is forced to face the possibility of losing that player for nothing in UFA, then it might be forced to shop that player in trade (think Dejounte Murray in San Antonio). If you don’t deal the player, you might wind up dealing with the ambient discomfort that comes with knowing you might be heading toward a reckoning (think the recent rumblings about Jaylen Brown in Boston).

Enter some new wrinkles: increasing that Year 1 bump for veteran extensions from 120% of the final-year salary to 140%, and allowing teams to add an extra year to non-max rookie-scale extensions (and, with it, more guaranteed money).

Whether those hikes — which would mean something like $25 million more in an extension for Brown, or an extra $17 million for Kings All-Star Domantas Sabonis — actually make it more likely that teams keep their homegrown talent remains to be seen; the supermax was introduced with similar goals, only to become an awfullythornyaffair. If nothing else, though, teams can now make more competitive extension offers right off the bat, and players have another avenue through which to lock in long-term money fast.

(Here’s where we remind you that, in manypastnegotiations, ownership fought hard to reduce contract length, limit total compensation and annual raises, and generally institute the rules that led to players exercising more agency over where and with whom they play … which have brought us back around to giving incumbent teams more avenues to pay their players more money for longer. History might not always repeat itself, but sometimes, it rhymes.)

… except, maybe, in restricted free agency?

Restricted free agency has always been a prettyfrosty game. It allows franchises to avoid bidding against themselves, forcing their players to go out and find an offer for their services while affording them the right to not only match any offer sheet the player signs to retain him, but also to wait multiple days to do so, tying up the would-be suitor’s cap space while the rest of the league wheels and deals.

With the board so clearly tilted toward incumbent teams, we rarely see RFAs of note switch squads outside of sign-and-trade deals. And the player’s lone avenue toward controlling his circumstances — signing a one-year qualifying offer that would allow him to enter unrestricted free agency the following summer — carries significant risk, since the qualifying offer is typically well below what he might earn on a new deal and brings none of the long-term security.

A 10% increase in qualifying offers might change the decision-making calculus for some RFAs. A tighter one-day window for deciding whether to match an offer sheet might change the decision-making calculus for some teams. Together, they could thaw out the RFA game some, making it more likely that choices come faster rather than dragging out all summer.

Plenty still to be revealed

The initial rounds of reporting offered the bones of some additional aspects of the new CBA, but we’re still waiting on the details to flesh them out. To wit:

• The widely discussed movement to require players to play a minimum of 65 games in a season to be eligible for year-end awards like Most Valuable Player and the All-NBA team will reportedly “come with some conditions.” What do those conditions look like? What kind of carve-outs might exist for certain types of missed games as opposed to others? In the search for a way to thread the needle of getting marquee players to play in more marquee games, have the league and union wound up crafting a response that will only create more headaches?

• Allowing players to invest in NBA and WNBA teams sounds interesting! In principle, I’m on board with the idea of players having a pathway to equity in the franchises they’re working for; they’re the ones whose labor draws the eyeballs that lead to all those multi-billion-dollar valuations, after all, with some players (LeBron James, Stephen Curry, et al.) driving revenues far beyond what they could ever earn in a financial system with a capped maximum salary. How that pathway works out in practice, though, to avoid conflict-of-interest and salary cap circumvention concerns, would seem to bear watching.

• How exactly can players “do endorsement deals with sports betting companies with complete separation from [the] gambling component?” Isn’t the gambling component … like … the thing they’d be endorsing? How does the league abstract that enough/put in enough guardrails to avoid the dangers of having players taking money directly from betting enterprises?

• To a large extent, the ongoing prosperity and well-being of the NBA — the sunny financial picture that so much of the league’s economic projections are based on — seems to rest on the revenue from massive national/international media rights deals. At the same time, the regional sports networks that have been the most direct conduit between local teams and local markets seem to be crumbling. How does the league make sure it’s putting its product in front of the people who most want to watch it?

• Can teams only use the second-round pick exception for one player, or will they apply to every second-round pick? Asking for teams like the Hornets, who currently control the 34th, 39th and 41st picks in the 2023 NBA Draft.

• I can understand the argument for removing the restrictions on how many “designated players” you can have on a roster; in theory, those limits effectively penalize a team for drafting really well and managing their books well enough to be able to add more star-level talent to the mix. In practice, though, I wonder whether the ability to stack up several of those nine-figure mega-talents — like Donovan Mitchell, Darius Garland and Evan Mobley in Cleveland, in the example furnished by Woj and Bobby Marks — will wind up colliding with the stiffer tax penalties associated with teams that go deep into the luxury tax. If you’re not restricted from having a bunch of those guys, but you are punished for paying a bunch of those guys, then might that not wind up functioning as a de facto restriction?

• If players attending the NBA Draft Combine now have to undergo physical examinations … the results of which will be distributed to “select teams based on player projections” … but players and their agents still don’t want every team to have access to all of their medical information before the draft for one reason or another … are we just going to have fewer prospects participating in the combine to try to avoid giving up information they don’t want to give up?

• On one hand, 30 more two-way contract spots represent more opportunities for teams to find, foster and elevate the next Jose Alvarado or Luguentz Dort. On the other: Might teams looking for a place to save a buck here and there lean further into rotating their two-way players in and out of the mix rather than spending to employ higher-priced veterans in a full end-of-the-bench roster spot?

• Does the new agreement make any explicit effort to address the headline-grabbing trade requests that have caused so much consternation over the past few years, and which some pundits thought owners might want to crack down on in the next round of negotiations? Or have the league’s stakeholders decided that the more punitive luxury tax system for higher-spending teams might provide an effective response anyway, and that — in this case, at least — gearing policy around actions employed by a comparatively small number of outlier stars doesn’t make all that much sense?