All locked out and no place to go, Part 1: The early years up to the end of the first lockout by DanH

Hi everyone.

Our resident capologist DanH has put together a thorough history of the NBA collective agreement and an analysis of how it got this far and where it might be going. We will be posting it in sections over the next week or so. It contains extensive information and lots of context for ongoing discussions about the labour disruption to the game we all love. We hope this will be the start of an ongoing presence for DanH on the RF blog team.

The entries will cover the following time periods:

1. The early years up to the end of the first lockout
2. The ‘beginning of the end’ up to the end of the 1999 agreement
3. The 2005 agreement and what has happened since
4. End game - the 3 main drivers of the push for change
5. Conclusions - How I Stopped Worrying and Learned to Love the Lockout, and The Way I See It Ending

This is some amazing stuff folks. I hope you enjoy it as much as we did.

Without further ado, take it away DanH!

So, this sucks. No basketball. No offseason of trades, free agent signings, training camps. Nothing basketball-related to talk about that is even remotely interesting in the slightest…

So let’s talk about the CBA negotiations instead!

With all the rhetoric thrown around by both the players and owners, it’s hard to say exactly what’s even going on, or what each side really wants.

So I thought now would be a good time to take a look through the ancient and not-so-ancient history of these sort of negotiations in the NBA, and see if we can figure something out about what the heck is going on.

I’ll be putting a few posts up about the history of CBA negotiations, what impact they’ve had, what that means for this season, and what we can expect in the coming months. If you want to read more about the CBA and its past, especially the last two agreements, see Larry Coon’s FAQ at NBA Salary Cap FAQ or the NBPA website at National Basketball Player’s Association. That’s where I got a vast majority of the information I present here, and all credit for facts and figures goes to those two sites (mostly Coon’s FAQ, the most useful CBA site in the history of the world).

Also, as I post these feel free to jump in with anything you think I missed or that you think would be relevant to the conversation. Keep in mind that there are several sections though - for example, if we haven’t covered the 2005 CBA yet, you may want to hold your comments about it until we get there.

Let’s start at the beginning…

The Beginning

Bob Cousy led the start of a union in 1954, and the union of players was eventually recognized by the league in 1957. Nothing much came of this until the 1964 all-star game, when a threatened player strike forced the league to adopt a pension plan for the first time.

In 1970, the first collective bargaining agreement was struck between the league and union. This agreement established minimum salaries for players and gave them a per diem.

Several agreements followed over the next decade, with little in way of changes. Arbitration was introduced, a limited form of free agency was created (prior to this, teams could keep players in perpetuity by utilizing option clauses), and no-trade clauses were eliminated.

The 80’s

Finally, in 1983, the league and union agreed that league revenues should be shared between owners and players, and would be defined through the institution of a salary cap. This was the concept of a salary cap - it would restrict teams to spend only a certain percent of revenues, and would encourage teams to spend to that limit to be competitive. The revenue split was well below 50% for the players at this point, since the salary cap was defined as approximately 53% of revenues (divided by the number of teams) - it has ranged from 40% to just over 50% over the years. However, most teams were not spending up to the cap just yet.

Unfortunately for the league, the union (and some owners…) insisted on including a clause called Bird Rights. This clause allowed teams to exceed the cap to re-sign their own free agents, within certain restrictions. This was the beginning of the slippery slope that led to today’s work stoppage. The revenue split grew very quickly because of the inclusion of Bird Rights in the agreement. This drove teams to spend more and more to be competitive, and team salaries grew very quickly form here on out.

The next bargaining agreement in ‘88 stemmed from an antitrust lawsuit filed by the union, and established ideas like unrestricted free agency, a shorter draft (the number of players drafted each year was excessive - there were SEVEN rounds! - and the union was suffering from oversaturation of talent available), and safeguards against collusion amongst owners.

The First Lockout

After that agreement expired, the players filed another antitrust lawsuit in 1994, attacking the concepts of a salary cap and draft, among other things. After a one-year “no-strike-no-lockout” agreement allowed the season to be played, the union and league reached an agreement, but when put to the players for a vote, they decided to have the union decertify rather than accept the terms, and the league locked the players out.

The lockout was short-lived, as both parties came to another agreement before the season started or the filed decertification was ratified, and the players voted against decertification in time to save the entire season. It is hard to say what side won in this round, as the resulting CBA included a rookie salary scale, and a limitation on the revenue going to the players beyond the salary cap (the owners reserved the right to cancel the CBA if the revenue split went above 51.8% to the players). However, the players won the right to be drafted straight out of high school. Until this point, a player had to prove a condition of “hardship” to bypass the requirement that they be a year beyond their graduation.

It should be noted that I do not have detailed information on what the exact percentages were that were used for salary cap calculation in the early years of the NBA. In the most recent agreements, the value of 48% was used most often, with a slight increase recently to 51%. I expect this 48% was the original value used. The cap exceptions didn’t really push player salaries up too quickly for the majority of the early years because of the rapid revenue growth. As TV deals were put in place, the salary cap leaped up as well, keeping player salaries in check relative to the revenues. It is only in the last couple decades that revenue growth once again slowed and made player salary growth a problem.

Stayed tuned for Part 2: The ‘beginning of the end’ up to the end of the 1999 agreement

2 Comments

'trane  on October 14th, 2011

someone should tweet this to all nba players and owners. we might actually get a season that way.

amazing work danh.

Acie  on October 14th, 2011

Great job, Dan!

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