So what does this mean? The revenue split was always meant by both the owners and the players to be 50-50 (or thereabouts). It was implemented incorrectly. So now the owners finally have a situation where they can make it right. Of course, they want a 46-54 split, but greed has ever been the driver of these negotiations. The fact that the players’ opening salvo was an offer to keep the current CBA active is an indication that they know just how good they have it. 57% is a huge cut of the revenues. Add in the limited escrow and the loose luxury tax and excessive exceptions, and that number would only rise again over time, even with the next-year corrections in place.
This is why the current situation is unsustainable – that 57% that everyone claims is ‘fixed’ is by no means fixed, and even a cursory glance at the BRI splits over league history shows that.
This examination of the history of the CBA negotiations has shown that there are three drivers for the owners (and players) to push for CBA changes.
1) The Hard Cap
The owners want a hard cap. And most think it is for parity’s sake, and it would help with that. But it is really the defining aspect of limiting the growth of BRI. If there is a hard cap set for a specific percent of BRI (say, 57%), then the owners will never be able to spend above that, and will simply top the players up to 57% every year. That would stop the growth dead.
The inclusion of exceptions to the hard cap could throw this off, but if it is limited to say, limited Bird Rights (one player per year, at a reduced salary), rookie, and minimum salary exceptions, then the spending should control itself – at some point it will become too hard to add talent while over the soft cap, and especially while above the ‘hard’ cap. High-paid teams will stagnate, and eventually move their players for expiring contracts to get back under the cap.
It should be noted that a very stiff luxury tax would operate in much the same way – they would have to set the bar lower so the ‘never going to spend that much’ point is not much higher than a hard cap would be. In this case, some escrow protection would be necessary, but it should be stable in the long run.
2) The Escrow Limit
Failing an effective hard cap, the owners need that withheld escrow to protect themselves from overspending. The escrow percentage has been between 8 and 10% and has been shown to fail to completely contain overspending under each of the last two CBA’s. Increasing this limit is the quick fix solution – it would help reduce the overpayment of players by more effectively covering the overage each year.
Unfortunately, without system changes, the effective BRI percentage would likely continue to grow each year. By settling for a soft cap and an increased escrow limit, the owners would be betting that they would get to the next CBA negotiations before the players’ salaries caught up to the escrow (which would almost certainly happen, if you want a league with any parity at all).
3) 50-50 Split
This has always been what the owners wanted. It used to be what the players wanted. At the time of the initial salary cap creation, it was the logical value (or range, at least) to use, and it remains so today. Everyone was happy with it then, and the players are only unhappy with it today because they tripped backwards (or were very shrewd negotiators decades ago) into higher percentages through cap exceptions meant to aid in player freedom.
The owners will not settle for much above the 50-50 split, and I’d be astonished if the next CBA has a split above the 51.8% defined in the 1995 renege clause.
Check back in tomorrow for final thoughts on what this all means for the lockout, and where we go from here.