So the system had to be fixed. The owners saw that even with their escrow system, the salary cap structure and exceptions were driving spending (in a competitive environment) up beyond their control. So, in the negotiations in 2005, the owners took steps to control salary growth.
The owners established the luxury tax as independent of the escrow system – if a team went over the tax, they paid the tax, period. This was seen as a good way to discourage team spending, despite the ineffectiveness of the previous conditional luxury tax. The tax threshold was set at 61% of BRI, to try to prevent teams from driving the BRI split up above that.
And the owners attacked the salary cap structure. They reduced the maximum years and salary for maximum contracts. The cut the maximum raises for all contracts, thus lowering the value of the mid-level exception in particular.
Unfortunately, to make cuts to the big contracts, and establish their tax (which players saw then as a hard cap, believe it or not), they had to give back.
And the players’ union was wily. They exchanged the slightly reduced pay for superstars and mid-level guys for drastically increased pay for low-level players. The …