NBA nearing massive media deals
Old 09-08-2014, 07:59 PM   #1 (permalink)
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NBA nearing massive media deals

The cap in the next couple years will be going way up by the looks of it!


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The NBA and its network partners expect to reach an agreement in principle on new long-term media deals by the start of the regular season, according to sources on all sides of the discussions.

Talks have progressed so rapidly that details are emerging on a massive agreement that would see the league’s annual rights fee more than double, with ESPN and Turner combining to pay more than $2 billion per year on average. One source said ESPN already has committed to pay “well over” $1 billion per year, and Turner is not far behind for a media rights extension that would kick in with the 2016-17 season.

A final deal might not be signed or announced before the new season, but talks with ESPN and Turner are advanced enough that sources said there is little chance the NBA will carve out a third package for another network, like Fox Sports or NBC Sports. ESPN, in particular, has been adamant during negotiations that the NBA not develop a new package to sell to a competitive sports network, sources said.
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The NBA cannot talk to other networks until the middle of next year, when ESPN and Turner’s exclusive negotiating window runs out. Barring an unforeseen snag in the ongoing negotiations, all sides expect new deals to be signed well before that happens.

The new agreements are expected to mirror the current ones in many ways. While many believe the league and its TV partners could fashion an agreement by the season opener on Oct. 28 — with a formal announcement likely to come weeks or even months later — several issues are left to be resolved, such as what to do with live streaming rights. The NBA wants to explore the NFL’s model, where streaming rights are sold separately. The NFL sold streaming rights to Verizon as part of a four-year, $1 billion deal that runs through the 2017 season. ESPN and Turner are balking at such a plan, saying that they need streaming rights to the games they produce.

One network source called a separation of those rights a “nonstarter.”

Streaming rights have been part of every TV rights deal (other than in the NFL) for the past several years, and the cable industry’s TV Everywhere streaming push continues to be a priority for networks and distributors.

While the league wants to retain control over its live streaming rights, one source said any new deal will likely include additional digital rights to the networks.

“That includes more video highlights and digital packages,” the source said.

The league and networks have reached broad agreement on several points. ESPN will retain rights to the NBA Finals championship series, which will remain on ABC. Turner will keep its exclusive Thursday night franchise and NBA All-Star Game coverage.

Turner also will continue to manage the NBA’s digital assets, which include NBA TV, NBA League Pass and NBA.com. Over the past 18 months, other properties, such as NASCAR and the PGA Tour, have taken their digital rights back from Turner. But it would be more difficult for the NBA to take its digital rights back since they are combined with NBA TV and with League Pass, the league’s out-of-market package.

The new agreements would represent a coup for NBA Commissioner Adam Silver, who viewed the media deals as a top priority when he took over for longtime commissioner David Stern in February.

League and network executives declined to comment, but Silver hinted at the scope of the forthcoming deals at an industry conference in New York last week, saying, “The rights are going to go up, and go up a lot.”

Silver set up two committees — one made up of owners, the other of team presidents — to look into new ways to negotiate the TV rights.

The NBA clearly is benefiting from a sports rights marketplace that has remained red-hot for most of the past decade. ESPN and Turner executives made it clear that they wanted to stay in business with the NBA, which has one of the youngest audiences in sports TV — a trait TV networks value.

The networks’ current eight-year, $7.5 billion combined deal has been in place since 2007.

ESPN and Turner have used sports programming as a way to convince cable and satellite operators to pay higher license fees. Over the past several years, ESPN has brought several championship events to its schedule, like the Bowl Championship Series, the U.S. Open (tennis) and the British Open. Turner has invested in the MLB playoffs and the NCAA men’s basketball tournament to get a higher fee from distributors. That strategy makes the NBA critical programming to have for both networks.

The sides started engaging at the start of the year, but talks did not start to pick up until the NBA playoffs in early June. Silver and Bill Koenig, league vice president of business affairs, are representing the NBA in the talks. ESPN President John Skipper and Turner Broadcasting System President David Levy have led talks for their respective networks.
NBA nearing massive media deals - SportsBusiness Daily | SportsBusiness Journal | SportsBusiness Daily Global
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Old 09-08-2014, 08:15 PM   #2 (permalink)
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Old 09-08-2014, 10:19 PM   #3 (permalink)
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It sucks that ESPN/ABC is retaining the rights to the NBA Finals, but as long as JVG stays on as a color commentator it's not as bad. I would have liked to have seen NBC sneak in and take back the Sunday games with their introductions, and bringing back the likes of Costas and Walton, but that was probably never going to happen anyway unfortunately.

The NBA has a good set up going, and the NBA on TNT, especially with Inside the NBA and their panel at halftime and after the game is one of my favorite shows to watch.
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Old 10-05-2014, 10:10 PM   #4 (permalink)
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Zach Lowe @ZachLowe_NBA
There it is. RT @RichSandomir: NBA to announce $24 billion/9 yr deal w/ ESPN and TNT on Monday. Annual average value nearly 3x current deal.



Kevin Rashidi ‏@KevinRashidi ·
Looks like we're headed towards another lockout unless the owners give the players what they deserve. Crazy $24bill/9year TV deal. Robbery.


Does this mean the cap will now sky rocket?

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Old 10-05-2014, 10:32 PM   #5 (permalink)
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Originally Posted by jeffb View Post
Zach Lowe @ZachLowe_NBA
There it is. RT @RichSandomir: NBA to announce $24 billion/9 yr deal w/ ESPN and TNT on Monday. Annual average value nearly 3x current deal.



Kevin Rashidi ‏@KevinRashidi ·
Looks like we're headed towards another lockout unless the owners give the players what they deserve. Crazy $24bill/9year TV deal. Robbery.


Does this mean the cap will now sky rocket?
Let the lock out posturing begin

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Old 10-05-2014, 10:38 PM   #6 (permalink)
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Zach Lowe ‏@ZachLowe_NBA · 3m3 minutes ago
It was not an accident, by the way, the Suns rushed to get their deals with Bledsoe and the Morris twins done before this news broke.
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Old 10-06-2014, 10:03 AM   #7 (permalink)
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The commish is discussing this live on nbatv right now.
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Old 10-06-2014, 10:08 AM   #8 (permalink)
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Zach Lowe ‏@ZachLowe_NBA · 3m3 minutes ago
It was not an accident, by the way, the Suns rushed to get their deals with Bledsoe and the Morris twins done before this news broke.
makes you wonder why their agents didn't hold out longer
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Old 10-06-2014, 10:09 AM   #9 (permalink)
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This is why Lebron took a shorter deal
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Old 10-06-2014, 11:31 AM   #10 (permalink)
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Cap, if unchecked, will now skyrocket to 95M or so in 2016. Smoothing may bring that down, but would push next year's cap way up (which would be great for the Raptors).

Don't understand the "give the players what they deserve" remarks. Players get half of that 24 billion.
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Old 10-06-2014, 11:33 AM   #11 (permalink)
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Cap, if unchecked, will now skyrocket to 95M or so in 2016. Smoothing may bring that down, but would push next year's cap way up (which would be great for the Raptors).

Don't understand the "give the players what they deserve" remarks. Players get half of that 24 billion.

I don't understand that either, do people expect them to get much more than 51%??
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Old 10-06-2014, 12:53 PM   #12 (permalink)
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I don't understand that either, do people expect them to get much more than 51%??
They used to get 57%. Memory is still fresh.

Zach Lowe is reporting now that the NBA plans to scale the income from about 2.1B to about 3.1B in the final year. Meaning 2016 cap would be about 86.5M, closer to original predictions, but also that we'll see continuous growth (bigger than current, possibly up to 5M per year if other revenues keep growing as they have been) of the cap for the full term of the deal.
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Old 10-06-2014, 04:48 PM   #13 (permalink)
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The nine-year, $24 billion broadcast and digital rights agreements that the NBA announced Monday put the sport in a new economic stratosphere. They also set the stage for a fascinating negotiation on how the massive windfall will change the dynamic when it is baked into the owner-player split in the coming years.

With TV and digital revenue more than tripling over the eight-year, $7.4 billion agreements that expire after the 2015-16 season, the financial landscape of the sport will be forever transformed. According to team executives who have crunched the numbers, the windfall could result in a $91.2 million salary cap in 2016-17 -- when LeBron James and Kevin Durant are due to be free agents. That's up from $63.065 million for this coming season and $58.679 million in 2013-14.

That's right, the cap jumped 7.5 percent for 2014-15, indicating that the league has been making more money that expected under the 2011 CBA even before the lucrative new TV deals were finalized.
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Basketball-related income -- the revenue pie that determines player salaries -- could jump to $6.7 billion in '16-'17, league sources said. That's up from an estimated $4.5 billion this past season and a $4.7 billion projection for 2014-15.

Individual max contracts for players with 10 or more years of service would start at $28.2 million in 2016-17 based on these projections and calculations negotiated in the 2011 CBA. This explains why James signed a two-year deal with a player option for 2015-16 when he returned to the Cleveland Cavaliers as a free agent this past summer. James' current max deal pays him $20.64 million this season. Other prospective free agents such as Kevin Love, LaMarcus Aldridge and Marc Gasol are expected to take the same approach to maximize their earnings under the new TV deals.

"Our game has never been better," commissioner Adam Silver said in announcing the new agreements.

Quite a contrast from the rhetoric of the 2011 lockout, when Silver hammered the owners' talking points that the NBA could not continue to operate without a massive reduction in the players' share of revenue. The players' guaranteed share of BRI -- which totaled $3.8 billion in 2010-11 -- went from 57 percent under the previous collective bargaining agreement to a cap of 51 percent under the current labor deal.

"There's never been a better time to be an owner of an NBA team," said Washington Wizards owner Ted Leonsis, chairman of the owners' media committee.

Whether the NBA's ongoing financial windfall has been the direct result of the new economic system established in 2011 or is merely a sign that such dramatic reductions in the players' share wasn't necessary will depend, of course, on which side of that table you find yourself sitting. Both Silver and Leonsis dodged the question of whether all 30 teams are expected to be profitable by the time the owners and players can opt out of the current CBA in 2017.

"I’m sure both sides will be studying this new deal and seeking to assure that it remains a fair deal to both sides," Silver said.

Regardless, everyone will benefit from the NBA's success and lucrative new broadcast deals -- the players, the owners and everyone remotely involved with either side. But figuring out how to satisfy everyone, as usual, will be intensely complicated.

All of these calculations are merely estimates based on the additional revenues and current methods for calculating the salary cap, luxury tax levels and player salaries. League sources say the NBA and the National Basketball Players Association are expected to discuss a phasing in of the projected TV windfall starting in 2015-16. The future revenues would be applied in advance to avoid a massive, year-to-year spike in cap room and player salaries in 2016-17.

For example, if the NBA and union agreed to phase in $800 million of future TV and digital revenues into the 2015-16 BRI calculations, the cap for that season would jump to $75.8 million and would still increase dramatically in '16-'17 -- though the effects would be cushioned by the phase in.

Beyond that, the very formula by which player salaries are calculated -- for max players, mid-level players, rookies, etc. -- could be revisited in the next CBA given the massive inflow of revenues. For example, the new landscape could be a boon to a vocal component of the agent community that has long argued that capping individual player salaries for the league's biggest stars was a mistake.

If the NBA is worth nearly $2.7 billion annually to ABC, ESPN and Turner Sports, what is LeBron James worth? It's a very important discussion for another day -- such as July 1, 2017, when the owners and players could find themselves staring across the bargaining table at each other once again.
NBA enters new stratosphere with TV deal, but how will pie be split?
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Old 10-06-2014, 07:48 PM   #14 (permalink)
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So it begins?


http://sports.yahoo.com/blogs/nba-ba...205656424.html

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Sports fans are smarter than ever about Big Picture sportin’ trends, and as a result NBA journalists have to serve the need for quick answers to pertinent fan questions. The big upshot from the reaction following the NBA’s updated television rights agreement with ESPN and Turner on Monday concerned the possibility of a players strike or owners’ lockout in 2017, when NBA players can opt out of the collective bargaining agreement.

NBA players did sign off on that agreement in the fall of 2011 after an extended lockout, but the feeling then and especially now is that the players took a massive negotiating hit along the way. With franchises selling for billions, and television rights fees tripling in 2016, players are rightfully already steeling themselves for a needed battle in 2017.

The dutiful Stefan Bondy asked Deron Williams about the expected fight on Monday at Brooklyn Nets practice. From the New York Daily News:


"I think it's going in pretty much the same direction as it was last time (lockout of 2011)," said Williams, who is Brooklyn's union rep. "So I feel like we made a lot of concessions last time, and it's going to be hard for us to do that again. With the new leadership we have and (former NBAPA president Billy Hunter) finally being out of the picture, which is a great thing, hopefully things will go better for us."


[…]


"I hope guys are preparing (for a work stoppage)," said Williams, who played overseas during the 2011 lockout — a stoppage into December that cut 16 games off the NBA season. "When I first got in the league (in 2005), it's when the old collective bargaining agreement was just kicking in. And as soon as I got in the league, they were already telling us to prepare for the next lockout. And it was ingrained in my mind. And I was prepared for that. I didn't know that everybody did. So I would hope that people in the league learned from that and can tell the younger guys as well.


"We just have to start preparing early as a union (for a work stoppage). When we had a meeting in July, that was the focus of the meeting. We'll be better prepared this time, we'll be more ready to take different actions if need be."

Now, there are distinctions to make here. The players would presumably opt out of the contract they agreed to in 2011 in order to re-negotiate, which would make this more of a strike than a lockout if NBA business is halted, and checks are turned down. Whether or not the players would vote to do as much, initiating the NBA’s first player strike in its history, is up for conjecture – but with so much money on the table the players could unite to make a penny-foolish, pound-wise move for the long term.

This would result in a public relations disaster for the players, chided by an unknowing American (often non) viewing public for refusing millions to play a child’s game, but the idea would be that by 2017 the majority of American sports fans would understand just how terrible a deal the NBA players agreed to in 2011. American sports fans, weirdly, typically side with management and owners in such disputes, so the NBA Players Association has its work cut out for itself in attempting to shift appearances.

The current CBA called for the players to receive as little as 49 percent of the basketball related income the NBA takes in, and as much as 51 percent should things go well for the league. Clearly, things are going well for the NBA, and the players will be right in wanting to shift the line of profits that head their way. Critics can take the players down for agreeing to a bad contract and not seeing it out, but the whole reason the NBA locked its players out in 2011 is because owners agreed to a series of terrible contracts, and they needed further protection to save themselves from their checkbooks.

The players, this time around, will be run by a new union president in Michele Roberts, who hopefully will have a long list of on-record quotes on the ready in order to throw in the face of NBA team owners – including the remarks made by Washington Wizards owner Ted Leonsis on Monday, who mirrored his city’s longtime obsession with supply-side economics (“a rising tide will lift all boats,” he offered at Monday’s press conference announcing the deal) and remarked unsolicited that it has “never been a better time to be an owner of an NBA franchise.”

The players and their representatives will remember these quotes. LeBron James mentioned as much at Cleveland Cavaliers practice on Monday.

From Joe Vardon at Northwest Ohio Media Group:


"We gave a lot," James said of the 2011 collective bargaining dispute between the league's owners and players that resulted in a lockout and shortened season. "The whole thing that went on with the last negotiation process was the owners are losing money. There's no way they can sit in front of us and tell us that right now.


"As we continue to see teams selling for billions of dollars, being purchased for $200 million, selling for $550 million, $750 million, and now $2 billion ... so that will not fly with us this time."

The owners were losing money the last time around, and Leonsis’ Wizards team did lose money last year. That had less to do with the prior collective bargaining agreement, and more to do with poor decision-making from NBA team front offices and a spotty economy – to say nothing of a dodgy TV rights deal that the league signed with ESPN and Turner at low ebb in the league’s history.

Things have changed in the years since, however, and things will certainly change once the NBA triples that television revenue in 2016. The players should be expected to want to be part of that growth in ways that go beyond their 51 percent cut, in 2017, and we sincerely hope the league’s extended fandom understands as much.
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Old 10-06-2014, 08:39 PM   #15 (permalink)
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Dwyer has a good take. Crock is about right.

http://sports.yahoo.com/blogs/nba-ba...191102835.html

This is just a snippet. The whole thing is worth the read.

Quote:
The immediate question, in the wake of Silver’s news conference, is how the league will handle the influx of new revenue, and just how smoothly it will implement that money into its collectively bargained promise to send 51 percent of all basketball-related income to the players. The soft salary cap is currently stuck at just over $63 million, moving incrementally higher through the years, but when the league triples its broadcast rights agreement in 2016, that number should fly way, way up.

Right?

In theory, yes. The NBA often works with a demeaning, patriarchal line of thinking, however, and it may attempt to convince the league’s players’ union that such a jump in salary is somehow not a good thing for its players. That it’s not fair to its current batch of superstars, working on “maximum” contracts under the current television agreement, would have to see a second batch of stars make in upwards of $10 million more per season just by virtue of their timing.

This is all, of course, an absolute crock.

The “our-players-will-eventually-get-their-51-percent” line of thinking is bogus. There will not be out-and-out anarchy because of a massive salary cap jump in 2016, as most teams are rolling over cap space and flexibility from summer to summer anyway. We don’t live in an era where a player will pout endlessly, a la Shawn Kemp in Seattle, because he signed a contract for too many years and a more recent free-agent teammate is making more. The NBA has sought and won the right to limit lengths on contracts in the past three collective bargaining agreements, it won the rights to maximum contracts in the first of those three negotiations and it’s inappropriate at best (and un-American at worst) for the league to attempt to, in Adam Silver’s words, “smooth out” this revenue distribution the players have earned.

If outposts in Washington, New York or Brooklyn suddenly have enough money to tempt Kevin Durant … so what? That’s not an actual problem. Oklahoma City’s current failure to surround him with championship-level talent, and coaching missteps – those are the problems, here. If LeBron James signs for more money per year than Michael Jordan made at his peak … so what? James might be the best player ever, and 1997 is pretty far removed from 2016. If the league abhors chaos and free spending, then it should have just decided to re-sign with ESPN and Turner for the same amount that it’s currently receiving.
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Old 10-06-2014, 09:44 PM   #16 (permalink)
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Cap, if unchecked, will now skyrocket to 95M or so in 2016. Smoothing may bring that down, but would push next year's cap way up (which would be great for the Raptors).

Don't understand the "give the players what they deserve" remarks. Players get half of that 24 billion.
Seems I wasn't quite a ways off then.

http://www.raptorsforum.com/f/916421-post574.html

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Old 10-06-2014, 11:42 PM   #17 (permalink)
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Dwyer has a good take. Crock is about right.

http://sports.yahoo.com/blogs/nba-ba...191102835.html

This is just a snippet. The whole thing is worth the read.
I'm not sure how the author can claim that the jump in cap space is not unfair to the players who are locked under long term contracts. It is EXTREMELY unfair, and whether they resent it or now, it makes no difference. He also makes a bunch of bogus claims that show he's clearly trying to stir the pot.

When it comes to money, there is only one thing that matters. The percentage of the BRI that players get. All the other rules only affect HOW the money is distributed among players, who gets more and who gets less. As a whole, the players will get a fixed amount of money every year.

Given the recent cba agreement, a new contract dispute should mostly focus on that percentage and little else.
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Old 10-06-2014, 11:44 PM   #18 (permalink)
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Seems I wasn't quite a ways off then.

http://www.raptorsforum.com/f/916421-post574.html
Two wrongs sometimes make a right, it seems. Your initial assumption was wrong (as all ours were - way underestimated) but your math was wrong too so it all worked out in the end!
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Old 10-06-2014, 11:46 PM   #19 (permalink)
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That said, rumour is NBA wants to bring first year money down to what we initially assumed, meaning that 95M is still more likely to be 85M.
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Old 10-06-2014, 11:53 PM   #20 (permalink)
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Regarding the potential contract dispute, the players have a case to ask for a larger cut, because the 50% the owners take is meant to covered fixed expenses, which are going to be the same as before more or less. And I'm sure the owners will be willing to give back some of it, presumably working on the same set of numbers from the last lockout (in terms of fixed expenses). The players already agreed to those numbers, so, in theory, things should be smoother the next time around. Provided the two parties use the last cba's numbers, the players can probably ask for something in the 3-10% range in addition to the 50% they're now getting.

I think there will be a lot of misconceptions thrown around the next two years:

1. players gets 50% of the revenues, so they automatically get a LOT more money with the new contract, even if they don't opt out.

2. many of the squibbles between the two sides about the various rules (length of contracts and so on) have NOTHING to do with money. Once the BRI percentages are set, the players are GUARANTEED to get that percentage, regardless of how much their combined salaries are actually worth.

So when you hear things like "owners were trying to save themselves from bad contracts" etc, you can pretty much qualify that author as ignorant or misleading. If the rules were changed so an insane owner would give all his players max contracts for the max length of time, the owners would not lose a cent. The losers would be that team's fans and the other players in the league will get less money as a result.

3. a direct corollary is the fact that all the rule changes the owners are trying to push are not designed to save or make them extra money. What the owners are usually trying to do is to prevent teams from making bad mistakes that would affect the parity of the league. They don't want a bad GM to fuck up a team for 5 years with a string of bad contracts - that's bad for everybody. However, many authors try to paint these rules as a sneaky plot to somehow rob the players of additional revenues. The truth is, take any rule in the CBA and its effect is on the distribution of salaries among the players. Some rules benefit the elite guys who make the max, some benefit the little guys, some benefit the bad or lazy players who play just well enough to get a contract.

For example, the stiff luxury penalties imposed on teams have 0 impact on how much money players get. All they do is prevent teams for spending too much, with the goal of allowing poor teams to better compete with the rich ones. Another example is the shorter contracts - their primary goal (and effect) is to prevent teams from being tied down by bad contracts, while at the same time preventing bad players from taking money from more deserving ones. Both players as a whole and the league as a whole would be in the same spot with max contract lengths of 3 years or 10 years.
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