Heisler Column: Goodbye mid-level, hello NBA season

By Mark Heisler

Gee, already?

After a one-month stalemate, a year of posturing, hints of contraction, et al., NBA owners and players began to engage last week….

Almost.

The owners reportedly bumped their offer up… by like 1 percent.

Hey, these things proceed at their own excruciating pace, and it was still early to expect anyone’s best offer.

There was David Stern’s usual foreshadowing (“The calendar is not our friend”) and his usual light moment, even as darkness gathered (“We told them we wouldn’t say anything, I’ve told you I wouldn’t say anything. And so I don’t want to say anything. If you’d like me to smile, I’m happy to smile.”).

Happily, I live on the other side of the country and don’t have to waste the day waiting for owners and players to  show they still can’t agree on anything, other than their high-minded resolve not to talk to us.

The “you” was the press, which then announced this, that and the other thing were likely to be cancelled.

Actually, all they have lost is exhibition games. But if they don’t get anywhere in 10 days, the tab will go up to $167 million a week.

To paraphrase the late, great Sen. Everett Dirksen, $167 million here, $167 million there, pretty soon you’re talking about real money.

Of course, the real deal remains what the real deal always was:

Despite this carefully maintained gloom, there’s a deal just sitting there, waiting to be made.

If you haven’t noticed, we’re your feel-good professional basketball site, or your we’re-not-falling-for-that-BS-again site, or, possibly, we’re setting ourselves up to be waaaay-wrong-on-this-one site.

Chris Sheridan and I have agreed all along that this wouldn’t be the disaster forecast everywhere else, with the sides within striking distance of a deal… if they would ever start dealing with each other.

Insiders have long said Stern really wants a 50-50 split, up from his owners’ 43 percent in the last deal.

The union is down from it’s current 57 percent share into the 54s — seeming to signal it would drop into the 52 range.

You’re telling me grown men are going to war if they can’t figure out how to close a four-point gap?

Of course, there’s the dreaded “Hard Cap the Owners Have to Have.”

That’s a deal-breaker. Right or wrong, the players will resist that to their last breath, whether they exhale for the last time in October or January.

Talk about your irreconcilable difference….

As bleeping if.

The owners have sought a hard cap in every round of negotiations since setting up a soft one — then abandoned it when they got the dollars they wanted.

If the owners are united as never before (as they say), and if they are due some relief on this issue, fixing it is no biggie.

Here is a key component to remember:

The Mid-Level Exception.

Put in the 1999 agreement as a trade-off for the players accepting a limit on maximum individual salaries, it started at $1.75 million. Since then, it has grown into a monster.

Last season the Mid-Level started at $5.8 million. With 8.5 percent annual raises, the role players it was designed for were getting five years and $37 million.

That’s an average of $7.4 million annually.

Remember when the Lakers were trying to get rid of Luke Walton, Vladimir Radmanovic and Sasha Vujacic?

All were Mid-Levels, who’d have been overpriced, even if any of them could have hit the ocean from a boat.

I just counted 24 full Mid-Level contracts ongoing, averaging about $5.5 million per season.

Cutting the Mid-Level to a flat $2 million-per-year would save $3.5 million per year per player, or $84 million.

Eliminating the Mid-Level entirely would save $132 million.

Before negotiations began, it was assumed the Mid-Level was a goner, or would be slashed.

Since negotiations began, we haven’t heard a word about the Mid-Level, and very little else on what side issues are being discussed.

The owners would love paring down the Mid-Level, or dropping it… and I don’t think the players would be that unhappy to weaken it.

They could even ease the impact on the owners, giving them “amnesty” to drop one of their bad contracts … like the Lakers’ last full Mid-Level guy, Metta World Peace!

If the owners bump up their minimums, never hard to do, the players would have 24 fewer journeymen at $7.4 million, but more bottom-rung players at, say, $750,000, compared to last season’s $473,604.

Let’s say the players take 52% of Basketball Related Income. Based on the upcoming season’s projected $4.36 billion in gross revenues (different from BRI), that’s more than a $200 million giveback in the first season alone.

Let’s say the owners quadruple their token revenue sharing, with Stern having already promised they will “at least triple” it.

That’s another $150 million, going from rich teams to poor ones.

(NBA officials insist revenue sharing is the owners’ business and shouldn’t be a part of the collective bargaining agreement.

(Of course it’s bad that so many teams lose money, but with the players being asked to make up the rest of the shortfall, this isn’t their business?

(Hey, if you can get Billy Hunter to accept that, play ball!)

It’s true, there’s a real threat to peace and, unless they really start rocking and rolling, a possibility of missing games.

However, it’s not because “the economic model is broken,” after setting back-to-back revenue records with player costs in line, the long-bedraggled 76ers franchise selling for $315 million and the have-not Timberwolves giving Rick Adelman a five-year, $25 million deal.

The threat comes from the owners, who promised themselves a new system in 2008, when the financial system crashed with the rest of the economy poised to follow.

In fact, the NBA had one down season, when the salary cap dropped 1%, before springing back in the next two.

Stern, who always dominated his owners, now is literally serving at their pleasure.

If he plays Attila the Commissioner, he’s not some endangered banker who downsized his NBA team, too, like Bob Sarver, or someone with an NHL team who wants to take a year off in this league, too, like Ted Leonsis.

Forget good guys and bad guys. All there are in “sports labor” are rich guys.

This time it’s the owners. In 1998, it was the union, controlled by the super-agent David Falk, ready to crash the whole thing to keep his clients from having their eight-figure salaries capped.

As for the rest of you, they don’t pay us enough to put us through this BS every five years.

Personally, I look at it as my way of giving back to the game.

Mark Heisler is a regular contributor to SheridanHoops. His columns will appear each Monday.

 

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  1. MLE? says

    Ok I think I get it, so basically the MLE doesnt count towards the lux tax.

    BUT the MLE seems very flawed. 5.8 mill is nothing to a contender in a big market. Looks like it helps out the already dominant teams ie the Lakers with Ron Artest much more than it helps the bad to decent teams ie the Raptors’ Jason Kapono.

    Also, I find it so funny how Ron Artest (I dont think I can ever call him Metta World Peace) on the Rockets was one of the best players in the NBA on the Rockets as a 2 way player, then he signs a deal for the MLE, which at the time seems like he could have earned MUCH more anywhere else. Then he ends up playing crappy anyway on the Lakers, maybe because theres too many stars but that doesnt explain his terrible shooting.

    Either way Ron Artest and Jason Kapono are making the same. WOW. Thats amazing.

    • says

      The MLE does not exempt a team from the luxury tax. The MLE is simply one of the exceptions that allowed a team to go over the cap to improve their team. That is why the salary cap that was in place in the collective bargaining agreement that just expired was called a “soft” cap. If a team used one of the exceptions and went over the salary cap they had to pay the dollar for dollar luxury tax no matter which exception the exercised to go over the cap.

      The salary cap exceptions did not exempt teams from the luxury tax. The exceptions were just tools teams could use to go over the salary cap if they chose to do so. Anytime a team went over the salary cap they had to pay the luxury tax.

      • says

        Ignarus is correct there was the cap which teams could go over by using the exceptions available to it. Simply going over the cap in and of itself did not trigger the luxury tax.

        The luxury tax was triggered when a team reached the luxury tax threshold. That threshold was determined by the amount of the cap and both the salary cap and the luxury tax threshold were generally announced before the free-agency signing period began so that teams would know at what amounts the limits would be set before they started signing free agents.

  2. MLE? says

    This may sound like a dumb question to all you experts but I thought the penalty for going over the salary cap is a dollar for dollar luxury tax. So what is the exact purpose of the mid level exception? I thought you can sign anyone to any amount, but the luxury tax is a deterrent for going too much over the salary cap. Here is the definition of the MLE straight from wiki which I don’t fully understand:

    Once a year, teams are allowed to sign a player to a contract equal to the average NBA salary, even if the team is over the salary cap already, or if the signing would put them over the cap. This is known as the Mid-level exception (MLE). The MLE may be used on an individual free agent or split among multiple free agents, and is available to any team that exceeds the salary cap at the beginning of the offseason. The Mid-Level Exception for the 2008–09 NBA season was $5.585 million.[2] The MLE is $5.854 million for the 2009–10 NBA regular season.

    I’d appreciate it if someone can clarify this. Thanks.

    • Karl says

      From what I understand, there really isn’t a purpose for the Mid-Level exception it was negotiated into the CBA. The exception basically encourages its use to avoid any luxury tax. The players wanted a concession from capping individual salaries and they got a mechanism that shifts the star player’s salaries to role players.

    • SmallStone says

      In the last CBA teams COULD NOT go over the salary cap without the use of an exception. Common exceptions would be the Bird exception that allows teams over the cap to re-sign their own players, minimum-player exceptions which allows over the cap teams to sign minimum contract players, and the Mid-level exception. The MLE was designed so that competing teams that were over the cap had a way to still improve their team in free agency through the signing of a “mid-level” contract player, the amount of which would be set at the beginning of the season based on that season’s salary cap. The exception could be used on one player at the full amount or split up to sign multiple players.
      The biggest problem with the MLE (IMO) is that it allows for full five year contracts and full 8.5% raises. Couple this with the fact that it normally is used by teams on the cusp of dominance (who may or may not be desperate) and player demands/expectations for the full amount and you have yourself an unstoppable, self-inflicted monster on your hands.

      • Karl says

        SmallStone, I assume you mean you cannot go over the cap unless you pay the luxury tax. Admittedly I don’t know if there was one before 1998. Am I wrong to say teams over the cap could still improve their team if they are willing to pay enough for it? The MLE just makes it more affordable.

        IMO the MLE exception is inherently flawed, to utilize it you already need to be spending at the cap limit. So it really is only useful for franchises that already spend a lot of money and allows them to spend more money while avoiding the luxury tax (a form of revenue sharing). It really takes the teeth out of the whole luxury tax.

        • DB says

          No, he’s correct. Exceptions give teams the ability to go over the salary cap. And there are several types of exceptions. Additionally, there are many types of ways and reasons for teams to use the MLE.

          Larry Coon has an excellent FAQ on the expired CBA(including the MLE)-

          http://members.cox.net/lmcoon/salarycap.htm

          If you really want to dig deep, the NBPA has the entire CBA available on their website.

        • ignarus says

          back up a second, karl. the salary cap and luxury tax thresholds were theoretically distinct things.

          the luxury tax was, if i’m not mistaken, set at a level a little higher than the salary cap, so the $4$ expense didn’t kick in until you managed to go over both.

          you couldn’t just sign anybody to go over the luxury tax threshold because the SC prohibited you from doing so with notable exceptions:

          -re-signing one of your own FAs (bird rights)
          -paying a guy the MLE (1x/year)
          -paying a guy the bi annual exception (1x/2yrs)
          -paying a guy the league minimum salary (determined by his # of years in the league)
          -signing a rookie that you drafted (determined by the rookie pay scale)

          -trades: if over the cap, you could only take on 120% of the salary you were giving up.

          So, yeah, teams who are over the cap (or just not so far under it to offer significantly more than the MLE) CAN go nuts, but it’s REALLY hard to acquire a top-notch player unless you luck into a crazy draft pick (2003 pistons who passed on wade, melo, and bosh for darko) or have enough $$ in expiring contracts to trade to a team that’s looking to dump salary (lakers when they traded kwame brown and marc gasol’s draft pick for pau gasol).

          When you’re over the cap and trying to add payroll you’re either bringing in MLE guys to surround your contender-viable core (which is what the hard-cap favoring owners want to halt) or you’re going all “Isaiah’s Knicks” about it and surrounding your best-case-scenario-8th-seed team with more MLE guys.

          man, i still kinda can’t believe that the pistons went with darko. i hated the pistons, but dang… ridiculous opportunity blown there.

  3. Let the season start says

    IS there any actual news on when or if there will be a meeting this week. last week, they seemed to expect a meeting this week, but I havent heard anything about it since then. Also- I keep hearing they have about another 10 days to figure this thing out, but it feels like Ive been hearing that for almost 2 weeks now. LOL

  4. Buddahfan says

    Still waiting for a column from someone who knows the real scoop on all of this.

    The fans are the ones that pay the bills. It is as simple as that. Without the fans forking over $100 plus a game in order to eat lousy concession food and get their car’s nicked in the parking lots, the players and owners get squat.

    Yes it may be the talent that people spend the money to see. But Hollywood has shown all of us who live in Los Angeles that you don’t need talent to get the public to pay up good money. All you need is a good marketing campaign.

    Without the fans buying into the NBA’s marketing campaign the players get squat.

    The fans fork over big bucks yet no one writes about how it is those who keep this game afloat at marketing inflated dollars that are getting the shaft because the owners and players can’t decide how best to divide up the money being forked over by the fans.

    • ignarus says

      yeah, but the teams have an opportunity for a big money grab at the expense of the players and they might not care at all about losing a season if they’re going to be raking in that money for the next decade.

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