Collective Bargaining Agreement

NBA Could Terminate Dinwiddie’s Contract If He Goes Forward With Digital Investment Plan

Spencer Dinwiddie has plans to convert his three-year, $34.4MM contract into a digital investment vehicle that would allow investors to buy a digital token backed by his contract, something that would allow the guard to secure a large upfront payment. The league, which sought outside legal counsel on the matter, is not approving Dinwiddie’s venture for a variety of reasons, as Shams Charania of The Athletic learns.

“At the request of Spencer Dinwiddie and his advisors, we have reviewed a number of variations of their digital token idea,” said Dan Rube, the NBA’s Executive Vice President and Deputy General Counsel. “All of the ideas presented would violate collectively bargained league rules, including rules prohibiting transferring a player’s right to receive NBA salary, gambling on NBA-related matters, and creating financial incentives to miss games.”

The NBA wants to work with Dinwiddie to find common ground, Charania writes. Dinwiddie has met with the league twice over the past month in an attempt to find a resolution that allows him to move forward with his venture. The guard has made several changes to the structure of his investment vehicles that would appease the league and attempted to alleviate concerns about “third-party assignment” or the transferring of his contract, which would violate the Collective Bargaining Agreement.

The latest hangup is over Dinwiddie’s 2020/21 player option, which is worth $12.3MM. Token holders would be invested in his decision on that option, though the Nets’ guard recently altered the payout mechanism for investors, reducing the risk to zero should he opt in and giving them potential upside should he opt out. Because of his option, the league views selling the digital token as gambling, since his investors would be potentially wagering millions of dollars on whether he becomes a free agent as well as his availability to play games in the league.

Dinwiddie still plans on moving forward with his venture, as he believes the NBA’s lack of approval is without cause. Dinwiddie carrying out his plan could bring penalties such as a suspension, a fine, or even the termination of his contract, though that would be an extreme measure.

Charania hears from a source that Dinwiddie’s goal is to design a method that can further improve a player’s economic options while adhering to the league’s concerns. The National Basketball Players Association recently release a statement supporting Dinwiddie.

“The NBPA’s mission is to support its members and we are currently assisting Spencer and his business associates in seeking to address the League’s concerns,” the NBPA said in a statement. “Our hope is that a resolution satisfactory to all parties can be achieved.”

For now, the two sides are in a standstill over the combo guard’s plan. Dinwiddie has played in 13 games for Brooklyn, starting two in place of Kyrie Irving. He’s averaging 18.5 points and 4.8 assists per game and the Nets are 5-8 on the season.

More Details On NBA’s Anti-Tampering Proposals

As we relayed on Saturday, the NBA issued a league-wide memo to inform all 30 teams of potential changes to the league’s anti-tampering policies. The NBA has proposed increasing the maximum allowable fines for tampering violations and requiring team owners to submit proof that no tampering occurred when they sign new players.

With the NBA’s Board of Governors set to vote on the new rules this coming Friday, September 20, ESPN’s Zach Lowe shares a few more details on what exactly the league is proposing. As Lowe notes, not all of these rules will necessarily be approved, but the Board of Governors will consider them.

  1. A requirement that a team reports within 24 hours any instance of a player or his representative asking the team for “unauthorized benefits” (ie. a benefit that is not permitted under the league’s CBA).
  2. Prohibiting players from inducing players already under contract to request trades.
  3. A requirement that teams preserve all communications with players and agents for one year.
  4. Introducing new channels for team employees to anonymously report tampering or rules violations.

The first two items on this list seem directly related to Kawhi Leonard‘s recent free agency. There were whispers in July that Leonard’s camp made requests that fell outside the purview of the CBA, and we know that he had a hand in encouraging Paul George to request a trade with the Clippers.

We’ll have to wait until Friday to see exactly what the league’s new anti-tampering policies look like, but it appears that players and teams hoping to get a head start on free agency will have to be more careful than ever going forward.

NBA Ponders Changes To Scheduling, Number Of Regular Season Games

As one of the more progressive leagues in the world, the NBA continues to explore changes to enhance the quality of its product. Altering the schedule to reduce the number of games per season is among the changes the league is exploring, Kevin Arnovitz of ESPN.com passes along.

All conversations are in the earliest of stages, though top executives from around the league recently had a “brainstorming session,” in which ideas on changing the schedule and adding a mid-season cup and/or postseason play-in tournament were discussed. Arnovitz suggests the talks were “very exploratory,” adding that even if changes were proposed and implemented, it wouldn’t happen before the 2021/22 season.

While “load management” issues have caused debate over the league’s 82-game schedule, Arnovitz writes that executives from teams and the league have made an economic case for shortening the number of games. Increasing the scarcity of events and ensuring that each game would be more competitive – with fewer marquee players sitting out – are among the arguments for a change.

Supporters of a schedule alteration believe that the pair of potential tournaments would also help to offset the revenue decline that comes with reducing the games on the schedule.

Arnovitz hears that there isn’t much interest in drastically cutting down the number of games. Options discussed ranged from implementing a 58-game schedule to simply cutting just a handful of contests.

The NBA would need to collectively bargain any changes to the schedule, as the CBA requires the league to make reasonable efforts to increase revenue. A reduction in games could be seen by the players as an attempt to reduce Basketball Related Income.

Latest On LeBron James’ Future

Cavaliers owner Dan Gilbert cannot offer LeBron James a stake in the franchise in an effort to retain his services, Michael McCann and Jon Wortheim of Sports Illustrated point out. The Collective Bargaining Agreement prohibits players from holding direct or indirect interest in the ownership of a team, thus the NBA would not approve a contract with any type of ownership provision, the story continues. The league has also been vigilant in preventing players and owners from intermingling their business interests, the SI duo notes. James can opt out of his contract or try to force a trade to a desired destination this summer.

Here’s some other interesting notes regarding the possibility of James playing elsewhere next season:

  • The Rockets would need to either gut their roster or make a trade with the Cavaliers to add James, but the latter option is complicated by the team’s roster composition, Jonathan Feigen of the Houston Chronicle writes. The Cavaliers would likely want quality young talent to kick-start a rebuild in any James trade and the Rockets don’t have enough of those players while trying to match up salaries to absorb James’ $35MM contract, Feigen adds. The most desirable option for the Rockets is to dump Ryan Anderson‘s contract ($20.4MM next season and $21.3 MM in 2019/20) on a team with ample cap room, according to Kevin Pelton of ESPN. But Houston probably doesn’t have enough first-round picks to package with Anderson to get a third party to bite, Pelton adds.
  • There are major obstacles to any possible pursuit of James’ services by the Celtics, DJ Bean of NBCSports.com notes. It’s highly unlikely that Boston would include Gordon Hayward in any deal, considering the high-level free agent chose Boston last summer and hasn’t even played a full game with the franchise, Bean continues. There’s also the sticky problem of trying to reunite James with Kyrie Irving, who asked out of Cleveland last summer. Acquiring James now would likely damage the team’s long-term prospects for being the dominant team in the league, given the assets they’d likely have to trade, Bean adds. Logically, the only big contract the Celtics would be willing to move is Al Horford‘s deal, according to Steve Bulpett of the Boston Herald.
  • James’ decision will have more to do with his family than basketball, former teammate Dwyane Wade predicts, as Manny Navarro of the Miami Herald writes. “I don’t really think for him the basketball decision is ‘Oh, let me go team up with three All-Stars.’ I think at this point in his life it’s more so of a lifestyle thing,” Wade said. “Where is my family going to be the most comfortable at? Where am I going to be the happiest at? Because basketball-wise he’s so great, he can take along whoever.”
  • The Lakers and Sixers are the favorites to land James while the Cavs are just a 5-1 shot to retain him, according to Bovada sports book, Keith Pompey of the Philadelphia Inquirer tweets. The odds rundown can be found here.

League, Union Formally Discuss One-And-Done Rule

Draft eligibility rules have been a topic of conversation between the NBA and the Players Association, Adrian Wojnarowski of ESPN writes, and earlier today league commissioner Adam Silver and union executive director Michele Roberts went so far as to formally speak with the government’s Commission on College Basketball in Washington, D.C.

The commission – which includes executives, retired players and political figures – was formed in the wake of recent FBI investigations regarding corruption.

The meeting between the three parties is said to have been strictly informational in nature and, ultimately, what the NBA decides to do with regard to incoming players is up to the league and the player’s union.

As Wojnarowski writes, there’s a growing belief that Silver seeks to end the one-and-done rule implemented by his predecessor in 2005. In order for such a change to happen though, the union would potentially need to accept a mandate declaring that players who do choose to enter college would be obligated to stay for two years prior to declaring for the draft.

Silver has previously said publicly that the current one-and-done rule isn’t working for the college game.

NBA’s Board Of Governors To Examine Revenue Sharing System

ESPN’s Zach Lowe and Brian Windhorst have published an expansive and well-researched report on NBA teams’ finances, providing details on the league’s revenue sharing system, the impact from national and local television deals, and how a lack of net income for NBA franchises could push the league toward considering relocation or expansion.

The report is wide-ranging and detailed, so we’re going to tackle it by dividing it up into several sections, but it’s certainly worth reading in full to get a better picture of whether things stand in the NBA. Let’s dive in…

Which teams are losing money?

  • Nine teams reportedly lost money last season, even after revenue sharing. Those clubs were the Hawks, Nets, Pistons, Grizzlies, Magic, Wizards, Bucks, Cavaliers, and Spurs. The latter two teams – Cleveland and San Antonio – initially came out ahead, but paid into the league’s revenue sharing program, pushing them into the red.
  • Meanwhile, the Hornets, Kings, Pacers, Pelicans, Suns, Timberwolves, and Trail Blazers also would have lost money based on net income if not for revenue sharing, according to Lowe and Windhorst.
  • As a league, the NBA is still doing very well — the overall net income for the 30 teams combined was $530MM, per ESPN. That number also only takes into account basketball income, and doesn’t include income generated via non-basketball events for teams that own their arenas.
  • The players’ union and its economists have long been skeptical of NBA teams’ bookkeeping, alleging that clubs are using techniques to make themselves appear less profitable than they actually are, Windhorst and Lowe note. The union has the power to conduct its own audit of several teams per season, and it has begun to take advantage of that power — according to ESPN, the union audited five teams last season, and the new CBA will allow up to 10 teams to be audited going forward.

How does the gap between large and small market teams impact income?

  • Even after paying $49MM in revenue sharing, the Lakers finished the 2016/17 with a $115MM profit in terms of net income, per ESPN. That was the highest profit in the NBA, ahead of the second-place Warriors, and could be attributed in large part to the $149MM the Lakers received from their huge local media rights deals.
  • On the other end of the spectrum, the Grizzlies earned a league-low $9.4MM in local media rights, which significantly affected their bottom line — even after receiving $32MM in revenue sharing, Memphis lost money for the season. The Grizzlies will start a new TV deal this year that should help boost their revenue, but it still won’t come anywhere close to matching deals like the Lakers‘.
  • The biggest local TV deals help drive up the NBA’s salary cap, with teams like the Lakers and Knicks earning in excess of $100MM from their media agreements. According to the ESPN report, the Knicks made $10MM more on their TV deal than the six lowest-earning teams combined.
  • As one owner explained to ESPN, “National revenues drive up the cap, but local revenues are needed to keep up with player salaries. If a team can’t generate enough local revenues, they lose money.”
  • Playoff revenue from a big-market team like the Warriors also helps push up the salary cap. Sources tell Lowe and Windhorst that Golden State made about $44.3MM in net income from just nine home playoff games last season, more than doubling the playoff revenue of the next-best team (the Cavaliers at about $20MM).

How is revenue sharing affecting teams’ earnings?

  • Ten teams paid into the NBA’s revenue sharing system in 2016/17, with 15 teams receiving that money. The Sixers, Raptors, Nets, Heat, and Mavericks neither paid nor received any revenue sharing money. Four teams – the Warriors, Lakers, Bulls, and Knicks – accounted for $144MM of the total $201MM paid in revenue sharing.
  • While there’s general agreement throughout the NBA that revenue sharing is working as intended, some teams have “bristled about the current scale of monetary redistribution,” according to ESPN. “The need for revenue sharing was supposed to be for special circumstances, not permanent subsidies,” one large-market team owner said.
  • The Grizzlies, Hornets, Pacers, Bucks, and Jazz have each received at least $15MM apiece in each of the last four years via revenue sharing.
  • However, not all small-market teams receive revenue-sharing money — if a team outperforms its expectations based on market size, it forfeits its right to that money. For instance, the Thunder and Spurs have each paid into revenue sharing for the last six years.

Why might league-wide income issues lead to relocation or expansion?

  • At least one team owner has raised the idea of expansion, since an expansion fee for a new franchise could exceed $1 billion and it wouldn’t be subject to splitting 50/50 with players. A $1 billion expansion fee split 30 ways would work out to $33MM+ per team.
  • Meanwhile, larger-market teams who aren’t thrilled about their revenue-sharing fees have suggested that small-market clubs losing money every year should consider relocating to bigger markets, sources tell ESPN.
  • As Lowe and Windhorst observe, the Pistons – who lost more money than any other team last season – are undergoing a relocation of sorts, moving from the suburbs to downtown Detroit, in the hopes that the move will help boost revenue.

What are the next steps? Are changes coming?

  • The gap between the most and least profitable NBA teams is expected to be addressed at the NBA’s Board of Governors meeting next week, per Lowe and Windhorst. Team owners have scheduled a half-day review of the league’s revenue sharing system.
  • Obviously, large- and small-market teams view the issue differently. While some large-market teams have complained about the revenue sharing system, they’re outnumbered, with smaller-market teams pushing those more successful clubs to share more of their profits, according to ESPN.
  • Trail Blazers owner Paul Allen is one of the loudest voices pushing for more “robust” revenue sharing, sources tell ESPN. Some team owners have argued that the system should ensure all teams make a profit, while one even suggested every team should be guaranteed a $20MM profit. There will be “pushback” on those ideas, Lowe and Windhorst note. “This is a club where everyone knows the rules when they buy in,” one owner said.
  • On the other end of the spectrum, some teams have floated the idea of limiting the amount of revenue sharing money a team can receive if it has been taking payments for several consecutive years.
  • Any change to the revenue sharing system that is formally proposed at the NBA’s Board of Governors meeting would require a simple majority (16 votes to 14) to pass.

Notable CBA Changes That Will Affect Free Agency

With July 1 just a few days away, the NBA is almost ready to turn the calendar and officially begin the 2017/18 league year. At the same time as the new league year gets underway, the league will also implement its new Collective Bargaining Agreement between the NBA and the players’ union.

For the most part, that CBA looks a lot like the previous CBA. There are very few major changes to the way players can be signed or otherwise acquired by NBA teams. However, the new agreement features several tweaks to existing rules, and many of those small changes will be noticeable once the 2017 free agent period officially opens on Saturday.

Below, we’ve rounded up most of the notable CBA changes that will affect this year’s free agent period. This list isn’t comprehensive. For more details, you can check out the NBA’s recap of key changes to the CBA, or – if you have a bit of a masochistic streak – you can even read the full CBA document. The changes we’ve listed below, however, are the ones that should be most important in the next few weeks.

Let’s dive in…

Salary cap management:

  • The salary cap and tax line for the new league year will be set by June 30. The cap and tax are currently projected to land at $99MM and $119MM, respectively.
  • The July moratorium will end on July 6 at 11:00am CT.
  • The tax apron will now be $6MM above the tax line instead of $4MM above the line. The apron represents a threshold that teams aren’t allowed to cross at any time for the rest of the league year if they’ve used the full mid-level exception or the bi-annual exception, or acquired a player via sign-and-trade.
  • The cap holds for first-round picks are now worth 120% of their rookie scale amounts, instead of 100%, slightly reducing available cap room for teams with first-rounders to consider. Those figures can be found here.

Restricted free agency:

  • Teams will now have two days instead of three days to match an offer sheet.
  • Restricted free agents will be able to formally sign offer sheets during the July moratorium. However, the clock for a player’s previous team to match his offer sheet won’t start until the moratorium ends. If a player signs an offer sheet during the moratorium, the player’s previous team will have until July 8 at 10:59am CT to match the offer.
  • The deadline to withdraw a qualifying offer to a free agent is now July 13, instead of July 23.

Other free agency:

  • Annual raises on new contracts can now be as high as 8% (Bird or Early Bird contracts) or 5% (all other contracts), instead of 7.5% and 4.5%.
  • The amounts of the mid-level, bi-annual, and minimum salary exceptions are increasing significantly. Mid-level and bi-annual figures can be found here, while 2017/18’s minimum salaries can be found right here.
  • The “over-36 rule,” which affected a player who signed a contract that extended beyond his 36th birthday, has been changed to the over-38 rule. This change may be beneficial for players like Chris Paul and Paul Millsap.
  • NBA teams now have the ability to sign a pair of players apiece to two-way contracts. Full details on these new two-way contracts can be found here.
  • Two-way contracts and minimum salary contracts can be officially signed during the July moratorium.

Trades:

  • As of July 1, each team will be able to receive and send $5.1MM in trades for the 2017/18 league year. The limit for 2016/17 was $3.5MM. Cash paid and cash received in trades are two separate entities, meaning a team can’t exceed $5.1MM in cash paid by taking back money in another deal — if a team has paid $5.1MM and received $5.1MM, it can no longer use cash in trades.
  • The traded player exception will now allow non-taxpaying teams to take back up to 175% of the outgoing salary in a simultaneous trade. However, over-the-cap teams still can’t take back more than the outgoing salary plus $5MM for any amount up to $19.8MM, or more than 125% of the outgoing salary for any amount over $19.8MM.

Contract extensions:

  • Veteran players will now be eligible to sign contract extensions if two years have passed since they signed their last veteran contract. Previously, veterans didn’t become extension-eligible until three years had passed since their last signing date.
  • Veterans signing an extension are now eligible for an initial raise of up to 20%, instead of 7.5%.
  • The Designated Veteran Extension will be available for players who met a specific set of criteria related to years of experience, contract history, and All-NBA (or other award) honors. Stephen Curry, James Harden, and Russell Westbrook will be the players to watch for the DVE this summer.

NBPA Publishes New Collective Bargaining Agreement

The National Basketball Players Association has published the league’s new Collective Bargaining Agreement on its website, making the entire 598-page document available for public consumption. You can find it right here, alongside the previous CBA.

The NBA’s new Collective Bargaining Agreement won’t go into effect for about five more months, but teams will be looking ahead to determine how the changes to the league’s rules will affect them, beginning on July 1.

Leading up to July, we’ll be updating several of our Hoops Rumors Glossary entries to reflect the changes in this CBA. We’ll also publish entirely new glossary entries on features that are new to this CBA, such as the designated veteran extension or two-way contracts.

In the meantime, we’ve recapped most of the notable changes to the CBA over the last month and a half, so be sure to check out our CBA news archive to brush up on those changes. And if you feel so inclined, you can tackle the full CBA document via the NBPA’s site — be warned though, even the table of contents is 22 pages long!

New CBA Officially Signed By Both Sides

The NBA and the Players Association have signed the new Collective Bargaining Agreement, according to an official league press release.  The seven-year agreement will take effect on July 1, 2017, and run through the 2023/24 season.

Both the NBA and NBPA have the ability to opt out of the CBA after the 2022/23 season by providing notice to the other party by December 15th, 2022.

According to the release, here are some key points:

  • The players’ share of Basketball Related Income (BRI) will remain in the 49%-51% range.
  • Existing rules on maximum free agent contract length will be retained.
  • The Mid-Level Exceptions and Bi-Annual Exception for 2017/18 will be increased 45% from the amounts in the 2011 CBA.
  • The Rookie Scale will also be increased 45%, with the increase phased in over three years.
  • The 2017/18 Minimum Annual Salary Scale will increase minimum salaries for that season by 45%. The revised amounts will increase or decrease annually beginning in 2018/19 at the same rate as the salary cap.
  • The 2017/18 limit on cash paid or received in trades will be increased from $3.6MM to $5.1MM,
  • Most veteran extensions will be permitted to cover five total years.
  • The moratorium period when free agents cannot be signed has been shortened and will now end each season on July 6. The salary cap and tax level will be set each season by June 30.
  • The period for a team with a right of first refusal to match an offer sheet will be shortened from three days to two days.
  • A player will be able to sign an offer sheet during the moratorium period.
  • The July 23 deadline for a team to unilaterally withdraw a qualifying offer will be changed to July 13.
  • The 150% Traded Player Exception for non-taxpaying teams will be increased to 175%.
  • The Over-36 Rule will be modified to be an Over-38 Rule.
  • Teams will be required to carry 14 players on their rosters, subject to the ability to carry fewer players for limited periods of time.
  • Each NBA team will be permitted to have on its roster up to two players under “Two-Way Contracts.” A “Two-Way Player” will provide services primarily to the NBA team’s D-League affiliate.
  • The period for training camp and the preseason will be shortened by seven days, and the maximum number of exhibition games per team prior to any regular season will be reduced to six from eight.

NBA To Offer Medical Benefits To Retired Players

The NBA will be the first professional sports league to offer medical benefits to its retired players, Ohm Youngmisuk of ESPN.com reports. The benefits will be part of a comprehensive and enhanced retirement package for former players. Youngmisuk adds that both the owners and the NBPA were unanimous on the decision to take care of retired players.

After the passing of Darryl Dawkins and Moses Malone, commissioner Adam Silver and NBPA executive director Michele Roberts agreed that something had to be done in regards to helping retired players maintain their good health.

“[Malone’s and Dawkins’ deaths] sent shock waves through the whole basketball universe,” said Dwight Davis, the vice chairman for the National Basketball Retired Players Association. “Some of the deaths of retired players could have been avoidable because guys didn’t have insurance and weren’t doing yearly checkups.”

Davis added that the new health insurance plan will provide much needed financial relief to many retired players. “Some of my younger counterparts are guys in their 40s, some of those guys are paying $30,000 a year for health insurance for themselves and families because of preexisting injuries. The abuse our bodies take, it is hard to get affordable insurance as a retired player,” Davis continued.

Michael Jordan was a key advocate of providing benefits to retired players, as were current stars, such as Chris Paul, LeBron James and Carmelo Anthony.

“I’ve said it a number of times: the biggest thing is the health insurance that we got for some of our former players and stuff like that,” said Paul, who is the president of the players’ union’s executive committee. “No question. That was a huge priority. Well, I mean, it was a huge priority to keep the game going, first and foremost, for the fans. But at some point, one time or another, everybody out here is going to be a former player. You know what I mean? I think that shows how connected we are as a body of NBA players.”

The NBA and the players’ union will jointly fund a new health insurance plan, an education/career development program and the increases in pension benefits for retired players. The pensions for former players will increase by as much as $300 per month and players with at least 10 years of service will be eligible to receive health care coverage for themselves as well as their family, Youngmisuk adds. Retired players will also be eligible for tuition reimbursement and career transition programs.

“You have to look at the different decades, and you look at guys who are in their 40s, guys who have been away from the league for 10-15 years,” Davis said. “They were not making an average of $5 million a year like some of the guys now, and if you have a significant medial issue, a heart problem or organ problem, like the average American, you can become bankrupt.”

Prior to this new package, retired players received a pension from the league, but did not receive health insurance. The new CBA provides this benefit for retired players, but also includes includes other changes to the NBA landscape. Check out our CBA news archive for the latest updates on the new labor deal.