Why NBA collective bargaining is so difficult, and some possible tweaks that could benefit all parties
A few months ago, when I was mulling over a conversation about Bradley Beal’s loyalty to the Washington Wizards, I was struck by a double-edged sword: an NBA supermax contract.
Beal, a three-time All-Star with two 30-point-per-game and one-time NBA appearances, is under fire for accepting a five-year, $251 million contract he earned as one of the best talents in his profession, and the Wizards are scolding for what they pay him. Both want to win a championship together, but paying a homegrown star to be one of them could prevent them from delivering on that promise to consumers who subsidize his salary.
So I started asking questions about the problems anyone had with supermax contracts and their 35 percent correlation with the salary cap in light of ongoing collective bargaining negotiations. The most startling response I heard from one agent was, “There are so many problems with this, I don’t even know where to start.”
A few months later, after two extensions to the December deadline for the NBA or its players association to opt out of the current collective bargaining agreement at the end of the season, I was down that rabbit hole and saw the same light. No solution will ever satisfy all parties. The hurdles to radically changing the existing pay cap system are also too great for both sides to find common ground on an entirely new vision before the current CBA expires in 2024, let alone the approaching March 31 waiver deadline.
This comes before the league’s media rights deal expires in 2025, when the current $24 billion nine-year deal could double or even triple. Disruptions in CBA talks could impact the next order of business, which is why both the NBA and NBPA are expecting a collective bargaining deal sooner rather than later, league sources told Sportzshala Sports. “Everyone wins, so why upset the feeder?” one source said.
Who benefits most is a completely different question and may have to wait until the next CBA, when the gap between the haves and the (relatively) have-nots gets even wider than it is now. In the meantime, there are simpler changes to the pay structure that could improve the current system ahead of another ceiling spike (up to $171 million) in the 2025-26 season, which will benefit the teams, players and fans of both.
Shrinking NBA middle class
Every NBA player has reason to complain about the salary cap. At best, it’s a cap of millions of dollars per player, and at worst, it’s only meant to rid billionaire team owners of their spending habits.
A rookie scale that assigns a salary to every draft pick is inherently unfair, severely limiting first-round pick returns for at least the first four years of his career. Dallas Mavericks superstar Luka Doncic, on his way to a third NBA All-Star selection, was the league’s 121st highest-paid player last year. His five-year, $215 million maximum extension, with a starting salary of 30% of the current $123.7 million salary cap, only started this season. Even this is far from its real value.
Not only can Doncic not qualify for a 35% supermax until 2026 (eight years of his career), but he is already one of the few players who could have more than a 50% limit if there were no cap on the maximum salary. Before the last round of negotiations Kobe Bryant rated LeBron James cost the Cleveland Cavaliers $75 million on the free market. The salary cap for each team at the time was $63.1 million.
Most teams have at least one player worthy of the maximum money. Teams without a second star retain a cap spot for the future if they can add another. This puts pressure on the middle class of NBA players, especially in terms of long-term contracts. Teams can remain flexible by filling rosters with low-end, rookie and short-term mid-range deals. Even the Mid-Level Exemption (MLE), which allows teams to exceed the salary cap for another hidden average salary slot in the league each year, has limits. The most profitable MLE causes a hardcap. Others are limited to two years. Everything can be divided among several players.
PJ Tucker, 37, was the only player to receive a full non-taxpayer mid-level exemption last offseason. In 2021, only Reggie Bullock and Alec Burks received it; none of them are completely guaranteed next season.
That all changed in 1998 when Michael Jordan’s $33.1 million salary topped the $26.9 million ceiling and 21-year-old Kevin Garnett began a record six-year $126 million extension. The ensuing lockout cost the players an estimated $500 million. And gave the rookie scale, the maximum percentage wage, and the MLE.
This undermined ordinary contracts. In the 1992-93 season, prior to the current structure, 60% of players were earning somewhere between what would have been an MLE and the maximum salary (if they were in place). Only 2% of players earned a salary equivalent to 25% of the maximum salary or higher, with the remaining 38% earning between the minimum and MLE. This season, 9% of players are earning 25% of max or more, 21% of salaries are somewhere between MLE and max, and 70% drop from MLE to a minimum.
That’s great for the extra 33 players who make the most money, but less for the 103 players whose salaries have dropped to a lower NBA class (which is, admittedly, still more than the rest of us).
Take, for example, Boston Celtics forward Grant Williams. He reportedly turned down a four-year extension within $50 million during the preseason, hoping instead to seek informed $20 million a year in Restricted Liberty this summer. Only nearly two-thirds of the league’s teams are projected to have less than $20 million in free space by July. Most of the remaining third will not want to give some of their money to a player whose salary could be comparable to the Celtics. This could see Williams agree to either the MLE (the Miami Heat are among the teams interested in that price, according to league sources) or Boston’s initial offer.
The advent of top-paying slots has led to a wider gap between the salaries of the highest-paid players and those of the average NBA. This gap will only widen with the new media rights deal, even if the percentages for top-paying jobs stay the same. The 25% high was about double the MLE in 2002-03 and tripled 20 years later. Fast forward to the 2032-33 season when it is predicted to be 35% high and MLE will be $55.1M different from each other. annuallyand mid-level contracts are likely to be even fewer.
There is no “fairness” in collective bargaining
This may be true in the context of a salary cap, although the system itself is inherently unfair to all players. Stars bring income. In a free market, their salaries would still be much higher than the salaries of the players who take their teams from the playoffs to the championship. Mid-range deals, such as those that were handed out during cap surge spending growth in 2016 under free agency are proof that: 1) team owners couldn’t help themselves without a cap, and 2) casual players are more likely to “overpay” for a cap.
Don’t blink an eye when superstars make $70 million in starting salaries as the ceiling will top $200 million in the not too distant future. Most will cost more than that. Remember that the average franchise valuation has grown at a rate (roughly 1200%) four times the wage cap growth over the past two decades. In the first season of the NBA lifted from pandemic-related arena restrictions, only the Brooklyn Nets — a failed superteam experiment in the league’s biggest media market — lost money last year. according to Forbes.
Like the middle class in the NBA feels about the growing income disparity compared to his elite teammates may differ from the reality that could result from the lifting of wage caps and caps in general. Here we remind you that superstars Chris Paul and James were NBPA President and First Vice President respectively when the union last negotiated the CBA in 2016. Among them were James and Kevin Durant. pushing most difficult lift all caps on maximum wages in the years prior to the conclusion of this agreement.
This year, NBPA leadership includes CJ McCollum as union president and Williams as his first lieutenant. These two could be at both extremes of what non-stars can earn between max and MLE.
Again, there is no perfect system. While 30 teams compete against each other for titles, the NBA hasn’t faced a challenger in half a century, and the basketball business is not an egalitarian endeavor. The NBA’s median salary has grown nearly tenfold over the lifetime of the ABA. The leagues merged in 1976, and by 1984 a salary cap was in place, and since then team owners have been taking bigger chunks of the basketball-related revenue pie.
There’s a reason billionaire team owners have wrested more control in successive negotiation sessions, even though the existence of the league depends much more on multimillionaire players than on their bosses.
“Miss a couple of paychecks and oh-oh,” a source once said from a union perspective.
According to league sources, the concept of a hard limit, which the NFL uses to have more power over its players, is “not a good start” for the NBPA. Removing caps on maximum wages in the current structure of the NBA only benefits a handful of real superstars. A complete lifting of restrictions, as was the case in MLB, would perpetuate the competitive imbalance; no amount of income sharing can stop Los Angeles Clippers owner Steve Ballmer from outperforming even more than he already has.