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LABOR PAINS NOTHING NEW TO THE NBA

by Robert Bradley


1995's labor problems between the National Basketball Association, the National Basketball Players Association and a group of so-called "dissident players" who are attempted to decertify the union and the 1998 lockout of the players by the owners have caused basketball fans to wonder aloud "what happened to the 'partnership' between the players and owners and when did their relationship become so adversarial?" The relative obscurity of the league until the 1980s has hidden the fact that labor negotiations between the league and it's players have always been painful, litigious, and drawn out.


EARLY WORKING CONDITIONS
The salary cap in sports is nothing new. Its origin in basketball can be traced back to the league's $55,000 salary cap for the league's first season, 1946-47. Most players earned between $4,000 and $5,000, but there were a few exceptions. Tom King of the Detroit Falcons for example. He drew the league's highest salary, $16,500, not solely because of his playing ability, but also due to his front office duties as the team's publicity director and business manager. Philadelphia's star scorer, Joe Fulks, pulled in $8,000 for his league-leading 23.2 points a game (King's rookie season was a bit less successful. He averaged 5.1 points in his only year and the Falcons went out of business following the season).


From 1946 to 1949 the top players managed to use the leverage of two rival leagues, the Basketball Association of America and the National Basketball League, to carve out a fair existence for themselves. George Mikan, the premier player of the era, signed a five-year contract with the Chicago American Gears worth $60,000 plus incentives in 1946; Bob Davies of the Rochester Royals, considered the top guard in basketball, was rewarded with a four-year, $50,000 contract; and Jim Pollard, a Hall of Fame forward, signed with the Minneapolis Lakers for $12,000 a year in 1947. The BAA was able to convince four of the best NBL franchises: Minneapolis (which featured Mikan and Pollard), along with Indianapolis, Fort Wayne and Rochester (who brought Davies) into switching leagues in an effort to exert their superiority. The NBL was far from dead however, and in 1949, after the NBL stunned the BAA by awarding a franchise to a group of former college stars from the University of Kentucky (which included All-Americans Alex Groza and Frank Beard, both top prospects), who would then each draw a salary of $10,000. The two leagues, which had been bitter rivals, merged to form the National Basketball Association, leaving the players with two options: play for the salary the NBA offered you or play Amateur Athletic Union basketball for a company team (such as the Phillips 66ers, Akron Goodyears or Peoria Caterpillers), an option which a few of the top players, including Clyde Lovellette, Jim Pollard and George Yardley chose.


COUSY ORGANIZES THE PLAYERS
Economic conditions continued unchanged through 1954, at which point Bob Cousy, the league's top player, began to organize the NBPA, which would become the first team sports player's union. Cousy began by writing to an established player from each of the league's teams (Paul Arizin of Philadelphia, Carl Braun of New York, Bob Davies of Rochester, Paul Hoffman of Baltimore, Andy Phillip of Fort Wayne, Pollard, Dolph Schayes of Syracuse and Don Sunderlage of Milwaukee) in hopes of encouraging solidarity among the players. All but Phillip responded positively (of all the owners, Fort Wayne's Fred Zollner, who owned a machine works plant, was the staunchest union opponent and this prevented the Pistons players from participating), and Cousy next went to NBA President Maurice Podoloff at the January, 1955 NBA All-Star Game with a list of concerns: payment of back salaries to the members of the defunct Baltimore Bullets club; establishment of a twenty-game limit on exhibition games, after which the players should share in the profits; abolition of the $15 "whispering fine" which referees could impose on a player during a game; payment of $25 expenses for public appearances other than radio, television or certain charitable functions; establishment of an impartial board of arbitration to settle player-owner disputes; moving expenses for traded players; and payment of player salaries in ten installments rather that twelve, to provide more money to players cut during the season. Podoloff agreed to the payment of two weeks' salary to six players who had played for Baltimore before the franchise folded and committed to meeting with the player representatives within two weeks over their concerns.


Podoloff and league owners continued to put off the players until Cousy met with AFL-CIO officials over possible union affiliation in January of 1957. The league then agreed to bargain in good faith with the players union following the season. In April, the NBA Board of Governors formally recognized the NBPA and agreed to their terms:


-a probationary abolition of the whisper fine
-a seven dollar per diem and other reasonable traveling expenses
-an increase in the 1957-58 playoff pool
-regular players would no longer be required to report to training camp earlier than four weeks prior to the season
-elimination of exhibition games within three days of the season opener or on the day prior to a regular season game with a limit of three exhibition games during the season
-player contracts would be mailed no later than September 1st
-referral of player-owner disputes to the NBA League President or a committee of three NBA Governors to be chosen by the player
-considerate treatment for the player in regards to radio and television appearances
-reasonable moving expenses for a player traded during the season.


In 1958, following the victory of the fledgling union, Cousy would resign his position as NBPA President after becoming frustrated with nonpayment of the $10 annual union dues by many of the players. His replacement as head of the union would be his Boston teammate Tom Heinsohn.
Under Heinsohn's leadership, the union would assume a more aggressive approach regarding negotiations with the league. Heinsohn, Schayes and Richie Guerin of New York reached an agreement with the owners in January of 1961 over a player pension. The owners agreed in principle to a pension plan for the league's players, with details to be worked out in meetings to begin in February after the players had set a goal of $100 a month at age 65 for players with five years of service and $200 a month at age 65 for players with ten years of service.


FLEISHER GIVES THE UNION SOME TEETH
Talks failed to bring an agreement and in 1962, after meeting with several candidates, Heinsohn hired attorney Lawrence Fleisher as the union's General Counsel in an effort to obtain a pension plan and achieve other union goals (which included the standardization of the use of team trainers, the elimination of Saturday night games preceding Sunday afternoon television games, a increase in player per diem, a reduction in preseason games, and player free agency).


Little progress occurred until the January 1964 All-Star Game. The game was important national television exposure for the league, and also presented a unique opportunity for the players. The players threatened to not play the game over the lack of a pension agreement. Minutes before game time NBA President Walter Kennedy gave his personal guarantee that adoption of a pension plan would occur at the next owners meeting, which took place in May when they approved a plan in which they would contribute 50% toward the purchase of a $2,000 endowment policy.


Heinsohn would continue as NBPA President until Oscar Robertson of Cincinnati succeeded him in 1966. Robertson's first major move was to announce at the January 1967 All-Star Game that the players would ask the owners that they be paid for exhibition games, that the limit on the number of exhibitions be reduced from 15 to 10, and that the NBPA hopes to meet with representatives of Major League Baseball and National Football League players concerning more unity among professional athletes. Tensions between the union and owners escalated until the owners announced in March that the playoff would be canceled unless the players gave assurances that they would "comply with their contracts" and participate in the playoffs as scheduled. The union then responded by threatening to file for certification with the National Labor Relations Board and to strike the playoffs in an effort to upgrade their pension plan. The dispute was settled soon after, with the players receiving an agreement which included:


-a $600 a month pension for players with ten years of service at age 65 and retroactively to the beginning of the career for all active players
-new medical and insurance benefits
-elimination of games played immediately before the All-Star Game
-an 82-game limitation on the regular season
-discussion of exhibition game pay
-formation of a committee to review the standard player contract before the 1967-68 season
Prior to the 1968-69 season, the union and NBA agreed on their first revision of the standard players contract which would increase salaries with the minimum rookie salary raised to $10,000 for 1968-69 and $13,000 in 1970-71 and the minimum pensioned veteran's salary raised to $12,500 in 1968-69 and $13,500 in 1969-70.


With the formation of a new rival league, the American Basketball Association, in 1967, the players' salaries again began to increase. With players such as Rick Barry, Billy Cunningham and Zelmo Beaty jumping to the new league for bigger contracts, and with the new league's success in signing top college talent like Mel Daniels and Spencer Haywood, the NBA soon opened talks with the ABA about a possible merger of the two leagues. As a merger drew near in 1970, the players filed the "Oscar Robertson Suit", an antitrust suit to block any merger; do away with the option clause which bound a player to a team in perpetuity; the college draft, which limited the player to negotiating with one club; and restrictions on free agent signings; and seeking compensation for damages incurred in the past due to the option clause. The union then received a restraining order to block any merger, and the talks then died. The acrimony didn't block a new labor agreement however, as the NBPA came to a three-year labor agreement with the NBA in October of 1970 with an increase in minimum salaries, the playoff pool and the per diem allowance.


After attempts to work out a compromise with the players in 1971 and to get Congressional approval for a merger in 1972 failed, the NBPA (now led by NBPA President Paul Silas of Boston who replaced Robertson in 1975) and the league reached a tentative agreement giving players free agency with their teams awarded compensation through 1980 (with the compensation of cash, players or draft choices determined by the NBA Commissioner) after which the player's former team would hold the right of first refusal on any free agent signings; limiting a teams rights to a drafted player to one year after which he would go back into the draft a second time if unsigned; ending the option clause in all contracts (with the exception of one-year rookie contracts); and paying about 500 players $4.3 million as a settlement and $1 million for the union's legal fees, pending agreement of a new collective bargaining agreement and dismissal of the Oscar Robertson Suit. Along with a new six-year collective bargaining agreement which brought with it an increase in pension benefits; the minimum salary (from $20,000 to $30,000); the per diem; medical and dental coverage, term life insurance; the playoff pool; and player's shares for the All-Star Game, the players could claim a major victory. While the leagues did indeed merge, the players now could negotiate with more than one club, insuring a better position for contract negotiation.


ESTABLISHING A PLAYER-OWNER PARTNERSHIP
Following a new three-year collective bargaining agreement (which included increases in the minimum salary, elimination of no-trade agreements in player contracts in 1980) and Silas' resignation as union head in order to become coach of the San Diego Clippers, financial health of the league became a major concern. Numerous franchises suffered from serious losses, headed by Cleveland, Denver, Indiana, Kansas City, San Diego and Utah. Some, including Kansas City and San Diego, nearly provoked a player strike in 1982 as they fell behind on their deferred payments to former players, as the league totaled an estimated $80 million to $90 million in deferred money owed to players. With the very real threat of the loss of franchises and player jobs, the union, now led by its new president Bob Lanier, agreed to a new four-year collective bargaining agreement in March of 1983 after strained negotiations and the threat of a player strike. The agreement was ground breaking for professional sports as it included:


- a salary cap guarantying the players between 53% and 57% of the NBA's gross revenues (gate receipts, local and national television and radio revenue and preseason and postseason revenue)
-$500,000 a year in licensing revenue
-a guarantee that the league will maintain 253 player jobs even if there is a reduction in the number of teams


The 1983 agreement would prove to be a major turning point for the league. An amendment later in the year which implemented the NBA's first league-wide substance abuse policy, proved to be a big step in cleaning up the league's image problems, and brilliant young players like Magic Johnson, Larry Bird and Michael Jordan excited the fans.
The financial well-being of the league improved under Commissioner David Stern, who assumed the position in 1984, but in 1987 the owners and players clashed over the salary cap, right of first refusal and college draft. Following a brief signing moratorium and a failed attempt at an antitrust suit by a player group headed by NBPA President Junior Bridgeman of Milwaukee, and the threat of union decertification, an agreement on a six-year collective bargaining agreement is reached, including:


-continuation of the salary cap; guarantying the players 53% of the leagues revenues
-reducing the college draft to three rounds in 1988 and two rounds in 1989
-eliminating of the right of first refusal after a player completes his second contract with unrestricted free agency for certain veteran players
-the inclusion of five-year veterans who finished their careers prior to 1965 in the pension plan.
Mutual good will continued under the cap until 1991, at which point the NBPA discovered that the league had underreported their income by excluding revenues from luxury suite rentals, playoff ticket sales and arena signage. After a legal dispute in which the league argued that the income fell outside of the defined revenues of the salary cap, and an increase of a total of $92.7 in player salaries and pension funding due to a ruling in favor of the union, the players would no longer look at their agreement with ownership as the "partnership" Stern had frequently proclaimed it.


WORKING TO CLOSE CAP LOOPHOLES AND FINDING MORE
Creative accounting would open loopholes in the cap as the restructuring of contracts, early termination clauses, one-year contracts and balloon payments provided means for teams to circumvent the cap in order to sign players. Following the completion of the labor deal in 1994, the league and players managed to reach a no-strike, no-lockout agreement to protect the 1994-95 season, playing under the previous agreement in hopes of striking a new deal during the season. Talks were unsuccessful, and a lockout was imposed by the owners following the completion of the 1995 NBA Finals in an effort by the owners to put pressure on the players. When the union (represented by NBPA President Buck Williams of Portland and NBPA Executive Director Simon Gourdine) reached a highly-secretive agreement with the league (represented by NBA Commissioner David Stern and NBA Deputy Commissioner & Chief Operating Officer Russ Granik) which included a luxury tax, rookie salary cap and other provisions designed to tighten the salary cap; a group of players led by Michael Jordan and Patrick Ewing began an effort to decertify the union. Noting the concerns over possible restrictions on player movement, the player representatives chose not to ratify the agreement and sent it back for further negotiation. In August, after the union had imposed a deadline to pressure the league into concessions, the luxury tax was dropped and exceptions for veteran free agents were restored in a revised agreement. The group seeking decertification remained unsatisfied and chose to press for an end to the union in hopes that it would provide the players with a means to sue the league under antitrust law to end the salary cap, college draft and restrictions on free agency. A decertification election was then held in September of 1995, with the players voting 226-134 against, a few days later player representatives voted 25-2 in favor of ratifying the agreement. The owners quickly voted 24-5 in favor of the agreement and the owner-imposed lockout was lifted days later. The contract remained unsigned until June of 1996 when the players and owners finalized the deal. The final agreement included:


-unrestricted free agency for all players following the conclusion of their contracts
-a guarantee of 48.04% of all Basketball Related Income to the players, which now included luxury suites, international television and arena signage
-various player exemptions to the cap, with the league keeping the so-called "Larry Bird Exemption" which allowed teams to re-sign their own free agents at any price
-shortening of the college draft to one round, beginning in 1998
-rookie salary cap with a graduated scale depending on the position a player is drafted, allowing him free agency after his third season.


The Rookie salary cap proved to be a windfall for the players. Draft choices such as Kevin Garnett (six years, $121 million) and Rasheed Wallace (six years, $80 million) and Bryant Reeves (six years, $65 million) all received huge contract extensions, while others like Antionio McDyess, Damon Stoudamire, Joe Smith and Jerry Stackhouse were traded before they could become free agents.

Another perceived problem was the loss of control over the players. After Latrell Sprewell was suspended by the league for a year and had his contract terminated by Golden State after an attack on coach P.J. Carlesimo, an arbitrator ruled that the penalty was to harsh, shortening his suspension to the remainder of the season and reinstating his contract, citing past penalties for violence by players.


AGENT REVOLT AND THE THREAT OF DECERTICICATION
During the 1997-98 season the NBA owners voted to re-open the collective bargaining agreement, claiming losses by 13 teams. The union, now led by its new Patrick Ewing of New York and Executive Director William Hunter, is expected to meet owner demands (including greater authority for the Commissioner in disciplining the players, an inclusion of marijuana in the league's drug testing and a hard salary cap), with resistance, citing the league's new four-year $2.4 billion television deal with NBC and Turner Sports as a counter to the plea of poverty and looking to restore the league's middle class and curb control of the Commissioner ability to impose punishment over players. Provisions in the television contracts guarantying the owners money even in the event of a work stoppage, and the failure of the rookie salary cap to curtail big contacts to young players may bring about a lockout during the summer and lead to the loss of games for the first time in the league's history.


The owners best chance for control of the situation would bring a work stopage for the first time in the NBA as on July 1, 1998 the owners locked out the players.  With the Larry Bird Exception softening the salary cap the league fought for a luxury tax and player salary limits to ensure more rigid cost control.  After the loss of half of the season the players relented on maximum player salaries based on seasons played, and longer rookie contracts (now three years guaranteed with an optional fifth season).  The owners also received a concession when the players agreed to an escrow tax in 2001-02 if salary expenditures exceed 55% of basketball related income.   In exchange the players received increases in the minimum salary for veterans based on service, additional exceptions to the cap, and the continuation of the Larry Bird Exception.  Commissioner Stern had met the objective given to him - further controls on costs in a clear victory over the union.

For more information on the current collective bargaining agreement visit Larry Coon's Salary Cap FAQ Site at http://www.members.home.net/lmcoon/salarycap.htm.


NBA Salary Cap FAQ