View Full Version : Arbitrator's decision could limit free-agent movement

09-29-2002, 07:24 AM
Slow motion

Arbitrator's decision could limit free-agent movement

Posted: Wednesday September 25, 2002 6:44 PM

Written by Marty Burns - Inside the NBA

It was the legal equivalent of a desperation 3-point heave at the buzzer.

Not surprisingly, it came up short.

An arbitrator on Wednesday rejected a legal challenge by the NBA players' association to the league's plan for redistributing money collected from the so-called luxury and escrow taxes.

All it means is the league can continue to punish high spending teams by withholding distribution of future escrow or tax funds. And that's bad news for NBA free agents and fans who wish to see more offseason player movement.

For the next few years at least, the NBA free-agent market is going to remain as chilly as Cleveland in February. Just ask Rodney Rogers, Rashard Lewis, Keon Clark and all the other guys who couldn't get a nibble this summer from teams fearful of going over the luxury tax.

"I'm not surprised," longtime player agent Henry Thomas said. "It's obviously had a chilling effect on free-agent signings. But that's the way it goes. It's just something [the players' association] will have to look at the next go-round."

The union argues that the league's double-punishment policy circumvents the collective bargaining agreement by creating extra penalties for teams with the highest payrolls. But arbitrator Charles Renfrew ruled that explicit language in the collective bargaining agreement gives the NBA sole discretion over how the tax moneys are redistributed. He rejected the union's contention that the league had violated the spirit of the agreement.

Last season players began having 10 percent of their salaries withheld because they were collectively receiving more than 55 percent of Basketball Related Income (BRI). Of the $154 million collected, about $23 million was returned. The rest was divided up among the 29 NBA teams.

In the upcoming season, teams with payrolls exceeding 61.1percent of BRI will have to pay a dollar-for-dollar luxury tax on the overage. That money would then be redistributed to teams that did not exceed the threshold. In addition, those high-spending teams would be eligible to receive only a portion (70 percent in 2003, 40 percent in 2004, zero percent in 2005) of the escrow money.

It's not difficult to see why such a policy might have a deleterious effect on free-agent signing. Instead of merely paying the $1 tax for each dollar spent, NBA teams also now won't be able to share in the escrow or luxury tax revenue collected. As several GMs have noted publicly, the cumulative effect is to hammer teams with a $3 tax for every $1 spent.

Of course, the NBA has every right to play hardball. Business is business, after all, and the wording is right there in the CBA. But given the reaction of the players' association, one has to wonder if the league isn't risking long-term damage to the relationship.

"We remain convinced that the NBA does not have the right to unilaterally create new ways to punish teams that want to improve by spending on player salaries," union boss Billy Hunter said in a prepared statement. "The effect of this decision is to continue to undermine player confidence in the NBA's administration of our collective bargaining agreement."

The players might have lost this round, but they might remember this dispute at the negotiating table next time.

Marty Burns covers pro basketball for CNNSI.com.

09-29-2002, 07:53 AM
1) From a fan's perspective, I don't really have a problem with team stability.

2) Looks like the players may need to get a little bit smarter attorneys, negotiators, and by all means, someone more on the ball than Billy Hunter.