NBA player salary limits as institutionalized collusion

Jimmy Jackson alleges David Stern and owners colluded to hold down rookie contracts before the rookie scale was adopted. If true, it wouldn't be surprising.

By Tom Ziller Jan 27, 2014, 11:44am EST

Jimmy Jackson did a sprawling interview with The Ticket, a Dallas sports talk radio station, last week. In that interview, excerpts of which were published by Sports DFW, Jackson reveals some intriguing allegations from his protracted holdout in his rookie season back in 1992-93.

Jackson says that while he was the No. 4 pick, the Mavericks offered him a contract comparable to previous No. 8 picks, so Jackson wouldn't sign it. But he also sued the Mavericks and the NBA, and this is where things get interesting.

"Now, also, I had a lawsuit against the Mavericks and against-which people really don't know about-against the NBA. Because David Stern came in and said, ‘You've got to stop paying these rookies these long-term and high-priced deals.' Well, that's collusion, and you can't do that. You can't tell an owner what to do. We got wind of it, got the players' association and said, ‘Here's what's happened.' So finally, the Mavericks came in and signed me. You know, they're hugging and kissing and ‘hey, we're so glad,' but it was because of the lawsuit. Because they would have to pay me double what a Cleveland offer would be, so they came in and paid me everything for 28 games, and that's the reason why, so there's always an underlying story to what it is. It wasn't as simple as two sides coming together. The lawsuit kind of trumped everything."

Remember, the rookie scale wasn't created until 1995. Before then, rookies and their teams negotiated contracts much like free agents. Drafted players couldn't go to another team, but if they held out the entire year they'd be re-entered in the next draft.

Jackson's words are allegations, and ones that never saw resolution in a courtroom. They happened two decades ago, so take it all with a grain of salt. But what's interesting is that the problem that allegedly concerned Stern enough for him to tell GMs to stop paying rookies so much was fixed in two years ... through collective bargaining. What Stern would have needed widespread collusion to enact in 1992 became a piece of the institution by 1995.

The development of the rookie scale was largely seen as a direct response to Glenn Robinson's insane rookie deal (10 years, $68 million, all guaranteed). But it had been brewing for even longer. Patrick Ewing, for example, signed a rookie deal in 1985 that would make him the league's highest-paid player until the free agent salary explosion of 1991. (That was the year Larry Bird signed for $7 million per year, almost double the No. 2 highest paid player.) Holdouts and harsh negotiations were increasingly the norm by 1995, and Jackson's case was one of the more notable both because of his potential and because how horrible Dallas had been.

There's also little question as to why players in 1995 would agree to the rookie scale. First, they all already had their contracts. The institution of a rookie scale would only affect future NBA players. No one was proposing to take away Glenn Robinson's contract, just to prevent Kevin Garnett, Tim Duncan or Kobe Bryant from signing deals like that. Second, the players' own contracts were at risk if the owners proceeded to take a lockout into the season. The owners locked out players on July 1, 1995. The rookie scale was one of David Stern's major goals. If players didn't relent, they weren't getting paid in October. Or November. Or December. Baseball had just experienced a devastating work stoppage, and in the end there was little obvious reason for players to protect the salaries of future draft picks at their own expense. So they signed Stern's deal in September, saving the season.

But that agreement bit their tails just three years later, when the collective bargaining agreement came up for renegotiation. That time, the owners aimed higher, seeking to set a maximum salary limit on all players. It took losing half of a season and untold levels of discontent, but the league got it done, and that was history. These days, the very best rookies and veterans basically subsidize the contracts of mid-rung players because of the artificial individual caps.

Collusion is difficult to pull off, and obviously even if Jackson's allegations are true, it didn't work too well. In Jackson's draft, No. 1 pick Shaq signed for seven years, $40 million, an annual average of $5.7 million. The league's highest-paid player in 1992-93, David Robinson, earned ... $5.7 million. Collusion to hold down salaries in an intensively competitive field like pro basketball is basically impossible. Unless there are actual rules which do the work of holding down salaries. Which is exactly what the rookie scale and individual player cap did.

Despite all the attention we pay to the rigidity of the team salary cap and luxury tax penalties, player caps remain Stern's most important financial feat. Turning rookie hold-outs into rarities and ensuring star salaries stayed at 30 percent of the team cap was a brilliant bit of institutionalizing collusion. Making collusion the norm and getting players to sign off on it, of course, means that it's not collusion at all. It just has the exact same effects.

That Stern and the owners allegedly tried to do it the old-fashioned way before getting an opportunity to make it legal is, in retrospect, not terribly shocking.