The NBA and its players’ union reached an accord on a new labor deal Wednesday, erasing fears of another work stoppage.
While this deal is more narrow than the 2011 agreement that sharply cut players’ share of salaries, it is expected to have serious ramifications across the league. With the caveat that the final details are still filtering out, here’s our initial sense of who the winners and losers of the deal are.
WINNER: Non-glamour franchises
We knew there’d be a reaction to the Warriors’ addition of Kevin Durant over the summer. The new Designated Player contract rules are that reaction. The rules, as described by ESPN’s Zach Lowe, essentially give teams a far greater chance of keeping their own best players by offering six-year extensions. It’s a stark reversal from the NBA, which has been shrinking maximum contract length since 1998 and which severely damaged the power of extensions in 2011.
Want a real-world implication? In two years, the Pelicans will be able to offer a 26-year-old Anthony Davis a six-year extension worth something like $250 million. If Davis doesn’t take it, a year later he’d be able to sign no more than a four-year deal worth $160 million or so with a different team.
Had this rule been in place two years ago, the Thunder could have offered Durant a six-year, $190 million extension. It’s hard to imagine he would’ve turned that down following foot surgery to test free agency.
Winner: The Oklahoma City Thunder
You might think that rule change makes the Thunder a loser because it comes too late to save Durant. (Read on.) But Oklahoma City has another superstar who will be eligible for a Designated Player extension: Russell Westbrook. We’ll discuss OKC more in a moment.
Winner: Marquee 2018 Free Agents Who Like Their Teams
My back-of-the-envelope math suggests that a six-year extension for Westbrook could be worth $218 million. That’s a lot of guaranteed bread. Paul George is another 2018 free agent who could cash in early if he and the Pacers want to keep the marriage alive. DeMarcus Cousins has been floated as another potential beneficiary thanks to his All-NBA status, but let’s not hold our breath on Boogie signing up for six more years of Sacramento.
Winner: Fringe NBA players
This season, the lowest-paid players in the league (minimum salary rookies) make about $540,000. Per The Vertical’s Adrian Wojnarowski, minimum salaries will rise roughly 50 percent across the board, meaning those same minimum-salary rookies will take home a cool $810,000 instead. That’s a big deal at that end of the NBA pay spectrum! The increases to the minimum will apply to veterans, too. Now old ring-chasers will be able to pull more than $2 million on the minimum.
This should apply to 10-day contracts as well. Assuming no changes to that particular contract structure, 10 days of NBA work would now come with a paycheck of at least $75,000.
The other aspect of the new deal that helps low-end players is the advent of two-way contracts. These deals will boost roster sizes by two spots per team and allow clubs to shuttle these players between the NBA and the D-League. With this new contract structure, the players will make more money and have a better chance to prove they belong in the league.
Winner: Team Banana Boat
Chris Paul is the union’s president. It just so happens that an adjustment of a rule intending to prevent teams from handing massive contracts to players nearing the end of their careers will benefit CP3.
The Over-36 Rule made it hard teams to offer four- or five-year max contracts to players who would turn 36 during the contract. So essentially, it forced 32-year-old free agents to take deals of three or fewer years. The Over-36 Rule is now the Over-38 Rule. Now those 32-year-old free agents can sign full-bore five-year contracts, and teams can sign 33- and 34-year-olds to four-year deals with impunity.
Guess who will be a 32-year-old free agent on July 1, 2017, when the new rule goes into effect? Chris Paul.
CP3’s Banana Boat ridin’ friend LeBron James (also a high-ranked union official) will be able to benefit for the rule tweak, too, but not until 2018. If fellow Banana Boater Carmelo Anthony opts out of his contract in 2018 at age 34, he’ll be able to sign a four-year deal that previously would have been difficult without a pay cut.
The final Banana Boater, Dwyane Wade, will be 36 when he’s a free agent in 2018, and looks to be out of luck with this one. It’s frankly his own fault for being so old.
My colleague Paul Flannery has suggested that instead of referring to this rule as the Over-38 Rule, we call it the Banana Boat Rule. This must happen.
The wild contracts we saw this summer will continue. The owners did not appear to target the revenue split (which would lower salaries across the board) and didn’t push a harder salary cap (which would make life difficult for certain classes of player). All told, the owners only really won one major item: the Designated Player rule helping teams keep their best players. And that rule change will result in more guaranteed money for certain players.
All told, this is a huge victory for players.
That doesn’t make it a loss for the owners by any stretch — they are benefiting from the NBA’s revenue boom just as much as players — but players are very much winners here.
Winner: Adam Silver
The commissioner is on fire. We don’t ask too much from our sports league commissioners: handle crises deftly, make sure the sport stays fun, and no work stoppages. Silver is shooting a very high rate from the field on these matters.
It’s trite, but fans can rest assured that they’ll have basketball next October, not court hearings and hotel stakeouts. NBA fans know better than any other how fragile labor peace can be. We’ll take it where we can find it.
Loser: The Oklahoma City Thunder
As noted above, the Thunder will be able to immediately take advantage of the Designated Player rule to lock up Westbrook. If he is interested. But as noted above, it’s two years too late to keep Durant. No offense to Westbrook, but you’d rather have Durant with a shot at keeping Westbrook than be without Durant with a better shot at keeping Westbrook.
This isn’t the first time the Thunder have been victims of bad labor deal timing, either. The Rose Rule implemented in the 2011 lockout deal caused retroactive tax problems for OKC because Durant’s extension grew in value. The beefed-up luxury tax penalties in that same deal contributed to the Thunder’s decision to trade James Harden, as well. Oklahoma City has taken a number of snakebites over the years. The collective bargaining agreement has bizarrely contributed several of them.
There’s no way around it: the one major item the owners got in this deal is a direct broadside on the concept of superteams. The owners have few feasible attacks on free agency at this point, so they instead focused on building incentives for players to stay home. Perhaps not all players offered the megadeals will stick with their incumbent teams. But if just one does, the rule would have had its desired effect.
Loser: College basketball
The NBA punted on the age minimum, which is the worst possible result for college basketball. Had the league and union agreed to increase the age minimum to 20 or killed it completely, the NCAA would be better off. Instead, the two sides will address it at some point.
This is exactly what the NBA and players’ union said in 2011, by the way. Spoiler alert: It didn’t get addressed.
Loser: Foreign basketball leagues
The two-way contracts and higher minimum salaries should keep more domestic players in North America, and may even pull some number of international players into the D-League. The European leagues have been weakened due to economic issues and the rise of the Chinese Basketball Association in recent years. The NBA’s increased focus on building a farm league of their own sure isn’t going to help matters.