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NBA: Establishing a Player-Owner Partnership

(By Robert Bradley, The Association for Professional Basketball Research) 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.

 

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