NBA Collective Bargaining Agreement
New NBA CBA | Aug. 10, 2005
I. General
A. Term of Agreement
The new collective bargaining agreement begins with the 2005-06
season and runs through the 2010-11 season. The NBA has the option to extend the
CBA for the 2011-12 season.
A. Length of Contracts
The maximum length of a player contract has been decreased from 7
years for Bird players and 6 years for other players to 6 years for Bird players
and 5 years for other players.
II. Escrow and Tax System
A. Escrow Level
The escrow level will be 57% (same as the 2004-05 season). This percentage
will be guaranteed to the players, so that if total player costs before
deducting escrow monies from the players are less than 57% of BRI, the
difference will be paid by the league to the players. (In the event BRI for any
season is more than 30% above the BRI level for 2004-05, the escrow level will
increase to 57½% for that season and subsequent seasons).
The maximum percentage of player salaries and benefits that can be withheld
from the players for purposes of meeting the 57% escrow level will be: 10% in
year 1; 9% in years 2 – 5; and 8% in year 6 (and 8% in the option year, if
exercised). The previous escrow withholding limit was 10%.
B. Tax
A team tax trigger will be set at 61% of BRI (the league-wide tax trigger
for 2004-05 was 63.3%). The tax will be in effect each season, and will apply to
any team with a payroll that exceeds the tax trigger. The tax trigger for each
season will be established before the season based on a projection of BRI. For
the 2005-06 season, the tax level is set at $61.7 million.
Each team will be permitted to waive one “amnesty” player on or before
August 15, 2005 and to remove that player’s salary from its payroll for purposes
of computing its tax payment for the 2005-06 season and any future seasons for
which the player was under contract. (The team will still be obligated to pay
the player his guaranteed salary, if any.) The team will not be permitted to
re-sign or re-acquire the player prior to the end of the term of his terminated
contract. Alternatively, a team that previously waived a player whose guaranteed
salary is continuing to be included in the team’s payroll for the 2005-06 season
and any future seasons will be permitted to designate that player’s salary for
removal from its payroll for purposes of computing its tax payment.
The “amnesty rule” will only provide relief with respect to a team’s tax
obligation (based on the designated player’s salary for the applicable season or
seasons) and will not, for example, enable a team to free up room under the Cap.
However, teams under the tax level (or under the Cap) for this season may still
waive an amnesty player and receive the possible tax benefit of removing the
player’s salary in future years.
III. Salary Cap and Related Rules
A. Salary Cap
The Salary Cap for the 2005-06 season is $49.5 million (which is based on
49.5% of BRI).
In the new deal, the salary cap increases from 48% of BRI currently to 49.5%
of BRI in 2005-06 and 51% of BRI for the remainder of the CBA.
B. Annual Increases and Decreases
The permissible year-to-year increases in multi-year player
contracts are as follows:
Bird and Early Bird Contracts may increase by up to 10.5% of year-one salary
(down from 12.5%).
Other contracts may increase by up to 8% of year-one salary (down from 10%).
C. Rookie Scale Contracts
Rookie scale contracts will provide for two guaranteed seasons with two
separate one-year options in favor of the team for seasons 3 and 4. (In the
previous agreement, rookie scale contracts provided for three (3) guaranteed
seasons with a team option for year four.) The first team option is exercisable
following the end of the player’s first season, and the second team option is
exercisable following the end of the player’s second season. A team that
exercises both options will continue to have first refusal rights following the
player’s fourth season.
The rookie scale and 3rd and 4th-year options and 5th-year Qualifying Offer
amounts for 2005 first round draft picks (at 100% of their scale amounts) are
set forth in Exhibit A attached to this memorandum. Teams will still have the
ability to pay 20% more or less than the scale amounts.
D. Maximum Player Salaries
As under the prior CBA, in the first year of a new contract a player
may receive the greater of 105% of the player’s prior salary, or:
0-6 years of service: 25% of Salary Cap ($12 million this year).
7-9 years of service: 30% of Salary Cap ($14.4 million this year).
10 or more years of service: 35% of Salary Cap ($16.8 million this year).
The maximum player salaries will continue to be based on a 48.04% of BRI
Salary Cap (not on the new, higher Salary Cap).
E. Minimum Player Salaries
Attached as Exhibit B to this memorandum are the minimum player salaries in
each year of the new CBA.
Any amounts paid to a player in a one-year minimum contract that exceed the
minimum salary applicable to players with two years of service (instead of four
under the prior CBA) shall be paid out of a league-wide benefits fund and shall
be excluded from Team Salary.
Solely for purposes of computing a team’s Team Salary for tax purposes (and
not, for example, for purposes of calculating a team’s room under the Cap), a
free agent with zero years of service (i.e., a rookie, but not a second round
pick) or one year of service who signs for the minimum player salary will be
included in Team Salary based on the minimum applicable to a player with two
years of service. For example, if a team signs a rookie (other than a drafted
player) in 2005-06 to a minimum contract that pays $398,762, the player will be
included in the team’s Team Salary for tax purposes at $719,373 (the 2005-06
minimum for a player with two years of service).
F. Salary Cap Exceptions
Mid-level Exception: For the 2005-06 season, the Mid-level exception will be
$5 million. In subsequent years, the Mid-level exception will equal 108% of the
average player salary for the prior season.
“Bi-annual” Exception (formerly “Million Dollar” Exception): For the 2005-06
season, the amount of the Bi-annual exception will be $1.670 million. In
subsequent years, the amount of the exception will increase by 4.5% annually.
The alternating-year rule that applies to this exception has been carried over
from the prior CBA. Therefore, teams that used all or part of the exception in
2004-05 will not have the right to use the Bi-annual exception in 2005-06.
G. Rosters
Each team is required to carry 12 players on its active list and one player
on its inactive list (which will replace the injured list). Teams may have a
maximum of three players on their inactive list (subject to hardship rules,
which will apply in the event that a team with three injured players on its
inactive list has a fourth player that suffers an injury). Players sent to the
NBA Development League (see below) will continue to count on a team’s inactive
list.
The league has agreed to guarantee that, on a league-wide basis, teams will
maintain an average roster size of 14 players over the course of the season.
H. Trade Rules
A traded player may be “simultaneously” replaced (i.e., in the same
transaction) by one or more players whose salaries in the aggregate do not
exceed 125% of the salary of the players being traded, plus $100,000 (In the
previous deal, the figure was 115% of the salary, plus $100,000).
“Sign-and-trade” rules remain unchanged.
If a team trades a player and the player is subsequently waived by the
assignee team, the assignor team will not be permitted to sign the player to a
new contract (or claim him off of waivers) until at least 30 days have passed
following the date the trade was made (or 20 days for trades that occur during
the off-season).
A draft rookie may not be traded until 30 days following the date on which
his contract is signed. Other players remain subject to the rule providing that
they may not be traded before the later of (i) three months following the
signing of the contract or (ii) December 15.
A player signed to a one-year contract who would be a Bird or Early Bird
player at the conclusion of his contract cannot be traded without the player’s
consent. If the player consents and is traded, he will lose whatever “Bird”
rights he has acquired (i.e., he will be considered to have moved to the new
team as a free agent). (The rule prohibiting such players from being traded has
been eliminated.)
Base Year Compensation rules remain unchanged, except that a player’s Base
Year Compensation will expire on the later of (i) the June 30 following the date
the Base Year goes into effect, or (ii) six months following the date the Base
Year goes into effect.
I. Restricted Free Agency
A team must exercise its options for the third and fourth seasons of a
Rookie Scale Contract in order to have first refusal rights (following year 4).
Offer Sheets must be for at least two seasons (instead of three), not
including any option year, unless the player’s prior team gives the player both
a Qualifying Offer and an alternative offer of a “maximum” contract, in which
case the Offer Sheet must be for three or more years (not including any option
year).
Offer Sheets for players with one or two years of service must comply with
the following: 1. The first year salary may not exceed 108% of the average
player salary for the prior year and the second year salary may not increase or
decrease by more than 8%. 2. If the Offer Sheet provides for 108% of the average
player salary for the first year with an 8% increase for the second year, then
the Offer Sheet may provide for salary in the third year up to the amount that
the player would have been eligible to receive in that year had his salary in
the first year been for any amount up to the “maximum” salary allowable for that
player (e.g., first year at the player’s maximum allowable salary with annual
increases of 8% of the first-year salary). The player’s salary after the third
year may increase or decrease by no more than 6.9% of the third-year salary. 3.
In order to determine whether a team has room to extend such an Offer Sheet, the
first year salary will be deemed to equal the average of the aggregate salaries
for each year covered by the Offer Sheet. 4. If the player’s prior team doesn’t
exercise its Right of First Refusal, the averaged salary amount will be included
in the new team’s Team Salary for each year of the contract. However, if the
player’s prior team does exercise its Right of First Refusal, the amount
included in Team Salary for each year shall be the salary set forth in the
contract.
A team now has seven (7) days (instead of 15) to match an offer sheet
tendered to a player that is subject to such team’s Right of First Refusal.
J. NBA Development League
During an NBA player’s first two seasons in the league (regardless
of his age when he entered the league), his team will be permitted to assign him
to a team in the NBA Development League. A player can be assigned to the NBADL
up to three times per season. The player will continue to be paid his NBA salary
and will continue to be included on his NBA team’s roster (on the inactive list)
while playing in the NBADL.
K. Training Camp
The training camp reporting timetable shall be the same as it was
for the 2004-05 season, except that teams can require veteran players to report
on the first day by 11:00 A.M. (local time) instead of 2:00 P.M. (local time).
L. Draft Entry Age
Beginning in 2006, the age limit for entering the Draft will
increase from 18 to 19 years of age. U.S. players must be at least one year
removed from high school and 19 years of age (by the end of that calendar year)
before entering the draft. An international player must turn 19 during the
calendar year of the draft.
M. International Player Buyouts
The limit on payments to international teams and players that will
be excluded from Team Salary has been increased from $350,000 to $500,000.
N. Moratorium Period
The moratorium period on free agent signings, etc. under the new CBA in
2006, 2007, 2008, 2009, 2010, 2011 and (if the NBA exercises its option to
extend the CBA) 2012, respectively, will be as follows:
July 1, 2006 through July 11, 2006
July 1, 2007 through July 10,
2007
July 1, 2008 through July 8, 2008
July 1, 2009 through July 7,
2009
July 1, 2010 through July 7, 2010
July 1, 2011 through July 7,
2011
IV. Anti-Drug Program/Conduct Discipline
A. Testing
All players will be subject to four random drug tests each season
(during the period from October 1 through June 30). These tests will be for both
recreational drugs prohibited under the Anti-Drug Program and
performance-enhancing drugs. (Under the prior CBA, rookies were subject to four
random tests per season while veterans were subject to random testing only once
and only during training camp.)
B. Penalties
The penalties for testing positive for performance-enhancing drugs
will be increased from suspensions of 5, 10, and 25 games for the first, second
and any subsequent violation, respectively, to 10 and 25 game suspensions for
the first two violations, a one-year suspension for the third violation and
disqualification from the league for a fourth violation. Penalties for testing
positive for marijuana will be increased from a $15,000 fine for a second
violation to a $25,000 fine and, for each subsequent violation, incremental 5
game suspensions. The first violation of the marijuana program will continue to
result in the player being placed in a counseling program, with no financial
penalties.
The list of performance-enhancing drugs has been
substantially broadened. Players will be tested for these new substances
commencing with the 2006-07 season.
C. Conduct/Discipline
A player’s failure to report for a trade has been deemed “conduct
detrimental to the NBA,” which (in addition to any discipline imposed by the
team) will subject the player to fines and suspensions by the Commissioner.
Suspensions by the Commissioner in excess of 12 games for on-court
misconduct are subject to review by an independent arbitrator. For this purpose,
“on court” generally includes anything that occurs anywhere in the arena during,
before, or after a game.
V. Miscellaneous
A. Pension Increase
The NBA has agreed to increase player pensions, subject to
government approval.
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