Stern details specifics of ultimatum in letter

By Howard Beck, New York Times

NEW YORK — The ultimatum issued by the NBA to its players over the weekend not only threatens them with a worse labor deal but also a massive pay cut if they do not make a deal by Wednesday afternoon.

A letter sent by David Stern, the commissioner of the NBA, to the players union Sunday contrasts the proposal on the table — highlighted by a 50-50 split of revenues — with a “reset” proposal that would cut the players’ share to 47 percent, roll back current contracts, impose a hard salary cap and reduce contract lengths.

The salary rollback, which was part of the NBA’s first controversial proposal in 2010, had not been included in any league proposal for many months, and it was not publicly mentioned by Stern when he announced the ultimatum Saturday.

But the rollback was included in the letter Stern sent to Billy Hunter, the union’s executive director. A copy of the letter was obtained by the New York Times.

The union has until 5 p.m. Wednesday to accept the NBA’s last proposal or have it replaced by the reset proposal, Stern wrote.

The NBA’s current proposal to the players includes a soft salary cap, a 50 percent share of revenues for players and these features:

• Salary-cap and luxury-tax levels in Years 1 and 2 of the new agreement will be no less than they were in 2010-11. By Year 3, they will be adjusted downward to conform to the new system.

• Sign-and-trade deals and the biannual exception will be available only to nontaxpaying teams.

• Extend-and-trade deals, like the one signed by Carmelo Anthony last season, won’t be allowed.

• The midlevel exception will be set at $5 million for nontaxpaying teams, with a maximum length between three and four years (alternating annually). The value of the exception will grow by 3 percent annually, starting in Year 3.

• The midlevel exception will be set at $2.5 million for taxpaying teams, with a maximum length of two years, and cannot be used in consecutive years.

• A 10 percent escrow tax will be withheld from player salaries, to ensure that player earnings do not exceed 50 percent of league revenues.

• Maximum contract lengths will be five years for “Bird” free agents and four years for others.

• Players will be paid a prorated share of their 2011-12 salaries, based on games played once the season starts.

• Team and player contract options will be prohibited in new contracts, other than rookie deals. But a player can opt out of the final year of a contract if he agrees to zero salary protection (i.e., if it is nonguaranteed).

The “reset” proposal features a flex-cap system that contains an absolute salary ceiling — to be set $5 million above the average team salary. In addition, the NBA would roll back existing contracts “in proportion to system changes in order to ensure sufficient market for free agents.”

Some of the other major differences in the “reset” proposal:

• The midlevel exception would be set at $3 million in Year 1, with a maximum length of three years, and would grow at 3 percent annually.

• Maximum salaries would be reduced.

• Contracts would be limited to four years for “Bird” free agents and three years for others, but each team could give a five-year deal to one designated player.

Both proposals include an “amnesty” provision that will allow every team to waive one player and have 100 percent of his salary removed from the cap.