“There’s a lot of changes on the horizon,” Timberwolves coach Kevin McHale recently said. “I think good changes. I think that the whole thing has taken on a life of its own. I think our guarantees are way too long and way too much money. Corrections need to be made. We’re kind of in the Fannie Mae/Freddie Mac era. What do they call them, sub-prime loans? There are some sub-prime contracts.” In the current system, players rationally want to protect their long-term guaranteed deals, and these are increasingly unacceptable to the owners. They also are going to be understandably reluctant to let their share of the pie decrease. Something has to give.
Is there a solution to this impasse? Can we avoid another deadly players strike or owners lockout, like took place in 1998 or that devastated the NHL and major league baseball over the past 15 years?
To do so, the NBA has to scrap the current system in toto and go the “full Garvey.”
What do I mean by this? The league needs to eliminate individual contracts between players and teams, and establish a salary structure that encompasses every player. Agents will play a smaller role, but I doubt many people will shed tears over that.
To be accurate, what I propose is a modified “full Garvey,” because the NFL plan basically distributed income equally among the players. That does not make much sense for a sport like basketball and would be a nonstarter with the players. The operating principle has to be to distribute the income to the most deserving players, with fairness in mind.
Both sides will have to compromise, but if they have patience and vision both sides will gain, and the future of the NBA will be on very solid fiscal footing.
What do the owners get with the modified full Garvey? The owners can have their financial flexibility, such that as their revenues decline, their labor costs do, too. They will not get hosed paying massive long-term contracts in a deflationary depressed economy. General managers can build rosters – make trades, sign free agents -- without any concern about salary. The “capologists” will be out of work. It will give the players added incentive to see that the league succeed, as they will all be the direct beneficiaries of increased revenues. They will become full partners with the owners.
What do players get with the modified full Garvey? Players can guarantee that they will continue to get the same percentage of revenues they currently get, even if many teams are struggling and eager to shed salaries and pay out well below the cap. They get depression protection, too. Also, players will be able to use free agency more readily, and go to whatever team wants them. Salary concerns will not be a factor at all for individual teams as they recruit free agents. This is a huge victory for the players. It is a mixed blessing for fans, so steps have to be taken to prevent anarchic free agent hop-scotching.
In broad terms, the league should maintain the current amount – 57 percent of the basketball-related income (BRI) – effectively allocated to player salaries, when the escrow system is taken into account. This will become a hard cap, with 54 percent of BRI going to the salary pool for players, 3 percent going to an account to cover seriously injured players, and the remaining 43 percent going to management.
