The National Basketball Association (NBA) Collective Bargaining Agreement (CBA): Controlling Contract Agreements in the National Basketball Association

The struggle between the fans, the players, and the organizations that control the teams can drive the NBA to restructure its rules to try to satisfy all three parties. Contract negotiations in the NBA have been a tool used to solve labor issues between teams and the NBA players. From as early as the 1940s, League representatives and players have worked together to implement rules that make business between players and organizations fair and beneficial to both parties. Changes in the recently approved 2023 NBA collective bargaining agreement (CBA) help to highlight the continuation of this mission. While past CBAs have allowed players to receive higher salary caps and more protections in their contracts, the NBA has introduced new types of contracts and contract incentives for players to ensure parity across the League.

The Designated Veterans Rule - A new type of contract

The Designated Veteran Player Contract, implemented in the 2017 CBA, was enacted to incentivize star players to stay with their original team. As of 2017, teams are allowed to offer players contracts that span up to 5 years and take between 30% and 35% of the salary cap. The goal of this new contract, also called the Kevin Durant rule, was to incentivize young star players from leaving their original team after their contracts ended. For this reason, the agreement required that the player either win an award or play for ten or more years consecutively with the team that drafted them. The regular Maximum Annual Salary (Max Contract) amounts to only 25% of a team’s salary cap. This new rule extends to the new CBA in 2023 and will likely continue to extend into the future due to organizations’ and fans' concerns about player movement. The 2017 CBA was a big step towards counteracting the players' freedom gained since the birth of unrestricted free agency in terms of giving teams tools to better retain their best players. 

Despite recent trends of players moving teams, the League has found ways to give the player a chance to gain more than a baseline salary but a percentage of the salary cap. The Designated Rookie Extension can be worth up to 30% of a team’s salary and is rewarded to players who win a League award within their first 4 seasons. As the NBA adds more salary cap restrictions, the teams are faced with tough decisions pertaining to how they should spend their money and construct their rosters. Not only has the NBA changed its contract laws, but they have also limited teams in contracting to acquire players.

The Second Tax Apron

Another restriction added in the 2023 CBA was the Second Tax Apron, restricting teams’ abilities to create contract agreements with players after spending a certain amount of money. In the previous CBA in 2017, salary cap exceptions allowed teams who spent more money than allowed by the cap to sign players to contracts that paid more than the mid-level salary. A mid-level salary is a contract given to a player who takes a pay cut by a team that has exceeded their spending limit. In the past, this allowed teams such as the Warriors, who had already spent an amount exceeding the salary cap on their roster, to get more quality players without paying the minimum salary. With the Second Tax Apron in the new CBA, teams are no longer allowed to offer these contracts if they exceed the salary cap by a specified amount. This change could potentially make every contract, besides a Max Contract, Designated Rookie Extension, and Designated Veteran Player Extension Contract, for players at the bottom of the roster less lucrative. Players who don’t qualify for one of these contracts could potentially make less money on their contracts because less salary is left over.

 65 game requirement-Stricter labor requirements

A big change in the 2023 CBA has resulted in the number of games played being more heavily tied to incentives for players. For high-level players to qualify for awards, they must meet the 65-game threshold in the regular season. Meeting this threshold is important because these awards allow players to be eligible for the higher paying contracts such as the Max Contract or Designated Rookie Extension. According to Section 7 Article II of the new CBA, a player must be named to either an All-NBA team, an All-defensive team, or win an MVP within 2 or 3 preceding seasons to qualify for a Max Deal. By making it more difficult for players to meet these contract requirements, the NBA has shifted its labor laws to cater to organizations and fans. With many players in the past getting rewarded for missing significant portions of the NBA season, organizations now don’t have to pay players lump sums of money for missing games. A player like Zion Williamson, who has made the All-Star team, could be eligible for one of the larger contracts once his expires and has a recent history of injuries. The New Orleans Pelicans, his current team, could save millions of dollars in cap space if he doesn’t meet the minimum game threshold within the last three years of his current contract. Fans will also benefit from this change in the long run, as players will likely be more willing to play 65 or more games per season to qualify for these incentives. Fans pay their money to see the best players on the court, so this new requirement could potentially minimize recent trends in load management and high-level players sitting out large portions of the seasons.

 Conclusion

With all these changes in the CBA, it appears that the fans have limited say in what goes into the contract. Despite not controlling the League's law, the fans have played and will continue to play a big part in changes in future CBAs. Fans are the ones who consume the games and help the NBA continue to be a profitable league and business. Despite not being in the negotiation room, we, as watchers, affect how labor is incentivized. NBA Contracts can be restructured based on how much we are willing to spend our time and money watching and supporting players and their teams in our respective cities and states.

Ryan Robinson is a second-year law student at Wake Forest University School of Law. He holds a Bachelors in political science from the University of Florida. He enjoys playing and debating sports, drawing, and watching and reading One Piece. Upon graduation, he intends to practice sports law, labor law and intellectual property law. He also will be working with professional athletes as a sports agent.

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