The Sports Business Journal has confirmed that the NBA is looking for a major overhaul of its business model.
The NBA's initial CBA proposal "called for a $45 million per team hard salary cap along with non-guaranteed player contracts and significant cuts in annual salary increases".
An April 26 memo issued by NBPA head Billy Hunter indicates that the NBA is pushing to "for a major overhaul of the NBA’s economic model and emphasizes to players an aggressive bid to significantly slash costs and shorten contracts."
The current cap is a soft cap of $58 million. Dropping the cap to $45 million would represent a 25% reduction.
Right now, the NBA has a soft cap, which means that there are several exceptions that allow teams to exceed the salary cap (for an example click here and read the Larry Bird Rule). In contrast, the NFL and NHL have hard caps, which means they offer relatively few, if any, circumstances under which teams can exceed the salary cap.
Migrating to non-guaranteed contracts would also represent a dramatic change.
The NBA is looking at fundamental changes to its business model, and the last time we saw a league do that was the NHL in 2004-05, where the league lost an entire season.
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