By February 1983, the financial health of the NBA was in serious doubt.
The majority of the league’s 23 teams were losing money. Six – the Cleveland Cavaliers, Denver Nuggets, Indiana Pacers, Kansas City Kings, San Diego Clippers, Utah Jazz – were on the verge of financial collapse. Some, including the Clippers and Kings, nearly provoked a player strike in 1982 as they fell behind on their deferred payments to former players, as the league totaled an estimated $80 million to $90 million in deferred money owed to players.
The NBA’s previous Collective Bargaining Agreement had expired on June 1, 1982.
Seeking relief from skyrocketing player salaries, the NBA was pushing the players union for sweeping changes.
It was proposing to guarantee the players a fixed percentage of league revenues, the first revenue-sharing plan of its kind in team sports. Under the plan, the owners were offering 40 percent of gross revenues up to $250 million, and 30 percent of revenues above $250 million.
In return, management wanted a hard cap placed on each team’s player payroll. The cap would reflect the fixed percentage of league revenues.
At the time, there were no caps or floors on team payrolls, which ranged from the $1.1 million that the Pacers were spending annually on their players to the $4.5 million spent by the champion Philadelphia 76ers.
The union was open to a fixed-percentage plan in concept. It would give them access not to gate revenues but also to the potential growth from lucrative new network and cable television contracts. It was pushing for the players to receive 55 percent of the league’s gross revenues.
Negotiations had been dragging on for eight months. More than half of the 1982-83 season had been played without a new deal in place. The players, frustrated with the lack of progress, imposed an April 2 strike deadline. If an agreement could not be reached by then, they would refuse to finish playing the season. The regular season was to end on April 17, and was followed by playoffs on which the league counted heavily for its revenues.
The primary stumbling block was not the split of league-generated revenues – the NBA had over the course of numerous bargaining sessions increased its proposal to an even 50-50 split, leaving just a five point spread from the players’ 55 percent demand, which it too had indicated was negotiable – but rather the immediate imposition of a first ever modern day salary cap in professional sports. Read more…