Average NBA salary hits $8.5 million in new labor deal

(Bloomberg) – The National Basketball Association and its players union have tentatively agreed to terms on a new seven-year labor agreement, according to people familiar with the talks.

Owners and players have agreed to extend the deadline for either side to cancel the current contract to Jan. 13, in order to give each side time to review and approve the deal. Some of the league’s biggest stars, including Chris Paul, LeBron James, Stephen Curry and Carmelo Anthony, lead the union’s executive committee.

Under the new deal, players’ minimum salaries will rise by about 45 percent beginning in the 2017-18 season. The average player salary will also grow to $8.5 million, up from a little more than $5 million when the previous deal expired in 2011, said the people, who asked for anonymity because the agreement isn’t final.

The league, for its part, negotiated rules to help teams hold on to top talent. Owners also retained core elements of the previous deal, like the salary cap and restricted free agency, which have contributed to the growing wealth of the NBA.

Franchise values have tripled since the last collective bargaining agreement was signed in 2011, according to Forbes, as have television rights fees. The league is in the first season of a nine-year, $24 billion TV deal with Walt Disney Co.’s ESPN and Time Warner Inc.’s Turner Broadcasting System.

The accord also governs the division of what’s called basketball-related income, which includes media contracts, ticket sales and merchandise. The split is expected to stay about the same as the previous contract, which allocated 51 percent to the players. Prior to that, the players got 57 percent, but as the overall pool of money has grown, a more even split became more palatable.

There are also a number of health-related changes to the contract, including more rest between games and fewer back-to-backs. Retired players will also get bigger pension payments.

In addition, teams will be allowed to expand their rosters by at least one and possibly two slots, provided they send additional players to Development League affiliates. The league and union also agreed to form an advisory committee on how the league will use wearable technology and the data it generates.

This is the first round of labor talks for NBA Commissioner Adam Silver, who took over the top job in 2014, and NBA Players Association Executive Director Michele Roberts, who was named union chief that same year. They will meet again to discuss the contract that governs what are called group marketing rights -- the licensing fees that, for example, Take Two Interactive must pay to use NBA players in video games.

Until now, the league has paid the union about $50 million for the rights, which it then parcels out to corporate partners and sponsors. Going forward, the union plans to take control of that process. They are currently the only athletes among the four major sports who don’t do so already.

The group license agreement expires in July, which gives the two sides time to work on a a transfer of rights without any disruption to corporate partners.

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