Commentary

Lockout FAQ: Uncertain future ahead

Updated: July 7, 2011, 11:31 AM ET
By Larry Coon | Special to ESPN.com

It's here. For two years we've had July 1, 2011, circled on our calendars, and a small shiver went down our spines every time we looked ahead to that date. Or we went through some ritual akin to whistling in a graveyard, trying to purge the lingering thought from our heads.

But now it's here. There's no avoiding it and no denying it. We just have to face it. The NBA's collective bargaining agreement has expired. The league has locked out its players. And it may be a long time before any of us sees NBA basketball played again.

Since the lockout will be occupying every NBA fan's mind for the foreseeable future, it's time to answer some of the more commonly asked questions about the work stoppage. I won't bother with elementary questions like "What's a lockout?" If you're taking the time to read an NBA labor article in July, you already know what a lockout is. And if you didn't know a week ago, you've now had it explained to you on every website, radio show, podcast, newspaper and TV show that covers the NBA.

So let's concentrate on the questions to which you may not already know the answer. We'll also mix in questions about what life might be like in a post-lockout NBA.

If the owners get a hard cap, how will teams like the Lakers and Magic get under it?
The league's previous soft cap was really more of a suggestion than an actual spending limit. Teams were free to operate above the cap so long as they used certain mechanisms called exceptions, and few teams were ever below the cap during an NBA season. The owners' original proposal sought to change all that, and called for a $45 million hard cap.

A true hard cap is a different animal altogether -- teams are required to be below a hard cap at all times. If a $45 million hard cap were to be imposed starting with the 2011-12 season, a number of teams would be in trouble. For example, the Lakers have already committed to over $91 million in salaries for 2011-12, and the Magic aren't far behind, at just over $76 million.

But teams likely wouldn't be forced to jettison half their rosters should a hard cap be imposed. The same proposal that included a hard cap also included salary rollbacks (reductions in existing salaries of 15 to 25 percent) and an amnesty provision, which would allow teams to waive one player without cap consequences. These provisions would have softened the blow of a hard cap, and additional rules likely would have accommodated teams in other ways.

Also keep in mind that the league's proposal for a $45 million hard cap was just that -- one proposal. Their next proposal kept the hard cap, but gave teams a three-year grace period before it would be imposed. They further softened their stance in later proposals, adopting what they called a "flex cap," which is a hybrid between a soft cap and a hard cap. It is possible that as negotiations continue, the proposals will become less and less stringent, and the final agreement won't force teams to make tough decisions regarding their core players.

If there is a hard cap, will the league provide teams with an amnesty clause? How would it work?
The 2005 CBA included a clause referred to as the "Luxury Tax Amnesty Provision." It allowed teams to waive one player whose salary would then be excluded from the team's luxury tax calculations. This clause was added because the league changed its luxury tax system in the 2005 agreement. Teams made their roster decisions based on the terms of the 1999 agreement, and might have planned differently had the 2005 rules been in place at the time. The provision was seen as a way of accommodating teams that may have been impacted by these rule changes.

This year the league wants to change more than just the luxury tax system -- it wants to make fundamental changes to the salary-cap system itself. Depending on how the negotiations turn out, these changes could be as severe as implementing a hard cap with which teams must immediately comply.

If the league makes a fundamental change to the salary-cap rules, it is expected to follow suit with another amnesty provision to accommodate the impacted teams. Such a provision would likely allow teams to waive one player, whose salary would then be excluded from the team's salary-cap calculations. The player would still be paid in full -- for example, Orlando couldn't use such a provision to escape its commitment to pay Gilbert Arenas the $62.3 million he is owed over the next three seasons.

The owners' proposal which included a $45 million hard cap reportedly also included such a provision. But the final determination won't be made until the two sides actually come to terms on a new agreement. The specific workings of an amnesty provision -- or whether a provision is included at all -- ultimately will depend on the changes that are made to the salary-cap system. It's possible that the next agreement will include an amnesty provision that can be used on more than one player, or can be used more than once during the lifetime of the agreement.

Can teams have any contact with teams, coaches or trainers during the lockout?
No, and in fact according to ESPN.com's Ric Bucher, teams will be fined $1 million for any contact. This would presumably extend to player agents, but as of this writing one agent says he hasn't heard anything official on this yet.

When do players start missing paychecks?
The regular NBA pay schedule has 12 biweekly paydays, starting Nov. 15 and ending May 1. But some players are paid over 12 months, and will continue to be paid their 2010-11 salaries through Dec. 1.

Teams are only required to pay 20 percent of a player's salary on regular league paydays. The remaining 80 percent can be paid according to whatever schedule the team and player agree to. A few players receive a large lump-sum payment July 1, the first allowable date.

So some players will miss their first paycheck July 1. All players will miss their first paycheck no later than Nov. 15.

What is union decertification?
Decertification occurs when the players effectively dissolve the union. It's a tactic that clears the way for the players to sue the league for antitrust violation. Many league practices, such as the draft and salary restraints, are exempted from federal antitrust laws because they are part of a collective bargaining agreement. This protection extends past the expiration of the agreement so long as a labor relationship continues to exist between the two sides.

By decertifying their union, the players would end that labor relationship and, in theory, also end the league's exemption from antitrust laws. This would clear the way for a lawsuit against the league.

How would union decertification affect the labor dispute? Would the NBA players actually decertify their union?
A union decertification would do nothing to hasten a solution to the labor dispute. It would put a stop to the negotiations and open the door to an extended legal battle. It's more like a nuclear option -- its mere threat could motivate the league to negotiate in earnest, but it also comes with consequences that no one wants to contemplate.

Union president Derek Fisher understands the potential consequences of decertification, and has said it represents more of a last resort than a first choice. "For us, decertification is never something that you want to do -- it's not a strategy like that," he said. "It's more a decision you make when your hand is forced and there isn't another option to try to save the season."

David Stern said that if the players decertify their union, all contracts would become null and void. What did he mean? None of the legal experts I consulted are entirely sure what he meant. The act of locking out the players means the players won't be paid until the labor dispute ends and a new agreement is in place. Once that happens, the players' paychecks resume.

So Stern had to have meant that if the players decertify the union during the lockout, then their contracts become unenforceable, even after the dispute is settled. According to everyone I've talked to, this simply is not true. Perhaps Stern was speaking metaphorically, as if to say that if the players decertify their union, it will be a long, long time before the dispute is settled -- so the contracts will have expired before the players actually return to work.

Can NBA players play overseas during a lockout?
The answer to this one is "It's complicated." Stern said as far as he's concerned, the players can do what they want to do. But keep in mind, he's going to say that regardless -- he doesn't want to appear in any way to be trying to prevent the players from earning a living. Labor laws don't allow an employer to lock out its employees and prevent them from earning a living elsewhere.

Ultimately, it doesn't matter what Stern says or does -- the decision isn't up to him.

In order to play professionally overseas, FIBA (the organizing body for international basketball) requires a Letter of Clearance from the player's national organizing body. In the case of players from the United States, that's USA Basketball. The Letter of Clearance certifies that the player is free to sign a contract -- i.e., he has no other contractual obligations that would get in the way. An NBA contract is such a contractual obligation. Lockout or not, it's still an existing contract. So on the surface, an NBA player who's under contract would not be allowed to sign in any FIBA league. NBA free agents, on the other hand, can sign wherever they'd like.

But here's the rub -- we're getting into uncharted territory. FIBA has never found itself in this position before. FIBA could decide to alter or suspend its rule requiring a Letter of Clearance, or allow contracts to be signed so long as they contain language that says the contract becomes null and void immediately if the NBA lockout ends.

More likely, FIBA simply would stick to its existing rule, essentially punting the problem to the national organizing bodies. These bodies (such as USA Basketball) could decide to issue a Letter of Clearance notwithstanding the NBA lockout. Or they could issue a Letter of Clearance with a specific notation about the lockout -- essentially punting the problem right back to FIBA.

Finally, the NBA players could take FIBA and/or the national organizing bodies to court. The ability to block players in a lockout has never been tested through litigation, and once they're there, anything can happen.

If players under contract are cleared to play in Europe, will there be a mass exodus?
It's doubtful. For one thing, there simply aren't enough teams with enough open roster spots to accommodate 400-plus NBA players. And the ones who do sign overseas will likely make only a fraction of what they earned in the NBA. The Euroleague and other FIBA leagues simply can't afford to pay NBA players commensurate with the salaries to which they've grown accustomed.

So we will probably see a few head overseas, but certainly not a Who's Who of NBA players.

If the lockout lasts an entire season, what will happen with the 2012 draft? How will the draft order be determined?
If the season is canceled and the sides come to an agreement by next June, the 2012 draft should go on as planned. The draft order will be a little tricky. There will be no season upon which to determine the order, and they can't just repeat the 2011 draft order -- that would "reward" teams twice for the same bad season in 2010-11.

The NHL was faced with this dilemma when it lost its 2004-05 season to a lockout. The league settled on a weighted lottery that included all 30 teams. The weighting was based on playoff appearances over the previous three seasons and first overall picks over the previous four seasons.

The NBA would likely adopt a similar system should the 2011-12 season be canceled. It would be a one-time occurrence -- the league would revert to its usual system the following year.

If the lockout lasts an entire year, what happens to contracts that expire following the 2011-12 season? Do they expire anyway, or does the contract extend through 2012-13?
A contract that is scheduled to expire following the 2011-12 season should expire on June 30, 2012, whether or not the season is played. This means it's possible that 2012 free agents -- like Dwight Howard -- may have already played their last game for their current teams. Nervous teams had the opportunity to make a trade by June 30 to avoid the risk of losing these players without compensation. However, no such trade was completed, which may indicate either some faith in their ability to hang on to their potential free agents, or in the league's ability to resolve the labor dispute before the season is lost. (Sacramento and Cleveland swapped Omri Casspi and J.J. Hickson on Thursday, but neither player's contract ends in 2012.)

It is also possible for the two sides to mutually agree that 2011-12 "didn't happen," so all contracts will simply be pushed back by one year. Therefore this is all subject to negotiation.

After the labor dispute is settled, will my team be able to ….
We're a long way away from knowing how the rules will work in the next agreement. At this point it's unknown whether there will be a hard cap or a soft cap, how much room teams will have to sign free agents, what the trade rules might be or whether exceptions will continue to exist. So it's pointless to ask right now if the Knicks will be able to sign a third star to go with Amare Stoudemire and Carmelo Anthony, if Orlando will need to trade Dwight Howard, if New Jersey will need to trade Deron Williams, if Miami can add a point guard and a center to complement the Big Three, if the Bulls can add a shooting guard, if the Clippers can add a small forward or if the Lakers can add a point guard who's not an AARP member. These questions will just have to wait.

The only hope is that we won't have to wait too long.

Larry Coon is the author of the NBA Salary Cap FAQ. Follow him on Twitter.

Larry Coon is the author of the NBA Salary Cap FAQ.