Things you can learn from Twitter

The NBA started a new Twitter account (@NBA_labor) to help people understand the labor talks and clear up misinformation.

In theory, I'm all for that. But in practice ... maybe the most curt of all media is not the way to hash out the finer points of the immensely complex collective bargaining agreement.

And if I'm feeling a bit negative about it, that may be in part because the very first tweet of the account was to make clear that a Monday TrueHoop post about amnesty clauses was incorrect.

As much as I love getting attention on Twitter, I also hate both being incorrect and being called incorrect. So I had to get to the bottom of it, and sort out which of these possibilities would carry the day:

  • Did I misunderstand something?

  • Did those cranks attack me for no reason?

You'd think this would be a simple phone call or two to get to the bottom of things. Alas, it's the CBA, and nearly 24 hours later it's still muddied.

Spending like crazy

This all started when I wrote that by giving themselves an amnesty clause, which lets owners pay players in full to go away, owners had undermined their own case. That case, of course, being the thing that underpins this entire lockout -- that owners need to spend less money on players. I argued they had given themselves a giant new way to spend more money.

For instance, with no amnesty clause and a hypothetical $60 million salary cap, next year the Wizards would be able to spend a maximum of about $13 million to improve their team by recruiting free agents.

With an amnesty clause, however, they'd be able to pay Rashard Lewis more than $43 million (his remaining two-year salary) to evaporate, and on top of that they'd end up $34 million under the cap. And on some schedule, this year or next, presumably they'd spend that cap money on more players to get better.

And before long, Ted Leonsis is reaching way deeper into his pocket than he ever could have otherwise. They'd have Lewis' entire contract in cap room to spend away. And the thing about spending is it can get spendy.

Now, if you're an incredibly geeky NBA fan, you might balk at what I just said, and remind me that I myself have written that there is basically a league-wide hard cap, so owners, as a group, can not spend more on players, really. All players share a fixed percentage of basketball related income, or BRI. Last year players as a whole got 57 percent. Next year it will presumably be something between 50 or 52.5 percent, which is the issue at the heart of these talks. So if owners pay all these players to go away, in the final analysis the total bill for player salaries would be the same.

In other words, if the Wizards pay Rashard Lewis $43 million to leave their team, that $43 million will come from Leonsis, but it will not increase total compensation to players, because it will all be drawn from the giant pool of BRI money, which is fixed.

This is the point that the NBA made in its tweet, which said: "@TrueHoop Incorrect. Amnesty $$ WILL count towards plyrs' total share of BRI and WILL NOT increase overall payout to plyrs."

Victory at hand

But I knew things were more complicated than that. For one thing, the NBA's league-wide hard cap is imperfect, and owners actually can spend more than that fixed pool of money, and have.

(Brace yourself for geekiness.)

Players have a chunk of their contracts held back every year in escrow. At the end of the year, if it is found that the players earned too much, some of that money is returned to the owners.

However, if players earn way too much money, if they negotiate contracts that total even more than all of their escrow dollar can fix, then owners have to pay them.

All hail salary cap expert Larry Coon who has whole charts about this very thing:

The escrow system provides the owners with salary protection -- but only to a point. The players have to give back some of their salary, but they never have to give back more than what is withheld in escrow. If the escrow money isn’t enough, then the owners will end up paying more than their designated percentage.

This is what happened in 2008-09, when salaries ended up being 57.4 percent of revenues, rather than the designated 57 percent.

An amnesty clause could lead to a repeat of the 2008-09 situation. Amnestied players will continue to be paid in full, and teams will also sign replacements for their amnestied players -- meaning overall salaries will further increase. If the salaries increase beyond the confines of the escrow system, like in 2008-09, then the owners will end up footing the bill. The amnesty provision increases the likelihood of this scenario.

Is it really possible that owners would spend that much in this economy?

I'd guess yes, given that last time they did it the economy was bad. And more importantly, I'd guess so because just last Friday, the man who is armed with the best projections and insight into owners' thinking seemed to telegraph that he expected it. David Stern described, with my emphasis, one of the league's key concessions: "All players currently under contract would receive payment in full under their contracts, even if that took us above any pre-agreed percentage."

In other words, forget your fixed pool of money. We are ready to spend more.

That quote loomed large in my thinking about this amnesty clause. Owners can spend more than the fixed percentage and have. Amnesty makes it easier to spend than ever. And here's the commissioner on record, outright saying that spending above and beyond BRI was a real possibility in this next deal.

So long as Stern is saying there could be spending beyond BRI, that snotty all-caps second part of the tweet ("and WILL NOT increase overall payout to plyrs") is as questionable as the league's spelling of "players."

This is what I explained to various people from the NBA this morning. At one point I said that I couldn't wait for that Twitter account's first tweet to be retracted. This became a secret goal of my day.

My line of reasoning seemed to confuse just about everyone. One guy promised to call me back when he understood it better, and I'm still waiting.

New information, and defeat

Eventually, though, I got the right person on the phone, and learned that in fact, that tweet will never be retracted.

For good reasons that had never been public before, that cranky Twitter account had, unfortunately, been right all along.

And one thing in particular that I had written -- that amnesty dollars, or any dollars, would not count towards BRI -- was just plain wrong. (There's already a correction in the old post.)

So, what in the hell was Stern talking about? How can it be that owners might spend beyond BRI, and yet the NBA's cranky new Twitter account might also be right in saying they will never spend beyond BRI?

Here's how: The NBA and the union have, sources say, agreed to close the loophole that lets owners spend beyond the limits of the agreed-to share of BRI. What that means is that owners might spend above and beyond the limits of BRI just as I had suggested they might in those confident paragraphs above. This is what Stern was advertising might happen.

However, if that happens under the new deal, owners will not just forget that extra bill ... they will fix it in the following year or years. So under the NBA's latest proposal to the union, they really were offering 50 percent of BRI over ten years. However, if in the first year the owners paid 52 percent, that would be acceptable, and they'd keep bigger escrows the next year, and essentially put it on the players' tab. The details remain in flux, but maybe the following year the players would make 48 percent, or maybe for the next two years they'd make 49 percent. By the end of the decade, however, players would have made precisely the agreed-to percentage, even if the owners spent beyond that sometimes.

The gist of my post still applies to most owners who end up using the amnesty clause. Leonsis, for instance, if he's in favor of the amnesty, is really in favor of increasing his own capacity to spend. But if he pays to cut Lewis, and then spends on his replacement, other owners would get similar relief. It really is, or will be, if they can ever strike a deal, a zero-sum game, where owners will may one total amount which players will share between them. According to my sources, there is not a chance that this amnesty clause will let owners spend like crazy.

So I stand corrected.