NBA returns escrow money to the players – Has the ice broken in the NBA Labour Dispute?
In the first positive development after the NBA locked out the players on 1st July, the league has decided to return the escrow money that had been withheld from the players. During the NBA labour negotiations, the owners
expressed their desire to keep the escrow money for this season but the players vehemently refused the idea.
The escrow money is money taken from the players pay checks, usually a small percentage, that is kept with the league in order to ensure that the Basketball Related Income, BRI, is split in the agreed ratio between the players
and owners. In the now expired CBA, that ratio was set at 57:43, with the players getting the larger chunk.
The league would keep a percentage of salary from every player until the end of the season. If the player’s salaries in total for the season amounted to more than 57 percent, the required percentage of the escrow money would be
taken by the NBA. If the salary total was below 57 percent or approximately the agreed amount, the players would be returned the money.
This measure was kept as a fail safe for transparent and fair distribution of the revenue under the previous CBA.
The NBA claims it suffered huge losses for the last decade under the old CBA, including $300 million just in the last season alone. The owners had demanded of the players to let them keep the money in order to offset those losses
this season. However, the players opposed the idea as they believed it was money they had already earned and their share of the revenue was not exceeding the predetermined threshold, so there was no justifiable reason for giving the money back.
As there was no legal precedent for the league to hold the money, David Stern’s hand has been forced and the NBA has agreed to return the money. On its official website, the league claimed that,
“That cash could ease or delay the point at which some players begin to feel financial hardship from the lockout. Based on the “average” NBA salary of $5.7 million, the escrow rebate would be worth $456,000. A minimum-salaried
player ($473,604) would be due $37,888 while a $16 million superstar could expect $1.28 million coming back.”
In total, $160 million will be returned to the players that had been withheld as escrow. Although the move was expected and possibly unavoidable, it is still being perceived a positive development that could help restart a negotiating
process that stopped the night the old CBA expired.
It could yet also prove a debating point. David Stern and the league would point towards it as a concession and demand the players to make one in return, while the players are bound to say that this has nothing to do with the new
CBA as the money was owed to them under the old one.
Tags: