The National Basketball Association (nba).

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Background:

The National Basketball Association (NBA) is a basketball league that is primarily based in the United States of America. The league consists of 29 American teams and 1 Canadian team. Furthermore, this league is currently comprised of 30 teams. Due to the vast quantity of players and the low amount of teams, there are many instances where players can be paid above their market value. Moreover, players are as known to team hop if they feel that they are not being compensated enough for their services. Moreover, players may also team hop if they feel that they are not being provided an adequate amount of time on the court. This is due to the fact that players need to be given the appropriate amount of playing time in order to showcase their abilities. In order for the players to gain their required amount of compensation, many forms of negotiations have to take place. However, these negotiations require the players in question to hire agents. These agents then negotiate the players’ contracts on their behalf. As soon as both parties agree on an amount and a contract, the player is then able to play for the team in question. 

Analysis of Transaction:

This process differs when a new or rookie player is concerned. In situations where a rookie player is the player in question, their deal solely depends based on which draft pick they were.  Additionally, the negotiations are handled through NBA’s Collective Bargaining Agreement or CBA for short. CBA is responsible for determining draft pick salaries before the players are selected. This is conducted by CBA in a descending order with the first pick receiving the largest amount of compensation and the last pick receiving the lowest amount. Agents are then able to negotiate for their respective player. They may propose bonuses for their players in the contract, however, due to the fact that rookies are new drafts, they seldom have a steady leverage over the contract. Moreover, only the first two years of a contract is actually guaranteed for the players. This indicates that after the second year is up, the team is able to decided whether they wish to retain the player for the prearranged wage or not. If the team decides to let go of the player when their rookie contract is up, the player is then a free agent. This indicates that the player is able to field offers from any and all other teams so long as they do not accept an offer. Moreover, during this time, the player’s initial team (the team that first drafted the player), is able to make offers to the player. This exchange will make the player a Restricted Free Agent. During this time the player is still able to entertain other teams and offers. However, once they accept an offer from a team they are then bound. This binding works differently if the player accepts a contract from a team that is not their draft team. This is due to the fact that if the player accepts an offer from a different team, their drafting team is then able to match the offer. If they match the offer within 3 days of the initial offers, they get to sign the player for the contract that they accepted from the other team. The reason for establishing this regulation was to prohibit players from team hopping. 

Requirements of Each Party:

        After reading through all the aforementioned information, one can clearly understand the inner workings of a NBA negotiation. Additionally, the previously mentioned background information provides a good backdrop for the case being highlighted through this paper. The case being highlighted through this paper is the case of Tristan Thompson. Drafted as the fourth overall pick in the 2011 NBA Draft, at the age of around 20 years old, Tristan Thompson was picked by the Cleveland Cavaliers. His rookie contract lasted for a duration of four whole years. During this time Tristan Thompson was said to have received an approximate sum of around $17 million before the application of taxes. After his rookie contract was over, Tristan Thompson was able to get his agent to renegotiate on his behalf. Tristan Thompson’s agent then proceeded to demand a maximum contract for Tristan Thompson from the Cleveland Cavaliers. A maximum contract, in the world of NBA is a term to describe a player asking for twenty-five percent of the salary cap. Moreover, this is highest salary a team can offer a player. This amount is typically offered due to a player’s seniority and or their previous salaries. Moreover, this was a contract that could only be offered by the Cavaliers to Tristan Thompson due to many factors. Firstly, a maximum salary could only be offered by a team to players who have been with the team for a minimum of two years consecutively. Secondly, due to the aforementioned information, the Cavaliers were also able to go over the salary cap for Tristan Thompson, while the other teams were not. Additionally, the other teams were only able to offer Tristan Thompson a sum total of twenty percent due to the information covered. This was the requirements of the first party, also known as, Tristan Thompson. 

The second party in question were the Cleveland Cavaliers. This party’s requirement was simple. They did not want to sign Tristan Thompson for a maximum contract. This was due to many reasons, the first being the fact that while Tristan Thompson was a good player, he was not a star player. He was not the best and therefore, in the perspective of the Cavaliers, he did not deserve to be paid the highest amount. Moreover, the Cavaliers were also well over their capacity for the 2014 – 2015 season. This was due to the fact that they had already signed LeBron James to a maximum contract during Free Agency (described above) and they had recently traded for Kevin Love who also had a maximum contract. Also the Cavaliers had also signed Kyrie Irving for a maximum contract which was set to begin in the 2015 – 2016 season, as well. Therefore, adding another maximum contract would not have been a financially feasible decision on the Cavaliers’ part. In addition to the above-mentioned information, there was also the financial issue regarding luxury taxes. This is a tax teams are required to pay if their players’ salaries cross an previously mentioned amount. Furthermore, with the addition of the maximum contracts of both Kyrie Irving and Triston Thompson, the luxury tax amount would have exceeded the team’s capped salary. The capped salary is the set amount that a team has access to in order to sign contracts with their preferred players. Therefore, those were the initial requirements of each party.