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October 30, 2006

The Ledger Domain

The New Collective Bargaining Agreement - Revenue Sharing

by Maury Brown

Wonders never cease. Almost two months before the December 19th deadline, management and the Players’ Association hammered out a new collective bargaining agreement that will run for five years, expiring on December 11, 2011. Without acrimony, and without any threats of a lockout or strike. At the end of this new agreement we will have seen 16 years of labor peace. Hallelujah.

The CBA hasn't been ratified yet, and what has been released about it doesn’t show the details that the final version will. Still, researching and interviewing several sources that have seen the details has painted a pretty clear picture.

The word has been that the new deal is not much different than the agreement that ran from 2002-2006. This is true to some extent, but there are a number of tweaks in place from the prior CBA that work to further define the cornerstones of the last agreement, with revenue-sharing front and center. Granted, what we're about to delve into isn't exactly light reading. Even those that I have spoken with that have either worked on the deal or reviewed the details admit, there's some complexity to the deal. Never mind that, you're smart, and you get it. You're interested in this because, after all, these adjustments are here for the next five years, and they’re designed to allow each of the 30 clubs a better chance to be competitive. Let's roll up our sleeves and take a look.

Revenue-Sharing

Revenue-sharing will remain in place in the new agreement. The system that funnels monies from the high revenue-making clubs to the lower revenue-making clubs will go through a number of changes designed to address some of its previous shortcomings, and intended to make it more equitable.

The total net transferred revenues will remain at the same level as they did for 2006, at $326 million, with the net amount changing depending on how revenues increase and changes in disparity. It’s the "how" that has changed.