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updated: 7/18/2011 9:00 PM

NBA labor situation and how to fix it

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By Mike McGraw

The NBA has gone through a strange progression during the past 12 months.

It all started with a wild spending spree during the vaunted free-agent summer of 2010. Everyone remembers the big deals signed by LeBron James, Chris Bosh, Carlos Boozer, Amare Stoudemire and Joe Johnson.

But smaller-market teams reached deep into their pockets to dole out questionable contracts for the likes of Drew Gooden, Darko Milicic, Travis Outlaw and Amir Johnson.

Then came a surge in attendance and television ratings, no doubt spurred by the Miami Heat and its unlikable Power Trio.

The ESPY Awards probably are not the most accurate barometer of American tastes, but the selection of Dirk Nowitzki as male athlete of the year and the Dallas Mavericks as team of the year seemed to support the idea that most NBA fans were elated to see the Heat lose in the Finals.

After all that, the league initiated a lockout this summer and claimed it lost $300 million last season. The sequence of events seems to lack logic, which is why there's so little optimism that the owners and players will reach an agreement anytime soon.

A solution is attainable. The framework of past collective-bargaining agreements should continue to work with a few key amendments.

The owners can start by eliminating one of their biggest mistakes of the past -- the maximum salary.

In theory, placing a cap on individual salaries provided some cost certainty. In reality, it resulted in a generation of overpaid players.

The maximum salary ended up creating a ridiculous baseline for negotiations. Whenever a team was concerned about losing a free agent for nothing in return, the player's agent knew exactly what to say: "Just give us the max and we've got a deal."

That's how Memphis' Rudy Gay ended up with an $82 million extension last year and Atlanta's Joe Johnson landed a $120 million deal.

The owners should have known long ago they were on the wrong path when Vancouver center Bryant Reeves became one of the first players to sign a max extension.

Figure out what a player is worth and start negotiating.

It should be clear by now that a small number of NBA players merit a salary in the $15 million-$20 million range.

Superstars such as James, Nowitzki, Kobe Bryant, Dwyane Wade, Dwight Howard, Derrick Rose, along with younger versions of Tim Duncan, Shaquille O'Neal and Steve Nash can change a franchise's fortunes. Everyone else should get less.

Likewise, elimination of the maximum salary also could create an unofficial NFL-style franchise tag.

James meant everything to the Cleveland Cavaliers, so why shouldn't they have been allowed to offer $25 million a year to keep him in town?

NBA owners need to make smarter payroll decisions, no matter what new rules are created.

But the rapid salary inflation could be controlled with a few tweaks to the system:

•Smaller raises: Nothing has contributed more to the escalation of salaries than huge annual raises.

In the most recent CBA, players could get a 10.5 percent increase when re-signing with their own teams or 8 percent with a new team.

That's why the Hawks owe Johnson $24.9 million in the 2015-16 season. Miami signed the Power Trio using roughly $43 million in cap room, but James, Wade and Bosh could make a combined $66 million in 2015-16.

Here's the new plan: Annual raises of 2.5 percent if a player stays with his own team; no raises at all if signing with a new team. The economy has spoken.

•Fewer guarantees: It's too bad Michael Redd got injured, but why should a struggling franchise like Milwaukee have to pay him $18 million to do nothing?

Most NBA contracts are fully guaranteed. A better system would make the final season of any contract longer than three years a mutual option. Both the team and the player have the freedom to end it.

•Give something back: As outlined last week, the players are going to have to give something back in these negotiations.

Slashing salaries by 10 percent across the board would be a good start. Every player still will be fabulously wealthy.

•Share the wealth: Revenue sharing could be a divisive topic among the owners. The NBA clearly needs more of it. Why? Because every game features two teams.

The Los Angeles Lakers will get a reported $150 million per year in local television revenue. They wouldn't get much for TV rights to Lakers intrasquad scrimmages. Local TV and ticket revenue should be shared throughout the league.

The NBA didn't want Michael Heisley to move the Grizzlies to Naperville, so it needs to do something else to even the playing field for small-market teams.

•The NBA should keep a soft salary cap, Larry Bird rights and midlevel exception. Fans will turn away if their team isn't allowed to keep popular stars or if it's given no means of improving the roster besides the draft and creating cap room.

The luxury tax has been relatively effective. The league could lower the tax threshold or double the penalty for exceeding the limit.

Then if an owner wants to pay the tax, it will add to the revenue sharing and benefit everyone else.

This column probably should end with a prediction. Will the NBA season start on time? Not a chance.

Will there be a 2011-12 season? Yes. The owners are acting like they've dug in for a long battle. But the success of last season will provide incentive to compromise.

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