Option 1: This is a revision of a previous proposal. We would see a fixed player share the first three years of 1.92 Billion, 1.98 Billion and then 2.06 Billion. After that, the players share is frozen until revenues reached $4.12 Billion (that is, when 2.06 Billion is 50% of HRR). After revenues reach $4.12 Billion, the players share is 50% of HRR (plus a small increment if yearly growth exceeds the predicted 5% — 57% of revenue above 5% and 61% of revenue above 7.2%).
Option 2: Option 2 is similar in its effects. Simply, the players share will grow each year by 24.7% of any HRR increase (down from the current 57%). If HRR growth is at the 5% rate the owners predict, then the players share falls to 50% in year 5. At 7.2% the share falls faster. (After revenues reach 4.216 Billion, the players would also receive the same small increment of yearly growth as in Option 1.)
Option 3: This idea proceeds from an entirely different approach. We take two principles of this negotiation: the owners stated desire to reduce the players share to 50% of HRR, and the Players position that there is no reason to go backwards. This proposal bases that second principle on existing player contracts, not the players’ share. Here is how it works:
A reduction to 50% from 57% of HRR is a 12.3% cut (that is, 7/57), but the loss in an individual player’s salary would be about 13%. (This is because benefit costs do not fall and these come off the top.) The owners honor all existing player contracts. We do this by dividing an existing contract, on a yearly basis, into two separate parts: the 13% and the remaining 87%. The 13% is paid to the player in any event, and it is not counted in the players share and is also off the cap.
– The remaining 87% of existing contracts, plus all new contracts, go into the players’ share (plus all benefits). Thus constructed, the players share will become 50% of HRR, immediately.
– This means that an individual player under an existing contract would receive the 13% segregated, plus a normal payment, subject to escrow, of 87% of his salary. A player with a new contract would have 100% of his salary subject to the 50/50 split. However, since the 13% of existing contracts are off the cap, this should create more cap space, which will be important as the cap will be squeezed.
– Over time, the existing contracts expire, and the share will fall towards 50%. Below is a chart showing the anticipated savings, but these could be greater if there are a significant number of buyouts.]]>