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NBA to return $160 million in escrow money to players

Jul 12, 2011, 8:59 PM EDT

NHL Season Cancelled Getty Images

In the one move since the start of the NBA lockout, the NBA announced Tuesday that it is going to give the players back money they already earned.

It’s a good thing in terms of thawing the ice, but it’s not going to really change things. As for what happened… this is going to take some explaining. Bear with me.

You know how as part of the last Collective Bargaining Agreement the players got 57 percent of the league’s gross revenues? Well, how they insured it was exactly that amount the players received was by putting eight percent of every NBA’s players check into an escrow fund. Then at the end of the season money in that fund was returned to the players (in the proportion they put in) to get the overall number to 57 percent. Some years the players got some of it back, some years none.

In the NBA owners first new CBA proposal to the players, one of the ideas was for the owners to keep all of the escrow money from last season, about $160 million. You might imagine how well that went over with the players, who felt they were owed that money under the old CBA. (Overall league revenue was up and salaries were down last season, so the full amount was due back the players).

The league has backed off that and will return the money, according to NBA.com.

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.

Not returning the money was a big non-starter for the players union, so just the fact they are getting it back should help move the next conversation off the old deal and on to the next deal. Of course, David Stern will call this a concession and expect one in return from the players, while the union will say this has nothing to do with the new CBA because this is money they had already earned under the old deal.

Basically, this is not moving the sides closer to a new CBA deal as the players want the status quo and owners continue to ask for a dramatic change from the old system. This could remove one stumbling block, but it also gives players more money, which means some may be able to hold out longer before the union buckles.

Maybe a month from now the two sides will start to have meaningful talks. For now we have this action and no talks.

  1. LPad - Jul 13, 2011 at 9:55 AM

    Maybe the players are right when saying that the owners proposal was one of the worst in sports history. After hearing this I think they were right to get the NLRB involved. There was no way the owners were negotiating in good faith, if they weren’t even willing to pay what they owed the players under the old deal.

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