The Nets, owned by Joe Tsai, have been accused of what sounds like salary-cap circumvention to benefit their stars.
His WNBA team just got busted for violating that league’s Collective Bargaining Agreement with extra benefits for players.
After years of receiving relatively pedestrian salaries and flying coach, WNBA players successfully lobbied for higher pay and better treatment. The new CBA, signed in 2020, requires teams to put players in “premium economy (or similar enhanced coach fare)” if available. No less.
But also no more.
Tsai’s New York Liberty repeatedly flew private.
Howard Megdal of Sports Illustrated:
The Napa trip, over Labor Day weekend, violated the WNBA’s collective bargaining agreement, a benefit that vastly exceeded the allowable compensation to players. So, too, did the charter flights Liberty owners Joe and Clara Wu Tsai bought and provided to their team repeatedly throughout the second half of the WNBA season, a competitive advantage for New York that led to a league-record $500,000 fine of the team—originally floated by the league at $1 million, reduced on an appeal, itself an irregular process—and the removal of Liberty executive Oliver Weisberg from the league’s executive committee, sources told Sports Illustrated. The league confirmed these details, as well.
After someone alerted the WNBA to the Liberty’s violations, possible remedies floated by the league’s general counsel, Jamin Dershowitz, ranged from losing “every draft pick you have ever seen” to suspending ownership, even “grounds for termination of the franchise,” according to a Sept. 21, 2021, communication between the league and the Liberty reviewed by SI.
If you’re at all interested in the WNBA and/or sports business, I highly recommend reading Megdal’s full story. It is a fascinating look into a league still finding its footing a couple of decades in.
This is a massive fine, one that would rank among the highest known to be levied by the NBA.
It’s also understandable.
Imagine the New York Knicks ignoring the NBA salary cap and paying players larger sums than allowed. Perhaps, free agents will still spurn the Knicks. But New York would have a far better chance of loading up. Outrage by every other team and their fans would be immense.
There is practically no difference in what the Liberty did.
You might think WNBA owners should get their teams charter flights if desired. But both owners and players signed a Collective Bargaining Agreement prohibiting it.*
*At least how the CBA is being read by the league. The actual wording: “All air travel provided by the Team (including, but not limited to, travel between games) will be, if available on the Team-chosen flights at the time of booking, premium economy (or similar enhanced coach fare).” Could the Liberty have said, “We chose a private flight. There were no premium economy seats. So we put everyone in other seats on the (private) flight?”
Especially because they negotiated with a players’ union, teams can somewhat operate in ways that would otherwise be considered collusion. In some respects, the WNBA is considered to be a single entity competing with other sources of entertainment for revenue rather than the 12 WNBA teams are considered to be competing with each other. In that sense, WNBA teams – and players – can agree on their own set of internal rules for the league.
To that end, there’s a perceived value in a salary cap and other cost-limiting mechanisms. Most people believe competitive balance is good for leagues. If the Liberty and Las Vegas Aces (who are paying Becky Hammon more than $1 million in annual salary because there’s no cap on coaching salaries) disproportionately attract top players, will other teams draw sufficient attention?
The WNBA must strike the right balance between the haves and the have-nots to preserve the league. That won’t necessarily happen without spending limits. But as Megdal’s story details and the Liberty’s flight violation really shows, tension is growing between the owners who want to spend more and those who don’t.
There are potential solutions, including:
- The next CBA could include a luxury tax/greater revenue sharing between teams. That could make it more palatable for big-spending owners to spend more while the more-frugal owners keep up. However, that would limit the amount of new money going toward players, instead redirecting it among owners.
- Owners who can’t or won’t afford to spend more could be ousted. Franchises in markets that can’t sustain keeping up with the heavyweights could be contracted.
- Players who want better treatment and big-spending owners can push for rule changes, even if every team would take advantage of the flexibility.
There’s a never-ending push for the right balance on these types of issues. The WNBA clearly hasn’t found its equilibrium yet.