NBA closes loophole that could have given Knicks edge with LeBron
LeBron James #23 of the Cleveland Cavaliers prepares to shoot a free throw in the fourth quarter against the Boston Celtics during Game Six of the Eastern Conference Semifinals. (May 13, 2010) Credit: Getty Images
The NBA has quickly closed a potential loophole in the league's collective-bargaining agreement that might have given the Knicks an edge in recruiting LeBron James.
A scenario reported by Forbes.com national editor Michael Ozanian on Tuesday suggested that the Cablevision spinoff of Madison Square Garden as a publicly traded company would allow James to buy stock in MSG, Inc., which would give the two-time MVP a vested interest in the success of the franchise and the overall brand, not to mention a potential financial advantage for benefiting from his own success, which is something that no other team could offer.
And considering the $775 million-$850 million Garden transformation project, there is potential for the stock value to rise over time, especially with James as the main attraction.
The league's CBA prohibits a player from having an ownership stake in a team, but it says, "A player may own shares in a publicly traded company that directly or indirectly owns an NBA team." In this case, MSG, Inc., could be that company. But upon further review, the NBA says James would be forbidden from purchasing MSG stock.
League spokesman Michael Bass said Friday in a statement, "Ownership of shares in MSG in a situation such as this would constitute salary-cap circumvention."
A spokesman for MSG, Inc., said the company would have no comment. The Knicks are forbidden by NBA rules to comment in any way on James or any potential free agents until the free-agency period begins July 1.
James technically has one year and $17.1 million left on his contract with the Cleveland Cavaliers, but he has an early termination option (ETO) that he can exercise this summer. As the "home" team, the Cavaliers have an advantage over any other team because, by rule of the CBA, they can offer a maximum term of six years with maximum raises of 10 percent per year. Other teams, such as the Knicks, can offer a maximum of only five years and only 8 percent raises. The current system was designed to give teams, especially smaller-market teams, a better ability to keep their own free agents.
The Dolan family owns controlling interests in the Knicks, MSG and Cablevision. Cablevision owns Newsday.
