ANSWERING THE QUESTIONS.

Byline: - Michael Murphy Houston Chronicle

The following is a look at some of the issues surrounding the NBA lockout:

Q: Are there any talks on the horizon?

A: No.

Q: What's the big problem?

A: Money, what else? The league's owners, shocked by salaries shooting into the stratosphere, are attempting to slow the trend by imposing limits on how much a player can make and setting an absolute limit on the amount of revenue devoted to salaries. The union, wanting to keep the open-market, free-economy system it has enjoyed, does not want to give up such things as the Larry Bird exception, which allows teams to exceed the salary cap to re-sign their own free agents. But the owners are serious about taking control of their industry, aiming to install a hard salary cap and using cost certainty to ensure profits.

Q: Will there be a season?

A: Probably. Odds are about 70-30 in favor of having a season. Why? Because neither side can afford to lose a season. The players' only stock in trade is their bodies and their ability, and losing a year - especially at the wages they make - would be disastrous to most. And the NBA can ill-afford to lose the trust of the corporate sponsors it has so carefully cultivated. Courtside seats at NBA games have gone from the Levi's crowd to Brooks Brothers, so once that magic is captured, you can't afford to let it escape.

Q: How much time is left to save the season?

A: It's going to take about two weeks to finalize the new collective-bargaining agreement and put it on paper, and then another three weeks to allow teams to make trades, sign free agents and have an abbreviated camp. The start of the season can't be later than Feb. 1, just enough time to squeeze in the 50 or so games needed for an acceptable season.

Q: Were the two sides close to reaching an agreement last week?

A: Yes. They were so close, Stern reportedly personally called selected East Coast writers and told them to drop everything and prepare to write about the new deal that was about to come out of last Saturday's bargaining session.

Q: What happened?

A: It depends on which side you ask. After making tremendous progress in previous negotiating sessions, owners say the players entered a meeting last Saturday and renewed their demand for 57 percent of the basketball-related income instead of what the owners thought was an agreed-upon average of 54 percent over the course of a six- or seven-year deal. The players say the owners have tinkered too much with a complicated escrow fund, which is designed to slow the salary growth that has owners so concerned about the future of the sport.

Q: What is the problem with the escrow fund?

A: The escrow deal is a fund whereby the players contribute a percentage of their salaries before the season as a hedge against spending beyond a predetermined limit. The union would like players and ownership to share the responsibility for overspending, and it is offering 10 percent of players' salaries to cover that agreed-upon limit. If salaries exceed what the players contribute, then the union would like owners to cover the rest with a tax on huge salaries. Owners, who want the players to kick in 15 percent of their salaries, agreed to the tax but want an exceedingly high tax rate - around 600 percent, according to union sources, meaning owners would have to pay $6 million for every $1 million of overspending. The players don't want that high of a tax rate.

Q: Why does the union care how much the tax rate is? The owners are spending the money, aren't they?

A: Yes, but the union would like to see salaries increase at an acceptable rate, and thinks such a prohibitive tax rate would paralyze salary growth. Plus, the union thinks such a rate would cause a competitive imbalance because only a few of the wealthiest teams - the Portland Trail Blazers (owned by billionaire Paul Allen), the New York Knicks (owned by MSG Inc.) and the Los Angeles Lakers (owned by billionaire Jerry Buss), for example - would be able to afford such a huge tax.

Q: Are there other points of disagreement?

A: Yes, but most can be worked out. The owners were demanding a timing-rules change, which would have forced a team that signed another team's free agent to forfeit its right to go over the cap to re-sign its own Bird-exception free agents. The union called this demand a ``deal killer'' and won't budge off that stance. But the owners have shown a willingness to relax their demand, offering a phase-in of the timing-rule change over a period of years and may include some exceptions. This one is debated - when the sides are talking, that is.

Q: If they have identified the problems, why are they not negotiating?

A: Again, it depends on which side you ask. The owners say the players have to make more concessions in an honest effort to get a deal done. The players say the owners are trying to sweat them out, to see if the union breaks ranks after the players missed a third paycheck Tuesday. The truth is probably that egos have gotten in the way and neither side wants to budge. It has become a power struggle as well as a battle over the financial future of the league.

Q: Why don't they bring in a mediator?

A: The union has asked for that three times, but the league has declined. Stern insists that if the sides can't work out a deal ``like partners,'' then having a third party deciding things won't do much good.