The players agreed to a 19-year-old minimum age and shorter guaranteed contracts, and the owners agreed to drop a proposed "super" luxury tax and to guarantee the players 57 percent of the league's $3 billion a year in basketball-related income.
The contract will subject veterans to four random tests a year for performance enhancers and recreational drugs. Under the terms of the old deal, they were subject to one test at the beginning of training camp.
"I'd call it a 50-50 deal," said NBA commissioner David Stern at a news conference in San Antonio before Game 6 of the Finals. "The essential economics stay the same."
Union director Billy Hunter agreed, saying, "I think we struck a deal that will be extremely good for the players and ... enhance the overall growth and stability of the league."
The sides worked out the agreement during four straight days of meetings beginning Friday. The league's Board of Governors and the players must ratify the contract. Stern and Hunter said they don't expect substantial resistance to the deal from either side.
The league's summer schedule will not be affected, Stern said, but the first day of free-agent signings will be pushed from July 14 to July 22.
Until the 12-hour meeting Friday, leaders of both sides were using apocalyptic language to describe what might happen if a compromise could not be reached. Stern said the players would be making a grave mistake if they did not agree to a contract by June 30. Hunter said a lockout could be a "death knell for the league."
Both said bargaining would restart virtually from scratch in case of a work stoppage. "We agreed almost all the way along the line that this business would suffer greatly from a lockout," Stern said.
Added Hunter, "We decided it was time to back away from the abyss."
Sports marketing experts said a lockout would have been disastrous, angering general sports fans far more than the ongoing NHL lockout.
"They both realized that the league's economics are so good for everyone, that it was of no use to anyone to play this big game of chicken," said Marc Ganis, a Chicago-based sports marketing consultant.
The NBA endured a seven-month lockout in 1998-99 that reduced the regular season to 52 games. The subsequent agreement was widely viewed as a victory for the owners, who won unprecedented limits on contract amounts and durations. This year's bargaining amounted to a tweaking more than an overhaul.
The age minimum (players under 19 who are at least one year out of high school would also be draft-eligible) was perhaps the most publicly debated aspect of the negotiations. Stern originally proposed keeping out all players under 20, a move that would have closed the league's draft to high school players, many foreign players and most college freshmen.
The commissioner said the league's image will improve with fewer pro scouts cluttering high school gyms. He added yesterday that he hopes to expand the NBA's developmental league from eight to 15 teams and turn that league into an alternative for 18-year-olds who don't wish to play in college.
The 19-year-old minimum would have barred most high school draftees from the past 10 years, including Kevin Garnett, Kobe Bryant and James. But a few, such as Amare Stoudemire and Kwame Brown, the first high schooler picked No. 1 overall, could have slipped in.
Ganis said the new rule will be a marketing coup.
"It'll be excellent for the league because the players will all have at least one year of exposure in the NCAA," he said.
Ganis pointed to Baltimore native Carmelo Anthony, who entered the league as a star after leading Syracuse to a national championship. "Just look at him compared to a guy like Kwame Brown, whom no one knew and who, as it turned out, had no game," he said.
Contract lengths were another widely debated issue. Under the old agreement, maximum contracts lasted six years for players signing with new teams and seven for players resigning with the same team. The owners wanted to reduce maximums to three and four years, but ultimately compromised at five and six.
Maximum raises will be reduced from 12.5 percent a year for those re-signing and 10 percent a year for those signing with a new team to 10 percent and 8 percent a year.
But the salary cap will increase from 48 percent to 51 percent of the league's basketball-related income. Based on last year's numbers, that would equal $5 million to $6 million more per team. The owners dropped a proposed premium tax on the league's biggest-spending teams.
Players also earned a concession on the league's escrow tax. Every year, the owners have placed 10 percent of each player's salary into escrow and if the league has spent more than 57 percent of its basketball income on salaries, the escrow money is distributed to teams that remain under the salary cap. Under the new agreement, the escrow tax will shrink to 8 percent and the money will go to all 30 teams.
In other changes, rosters will be expanded from 12 to 14, and players will have the right to an arbitrator's review of any suspension of more than 12 games for on-court misconduct.
Sun staff writer Don Markus contributed to this article.
Key points of agreement
The minimum age for entering the draft will increase from 18 to 19 (or one year removed from high school).
The maximum length of a contract will decrease by one year, from seven years for a player re-signing with a team and six years for a player joining a new team to six and five.
Rosters will be expanded to 14 players, up from 12.
Players will be subject to four random drug tests a season.
Players in their first two seasons may be placed in the NBA developmental league.