(FORTUNE Magazine) – The nice-nice, hug-hug made by NBA Commissioner David Stern and union leader Billy Hunter last week was understandable. The two men staved off humiliation with an all-night negotiating session and a settlement of the labor dispute that threatened to cancel the 1998-99 season. Any chance of ending the six-month feud between players and owners absolutely had to begin with the two principals making it seem as if each was content with the deal. But don't be fooled: The owners won. And they won big.

They won because they got the one thing they've wanted since the mid-'90s: a hard cap on salaries. No more than 55% of defined revenues will go to the players in the fourth, fifth, and sixth years of the deal (the share owners were willing to give all along), 57% in the seventh year. "I call it the Viagra cap," jokes former union leader Charles Grantham. "It's so hard it gives you a heart attack."

Sure, you'll hear a lot about the more lucrative "exceptions" that allow teams to sign players even if they're capped out, about higher minimum salaries and fatter paychecks for (cough) "middle-class" players. And, yes, NBA players will likely remain the highest-paid athletes on the planet, so shed no tears for them. Someone ought to put the last $100 million deal to be signed--Shawn Kemp's seven-year contract--behind glass at the Smithsonian, because we may never see one like it again.

Owners want to control salaries not only to cut overhead, but also to ensure a robust resale market for their franchises. This is particularly important for small-market teams whose revenue potential--broadcast rights fees, concession and tickets sales, and local advertising--simply isn't big enough to appeal to media giants (such as Time Warner, FORTUNE's parent, which owns the Atlanta Hawks). The new, stricter salary controls mean smaller teams can now compete with their big-market brethren for the best players. And when every team has a chance to build a contender, franchises throughout the league are more attractive to a wider pool of potential investors, including the merely rich individuals who were slowly being squeezed out.

"[The deal] was about effecting change in the model that might impact certain individuals but would still deliver enormous sums to the players--and that's not an easy thing to do," Stern explained the night the settlement was announced. "But none of it hangs together in the future if we're discouraging local investment by being less attractive as an entertainment vehicle." Or as a business.

Like most of us, Stern and the owners were inspired by last year's baseball season, the best ever. Not by Mark McGwire and Sammy Sosa, however. Their resolve was steeled by watching baseball's economic caste system at work: In that sport, the big winners usually have the biggest wallets. In 1998, the Baltimore Orioles were the only team with a payroll higher than $48 million and a losing record. Conversely, only the Toronto Blue Jays paid less than that amount for player salaries and managed a winning record.

The "familial" tone now expressed by Stern and Hunter is reminiscent of the extremely effective partnership between the league and its players that once made it a model for all sports. Now it is a model for another reason. Owners in pro baseball and the NFL are likely salivating at the prospect of mimicking the NBA's scheme when their own current collective bargaining agreements expire in the near future. But for now, at last, the game's the thing.

--Roy S. Johnson