Back in February the New York Times published an article on agent David Falk and the next NBA Collective Bargaining Agreement. In it, Falk said that the NBA owners will push for serious changes in the next CBA and since they are prepared to lock the players out for two seasons, they will likely get their changes approved. Two weeks ago the player’s union president, Billy Hunter, refuted the claims that the league will win on all fronts, saying the players would negotiate not surrender. As opposed to the overhaul Falk is suggesting, Hunter said the players will only agree to minor changes to the CBA. Some of the changes that Falk is proposing won’t affect the average fan, like the percentage split between players/owners or the age limit. However there are a few changes to the salary cap that could benefit the common follower.
Understanding the ramifications of the NBA’s salary cap can be difficult for the average viewer. The NBA has a soft cap, meaning all teams over the cap are unable to sign new free agents except for the mid-level exception (about $5/$6M per year) and the low level exception (about $1/$2M per year). Using the Bird exception a team over the cap can usually resign their own player. Additionally a team that is over the cap can only swap players whose annual salaries match. Although the rules are simple, their constraints make for strange results. For instance, last year the Blazers sent Zach Randolph to the Knicks for Steve Francis and Channing Frye. Randolph played nearly every game for the Knicks for a year and a half, while Portland instantly cut Francis, and Frye eventually fell out of the rotation. Yet the Blazers received the better end of the deal!
NBA trades aren’t evaluated at the talent level, but at the financial one. There’s a problem with the league when fans can’t analyze a trade without consulting an accountant. It’s hardly something you’d expect from a business in the entertainment field. The issue stems from guaranteed contracts, or more specifically bad contracts. Nearly all NBA contracts are guaranteed, which means that if a team cuts a player, his contract stays on the cap for its entire length. A player can be overpaid when a team misjudges his potential (Eddy Curry, Larry Hughes), the player regresses due to injury (Antonio McDyess, Darius Miles), or bad management (Jared Jeffries, Jerome James). Since NBA contracts can last 6 years, when a team hands an oversized contract to a player the effects last a long time. Once the contract is signed, the only option the team has to get out from its length is to trade for another player with a contract of similar size but shorter length. But from the league’s perspective, the unwanted contract isn’t removed. It is just redistributed to another team. Hence as these bloated contracts float from team to team until their final demise, the overpaid player becomes a burden on the entire league. It’s not a surprise that players with bad contracts are the ones that are frequently mentioned in trade rumors, since teams are always looking to move them.
While it’s easy to lay blame at the feet of the team presidents that hand out such ridiculous contracts, it’s ultimately the fans that end up suffering. One GM with a few bad moves can cripple a team for half a decade. It will take the Knicks two years post Isiah Thomas (on top of the four years with Zeke at the helm) to be able to get out from the salary cap landslide he created. But this isn’t isolated to the Knicks, because bad contracts are commonplace in the NBA. One misguided front office can hurt a team years after they have been removed.
Adding to the problem is the league’s tough stance on guaranteed contracts, which are seemingly written in stone. Darius Miles was given a contract extension by Portland back in 2004 that lasted until 2010. He played his last game for the Blazers back in the 2006 season. The team petitioned the league to remove his contract from their books due to injury, and the league capitulated. However this year Miles has resurfaced to play in a handful of games for Memphis, and the league has applied his salary back to Portland’s cap. Also this year the Knicks received Cuttino Mobley in a trade, who was forced to retire due to a heart condition. New York was denied a disabled player exception from the league, even though Mobley’s “hypertrophic cardiomyopathy had progressed to the point that playing professional basketball could be life-threatening.”
The two other major American sports don’t have this problem. Major League Baseball’s lack of a salary cap means teams are able to sign any player regardless of how much the team has already spent. Unfortunately this model would be a disaster for the NBA because the league isn’t as stable and lucrative as baseball’s. However the NFL’s model would be a good fit. Football has a hard cap, which means teams are not allowed to exceed their cap number. And to allow teams to accomplish this goal, most contracts in the NFL are not guaranteed. According to wikipedia:
Because of this treatment, NFL contracts almost always include the right to cut a player before the beginning of a season. If a player is cut, his salary for the remainder of his contract is neither paid nor counted against the salary cap for that team. A highly sought-after player signing a long term contract will usually receive a signing bonus, thus providing him with financial security even if he is cut before the end of his contract.
Which leads us back to the NBA’s next CBA. Falk suggests the owners will push for a hard cap and shorter contracts. And I hope they win, because the soft cap/guaranteed contract is bad for the league and its fans. Imagine if player deals were only guaranteed for the first 3 years. Almost instantly the Knicks could have jettisoned any unwanted players and reshape their team in a single offseason. On his first day Donnie Walsh could have cut Stephon Marbury, Zach Randolph, Eddy Curry, Jerome James, Jamal Crawford, and Malik Rose. With the players cut from other teams, Walsh could have had a wider berth of players to chose from when building the 2009 roster. Unfortunately the current cap rules forced Walsh to stick with these undesirable players and allowed him to trade them only for matching salaries (and in Eddy Curry’s case – not at all). It’s easy to see why this would benefit teams and their fans. Bad franchises would be able to fix their mistakes quicker, which means fans wouldn’t have to wait years for the hometown squad to turn things around. And since winning correlates to ticket sales more than anything else, it means the owners would see more money in their pockets.
Switching to a hard cap would probably add one more added benefit to the league: parity. The NFL’s popularity can be partly attributed to the ability of teams to make single season turnarounds. This means that every franchise with competent management (everyone but the Oakland Raiders) has a chance to make the playoffs and go to the Super Bowl. Last year the Dolphins, Falcons, and Cardinals had years that surpassed their fans’ wildest dreams. Over the last three years, the NFC has seen a different winner in 3 out of 4 of their divisions. In that same time span the NBA has had only 1 of their 6 divisions with three different winners (the Southwest). With the current rules, rebuilding in the NBA is a slow and tedious effort. Allowing GMs to cut their players without long term harm means that more players would become free agents each year. This increased player movement would give teams more flexibility to address their needs.
Of course the biggest hurdle in this change would be the players. Overall shorter contracts probably wouldn’t fly with players, since that curbs the earning power of the sports’ best players. And many players would balk at non-guaranteed contracts, since that wouldn’t allow them get that lucrative 5 or 6 year deal for financial security. However by asking for non-guaranteed contracts instead of shorter ones, the league can keep their top earners happy (who would cut LeBron or Kobe?) while making a pitch to the underpaid. For instance if teams weren’t bound by large contracts to undeserving players, there would be more money to sign those who merit it. In other words, some of the younger Knicks might be splitting Stephon Marbury’s $19M per year. And Portland could take the nearly $40M they’re giving to Steve Francis, Raef LaFrentz, and Darius Miles and use that on some of the players that have actually played for the team this year.
Perhaps to even things out for the players, the league would have to make the concession to raise the salary cap. Currently the cap is at $57M, but since it’s a soft cap teams can exceed that number. Using the salary data from hoopshype, it seems that the league paid out an average of $72M this year. Although some players may object to such a concession, there seems to be room for negotiation. And it does redistribute the wealth to players that deserve it more. If there’s resentment in NBA locker rooms over disproportionate salaries, this would go a long way to remedy it. When some players are getting paid more than they are worth, it hurts both the league and the players that deserve more money. And last but not least, the fans.