Observations On The Eve of the Summer of Our Discontent (Conclusion)

Well, let?s wrap this up by looking at the other component of a strategic plan for the Knicks. (If you didn?t catch Part I and Part II go check them out.)

I suggested in Part II that by publicly backing Larry Brown the Knicks have made a de facto commitment to rebuild via the functional model. In this approach all the players, even superstar players, have well-delimited roles. Brown has been quite explicit about this, publicly stating his desire for players who can perform the following functions:

* Three guards that can bring the ball up against the press (presumably at least one is a pass-first point guard)
* Two small forwards (one that can play big guard, another that can play power forward if necessary)
* Four guys that can guard the post

In order for the Knicks to assemble the roster of Brown?s dreams however, they must get their fiscal house into some semblance of order. To that end, I would offer that the team’s strategic rebuilding plan should include a second major objective.

Objective #2: Institute a Zero-Growth Budget

We can all agree that the Knicks are in the seventh layer of salary cap hell, a place where the sign over the gate reads ?abandon your championship hopes all ye who enter.?

I teach college juniors and seniors, many of whom will graduate with enormous debt loads. Yet many of them exhibit better fiscal discipline than this organization. As one reader mentioned in the comments section of Part II, it seems as if Dolan is living out a boyhood fantasy. He tosses money around like he’s the BMOC. Back in the reality-based world however, Mr. Dolan is just another daydreamer doing a bid in the NBA debtor?s prison. He’s bound at the ankles to limited players with ridiculous contracts, a brilliant coach with exaggerated ego needs, and a front office in shambles. What’s worse is that all these parties are pulling in separate directions.

Zero-Growth Budget. A budget with limited or no growth would require more disciplined transactions, forcing the front office to walk away from many of the deals that have taken a bad problem and made it virtually intractable. Many reputable consumer debt counseling programs will demand that people destroy their credit card(s) in order to participate in the program. The reason is simple. Additional debt, regardless of the reason, can push some people into complete financial ruin. The same basic logic holds in professional sports managed by a salary cap. New York?s lack of fiscal discipline, and increasingly inane rationalizations for it, has put it in a position where it can no longer be competitive. Thomas?s efforts to swap expiring deals for so-called proven talent have proven too costly (e.g., Curry), superfluous (e.g., Jalen Rose), or worse, have robbed more deserving young players of needed development (i.e., Mo Taylor/Jackie Butler). Though he clearly bears the responsibility for this oddball collection of? ahem? talent, it would be a mistake to conclude that he simply should have gotten better players. The Knicks are a perfect illustration of how such thinking leads down the path to salary cap oblivion. Salary caps, for all their faults, punish the undisciplined and the intransigent who think they are being creative and clever.

A zero-growth budget is of course a bit of a misnomer. The Knicks will at bare minimum add draft picks to the cap each June, and presumably some players in trade. The real focus of the zero-growth budget is on free agency. New York?s free agency involvement is officially limited to free agent exemptions like the mid-level exemption (MLE), though more practically it also involves sign-and-trade deals.

The Knicks should treat the MLE the same way I treat the ?checks? I get in the mail from credit card companies. I shred them and put them in the trash because cashing those ?checks? worsens my financial situation rather than helps it. Just like those hyper-inflated loans masquerading as free money, the MLE market is systematically overpriced. It is the nature of any capped system to put a premium on the talent that lies between ?replacement level? and star quality. The Knicks have already paid far too high a premium in dollars, years added to the cap, and draft picks for other people?s headaches. Enough already; the Knicks will simply have to make do with less expensive role players from the veteran?s minimum market (i.e., NBA vets, D-League, CBA, and international players), undrafted rookies, and the NBA draft.

In the trade market, the overriding zero-growth principle is that no deal should add (net) salary or years to the cap. The kind of deal we want brings in players who perform a particular function and who match the trade counterpart in dollars and years. What we wish to avoid are the kinds of deals the real Isiah makes that net us a useless (on this team anyway) Steve Francis, depreciating in trade value by the day, while adding years to the cap.

One place Mr. Dolan?s mega-bucks, and his apparent willingness to throw them around, can actually help is in creating additional roster space by swallowing one or more contracts. Extra roster space can potentially enable the team to move one of the monster contracts by allowing the Knicks to take back multiple players. The Knicks could use targeted buyouts to help clear roster space. Even though teams hate to pay players not to play as a matter of religion, it may well may be worth it to create enough roster flexibility to move a bad contract without adding to the cap. Although bought out contracts stay on the cap, settlements do not. It would just be money out of Dolan?s pocket. Buyouts are one way Dolan can use his built-in cash advantage to actually help rather than hurt the team’s competitiveness.

The most interesting thing about selling a zero-growth budget to the fan base is that Isiah?s most fiscally prudent moves have been by far his best competitive moves, dollar-for-dollar. Thomas has drafted reasonably well, in sharp contrast to Layden, Grunfeld, and Riley. He plucked the likes of Jackie Butler, Qyntel Woods, and DeMarr Johnson (Denver) from the veteran?s minimum scrap heap, and each produced a 12 or higher PER this season. Since his best work occurs at the low end of the pay scale it seems the Knicks would do well financially and competitively to insist that he his focus his efforts there, and not allow his gaze to be diverted by anything shiny, sporting a high price tag.

So that?s it; a strategic plan with two straightforward objectives: pick a rebuilding plan and implement a zero-growth budget. Will the Knicks do anything like this during the off-season? I certainly hope so but what the hell do I know? I?m just some guy writing about an organization I know nothing about unless it appears in the newspaper. But, the NBA isn?t brain surgery. It?s pretty clear to anyone and everyone outside Madison Square Garden that the Knicks have mindlessly spent their way into oblivion, and currently have no idea how to get themselves out. So what else is there really but to pick a direction and quit mindlessly spending money? So get on with it already. Yeesh.

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Part-time blogger on the Knicks at Knickerblogger.net and Seahawks at FieldGulls.com. In my free time I hang out at the University of South Carolina and occasionally fill thirsty young minds with knowledge about various and sundry things related to consumer behavior and marketing.

21 thoughts to “Observations On The Eve of the Summer of Our Discontent (Conclusion)”

  1. Part of the problem with a zero-growth budget (and indeed, part of the incentive that created the actual situation) is the value of expiring contracts. Letting expiring contracts, well, expire, has very little value (besides the money saved) if you still remain over the salary cap. You are losing the trade value of the contract (besides the abilities of the player) without getting nothing in return. Sure, you are a bit closer to your goal, but that has zero utility at the moment as you still are over the cap.

  2. Carlos-

    Two points.

    * Almost all of the teams in the league are over the cap. So a zero-growth budget (ZGB) is mostly about setting strict guidelines on spending. I see it as a given that good management is management by exception. But right now, everything is an exception. Every player is the “one piece we need.”

    * The value of an expiring deal is really an empirical question. They can bring back talent in trade. But, if allowed to expire they can also provide cap relief, control spending growth, and open up roster spots. Combined, those may equal or even far exceed a contract’s trade value.

    My point is that any deal where you’re paying a big time premium in years added to the cap in order to move an expiring deal is almost incapable of being worth it. If you’re going to move an expiring deal you would much rather get the deal Chicago got than make the deal Thomas made.

  3. “Although bought out contracts stay on the cap, settlements do not. It would just be money out of Dolan?s pocket.”

    What are “settlements”?

  4. I agree that the “let’s trade an expiring contract for a larger and later expiring contract” mechanism needs to stop, but I was pointing out that the mechanism has real benefits and abandoning it has very real costs. Letting a contract expire opens up a roster spot but if you have to fill it with an undrafted rookie because that’s all you can get, well, that’s a cost you are paying.

  5. Marc Berman reports in the NY Post today that LB has asked Thomas to target Kenyon Martin and possibly go after Zo with the mid level.

    Here we go again…

  6. Mark-

    I’m referring to the amount of money paid to settle a contract. For example, Tim Thomas’s contract is still on Chicago’s cap but the amount they paid him to go away is not.

  7. Kenyon Martin… That’s using your noodle!

    This is why the ZGB is what must be implemented, and it seems that the only way to put it into action is to do away with (certainly) Isiah, if not both Larry and Isiah. One loves vets — preferrably expensive ones who add “intangibles” that don’t really contribute to “wins” — and the other loves spending money like an entire ship full of drunken sailors. That pair is not capable of going forward with the ZGB, and Dolan cares even less than they do about fiscal responsibility. It would be okay if the payroll was $123 million and wins were the result, but Dolan has to recognize that spending that much on a 59-loss squad is downright scandalous.

    Dave, you’re totally right about just letting the contracts expire for the cap relief instead of worrying about their trade value. We’ve seen time and again (and Jackie Butler is a great example) that NBDL/Euroleague “call-ups” can be as productive at the minimum salary as the overpaid, overdone types that Isiah is always pulling in. If you’re getting a 12 PER out of a guy, you might as well have paid $600,000 and not $15 million, and he might as well be in his mid-twenties and not mid-thirties.

    You’re also dead-on about not using the MLE… It only serves as a temptation for bad GMs like Isiah to spend more on players that, let’s face it, at $5 million or less are not going to be world-beaters in the first place. It reminds me of an SNL skit a couple months ago, where a debt relief firm sent out a book entitled “Don’t Spend Money You Don’t Have: The Key to Escaping Debt”… If you can’t afford to sign somebody for more than the minimum — and the Knicks are way beyond this — don’t do it.

    Fixing the Knicks, on paper, would not be that hard. It would require incredible patience and very good drafting, though. Isiah’s got one of those skills, but is completely bereft of the other, and until someone says “enough is enough” with all of his non-draft moves, New York will never move forward.

  8. The Kenyon Martin rumors remind me of another SNL sketch: Bad Idea Jeans.

    “Because, I figure, if you have the chance to sign yet another extra power forward, AND he has a gimpy knee, a bad contract, and his numbers have all dipped since he stopped playing with Jason Kidd, so there’s no wonder why; I mean how many times do you get the chance to make that move?”

    Bad Idea.

  9. “For example, Tim Thomas?s contract is still on Chicago?s cap but the amount they paid him to go away is not.”

    So the idea is to take on other teams’ contracts and then buy out the players? Sure, this clears the roster and we have the benefit of never having to watch Steve Francis toss the ball into the stands if he’s bought out. But how does it help the salary cap situation?

    This was actually a tactic that Layden did a lot. For example, the Knicks were paying Luc Longley and Muggsy Bogues long after they stopped playing in the NBA and those contracts contributed to the Knicks’ being over the cap. Forgive me if I don’t look back on those years as the good old days.

    I still think that the best way for the Knicks to take advantage of their singular situation of wealth and an owner willing to pay the luxury tax is to find teams with one good (or, in any event, desirable) player who are looking to get under the salary cap and then trade for that player with some of the team’s expiring contracts. The key, of course, is not picking a big-name, but overrated, player. (I’m looking at you Stevie!)

  10. Marc R Said:
    April 29th, 2006 at 10:48 am e

    “I still think that the best way for the Knicks to take advantage of their singular situation of wealth and an owner willing to pay the luxury tax is to find teams with one good (or, in any event, desirable) player who are looking to get under the salary cap and then trade for that player with some of the team?s expiring contracts. The key, of course, is not picking a big-name, but overrated, player. (I?m looking at you Stevie!)”

    Oddly enough that tactic seems to work better for teams that are getting the cap relief (see the Suns).

  11. Sure, it’s nice if you clear cap space in the year that the guy who is about to win back-to-back MVPs comes onto the market AND his old team for some reason decides not to resign him. The Suns caught lightening in a bottle; they’re not a case we can generalize from. Many teams have sat there for years with cap space and no one to take it.

    I’ll bet dollars to donuts that the superfabulous free agent class people have been looking for when LeBron’s rookie contract is up will not materialize — their teams can offer them the most money, and LeBron, Melo, Wade, and Bosh will sign extensions with their teams before they ever go on the market. Nash was only there because the Mavs allowed it. I believe that cap space is overvalued on the market given the lack of incentive for high-level talents to even test free agency; it makes sense to trade cap space for talent.

  12. i absolutely disagree with a zero growth budget, in the past 2-3 seasons the knicks have gotten their core from expiring deals eisley, ward and mcdyess became marbury with penny , trybansky mutumbo and othella became jamal crawford Tim thomas’ expiring deal made eddy curry possible and penny’s made getting francis happen.

    the team is right now a bad fit, it has too many scorers and not enough of other things , but if it can change mo taylor’s and jalen rose’s contract into a good post defender(or 2) and a good defender at small forward the team would be fine or at least substantially improved.

    i say keep adding talent just taper it to what the team needs at this point , and use the MLE to help get another good defender.

    i would put a muzzle on larry brown about the talent on the team and give what he asks for and if he still has trouble then he should go.

  13. I don’t really have anything to say on the Knicks issue, but I was wondering if Knickerblogger was going to put up a playoffs stat page like in years past.

  14. Hey, KB, since Tim Thomas is playing so well in the playoffs for Phoenix, what’s the over-under on Isiah using the MLE on Thomas this summer? That, and acquiring Kenyon Martin, if not just to re-live the whole “fugazy” thing from a few years ago? It’d be a classic Isiah move, that’s for sure…

  15. The fugazi thing…

    Man, I had repressed that. Seriously, I had completely forgotten about that until this very moment. The fugazi thing. How funny.

  16. I find it unbelievable that we are 7-10 days into the latest Larry Brown/Knick fiasco and no one has found the energy to post a comment or blog entry on it. It’s almost sad how beat down Knick fans are – a hall of fame coach is getting chased after one year, and potentially getting paid as much as $40 million to go away and it is all met by a collective yawn from Knick fans. It’s almost as if everyone is resigned to us sucking for the next three to five years, so no one really cares how or why we suck. Dark days in Knickville indeed.

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