Understanding and fixing this CBA mess, part two
By Max Trueblood
Read part one here
ALLOW THE OWNERS TO TERMINATE ONE GUARANTEED DEAL OVER THE FIRST FIVE YEARS OF THE CBA AND THEN ONE MORE DURING THE 2ND FIVE YEARS.
This is one I could actually do without but with public pressure to limit or get rid of guaranteed contracts at an all time high, I concede this to the spirit of compromise. Plus, with a hard cap in place, teams are going to need to be able to get out from under mistakes and allowing for this clause makes that an easier task.
The thinking behind limiting it to one per five years or two over the course of a hypothetical, league proposed 10 year deal is that the public outcry from hard line fans and owners is for the most part, overblown. If you look at the history of team payrolls, it’s rare that a team has more than 1 or 2 horrible contracts that limit their ability to improve. Being able to get rid of just one of the them would usually put a team below the cap or at least in position to better the team via the MLE or portion of it.
If a team needs to get rid of more than one deal then I place the blame at the feet of management. At that point, they need to look themselves in the mirror as opposed to just trying to find ways to get more money back from the players.
I also add a phase in for this concept as well, only this time for the players benefit. We can point our fingers all we want and laugh at how much the players spend but at the end of the day, it’s their money and they can spend it how they see fit. They signed their contracts with the thinking that they would see every penny of it and have bought houses, cars and various goods for family members and friends, financing all of it based on their respective contracts. The phase in would make it so the owners would not be able to terminate any deals during the first 5 years of the CBA until the summer of 2013. That gives players time to re-finance or prepare for the possibility of their contract being voided.
Another benefit to the players is that while someone will most likely get their contract terminated, that means that there is an available opening for someone else to get a well deserved contract whereas had the opening not existed in the first place, said player would most likely have to play for the minimum or in Europe as opposed to getting the MLE or contract created by cap space due to the outgoing contract. In short, the good players get paid while the overpaid jake loses out. Owners, fans and players win. Overpaid chump who didn’t live up to his deal gets tossed. I don’t see how you can argue with that.
I will also add that the concept of rollbacks is a no go as well due to what I pointed out above. A contract is a contract and you can’t just go back on what has been signed. Giving the Gilbert Arenas’, Brandon Roy’s and Mike Miller’s of the world a 2 year warning is a good compromise.
Also, make it so that not only is there a 2 year phase in period from the time the CBA is ratified but also allow for all players to have completed 2 years on their deal before it’s eligible for termination. This protects players who get hurt in the first year. At least now, they have a 2nd year to fall back on and when you get down to it, injury isn’t their fault but the result of unfortunate circumstances so they shouldn’t be punished in full.
For those of you who want more and think the players are lazy, I will disagree with you but comfort you with the knowledge that nobody knows in advance who will be terminated. Therefore, it adds incentive to ALL players to play hard, team oriented ball despite the fact that only one can be terminated and should help improve the on court product all the more.
Also, BE CAREFUL WHAT YOU WISH FOR!! For those of you who want all contracts to be non guaranteed, we would actually be thrown back to a situation where this is less parity in the league. Big, attractive market teams could just terminate as many contracts as they need during a summer in which there are a number of big time free agents and just build more super teams. And trust me, it would happen. If the Heat could do it despite not being able to terminate guaranteed deals, imagine what the Lakers could do if they had that at their disposal.
How this effects teams around the league:
Teams like Orlando can take advantage of this after 2 years since they will still have 2 horrible contracts in Hedo Turkoglu and Gilbert Arenas on the books. By getting rid of one of them, they can better convince Dwight Howard that changes are coming and that the team can improve if he’s patience.
How this effects the Thunder:
Again, the Thunder are loaded with high character, talented players which most likely means that they wouldn’t be looking to terminate any deals but you never know. If they are trying to stay below the hard cap or flex cap and they need to decide on whether to let Eric Maynor or Daequan Cook walk via free agency but Kendrick Perkins suffers a career threatening knee injury, they could then take Perkins’ deal off the books and conceivably keep both players on the fence.
NATIONAL TV SLIDING SCALE
Revenue sharing is a big source of controversy. As mentioned before, the players believe that the majority of the league’s problems are a result of the lack of revenue sharing and that if the league could install a system of more revenue sharing, the players wouldn’t have to give back as much. This is true to a certain extent but as we’ve seen in Major League Baseball, it doesn’t stop the big spenders from spending more on talent. They can write a luxury tax bill that allows the little guy to be profitable but at the expense of the fans. You see, the small market owners just keep the money instead of spending on free agent talent to make the team better. If they keep their payroll low enough, they can be profitable but then wind up losing 100 games or so.
This is why a cap is necessary so the combination of a hard cap to go along with revenue sharing makes everyone a winner in this mess. The question now becomes, how do we go about implementing a system of revenue sharing that’s fair for the small market but doesn’t take away too much from the large market? You see, new owners in Detroit, Phoenix, Brooklyn and Golden State can say that they spent as much on their respective teams with the knowledge that they would get a large return on their investment due to being in a large or successful NBA market. Having to give away too much to the little guy will make their investment a long term loser or so they project.
I actually agree with this sentiment to a certain extent. Some will argue that there is something fundamentally wrong with forcing large markets to share and that it’s borderline communist and un-American. While I think that’s going too far, a good solution would be for the league to disperse their national TV money differently. Teams wouldn’t be forced to share their earned revenue but rather the LEAGUE itself would be deciding that for the good of the game, the gap needs to be closed so we’ll take it upon ourselves to decide how to disperse the money that WE NEGOTIATED.
As it stands now, teams get roughly $32 million per season as a result of the national TV deal that Stern inked with Disney and Turner. Despite this equal dispersion, there is still a wide gap dividing the haves and have nots. Some teams are very profitable while others lose money in the eight figure range. In order to rectify this situation, the league should be able to disperse this money depending on how much revenue the teams bring in on an individual basis for the previous season. I will use the 2008-09 season as an example. The Lakers led the league in revenue earned, followed by the Knicks, then Detroit, then Chicago, Houston, Cleveland and Dallas.
At the bottom of the league, you had Memphis in last, followed by Milwaukee, New Jersey, New Orleans and then Minnesota at #26.
My system would then pay the top grossing team, the Lakers in this case, $17.5 million. The #2 team would get $18.5 million, followed by #3 at 19.5 million and so on, adding one million to each team in the ranking order. By the time you get to #26 Minnesota, you have $42.5 million, then $43.5 million to New Orleans, $44.5 to Jersey/Brooklyn then $45.5 and finally $46.5 to the lowest ranking team.
To some, this is an ugly form of welfare. My counter argument is that it’s not welfare. Franchises shouldn’t be penalized for being in small markets. Fans shouldn’t suffer losing season after losing season because their team can’t create enough revenue to compete. This is just a way of bridging the gap some. According to Forbes, the high ranking teams would still be profiting well above $30 million while if you add $15 million to a team at the bottom, they go from losing $5-10 million to profiting $5-10 million. In short, the big guy doesn’t get hurt much while it makes all the difference for the little guy.
How this effects the Thunder:
Not much. OKC is a small but very strong NBA market. That puts them in the middle of the road so they’re probably still getting around $32 million or whatever the average is per team on the national TV scale.
TWEAK THE NUMBERS
From here, it gets easy. You keep most of the elements of the old CBA but just lower the numbers. What most people forget is that this recently concluded collective bargaining agreement was even more owner friendly than the CBA that was ratified in 1999 after the big lockout. That 1999 deal was considered to be a huge victory for the owners. If that was a huge victory then the 2005 deal should’ve been considered a landslide. So what happened?
In my opinion, the cap just kept going too high. With revenues in the league going up just about every year, there’s no reason why teams should becoming less and less profitable. If only 8 teams spent the luxury tax yet 22 of them lost money, then the simple answer is that the cap and lux tax threshold were just too high. The cap was determined by overall revenue created and since the large markets were mostly responsible for that revenue, the cap wasn’t fairly determined. Sure, the big market will still be profitable but the small markets weren’t seeing more generated revenue so the cap would eventually be too high for them. So……
Lower the cap. As mentioned earlier, the soft cap should get down to $50 million in 2015 and then from there, base the number at less than 40% of BRI as opposed to the current 48%.
Lower the amount of the max salary by reducing the percentage that players can get. Currently, 0-6 year vets can max out at 25% of the cap, 7-9 year vets get 30% and veterans with over 10 years experience can get 35%. Lower it to 20%, 25% and 30%.
Lower the length of contracts to 5 years maximum if you resign with your current team and 4 if you switch teams as free agents from the current 6 and 5 setup. Limit MLE signees to 3 year deals. The combination of a 5 year deal and a 20% max for players coming off their rookie deal would make for a $10 million base salary on a hypothetical $50 million cap. With 10% raises, this would make the total deal come out to $60 million over 5 years. This is well below the $100 million deals that we see all over the place and would lower the total payroll to the point that teams would still be under the hard cap and opportunities would still be abundant for free agents.
Add a “Keith Van Horn” provision. Dallas was able to use KVH’s bird rights to their advantage despite the fact that he was almost 2 years into retirement. It was a loophole that made a mockery of the system. To fix this problem, players should no longer have bird rights if they’ve been out of the league for over a year. The whole point of bird rights is to allow teams to retain their stars. If a player is out of the league for over a year, he really isn’t much of star anymore.
Add a “Big Z” provision. When Cleveland dealt Zydrunas Ilgauskas to Washington for Antawn Jamison, the Wizards then waived Big Z and he then went back to Cleveland. They basically got Jamison for nothing. Other teams have taken advantage of this loophole as well. To get rid of it and the possibility of teams colluding together in the future, a new simple rule should be put in place that says a team can’t bring a player back until the following season.
Make the raises in contracts be 10% for someone resigning with his team and 5% if they leave via free agency. Those numbers are easy to factor in your head and are lower than the current 10.5 and 8.5. Lower raises means lower overall contract and lower payroll.
KEEP THE GRANDFATHER CLAUSE AND FORGET ABOUT FRANCHISE TAGS!! This is a clause that allows for teams to resign their own free agents to a number that is above the max. For example, if a free agent is coming off his 8th year in the league and he makes $17 million, he should be eligible for a 5% raise off that $17 million. That would bring his new base salary to $17.85 million. With a hypothetical $50 million cap and a 25% max for 7-9 year vets, that would mean that he could only sign for a max of $12.5 million elsewhere. That’s a difference of over $5 million on the base salary alone and probably is enough to keep the player from leaving. It’s one thing for LeBron James to take a $2.3 million base salary cut but if you more than double that, he probably stays in Cleveland so future free agents will have less incentive to leave and eliminates the need for franchise tags, something the players union is justifiably fighting.
Well, that’s it in a nutshell. The players get paid a ton and will still be getting paid a ton. Large market owners will still be quite profitable. The only difference is that now, small market owners will not only be profitable but have teams that will be able to compete on a level playing field. C’mon NBA, let’s produce the great compromise of 2011 and give the game back to it’s loyal fans. They deserve as much.
Max Trueblood has studied NBA business for the last 16 years and is a contributor to Daily Thunder.
