Did you see the warning shots? Owners ready to play hard ball.
The proposal, a source familiar with talks said, includes rollbacks
that could reduce maximum guaranteed salaries, both for veterans such
as Kobe Bryant and LeBron James, as well as up-and-comers like Kevin Durant and Derrick Rose, to almost a third of what they would have been eligible for under the current agreement.Perhaps
the biggest shocker: The owners' proposal includes a provision that
would require any pre-existing deals to be revised to conform to the
new deal's limits.
The total value for a veteran maximum deal would be well under $60
million and for players currently on rookie salary-scale deals well
under $50 million, the source familiar with the proposal said. Fully
guaranteed maximum deals also could be a thing of the past, with the
proposal allowing for less than half of any contract to be guaranteed.The
mid-level exception and other devices that allow teams over the salary
cap to sign free agents also would be abolished, several sources said,
effectively creating a hard cap.
So let's recap the rumors here:
1) Limiting of exceptions used to sign players [no more bird rights, mid level exception]
2) Contracts become no more than 50% guaranteed
3) Total veteran max under 60 million, younger player max under 50 million [and it's not even guaranteed?!]
4) All new rules will be applied to old contracts, [meaning present players would lose tons of money already guaranteed as well as having some money become non guaranteed].
I'm going to start with an assumption that the owners want to radically change the % of BRI that the players receive as well. If not, then lowering max contract value will radically inflate mediocre player contract value [as the money has to go to someone]. The NFL was recently saying they wanted to lower player percentage of BRI from 59% to 41%.
It will be interesting to see where the NBA goes with this. The lower BRI is, the higher the owner's percentage of it needs to be. Since it's a function of revenue and many of the costs are fixed, the owners are all getting smeared at lower revenues while the players are still ultra rich. That's not sustainable for the owners.
Whenever a discussion of salary cap negotiation comes up, I always like to come up with the scenario I think is most fair to everyone and best for the league. Clearly the players will negotiate to get the most they can as will the owners. Neither side is likely to care too much about what's fair or best for the league unfortunately, but here are my thoughts:
I would base my CBA on the following theories:
Contracts should become only partially guaranteed. Upon signing, a player is only guaranteed 100% and a declining percentage after that (75%, 50%, 25%, 25% for years 2-5).
Why not fully non guaranteed deals? If there were no guarantees after one season then players would never negotiate a deal longer than a year as they'd have no incentive to do so. This would create massive prolonged contract negotiations each season. You have to draw a line to allow some continuity without letting guys get too lazy or obnoxious because their money is all banked.
Guarantee players X% of basketball related income, but the percentage drops as BRI drops.
This accomplishes two things. One for the owners and one for the players. Having the percentage of BRI drop as revenues drop limits the scenarios where players are banking massive amounts of money while owners struggle.
If BRI drops by a certain amount than all player contracts go down by enough to compensate owners for the drop in revenue. This will be a more severe drop based on league revenues than presently in the league, because their percentage goes down. So if the league revenues go low enough the player percentage might go from 53% to 45%. Rather than only getting 53% of a smaller pie they'd drop more quickly to 45% of that smaller pie.
The other thing it does is make sure that with the non-guaranteed nature of contracts the players as a group always make a fair amount of money. By guaranteeing players a percentage of BRI that is termed reasonable any loss of money by one player goes to another player.
While players may resist the idea of non-guaranteed contracts, if one billion goes to players every year, then isn't it better that it goes to the players who deserve it most rather than guys who signed a big money deal than quit on their team or got hurt?
There is no salary cap, but there are instead several luxury tax thresholds. A 2x penalty, 3x penalty, and 4x penalty at various levels. Luxury tax money is paid out to all teams evenly not just those under the tax which removes the insane penalty for going $1 into the tax.
These levels would be based on BRI, The goal is to never let a team lose a player if they absolutely don't want to, but to make the penalty so sickeningly high at some point that major markets can't push too much advantage over having more money. The gap between the borders would be small, and you would set the first tax limit at the point where you want teams to stay and have only an additional five million or so for each threshold after that.
So if the first limit is 70 million, the second is 75, the third is 80. Basically no team is going into the 80 million threshold where they're paying a guy four times his salary. Even the Knicks would lose money like crazy this way. This scenario does allow a team to keep a guy if they desperately want to, especially if they only have one year of salary overlap, but it stops teams from massively outbidding each other and using market size to crush the competition.
No more salary matching on trades.
There is no more purpose to them anymore without a salary cap. It gets rid of the value of expiring deals and allows teams to immediately dump guys if they want to save money. Even with partially guaranteed contracts this would still happen occasionally if a guy doesn't even want to be on the hook for part of the money, but most trades would be talent for talent swaps now.
No more cap on maximum deals for players in terms of dollars, but a 5 year cap for your own player for years and 4 year cap for other teams in terms of years.
The owners will hate this, but the individual player salary cap screws with the league more so than any other function of the CBA. If this cap is removed, but teams are all playing with roughly the same amount of money then it add dramatic parity to the league.
What is better? LeBron James at 35 million a season and filling out the rest of your roster for 35 million or getting a team with five guys who are near all-stars, but not quite there? Suddenly a choice like prime LeBron or something like Ben Gordon, Carlos Boozer, and Joakim Noah for the same dollar amount is a lot more compelling.
Superstars are presently the most underpaid group in the league. That extra money has to go somewhere, and that's why all the guys in the next tier are considered so vastly overpaid. Remove this cap and smart teams could win without superstars. Add in the partially guaranteed deals, and teams could reload much faster from mistakes as well.
Change rookie deals to two years followed by an arbitration year where the drafting team has the rights to negotiate a long term deal or offer arbitration for the season. A player coming off arbitration would be in a harsh restricted free agency where the matching team must add 10% to any offer in order to match it and they would only have 48 hours to decide.
Again, the idea is to let everyone be paid fairly here. Rookie contracts of great players are the second most underpaid group in the NBA. Make the contracts shorter and give teams less of a hold on the players after those contracts are over.
However, the rookie salary scale is still good initially, because rookies were previously the most overpaid segment of the NBA. Keeping the scale salary for two seasons stops all the rookie hold out garbage and stops the dramatic overpayment of rookies who are busts.
In the third year, the team can let a player walk if he's not any good, offer salary arbitration, or agree to a long term deal. This allows teams to have the best shot at keeping their player long term, but limits their near complete hold on that player.
By adding the 10% penalty to restricted free agency and shortening up the deadline to match, teams can no longer use the stall and wait negotiation tactic. The extra money means opposing teams will no longer need to overpay a restricted free agent in order to get them not to match. Since the 10% kicker forces teams to overpay if they do.
The two day wait period shrinks the time a team's money is tied up and gives them more incentive to throw out offers at players as there is no longer a downside to having your money tied up for a mere two days.
Threw in the removal of the salary cap and non guaranteed contracts and tons of teams will be out there to bid every summer. Teams will need to proactively make quality offers to their players in order to keep them and restricted free agency won't restrict players that much anymore.
The Bottom Line:
I'm attempting to improve several things in the league with this proposal. First, I want the money split to be fair and the money to go to the right people. I'm removing limits that underpay the most underpaid groups of players which will take money from the most overpaid groups. I'm guaranteeing the owners some protection from a huge recession as well.
I'm also trying to create more interest in the league. The new nature of partial guarantees on contracts and no salary cap means that free agency becomes a much bigger story every season. The removal of salary matching rules means the trade deadline becomes much more intriguing. This creates a much bigger buzz around the league.
I've tried to create a league where every team can have a chance to win as long as management is decent. Instead of every good team having a superstar who's vastly underpaid relative to his actual worth with teams forced to overpay guys without superstars, this new NBA would have a much greater sense of parity as teams built around 6-7 good players would go up against teams with a superstar and mediocre players.
Have I forgotten something? Probably. Let me know what you'd change.
Filed under: Uncategorized
Tags: chicago bulls, collective bargaining agreement, lockout, nba, owners, players association
If the league actually cares about parity you can't really bring it about by playing with the salary cap alone. The market situations of various teams dictates that come clubs aren't going to be able to pay as much as others.
The owners of the richer clubs will never go for it, but for there to be parity there needs to be some income redistribution. Basically teams like the Bulls, Lakers & Knicks are going to have to subsidise the Timberwolves & Grizzlies of the league so everyone can afford to pay the same amount in salaries.
That said, I doubt the league cares. It's good for their bottom line if the big clubs are doing well, because increasing interest in a team with 10 times as many fans is obviously where the money is to be made.
I loved it, but your right the owners would never go for no individual salary cap. I also don't think the players would go for guarantees that fall to 25% but then again in a game of waiting between the rich and the ultra-rich the rich will always lose. The owners especially don't want what's "fair" for the league, they seem want to be permanently protected from loss, essentially they want business without the risk of business, no matter what it takes to get that goal accomplished.
I know these are just rumors but the "All new rules will be applied to old contracts" is a perfect example of the owners not caring at all about "fair" and in my admittedly far beneath amateur legal opinion, without precedent and bordering on absurd. That could just be posturing by the owners in order to get the players to cave to everything else.
Also for your CBA, the lack of an individual max on contract sounds like it might cause a choice between "prime LeBron or something like Ben Gordon, Carlos Boozer, and Joakim Noah for the same dollar amount... a lot more compelling" but I think you are forgetting the "I'll play for less to win a championship" factor admittedly this already comes into play but I think that might become the ultimate unequalizer that ruins the choice but of course, this is pure speculation and it could turn out to be about the same as now. However without the Rashard Lewis' of the world eating up so much money I think this trend might takeoff.
That new CBA epic you wrote was fantastic. The idea that superstars are underpaid really is true, and something I hadn't thought much about. Teams can luck into having LeBron in the draft and then avoid having to pay him what he's worth, thus making superstars an even bigger asset than they should be based on their talent.
I have to say though that I think that NFL style contracts (where a player can just be cut at anytime) are grossly unfair to the players, especially in such a brutal sport where they take such risks and risk catastrophic injury everytime out. If players are prevented from cancelling the contract, so should the team.
On the other hand, if someone decides to offer Joe Johnson $30mm a year since there's no salary cap, that will totally kill a team if that contract is guaranteed for 5 years. So I think your proposal is a reasonable one to guarantee contracts. However, I think that it's still unfair to the player to be locked in to a certain salary structure but only give the team the option to cancel the contract. So, perhaps the fairest thing is to give the players some sort of option to opt out of the contract as well. Now, if either side had the option to bail out of the contract that would create havoc, since it's rare that both sides would agree a player is worth exactly as much as he's being paid. Inevitably, one side or the other would want to cancel the contract.
Maybe the answer is that after the first two years of the contract, the player has the right to give the team 1 year's notice that he's going to opt out of the contract at the end of the upcoming season. However, if the player gives notice, then the contract automatically ends at the end of the year, even if something bad happens to the player during the year and he no longer wants to cancel it.
This would allow the player and team a 1 year exclusive negotiating window to agree on a new contract before he becomes a free agent at the end of the year.
I like the idea of the contracts still being at least 25% guaranteed, because then teams can get out of the true salary cap albatrosses, but those players still get paid their 25% and can get another contract elsewhere if they can still play and hopefully recoup close to what they would have gotten had the contract been honored.
One other point is how this will allow the competence of the various front offices to affect competitive balance. On one hand, it will allow the stupid front offices to get out of contracts for preposterously overpaid players. On the other, it will take teams awhile to get a feeling for the new rules. During that time, the smarter front offices will have more of an advantage.
I would argue that as time has gone on with this CBA, even the dumber front offices have gradually made less mistakes, unless you're Golden State giving Stephen Jackson a 3 year, 30 mm extension. You're less likely to see Jerome James for the full mid-level or Jason Richardson for a max contract anymore.
Anyway, I think this proposal would be fascinating. Email Billy Hunter immediately! Have you shared this with any other "experts," like Hollinger or maybe someone like Larry Coon? What were their thoughts?
NFL contracts sort of work like this, in that there are signing bonuses that are guaranteed money for the player even when they get cut. But I think you see that more for the star players; I don't know for sure but I think the guys 30-54 aren't getting large signing bonuses.
But the effect is the same--the player gets some percentage of the contract guaranteed. I like Doug's proposal, although I wonder if it would be possible to enforce such a declining structure on all NBA contracts.
I like a lot of this, but the automatic lowering of players' salaries is absolutely a no go. And I think I wouldn't accept it as a player, either. First off, how many jobs are there where people's salaries are lowered if the company doesn't make as much money? Maybe salesmen on commission, in a way, but that's more based on them. And I wouldn't want that in my contract, either. I'm going to sign something, I want to know what I'm getting and be able to plan on getting what I signed for.
I don't know what the better alternative is, but that seems to be a sticking point to me.
Well I'd dispute that everyone would pay 70 million: they don't now, so I don't see why they would under your scenario.
Why not just have a hard cap instead? A hard cap would eliminate any need for max length of contracts too: nobody wants to lock in a bunch of long contracts if it might mean losing players for nothing because you have no possible way of retaining them.
You mean how the cap rises and falls each year? That's a bit different--it's affecting NEW contracts, but not existing ones.
Or is there a part of the NBA's labyrinthine CBA that I don't know about (likely)?