Analyzing the details of the completed portions of the CBA

Analyzing the details of the completed portions of the CBA

The New York Times suggests that the CBA is 95% done and has listed many of the details on the agreed to items. As such, we can begin to analyze how the CBA will affect the Bulls (and their competitors) next season.

Read the full article:

Luxury-tax rate: Teams will be charged $1.50 per $1 spent beyond a threshold, replacing the previous dollar-for-dollar tax, according to people who have seen the plan.

To further discourage spending, the tax will increase for every $5 million spent beyond the threshold: to $1.75 after $5 million, $2.25 after $10 million and $3 after $15 million.

Under this system, the Los Angeles Lakers would have paid $42.5 million in taxes last season, compared with $20 million under the old formula. (The rates could still change based on other tradeoffs.)

The news on the luxury tax probably stops the Bulls from going deep into it. I know Jerry Reinsdorf has always suggested a willingness to pay the tax in the old system, and fans have always suggested that he's full of crap given his other massive cost cutting moves.

The Bulls have never really been in position to make a legit run prior to last season, and this represents the first time Reinsdorf could approve paying the tax in order to maximize wins. I'm not holding my breath on that happening under this new ultra punitive system.

Of their competitors, the Lakers will likely continue to pay the tax, and they'll even possibly continue to go deep into tax land with their new monster TV deal. The Knicks can also do the same thing. The real question is whether or not the Miami Heat will continue to escalate salary or not.

Miami has the core to win multiple championships, and has sold like crazy since getting it. However, even with the big three, they're more limited than the true large market teams in what they can charge and won't have a monster TV deal. I'd suggest they'll find themselves with similar financial constraints as Chicago, perhaps dipping a toe into the first tax but losing nerve quickly.

Oklahoma City has the core to be a true contender for a long time, but they're a team that won't likely afford the tax even as a title contender. Their market is too constrained by population size, and there's no monster local TV deal to be had.

Contract lengths: Players with “Bird” rights will be eligible for five-year deals, while others will be limited to four. The previous C.B.A. allowed for six-year (Bird) and five-year deals. The 1999 C.B.A. allowed for seven-year (Bird) and six-year deals.

Raises: Annual raises will be reduced by several percentage points, possibly as low as 5 percent for Bird players and 3.5 percent for non-Bird players. The prior deal allowed raises as high as 10.5 percent (Bird) and 8 percent.

Midlevel exception: It will start at $5 million, a decrease of $800,000. The contract length and annual raises attached to the exception remain under discussion.

These three rules combine for a few different affects.

First, when it comes to Taj and Omer, they're likely MLE ceiling players in terms of free agency. As such, the Bulls will most likely be looking at five million dollar deals with reduced raises in order to keep them which is good news for Chicago.

In general, the new rules give a fairly significant advantage to signing with your present team. Every time the league shortens the maximum length of the deal, they push harder on players to stay put. In terms of total money, players get 28.7% more by sticking with their own team by having the extra year and extra raises.

The shorter contracts will result in more player turnover on teams though, and more player turnover will benefit the most attractive markets. Chicago is one of the top five NBA markets for free agents, so it should benefit slightly from this increased turnover, but it likely isn't increased enough to make a significant impact.

Amnesty clause: Each team will be permitted to waive one player, with pay — anytime during the life of the C.B.A. — and have his salary be exempt from the cap and the luxury tax. Its use will be limited to players already under contract as of July 1, 2011.

The initial thought here is this is a Carlos Boozer out clause. There are two instances where this would be valuable for Chicago, and neither is necessarily all that likely.

1: The Bulls convince Howard to join them. If so, they might be able to amnesty Boozer then waive Korver, Brewer, and Watson to get maximum contract room under the cap. It would depend where the cap falls. If so, the Bulls would probably be willing to sacrifice the 45 million they owe Boozer over the final three seasons.

2: In Boozer's last season or two, the Bulls are going to hit the luxury tax, and they decide that Taj/Omer/whoever are simply better players. At that point, they waive Carlos to avoid a heavily punitive tax.

Otherwise, there's really no point. Say what you want about Boozer, but he's not a crap player. If he was our third big man making eight million, you'd be amped to have him. As such, you're better off paying a guy worth 60 million over four years for 32 million worth of value rather than to pay him 60 million over eight years for zero in total value.

Stretch exception: Teams will be permitted to stretch out payments to waived players, spreading out the cap hit, over several seasons. The payment schedule will be set by doubling the years left on the contract and adding one. (Thus a team waiving a player with two years left could pay him over five years.)

Nearly all of the new provisions will benefit the owners. In return, the players will gain an easing of trade rules and relaxed regulations on restricted free agents.

Both of these rules will increase player turnover as well, and as I mentioned earlier, increased player turnover will increase the likelihood of the Bulls filling their needs as they have an above average team in terms of desirability.

All in all, it sounds like the majority of the system issues have been tackled, and while there are still some gaps in terms of whether tax payers can use the MLE or will get an additional punishment for multiple years in the tax, if the sides have agreed on this much the system can likely be resolved once money has been decided on.

Comments

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  • Wishful thinking on your part Doug, to think Miami and Chicago will treat the salary cap in a similar fashion. Micky Arison is the third wealthiest owner in the NBA, and it is widely known that he will join the Lakers, Knicks, and Mavs in spending whatever it takes to win, now that he has Lebron, DWade, and Bosh. While there are serious reasons to doubt Jerry Reinsdorf, there are none whatsoever to doubt Micky Arison.

  • In reply to RichG:

    You could be right. We'll see what happens with Arison. The Heat have not historically been big spenders.

  • In reply to DougThonus:

    Until now, the Heat have never had a reason to be big spenders. The post 2006 championship team sunk too fast for Riley to even consider spending money. After that debacle, his plan all along was to wait for 2010, once the Shaq/Jermaine contracts were off the books. Arison's stated publicly that he'll spend the money once he has a contender for the long term.

  • Wow, that luxury tax system is huge! Don't see Jerry spending much into that.

  • In reply to ChiRy:

    and it seems like this more punitive luxury tax hurts parity, if you have teams like the Knicks, Lakers, & Mavs then everyone else.

  • 1. Can the Bulls workout and supervise Jimmy Butler as he is not under the union yet?

    2. I don't know about the bulls contract with Comcast or WGN? Can't they have like the 2nd or 3rd biggest TV contract? Both NY and LA share teams although the Clippers are probably not much competition to the Lakers. Reinsdorf will probably have a better idea after the deal whenever it is done

  • In reply to schaumburgfan:

    Jimmy Butler is considered part of the union, so no.

    I'm sure the Bulls have one of the better local TV deals in the NBA, but it pails in comparison to the Knicks and Lakers. The Knicks are wrapped up into their own TV network (MSG), so they also cut out the middle man on advertising.

  • The NYT article does not mention the increase in minimum age to 20 (two years of college). Where does the negotiation stand on this issue?
    As a basketball fan, I personally I am in favor of 2 years of college as it will improve the quality of play in both the NBA and NCAA.
    http://sports.espn.go.com/nba/news/story?id=5184291

  • In reply to Edward:

    The players fight against an age minimum, but I don't think they really care. They fight against it largely just to concede it later IMO.

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