Why Mirotic Won’t Be Coming to the NBA Until Obama’s Third Term

Contract Situation Worse Than Has Been Reported

This is the first of four articles on Chicago Bulls 2011 draft pick Nikola Mirotić, who is quickly becoming one of the better basketball players in Europe. Today we will discuss the details of Mirotic’s contract extension and his buyout clause.  Tomorrow we will show what Mirotic is telling Spanish media about the selection.  Next we’ll dig into the calculus behind exactly what options Chicago has to bring over Mirotic before the 2017-2018 season (yes, you read that right), given the limitations of the new CBA.  In the final article, we’ll examine what in the world each side was thinking when the Chicago Bulls and Nikola Mirotic entered into a contract they had no intention of consummating for 3-6 years.

According to Spanish media outlets (such as MSN affiliate AS.com), Nikola Mirotic signed an extension with Real Madrid on April 26, 2011 that locks him up through the end of the 2015-2016 season, with a team option for 2016-2017.  Real Madrid plays in three leagues/tournaments per year:  the ACB (Spain), the King’s Cup (Spain), and the Euroleague (top teams from throughout Europe).

The official press release from Real Madrid after signing the extension does not mention the team option, stating only “Real Madrid C.F. and Nikola Mirotic have reached an agreement for the contract extension of the player, who will remain linked to the club until the end of the 2015-2016 season.”

It has been repeatedly reported in the U.S. that his contract expires in 2015.  It is possible that the answer lies somewhere in the middle, with the U.S. sources mistakenly leaving out the team option, the Real Madrid press release including the team option but not mentioning it, and the Spanish sources mistakenly adding an option year in addition to the five-year extension.  But I’m going to have to go with the Spanish sources on this one.  Not only is the resident media more likely to get an ACB contract right, but a five year extension signed at the end of 2011 and expiring in 2015 doesn’t pass the common sense test.

I suspect that the Chicago Bulls front office mentioned that they expected to bring him over in 2015, and the statement was misconstrued to mean that his legal obligations expired that year.  For the most part, Sam Smith has gotten it right by avoiding all contractual details, but reporting that the Bulls’ options to bring him over early increase considerably beginning in 2014-2015.  However, the Bulls are allowed to contribute more than $500K towards his buyout (more on that in the third article in this series).

The second-highest paid, youngest, and arguably the best player on the team, Mirotic makes approximately 3,500,000€ ($4,408,600) per year.  Real Madrid is apparently even more tight-lipped than the Chicago Bulls when it comes to publically releasing details of player contracts.  However, by their rules, 3,500,000€ is the maximum that Mirotic can receive as a JFL-licensed player of his experience.  According to the Spanish blogosphere, Mirotic received a max offer from another team, which was matched by Real Madrid with the extension.

The “roughly 2 million euro” buyout that has been reported by numerous American media outlets is actually an early termination clause in the contract, which states that Real Madrid must be paid 2,500,000€ ($3,149,000) to release Mirotic to play for the NBA, or 3,500,000€ ($4,408,600) to play for a European team.  Several Spanish websites have actually reported it the other way around (with the more expensive buyout applying to an NBA exit), to include the well-connected tubasket.com, which released other accurate details of Mirotic’s contract extension seven days before it was officially announced.

It appears that the beat writers are not including the portion of the buyout that the Bulls can pay without it counting against team salary (which increases to $550,000 for next season), so the “roughly 2 million” is what Mirotic would have to pay out of his own pocket.  The buyout is also negotiable; if Real Madrid runs into financial trouble in a couple years and is looking to shed salary, they may accept less.  However, at this time Real Madrid intends to keep him until minimum 2016, and even then would likely charge close to the full buyout.

All euro-to-dollar conversions were done based on the exchange rate on the morning of 16 June.  The eurozone crisis (Ireland, Greece, Italy, and Spain bailouts) has significantly devalued the euro, which has actually made the buyout situation considerably better for Chicago than when Mirotic was first drafted.  Of course, any future changes could easily make it go the opposite direction.  In other news, Mirotic was born about 260 miles south of the hometown of Toni Kukoc, the year before Toni played the Dream Team at the Barcelona Olympics.  Don't I feel old.

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  • And Gar was saying he hopes to bring him over in a few years... I guess "hopes" had a pretty big meaning in that statement. That really blows for the Bulls. I was hoping to see him in a Bulls uniform in 2-3 years not 5!

    That is an ugly contract not sure why he signed that right before the draft... Although for him I think that 4.4 mil maybe tax free if so that would be like making 8+ in the states. Could be totally wrong on that though.

  • In reply to Chad:

    I believe he'll come over in 2015 - but that's coming in the third article.
     
    As far as taxes, I probably should have factored that in to the calculations (in the CBA article) to determine how much it would cost Mirotic to come over here.  My wife is Spanish, and I can assure you that his salary is not tax free.  Spain pays much, much higher taxes than the U.S.  Their highest income tax bracket is 45% on everything above 45,000 euros (compared to 35% on everything over $373,650 in the 'States).  They also have a hefty national sales tax, the VAT (or IVA in Spanish), which charges 7% for things like prepackaged food, hotels, and restaurants, and 16% on consumer goods such as cars, alcohol, and electronics.  In addition, 15% of their mortgage payment goes to social security.
     
    Lower taxes in the U.S. is definitely an advantage for the Bulls, but I don't know if it's enough of an advantage to get him for the mini-MLE.  I'll run some numbers this weekend.
     
    Interestingly, Spain has a nice exception where they only charge high-income foreign professionals (including athletes) 24% (instead of 45%) on their income tax for the first six years that they decide to reside in Spain (in order to attract talent).  However, Mirotic gave up this right two years early - voluntarily doubling his taxes - when he became a Spanish citizen in 2010. 

  • In reply to Gringo Rican:

    Thanks that is good info! I had just heard when some NBAers were looking to go over to Europe and play they were talking about some places not having to pay taxes on their salary or minimal taxes compared to here in the US.

    Wasn't expecting it to be that much worse! 45% income and 16% on goods and 15% of mortgage payment for social security. That is nuts! You know your tax situation is ridiculous if you can make the US look appealing!

    Good point though on the dollar to euro conversion. This could be wildly different in 3-5 years. The US is likely to be facing a major financial crisis in the near future which could tank the value of the dollar which would make the cost of a buyout skyrocket assuming the euro doesn't fall too. The states with the largests markets are all in big debt the federal government is running unsustainable deficits with no end in sight plus the money supply has been increased dramatically (Based on the FED's total money supply of 4 trillion in 2008 to over 12 trillion at the end of 2011) over the only 3 years all spell really bad news for the Dollar value. Especially the money supply issue. More dollars pumped into circulation equals less value per dollar. Its just basic economics.

  • In reply to Chad:

    Maybe the NBA players going overseas negotiated the non-tax-paying part (team would pay it) into their contracts, so my guess is if Mirotic is as good as claimed, I'm pretty sure Mirotic could negotiate the same type of deal NBA players get.

  • In reply to Gringo Rican:

    By the way, you are aware, that even if he survives this election(50/50 at best) there will be no third term for Obama, unless of course he pulls a Bloomberg and overthrows the constitution(again).

  • In reply to BigWay:

    Maybe he didn't know US Presidents couldn't have a 3rd term.

    But maybe he did and used that reference as a metaphor to say just like Obama won't have a third term, Mirotic won't be coming over at all.

  • In reply to YouBlewwIt:

    You be the judge.

    Incidentally, I literally carry a copy of the Constitution (which I am sworn to protect and defend) in my pocket whenever I'm working.

  • Exactly why I haven't been a fan of all of this Moronic, yeah you all read correctly, I said Moronic hoopla from the time the Bulls drafted the Euro. So the Bulls are going to waste five years eating on this guy???... PLEASE!!! stop the madness GarPax. They're going to wait half of a decade on this guy? If they do this then they're as stupid and stubborn like I thought they were. Bulls are trying to win a championship within the next couple of years not by the year 2018. Yeah they need to make a trade for Deng and get some value now through the draft next week.

  • In reply to Reese1:

    I still feel it will be good by the time he comes over. They used the 24th pick (I think) for a guy who sounds like a star. Rose will only be what 27, 28 when he shows up? That is the prime years of his career. If the Bulls are involved in making a move for a top pick in this draft, then they could potentially have Rose, this years pick, the Charlotte pick and Mirotic within 5 or 6 years. Nothing is set in stone, but that could be a 'big four" waiting to happen. Disapointed but not the end of the world.

  • In reply to Reese1:

    Mirotic is the only player to ever win the rising star award twice and is one of the best players on possibly the best team in Europe. He was a high lottery talent who fell on draft day do to an ugly contract situation. If he makes it to the Bulls in three years and has added even more to his game it will be a huge steal. It cost them surprising little to move to the 23rd pick and grab him so the downside is very minimal and the upside could be massive.

    Plus when they were drafting I am sure they were thinking their rotation was set for two - three years and could wait on the kid easily. Obviously the new CBA cap rules and Rose injury have altered their situation.

  • In reply to Reese1:

    It's not that they're wasting any time on him. They just spend a late 1stRounder on him and if he comes over, great. if he doesn't, you can chalk it up to a bust of a player (which the majority of late 1stRounders are anyway).

    The bigger problem is IF he comes over at all.

  • In reply to YouBlewwIt:

    +1

  • The Mirotic pick was a good gamble that still might have a terrific payoff. Late-first picks are always a crapshoot -- remember, the Bulls used a 16 on James Johnson and then got Taj at 26, so you never know. And you can't say it's a "wasted" pick until you take a look at the guys who were picked after Mirotic. Only one, MarShon Brooks, has made much of an impression in the league. And he wouldn't have made the Bulls.

    Ironically, it looks like the guy we traded for Mirotic, Norris Cole, is about to get himself a ring in Miami... but he hasn't really done much there, shooting less than 40% from the field.

  • Thanks for the update Gringo. When the Bulls signed Mirotic I was dissapointed at the time because I thought there was a guy available who could be a legit scorer(13-15ppg) in the league and a solid guy in JuJuan Johnson. So far he hasn't done much with the Celtics, but we'll see. He's certainly not taking the league by storm. My other guy Tyler Honeycutt is in the D-League so it's hard for me to complain about the Mirotic pick.

    That said, I was turned off quite a bit when I heard he had just signed a long term contract with Real Madrid. Then I learned Mirotic himself would have to pay for a lot of his buyout(Sam) making it unrealistic, and not likely here before what summer of 2015 now is it? That means he won't play for the Bulls in the next three seasons. He's like an IRA that will probably be valuable in the somewhat distant future(in sports terms/years i.e coaches, G.M.'s fired often in four years time etc.).

    As for now, I don't think you should base any of your plans on what might happen four years from now to be honest. And people talk about "need," and how we don't need a big or PF due to Boozer, Taj, and oft mentioned Mirotic. If the Bulls as some think possibly amnesty Boozer next summer then you have Taj really as your only PF for years to come.

    My take is, in this deep draft we need to hit on a scorer along with a competitor. I don't care what position he plays. And if you do hit on a talent then you have a valuable trading chip as opposed to a less likely scorer simply because he fills your position or "need." What we Need is an offensive talent IMO. Period.

    It's funny, K.C.(Johnson) made rumblings innitially to look for the Bulls to be moving a "core" piece in a draft day trade. And yet weeks later he's on Chicago Tribune Live saying he doesn't expect the Bulls to do anything until next summer. All about the money/ratings driven by phony plants of hype driven speculation. Who told K.C. the Bulls were looking to move a "core" piece? In this era of "unamed sources" aka ridiculous speculation planting hype to grow fan interest and therefore advertisement money is the norm.

    Honestly, everything I'm hearing and reading is that nobody wants an injured player who many think will be out until December or January and is owed $27 Million over the next two years. Would you? Seriously with Deng's injury history in recent years and that money? Once again we have likely pipe dreams of trading low value for high value i.e Lottery Picks, which are highly coveted, of all things.

    You want a high draft pick in the lottery or even in the teens your talking only one player the Bulls have of value like that IMO and it's Noah. Also Taj and Omer have some value moreso Taj in my book because Omer brings you no offense and free throw playoff foul liability.

    So the real question is what can you get for a limited offensive player but a playoff gamer in Taj or a defensive stalwart in Omer, yes valuable players, as in trade for other players of value or draft picks of value? Would you trade Noah for a top five? Could you get a top five for him or top seven? Even as we speak he's injured and has been in the last two playoffs. Once a burgeoning star, he's abandoned much of his short lived offensive game.

    Is there a likely star top 5-7 where we trade Joakim? Taj or Omer get you how high a pick 12-14 range or at worst 14-16 would be my guess.

    If you really want to jump into this draft as in move up it's going to take a serious loss for possible gain IMO. Unless you think two eary seconds get you some legit rotation talent then that is doable without much of a loss. But if it's Lotto, teens? Who goes?

  • In reply to RoadWarrior:

    Nobody said KC Johnson was reported the Bulls were looking to dump one of their core pieces. He could have been simply giving his opinion, especially when you take into consideration Rose/Deng will be out for at least half the season, the payroll will be near $70mil, and Reinsdorf has never paid into the luxury tax.

    But I agree, trading Deng now will be at his lowest value because of his injury. But I still see GSW and TOR trading for Deng, as long as we took back salary. CHI would have to take on RJeff or Biedrins, which is a no-no, so GSW is out.

    So that leaves TOR. TOR definitely wants a SF so they can entice Nash to join. If MEM keeps Gay like their owner has said, it comes down to Iggy, Josh Smith, Granger, and Deng.

    I suspect if the Bulls were willing to take back Calderon's $10mil and none of the other teams do, I could see a trade happening with them.

  • In reply to YouBlewwIt:

    As for K.C. I said it was "hype driven Speculation," with a capital S. Even when they report they have "heard" something it's always an "unamed" source. In this case he went on radio and TV and made the same speculation which was followed up by towards the end of his radio interview finally saying, no the Bulls will keep this core, no trade. It's just a ratings game scam. No one sits 7-8 minutes into the interview to hear the disclaimer. Then fans forget the previous sentiment that Deng is untradeable. It just plants a seed of hope which is just plain inaccurate and they themselves don't even believe. It muddies the waters for fan reality and discussion. But people want the fantasy to believe we're getting the lotto pick for Deng, LeBron "Chicago is one of his TOP choices." It's all tabloidism, and an insult to the truth and real reporting.

    IMO there's not a chance in hell someone saddles themselves with Deng's 27 Million and he's injured half the season which is what other media are saying, and give back what $8 Mil in a bad contract? So you give up a coveted No.5 Lottery pick just so you can add what $6 Million dollars to your payroll? To me, it makes no sense whatsoever.

  • And Mirotic was about 6'10" and 210 pounds at the time of the draft. Built like a praying mantis. There's no way he would have gotten five minutes a game of playing time at that weight, and no way he would be improving on the bench. Many teams at the bottom side of the draft will sell their first round pick outright (to avoid the mandatory multi-year deal), trade back into the second round (plus cash), or draft a euro player to stash overseas. San Antonio has made this work repeatedly.

  • In reply to sfpaper:

    'I agree with your statement."

    -Kevin Durant

  • In reply to YouBlewwIt:

    Kevin Durant: 6'9" 235 pounds. Mirotic makes Durant look like the Hulk.

  • In reply to sfpaper:

    http://www.draftexpress.com/profile/Nikola-Mirotic-5134/
    6'10 210lbs, 19yrs old

    http://en.wikipedia.org/wiki/Nikola_Miroti%C4%87
    225lbs, 21yrs old

    http://www.draftexpress.com/profile/kevin-durant-390/
    6'10 215lbs, 19yrs old

    http://en.wikipedia.org/wiki/Kevin_Durant
    235lbs, 23yrs old

    Mirotic is listed at 6'10, while KD is listed at 6'9. But according to Draft Express, KD was listed at 6'10 during his draft measures. We really don't know if these are with or without shoes, especially with Mirotic, so let's just say they're the same height.

    Now, weight wise...KD as a 19yr old at the draft combine weights 215lbs. Mirotic was 210lbs.

    As a 23yr old, KD is now at 235lbs. Mirotic at 21yrs old, is 225lbs.

    Not only can Mirotic still put on weight right now, but are you making the argument Mirotic wouldn't have been able to put on the weight if he came over right after being drafted? With a Professional NBA training staff?

  • 1) This was a huge value to cost pick. If the Bulls FO could do this every year, they would be winning another NBA ring soon.
    2) The economic situation in Europe is worse than in the USA. Greece, Spain, and Italy all are way under water. It's bad everywhere, but the odds are that Mirotic's buyout will cost less, not more, in a few years.
    3) However, if the Bulls don't want to wait, then guaranteed they can trade this pick, and guaranteed they will get more than a late #1 for it. It could be a key chip in a trade for D Howard or D Williams, if that is the direction they want to go.

  • In reply to rustyw:

    Did you not read the article?

    How does Mirotic get MORE value now, if it looks like he won't be coming until at least 4-5 years, and even at all?

  • In reply to YouBlewwIt:

    I actually agree with Rusty. The Euro's more likely to lose ground against the dollar in the next year or two, shrinking the buyout (but may go up after that).
    And he has a great point - if the could make low-first round high-talent picks like this every year, the wait wouldn't matter, because there would constantly be a polished player rolling off the back end of the assembly line. It has worked for San Antonio.

  • In reply to Gringo Rican:

    But there isn't a Mirotic every year. Besides Ginobli who has San Antonio gotten that's a real difference maker in winning a championship? Did San Antonio have to wait long for Ginobli? If so it was obviously worth it. But Tiago Splitter, Omer etc. they do have value, but a lot of these mysterious European stashed away picks are a waste. I think it should be an option but not a panacea, or something you do every other season.

  • In reply to RoadWarrior:

    And to add on to your point about Manu and the other great International players...

    People use the Spurs way of drafting International players as a system all teams should use, but that simply does not apply to this current era.

    When did Parker/Manu come over...about 12 years ago? How about Dirk...15 years ago?

    The reason why those superstar potential guys came over to play in the NBA is because back then, the money overseas is not the same as the money is now. So Parker, Manu, Dirk taking on a 5yr $5mil rookie scale contract was actually a pay-raise than if they were to stay overseas.

    But nowadays, there are teams overseas who are willing to shell out the big bucks (Ersan Ilyasova got a $5mil per year deal from a Turkish team, Rudy Fernandez got a $5mil per year deal from a Spanish team). If Mirotic becomes a GREAT player like everybody is thinking he will be, do you think he would come over here and play on that rookie scale contract of 5yrs for $5mil deal? Or would he rather stay overseas and play more than $5mil per year (I don't know the salary restrictions/caps so I'm not going to guess a max number).

    Even about 6 years ago, the Magic draft that Spanish kid Fran Vasquez in the draft they took Dwight in. They were hoping he would come over in a couple years and he and Dwight could be the frontcourt of the future...he still hasn't shown up.

  • In reply to RoadWarrior:

    You are right, there isn't one every year, or even very often, but that doesn't mean that it still isn't an extremely astute move to grab the guy a couple of years early when there is an opportunity to do so.

    The Bulls drafted Toni Kukoc after the first championship of the first 3 peat, he became a major contributor during the second 3 peat, 4-5-6 years after he was drafted.

    Should he come to the NBA, Morotic's career timing will be similar to Kukoc's. We can only hope that the championships follow a similar pattern as Rose is/was considerably younger when Mirotic was drafted than Jordan was when Kukoc was picked.

    I've got no problems using late first and second round picks to acquire guys like that. Taj Gibson was a home run, yet 5 Taj Gibson's won't win you a championship.

    By the way, that is why I am taking Tony Wroten(top 5 talent) @ 29, if he drops that far.

  • This is why I never talked about Mirotic coming over and poo-pooing everybody who ASSUMED he was a lock to come over...let alone coming over within the next 2 years.

    Even if this wasn't these reports weren't true, I was still doubtful Mirotic would be coming over here in the near future ('near future' = Before his contract ended, presumably after 2015-16).

    Because if he is as good as everybody is saying he is, why would he come over to the NBA and have to play under the rookie scale contract for about 5yrs $5mil.

    I don't know if there is a 'max' in the International leagues, but I would expect him to get paid more than the 5yrs $30mil Rudy Fernandez was offered.

  • 1) It is tough to analyze the dollars and cents of Mirotic coming to the Bulls without knowing the details of his buyout option. But here's one thing we know: MJ was making $3 million salary per year. How did he wind up with hundreds of millions? Advertising contracts! Endorsements! (He didn't get his $30 million contracts until late in his career.)

    If Mirotic has a winning personality, and if he becomes an NBA superstar, he could play for Chicago for nothing and still make $10s of millions a year, especially in a basketball city like Chicago. Plus he could get bigger international endorsements. Like Yao. So he will have financial incentives to come over ASAP. Look at the whole picture when analyzing.

    2) As for value, the Bulls got Mirotic for a #23. Most teams in the lottery would trade their pick for Mirotic this year. Heck, I think Jordan would trade the Bobcats' #2 for him. But three years from now we all might feel the Bulls got their pocket picked on that trade.

    There is not a player in this draft that I would trade Mirotic to get. Unless I could read the future. But maybe make him part of a trade to get D Howard or D Williams. Even that might not work out long term, but it sure would be an immediate upgrade.

  • In reply to rustyw:

    Mirotic is no Michael Jordan, and I don't think he's going to rake in lucrative endorsements. I'm not hoping for him to become a perennial All-Star, really.

    I'm just hoping that he's a bit better than Boozer. If Chicago can replace Boozer with someone that makes 1/3 of what he does, the Bulls can get rid of their biggest, most disappointing contract, and use that money to address other weaknesses on the team. I think Chicago viewed Mirotic as a cheaper alternative to Boozer, serving as insurance or an eventual replacement. Having so much money tied up at the four spot is the reason that we have a glaring need at the 2, and why re-signing Taj and Asik is at risk. If Mirotic turns out to be better than Boozer as well, that's just a hell of a bonus for us.

  • It's kind of hard to believe that Mirotic won't be better that Boozer. There are some pretty good teams in Europe. Haven't some of them beaten the USA teams of NBA Allstars in international play? So, if Mirotic, tho young and with limited experience, is a really strong player over there now, surely there is reason to think he will be over here too -- especially in a few years.

    It's too early to say, but will he be a LeBron? No. A Dirk? Not likely, but it has been mentioned. How about a Bosh or Gasol? That seems realistic. Is there anyone in the draft who's a Bosh or Gasol? Maybe, but, if so, no one knows who he is yet.

    Mirotic is more likely to become an Allstar than anyone in this year's draft. He may not, but his probability is higher. Therefore, he was a great pick at #23. In fact, he'd be #1 this year if he were available.

    As for endorsements, does he have personality? If so, and if he becomes an Allstar, then he will get endorsements. But he needs the NBA to make the top endorsements. So, he will likely come over, sooner than later. The Bulls made a great pick.

    Now they need some solid ones this year.

  • In reply to rustyw:

    He could end up a Dirk or Pau, but could also turn out to be a Darko or Kirilenko (which still isn't terrible for a #23 pick - or, more accurately, a #28 bundled with a second rounder). He'll probably be in between. But I don't think he would be smart to rely on endorsements. How often do you see Turkoglu or Asik or Marc Gasol in ads? Toni Kukoč was the best player in Europe for a decade, but was a sixth man on the Bulls. I doubt he ever made more in endorsements than his salary, despite being a likable guy playing on the most popular team in the world. I could be wrong, I have no idea how much he made on the side, but this seems a little desperate.

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