Hey, big spender! Why this summer may mark end of free-agent excess
Enjoy this frenzied summer of free agency. You're probably never going to see anything like it again.
Lost amid the feverish maneuvering of NBA owners and front-office personnel to recruit individual members of the best free-agent crop ever is that next summer these same men are going to claim they can't afford to pay the contracts that they will so proudly distribute over the next few weeks.
The irony of the owners likely shutting down the league next summer in order to get their books straightened out is that speculation over free agents' destinations has generated unprecedented publicity for the NBA. But media coverage does not pay the bills these days, at least not enough to overcome the sobering deficits some teams are incurring by virtue of the very process they are undertaking in the last year of the collective bargaining agreement. And so a lockout, it seems, is inevitable, because as one owner admitted earlier this year, "We need protection from ourselves."
The first day of the free-agent negotiating period proved that point emphatically. Despite playing in a small market and losing loads of cash, Memphis owner
And yet, after these next few manic weeks of profligate spending, the joy of signing free agents will be replaced by furrowed brows that suggest the machine is broken and badly needs an overhaul. This is precisely why there is so much mistrust between the owners and the players; essentially, the owners talk out of both sides of their mouths and the players don't know which side to believe.
In reality, if the players and the owners could work collaboratively, they probably could enjoy an unheard-of level of financial success. But it is not going to happen because there is inherent suspicion between the sides.
I asked one of the best financial minds I've come across -- who asked to remain anonymous because he consults for an NBA team -- what he would do to repair this broken system. No restrictions on ideas. Think outside the box rather than building off what is in place.
His suggestion was to remove cost-control barriers like the salary cap and the luxury tax -- which require more layers of convoluted rules in subsequent CBAs because teams inevitably find loopholes -- and focus solely on maximizing basketball-related income. The first step is to agree on what percentage of that income each side gets and then guarantee that percentage by using an escrow system. And the second step is to work in a non-adversarial fashion to make the league as popular, successful and, by extension, financially flush as possible. In effect, the larger the pie grows, the bigger the piece of pie everyone gets.
To me, one of the best ways to do that is to eliminate guaranteed contracts. Just look at the list of next season's highest-paid players to understand. And this is before even one contract is signed this summer.
Yes, teams agreed to these contracts. But teams should not be penalized for five or six years for making a bad choice, or because circumstances like Redd's injury intervene and make their investments basically a total loss. Isn't having to pay somebody $15 million for one season of nothing penalty enough? To be locked in for half a decade is absurd.
It makes teams worse, and in the end it makes the league worse. And because the product is not as good as it could be, it drives down overall revenue. After all, what fan wants to pay an astronomical ticket price to see Davis loaf up and down the court, or Brand and
Wouldn't it be better -- and downright refreshing -- to see players have to compete for and justify their contracts every season? Wouldn't the level of play be higher if the guidelines were similar to those in the NFL, where production and quality of play are paramount and insouciance is not tolerated? Wouldn't the overall quality of the NBA improve if the players who are producing are paid, while the ones unable to compete for whatever reason -- age, injury, lack of skill -- are jettisoned?
I asked Lakers guard
"Because the owners agreed to them," he said.
But why do players who are actually contributing care whether a guy who is unable to help either the team or the league gets his $10 million?
"Because that is the contract that an owner signed and the player is entitled to that money," Fisher said.
This is why a lockout appears inevitable. There is a disconnect between what is needed and what is wanted. Players have become so accustomed to getting their money that they can't see an alternative solution to the obvious problem. But make no mistake, guaranteed contracts are the very thing that will bog down CBA negotiations next summer and could cost a good portion, if not all, of the 2011-12 season. The owners will not completely eliminate the guarantees, but they will limit them -- again, in part to protect themselves from their own errors in judgment.
"Performance is subjective," West said. "One owner may think that what you are doing on the court is worth your salary, while another may not think he is getting his money's worth. That gives them the opening to cut somebody loose just because their salary is too big. You would never see an older player get to the end of their contract because the team would just use the excuse that he is not being productive enough and cut him before they have to pay him."
The solution to that is to front-load the contract rather than backload it, the latter being the current formula because teams are always trying to defer their initial costs, thinking they can trade a player in the final year of his contract to a team seeking cap relief.
The other solution is to implement a minimum salary threshold so that if a team cuts a player to save salary or renegotiates his contract, it has to spend at least a portion of that money on other players to upgrade the club.
"I just don't trust that owners will do that," West said. "Some guys want to save money more than they want to win."
The other factor, West acknowledged, is that players feel their careers are short-lived and they want to maximize their earnings in that span. But that goes against the very argument that it is better for the overall health of the league for the best players to be on the floor and earning money -- something the players are going to have to reconcile in their minds during the upcoming negotiations.
The mid-level exception is a contract equal to the average player salary, which last season was $5.85 million. Falk said allowing teams to sign players to that contract while limiting what they can give players like
The very prospect of smaller salaries and shorter deals for players in the next CBA is why so many stars opted out of their contracts this summer. A new day is dawning soon in the NBA, one that embraces fiscal responsibility and temperance through institutional design.
It will take six years -- the maximum length of a current contract -- to get to the end of this cycle, at which point we'll remember those heady days of obscene spending as perhaps the last of their kind.