A new road to riches

Free agents are costing millions under the NBA's Right of First Refusal system
July 12, 1981

For Mitch Kupchak, 27, a 6'9", 235-pound free-agent power forward soon to be both a former Washington Bullet and a millionaire, the biggest worry these days is how to invest newfound riches. "Gold and diamonds are just too expensive," he says. "Fancy cars I'm too hard on. I'd just wreck 'em. Besides, I probably wouldn't fit into one. All I'd like is a pool built into my backyard."

The cost of a pool no longer poses a problem for Kupchak; the question simply is where it will be built. Although the answer won't be official for weeks, contractors in Los Angeles should get ready. Kupchak, who says the Bullets have told him they can't afford to meet his demands for next season, has received an offer from the Lakers for between $700,000 and $850,000 per year over an estimated seven-year period.

The Lakers' offer represents quite a windfall for a man who has never been a starter in the NBA, who last season made $160,000 and who two years ago almost had his career ended by a herniated disk. But under the NBA's new Right of First Refusal system, windfalls for free agents are fast becoming commonplace. Indeed, in the two months since the Right of First Refusal went into effect, it has radically changed the salary structure of pro hoops.

Laker owner Dr. Jerry Buss, not wanting to risk what might happen under the new system when Magic Johnson's contract is up in 1984, two weeks ago signed Johnson to what is probably the biggest contract in sports history—$25 million for 25 years. Cleveland's Ted Stepien has lavished riches on even journeymen players. And Seattle has offered Denver Nugget Forward Alex English a contract that includes a four-year option to buy stock in the Sonics' parent company, FNI, at $7 a share. The stock is currently worth $3.60 a share, but the NBA's special arbitrator, George Nicholau, has ruled that the Nuggets must come up with $300,000 just to match that clause, a decision which, if it's based on sound information, could produce a run on FNI stock.

In short, free agents are rich agents, and Kupchak is the most talented and marketable—read white—big man in this year's free-agent crop. Under the rules of First Refusal, the Bullets can match Kupchak's offer sheet from the Lakers and either keep him or work out a trade for him, or they can simply let him go, without compensation. Whatever happens, Kupchak is guaranteed the amount of L.A.'s offer.

The 13th pick in the first round of the 1976 draft, from North Carolina, Kupchak originally signed a four-year deal with the Bullets at $160,000 per year with much of that money deferred. In his first training camp he was faced with the prospect of beating out either Wes Unseld or Elvin Hayes for a starting spot. He didn't, partially out of self-preservation. "Unseld said he'd kill me if I took his spot," Kupchak says. Still he gained a reputation as a hard worker; coming off the bench in his first three seasons he averaged 13.6 points and 6.5 rebounds a game. He suffered his back injury near the end of that third season and missed much of the following year. Concerned about Kupchak's disk, the Bullets last year refused to exercise the option on his original, guaranteed contract and signed him to a one-year deal with no option. Kupchak made a strong comeback, averaging 12.5 points and 6.9 rebounds, and decided to test his value as a free agent.

The first indication Kupchak had that the market would be bullish came while he was in Acapulco in May for the NBA Players' Association meeting. Word arrived that All-Star Guard Otis Birdsong, then of the Kansas City Kings, had received an offer worth a potential—with incentives—$1 million per year for five years from the Cleveland Cavaliers. Within days, Indiana Pacers Center James Edwards, a rather ordinary performer, got an offer of $750,000 per year for four years, also from the Cavaliers.

After listening to offers from at least six teams, Kupchak went to the Bullets and said he'd re-sign with them for $100,000 less than the highest bid. "My friends said I would've been nuts to sign for less than the highest offer," he says. "But I was content here. It got to a point where I was wondering how happy I could be. I'm the last person to say that I deserve this kind of money, but I didn't go after those bids, and I'll never be in this position again. All I asked was for the Bullets to be competitive. I understand their economic decision. I hope they understand mine."

Kupchak's numbers are just a fraction of the figures that Buss threw at Johnson, who had approached Buss early last season and asked if anything could be done to ensure his being a Laker forever. The result was a contract that surpasses the one previously considered the richest in sports, Dave Winfield's 10-year, $22 million deal with the Yankees.

To pay Johnson, a 6'9" guard, his cool million a year, Buss purchased for $5 million the trust deed to what is presumably a piece of real estate in an unspecified location ("To tell where would only lead to someone desecrating it to get some attention. There are a lot of crazy people out there," Buss says). The interest from the 20% mortgage comes to a million dollars a year for Buss—or Magic.

Unlike most sizable or lengthy contracts, Johnson's will be paid in cash, with no deferrals. As a result, Magic will make $2,739.73 per day when his new contract takes effect in 1984. Or, based on the NBA norm of two checks per month over an eight-month period, he will get $62,500 in each pay envelope.

Buss envisions Johnson playing another 10 to 12 years and then becoming Coach Magic or General Manager Magic, which should make the incumbents in those jobs, Paul Westhead and Bill Sharman, feel terrific.

Last week Buss tried to justify Johnson's contract while relaxing at Pickfair, beneath a portrait of Mary Pickford, who seemed to beam approvingly. Pickford and her second husband, Douglas Fairbanks Sr., were the original owners of the isolated Beverly Hills mansion Buss purchased in 1980 for $5.4 million. "What we tried to do was find what would be a fair salary for a free agent in 1984," he said. "We figured that would be $700,000, but inflation until then will be a minimum of six to seven percent. Over the 12 years of the basketball portion of the contract, then, that figure would double to $1.4 million a year, so we just averaged it off to a million a year.

"Past that, you have to look at Magic's front-office capabilities. Right now a good coach or general manager, with Magic's P.R. value, averages $200,000 a year. That doubles during his playing career, and in another 15 years, with inflation, that same coach would be making $800,000."

Buss believes that in 25 years the average secretary will be making $60,000 a year, but adds, "It won't mean anything. You'll also be paying $5 for a gallon of gas and $35,000 for a car. That's if inflation goes the way I say it will. I'm gambling, but if it does, then I've got the edge."

Buss would like to end the NBA draft now; he advocates free agency for every NBA player, rookie or otherwise. "If Ralph Sampson was a pianist or mathematician and six people wanted him, they would bid for his services and he would choose where he wanted to go," Buss says. "That's how it is in every other endeavor in life, why not in sports? All the draft is is selecting the right of first refusal for a player after the player's first three-year contract."

If the draft were to be abolished tomorrow the Cavaliers would be way ahead of the game. Because of trades, the Cavs have just one first-round pick until 1987. As a result, Cleveland, 28-54 in 1980-81, has been forced to go heavily after free agents. Some owners and general managers of other teams would say heavy-handedly. Besides the offers to Birdsong, whom Kansas City traded to New Jersey after matching Cleveland's offer, and Edwards, Cavalier owner Ted Stepien has signed former King Forward Scott Wedman to a five-year deal for a potential $4 million and has offered a four-year, $1.4 million contract to Guard Bobby Wilkerson of the Bulls.

According to Stepien, the Cavs' No. 1 need was for a center. Robert Parish of the Celtics was their first choice, but he signed before the regular season ended. No. 2 on their list was Edwards. Cleveland's second need was a big guard. The first choice there was Ray Williams of the Knicks, "but right off the bat he was in the million-dollar range," Stepien says.

"We were amazed when we heard that Birdsong was available. K.C. had made an offer of $600,000 and withdrawn it when Otis decided to test his worth in the open market. From there it was only guesswork coming up with a figure that would be acceptable to Otis. We also wondered what we could do to make it difficult for another team to match our offer." What Cleveland did was present a bid that shocked most owners.

Although that didn't secure Birdsong, it did get Edwards and Wedman for Cleveland. The Cavaliers guaranteed those acquisitions by giving draft picks to the Pacers and Kings not to match their offers.

While other owners have assailed Stepien for destroying the NBA's salary structure, he pleads guilty to nothing but being the victim of geographical bias. "Was Red Auerbach crazy for giving $650,000 two years ago to Larry Bird, an untried rookie?" Stepien asks. "Is Jerry Buss crazy for paying Magic so much? No, they're coastal geniuses. Me, I'm a Midwest jerk."

"The difference between the Lakers and Mr. Stepien's team is that we can afford the salaries we're paying," says Buss. "If Cleveland can clear a profit, O.K. If not, he's cheating by borrowing money from his business. He thinks he can make money. I think he's wrong."

Stepien reportedly was obliged to borrow $3½ million from his company, Nationwide Advertising, to cover his team's losses last season, but he says, "The Cavaliers have paid all their bills since I've been here, and as long as that continues I expect to be treated like any other owner." When some of Stepien's players become free agents, he will be.

PHOTOEver a sub and often hurt, Kupchak still has a million-dollar smile. PHOTOMagic hit a home run with his new Laker deal.

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