When John (Hot Rod) Williams left Tulane University in March 1985, he was a confused, undereducated young man living under a cloud, barred from the NBA pending a trial that would determine whether or not he had conspired to fix college basketball games. Today? Well, with a career scoring average of 13.5 points per game, Williams, 28, is no NBA All-Star. But he's a solid citizen—he was acquitted of all charges several years ago—a veteran member of the Cleveland Cavaliers and a 6'11" frontcourtman respected for his unselfish play and all-around ability.
Oh, yes, and with the $5 million he will be paid by the Cavs for the 1990-91 season, Hot Rod Williams suddenly has the second-highest salary of any American team athlete. Jose Canseco of the Oakland A's will earn $5.5 million this year.
You may gulp now.
Williams's seven-year, $26.5 million deal with Cleveland, which was precipitated by a free-agent offer sheet extended to him by the Miami Heat, is simply incomprehensible to many NBA fans. Patrick Ewing will receive more than $4 million from the New York Knicks this season, but at least America knows who he is. Five million dollars for Williams, a sixth man for most of his four-year career? The numbers seem to be way, way off the sanity scale. Sure, NBA players' annual salaries average almost $1 million, but Williams's stupendous contract raised eyebrows and pulses.
"Amazing," said Hot Rod's teammate Mark Price, the Cavs' point guard.
"I'm stunned," said one NBA general manager. Said another: "It's insane."
So, why did it happen? And what will its impact be? As with almost any player who gets a megacontract in sports, the recipient was in the right place at the right time. Last November, with Williams's contract due to expire at the end of the season (Williams made about $675,000 in '89-90), Cleveland offered him a five-year, $11.8-million deal. Williams and his Chicago-based agent, Mark Bartelstein, rejected it, gambling that Williams would be among the most attractive free agents of the summer and thus be in a position to command an even more lucrative offer from another team. Cleveland made other overtures to Williams, the last being a five-year, $13.5 million offer in July, but Williams said no.
On Aug. 22, the Heat offered, and Williams signed, the eye-popping, must-be-a-misprint, seven-year, $26.5 million deal. Last Thursday, the Cavs did what they had to do to keep Williams—they matched the figure. The Cleveland contract is structured to give Williams maximum benefit right away: He gets a $4 million signing bonus and a $1 million salary for this season. That's $60,975 per game. By the end of his contract, in '96-97, Williams will have to struggle along with only $2.5 million for the year.
"Higher risks for higher rewards," said the Boston Celtics' Kevin McHale, a better forward than Williams who will make far less ($1.4 million) than Hot Rod this season. "John Williams played the game by the rules. He waited until his time came, and he hit a home run."
But why would Miami lob Williams such a multimillion-dollar gopher ball? "I guess just about every team in basketball is upset with Miami," said one NBA team executive who asked to remain anonymous. "What they did was very irresponsible and bad for the league." On the other hand, Miami's proposal was totally within the guidelines and makes sense for several reasons.
First, Miami had to do something extraordinary—O.K., in the realm of the ridiculous—to have any chance of signing Williams, whose "restricted" free-agent status (he has been in the league less than five years) would return him to his original team if it matched the offer.
Second, although the Heat has been pursuing a cautious, build-with-youth approach since entering the NBA as an expansion team in 1988, it was becoming increasingly clear to management that a bold free-agent move had to be made, lest interest in the Heat fall somewhere behind jai alai, shuffleboard and greyhound racing.
Third, because of the mandates of the league's salary cap, Miami was—and still is—in the rare position of having to spend a considerable amount of money to reach the $9.6 million cap minimum. Finally, paying an outlandish salary to a player like Williams is not as likely to cause chemistry problems for a young expansion team on which no player has a very impressive rèsumè.
Why Cleveland matched Miami is a little harder to figure. Williams is the Cavs' fourth-or fifth-most-important player, behind Price, center Brad Daugherty, veteran forward Larry Nance and perhaps even rookie forward Danny Ferry. In the end, Williams remained with Cleveland because Wayne Embry, the general manager of the Cavaliers, wanted to send the message that another team couldn't steal his veteran players and because he was worried that Hot Rod might improve markedly and come back to haunt his old team. "It was not a difficult decision," said Embry.
At any rate, the deal is done. Now for the fallout.
It will be most immediate in Cleveland, of course. Indeed, before Embry made the Williams deal final, he knew he had to keep Price, his most prized asset, happy: Last Friday, the Cavs announced that Price's five-year, $5 million deal was extended by three years (at an estimated $2.5 million annually). The Cavs are a fairly mature, close-knit team, but they are sitting on a powder keg. Even Price, while not begrudging Williams his money, noted, "John is making almost five times as much as any of the veterans on the team." Furthermore, Ferry, an untested albeit much-ballyhooed rookie, will make about $3 million this season.
And what about Williams, who is aware that it was Miami's largess, not Cleveland's, that opened the vault? "I take my hat off to Miami," Williams said. "I didn't think Cleveland would match. They didn't think I was worth $11.8 million last November, so why should they think I'm worth this much now?"
The money paid to Williams puts the Cavs over this year's salary cap of $11,871,000—teams are allowed to go over the cap to re-sign a free agent. The Cavaliers' payroll is an estimated $14.5 million, reportedly the highest in the NBA, and now Cleveland's hands are tied for future deals.
Outside Cleveland, there will almost certainly be a couple of repercussions from Williams's contract. First, some teams will no doubt try to sign their key players to long-term deals—perhaps as long as 10 years—a course already being pursued by the Indiana Pacers. (Long-term deals, however, can't guarantee financial stability in this era of renegotiation.) Second, Williams's contract will up the salary ante for the NBA's superstars. If Hot Rod is worth $5 million this year, and an average of about $3.58 million over the next six years, then what in the name of Midas is Michael Jordan worth to the Chicago Bulls?
"How do you ever compensate the Birds, the Jordans and the Magics?" said George Andrews, another Chicago agent. "Should they become equity owners in their teams?"
That seems quite possible. Otherwise, how high is up for superstar salaries? Bob Woolf, the Boston-based agent for Celtics Larry Bird and Robert Parish, said that he wouldn't be surprised to see a $10 million-per-year player within a couple of seasons. Do you think that figure hasn't crossed the mind of ProServ's David Falk, the high-powered representative of Jordan and Ewing, among others? Indeed, the Williams signing has already triggered a clause in Ewing's contract that says he becomes a restricted free agent if four NBA players are paid more than he is during a single season. That will become a reality in '91-92, when Williams—who will make a measly $4 million—joins Magic Johnson, Jordan and Akeem Olajuwon in surpassing Ewing's $3 million salary (it drops in '91 because the contract is structured that way). How much will it cost the Knicks to stand Pat? Will Ewing be the first $10 million-a-year man?
In any case, the Williams deal is likely to cause what Falk calls a "polarization" of salaries: "I think it's the stars that create the great market in which everybody shares, and those stars will hold a disproportionate share of the money."
He's absolutely right. Embry knows that to win a championship he needs role players such as Williams, but he also knows that role players don't pay the bills. "What we'll see is superstar players getting up to a third or a fourth of the salary cap," said Embry. "Then there will be another level. The ninth, 10th, 11th and 12th players will make the minimum."
Megasalaries like Williams's, finally, should have a profound effect on labor negotiations in 1993, when the current NBA Players Association agreement expires. Having seen the benefits of free agency, the players may want more freedom of movement. Last week Charles Grantham, head of the Players Association, floated this trial balloon: "Maybe the salary cap won't always be there. This [free-agent] movement is putting pressure on the whole concept of a cap."
As Grantham knows, the league is about as likely to scrap the cap as it is to outlaw Jordan's dunks. Indeed, the NBA believes that the existence of the cap, as well as the system that guarantees the players 53% of gross revenues, is the very reason that contracts like Williams's won't destroy the league. The thinking goes like this: The cap keeps teams in relative line with each other; the cap is adjusted upward as league revenues rise; and the players are always guaranteed their 53%. And revenues will keep rising because of the growth of the game internationally (TV rights and merchandising are lucrative areas for targeting) and the possible advent of pay TV.
Says Gary Bettman, the NBA's general counsel: "We are optimistic that the upward trend will continue. Television ratings have been good, and we hope they'll get stronger. We see help in other areas. NBA players will be able to play in the '92 Olympics, and I'm not just talking about Americans on the U.S. team. The league has a strong international focus, things like the McDonald's Open [in Barcelona next month], regular-season games in Tokyo [Phoenix and Utah will play there in November], telecasts in 77 countries."
Others are not as optimistic as Bettman. "The bottom could fall out a lot sooner than people think if this sort of salary growth continues," says Embry. Robert Baade, a noted sports economist in Chicago, says, "How many times can a team pay $26 million for a player like Hot Rod Williams? The Williams contract probably means more holdouts down the road, more renegotiations. Players have more options than ever before. You have more teams bidding, you have the European [teams] involved as well.
"I wonder, in all of this, what would happen if this tremendous growth of the NBA tails off? Would the players agree to give back a percentage of the gross?"
The players probably aren't thinking much about that, Professor. As Lewis Schaffel, managing general partner of the Heat, said last week: "I'm not saying this situation will go on forever. But it's a great time to be a 6-foot-8 10-year-old or maybe a 15-year-old who's on his way to being seven feet tall." It's an even better time to be Hot Rod Williams.
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