Trade talk getting you down? Let's fix the NBA labor/salary structure instead!

by Xiane on Feb 13, 2010 10:18 PM CST in Whimsical Posts

This idea actually originated in one of those whimsical pieces beloved by all Dreamshake readers, but after seeing some details of the owners Collective Bargaining Agreement proposal, it actually looks rather sane. No, I don't think we're going to be seeing The Malcontent All-Stars, as much as I think everyone, and I mean everyone, would enjoy them.

There's a germ of an idea in there that I think provides a better, or at least more palatable solution than the NBA's suggested "cramdown" of big contracts. Here's what I propose:

Once in a three year period an NBA team may choose to extend payment on a players contract for ten years, with the remainder of the money owed on the contract divided into ten equal yearly payments.

That is, total deal money remaining, with options assumed to be exercised by both parties, divided by ten. For example, Player X has $23 million and one year remaining. Team Y chooses to extend him. Now he gets $2.3 million per year for the next ten years, plus interest yearly, at prime +1% or something like that. In another example Player A is owed 40 million over 4 years. If extended, he gets $4 million a year for 10 years.

The time to do this move is the week before the summer Free Agent period. When a team chooses to extend a deal the player is immediately dropped from the roster, and no longer counts against the salary cap. The player becomes a free agent and is eligible to sign with any team but the one who extended his deal. He gets whatever money he is owed from the extension of his contract plus whatever money he signs for.

No player may be extended twice in his career, and the player may not play for the team that extended him in that same season. No player may be extended by a team he was traded to in the same season, or in the same season he signs a new contract.

This, to me, is a much better way to deal with deadly contracts. The player still gets all his money, plus interest. The team gets immediate relief, and the player can actually end up making much more money if he signs another lucrative deal. The bad contract doesn't cripple a team, but neither can the team simply escape it. If you make a terrible deal, like certain ones in DC or NY, well, extending 5 years out to 10 is nice, but still hurts, as it should. The fact that the salary drops off the cap, though, makes it attractive.

I honestly think this is pretty reasonable. Your take?

PS - I know this doesn't really account for the time value of money - it IS a haircut, but not a total "You'll take 40% less and like it!" haircut.

Poll

The 10 year contract extension idea is:

Pretty good, actually

54 votes

Awful. A blight on reason itself.

101 votes

No crazier than what's actually been proposed.

65 votes

So crazy it just might work.

50 votes

270 votes | Poll has closed

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Comments

What if the player has multipl years left on his deal?

Say its 3 years, 40 mil. They still just get that 40, 4 mil/year, for the 10 yrs?

by returnofswagger on Feb 13, 2010 10:30 PM CST reply actions

Yes, I'll fix it so its more clear.

Total deal money divided by 10.

Significant gravitas shortfall expected in 2010.

by Xiane on Feb 13, 2010 10:31 PM CST up reply actions

i think its a terrible idea. especially for the bad owners

i can somehow see bad contracts having an effect for many more years than they do currently.
look at gilbert arenas’ contract. say the owner decides to extend that contract. all of a sudden he is paying 8 mil a year over 10 years, add up multiple contracts and owners( most likely the bad ones) could potentially have team sized salary obligations outside the active roster. There def needs to be a limit on how many players can be on this extended plan for a team at a time.

also there needs to be a time limit on how long owners have for paying it off. lez alexander could be very willing to take brian cooks contract. put it in a bank and let it sit collect intrest at 4% from a bank. He actually makes money off it if the owners intrest rate is lower than a banks. and as for time limit…. 3 mil over 30 years… 100k a year. its a nice salary… probably dont have to work… doesnt affect lez alexanders bottom line at all really, but tell me really would you rather have 3 mil now where you can maby invest it or get some sort of return or just collect 100k over 30 years….?? and what if an owner decides he is going to make it over the next 300 years both people are long dead… and lex alexander probably doesnt ahve to care about really ever paying all of it off. brian cook is royally screwed… not that i mind this last 3 is entirely undeserved..

lastly the players get screwed alot.
most of them are not really known for saving and i can easily see them building up large debt commitments…
living a lifestyle that requires you to make payments on your 4 million dollar house isnt a big deal when you are making 10 million a year, but what if all of a sudden your contract gets extended for 10 years and you make just 1 million a year… you get royally fucked by the debt. besides its not like players can always get a new contract.. take tmac. the dude is making 20 million a year, playing great has every right in the world to spend like he is earning 20 million a year. all of a sudden he is injured. team extends his contract. he cant get a new contract due to the injury. again debt obligations blow up in your face.
while its easy to say dude they make so much money i would love to get 2 million dollars a year over 10 years i could live my life the way i wanted too…

imagine the average joe. makes say 60k a year. all of a sudden he gets fired but his company decides they will give him an entire years worth of salary just over 10 years… yeah…. not a pretty sight.

its an idea, but it has lots of details to be worked out. i think while on the surface it looks good theoretically in a world that works like it should, putting it into actual practice will be impossible in the real world

by AlDe2356 on Feb 13, 2010 11:26 PM CST reply actions

is see you adressed some of my issues in the post

should have re read it… but i think those issues are alot more problamatic than you make them seem.

by AlDe2356 on Feb 13, 2010 11:30 PM CST up reply actions

I think I did cover a lot of this.

I think I did cover a lot of objections. Teams would get to do this 1 time every three years.

When you say that some players aren’t good with their money, well, wouldn’t spreading it out actually protect them?

Yes, going from 12/year for 5 years to 6/year for 10 could possibly upset some things, but they’d have to be awfully expensive things. If the risk of this happening is known in advance, then a player could adjust his lifestyle to account for the risk of extension of payment. But don’t worry, if you have a very safe payment stream going 10 years into the future, someone will advance you the cash now, with some fee attached, but nothing too dire, since they can claim your payment stream if you fail to make payments.

But you don’t consider guys who could make more – if you’re getting your current deal, plus a new one, well, that’s more money. If a player’s health is such that he can’t play, and would only collect money for doing nothing anyway, what’s really bad about extending that?

If your $10 million a year turning to $1 million example, remember, that’s only one year left – I suppose if you have to pay off the Lear or something with that last year of salary it could hurt, but again, someone would loan you the money and let you pay it out. The biggest risk is the interest you’d pay on that loan, which shouldn’t be that high, seeing as an NBA team is the cash flow source.

I also don’t think the likes of Brian Cook and other small fish would get this done to them. You save this for big, bad deals. The way I see it, your next use is three years after the first one, so not 2010 and then 2013, if you used the extension in 2011, the next one is 2014.

Significant gravitas shortfall expected in 2010.

by Xiane on Feb 14, 2010 12:07 AM CST up reply actions

2010 and 2013 no matter what it should read.

Significant gravitas shortfall expected in 2010.

by Xiane on Feb 14, 2010 12:08 AM CST up reply actions

Flat base pay. Everyone gets paid the same.

Then load the contract with incentives, performance-related and otherwise.

The ballhogging would be insane, but at least it would reduce the loafing on the court.

by DribbleHooper on Feb 14, 2010 1:45 AM CST reply actions

Make the incentives strictly based on MPG. So basically the coaches wind up deciding who gets paid what based entirely on how much they value each player’s performance.

by OremLK on Feb 14, 2010 3:40 AM CST up reply actions

In the Philippines' pro basketball league, we have a maximum salary ceiling for veterans and for rookies.

Then we have incentives FOR EVERY GAME WON. Everybody gets a bonus at a percentage of their salary so you don’t see players ballhogging or piling up stats, since it’s an incentive for all. And the teams give SIGNING BONUSES that are one-time.

What drives up the salaries are the bidding wars between the teams, so if teams have a saner way of eavluating talent, then the salaries will level out at a range that’s more reflective of the economy.

by RoxBeliever on Feb 14, 2010 5:29 AM CST up reply actions

That's sort of how MLS works.

I could never see it happening in the NBA.

Significant gravitas shortfall expected in 2010.

by Xiane on Feb 15, 2010 12:51 AM CST up reply actions

My 2 Cents...and the some

Half of money from tickets sales and local media contracts gets split among teams.
Helps keep small market teams finacially competitive while still giving big-market teams an edge-and incentive to negotiate larger contracts. Minimizes situations suge as recent huge Laker TV deal raised salary cap for all teams but provided no funds for the other 29 teams.

Players percentage reduces to 55%.
Player gets 10% of all NBA licensed products bearing his name-and his name only.

Signing bonuses outlawed except for draft picks and team’s own FA signings. Signing bonuses don’t count towards Cap or 55%.

Salary Cap and Lux Tax Level combined. Salary Cap set at 57% of anticipated revenue.
Teams exceeding Cap by up to $10mil pay a dollar for dollar fee as now. Teams exceeding from $10mil to $20mil pay 2 dollars per dollar exceeding and teams over $20mil pay 4 dollars per dollar over.
Salary floor set at 50% of anticipated revenue. If less team pays equivalent amount in fine that is distributed to players pro-rated to their salary that yr.

Maximum length of contract 4 yrs.
Raises set at same % as Salary Cap increases.(No paycuts for Cap decrease.)
Max contract is set at 20% of the Salary Cap.(Again no paycut for yrs Cap decreases. Just no raise until Cap rises above salary.)
Teams may re-sign their own FAs(that they have not renounced rights to) and include a signing bonus of up to 25% of the guaranteed money in contracts of 3 or 4 yrs.
Teams may sign FAs regardless of their Cap situation.(ie,a team over the cap could sign a player to a max contract if they wish to pay the Lux Tax involved.)
Trade conditions remain the same.

Injury Exception. If a player signed for the season is injured,he can be bought out by his team w/all guaranteed money due. But he no longer counts as a roster spot and his salary no longer counts towards Cap. He also becoumes a FA whose team had renounced him. If the player re-signs w/the team that used the Exception w/out having been on another team’s roster for at least 30 days,both his new AND his old salary count towards the Cap,retroactive.

Rookie contratcs identical for 1,2 Rd picks. $750thou,$$750thou,$1mil,$1.5mil. 3,4 years team options. Complete FAs at end of 4rth yr.
Second Rd picks get a $500thou signing bonus.
First Rd picks get signing bonus as follows:
#1,$8.5mil #2,$6mil #3,$5mil #4,$4.5mil #$4mil and from there $100,000 less each position til #30 gets $1.5mil.
If a drafted player has not signed a contract w/in 4 yrs of being drafted,the team holding his rights loses them and he can be drafted in the 5th yr and if not drafted is a FA.
Players on Rookie contracts can be assigned to Team’s D-League affiliate throughtout the length of the Rookie Contract. When so assigned they do not count towards the roster limit,but their salary does for Cap purposes.(They can be brought up so long as there is a roster spot available and then count towards the roster limit.)

For pre-existing contracts that exceed the new max,only that portion that equals the new max counts towards Salary Cap and the 55% Players share. They still get paid what is in their contract,it just doesn’t exist as far as the Salary Cap is concerned. Any new contracts must abide by the new terms.(Players on contracts that exceed the new max do not get the 10% merchandising cut-unless they agree at beginning of new CBA to opt out of old contract and accept a new one under new rules.)

If Player salaries does not end up equaling 55% of NBA revenues,Players shall get a prorated share based on salary pd paid by their team to make up difference.

While it would certainly be possible under this to assemble a super-team of max players,the cost would be astronomical-go $21 mil over Cap and you are paying $84mil in Lux Tax.

by Tisbee on Feb 14, 2010 3:15 AM CST reply actions