The CBA: Guaranteed Contracts and Accompanying Issues

Performance-based requirements to fully guarantee a contract for a full year. Say, 60% guaranteed at the beginning of the season, with the amount of games played and performance in those games filling out the rest.

This would help protect the owners from having to pay all of a player’s salary while the player rehabs halfway across the country whilst not logging a single minute of game time (ex: Raef LaFrenz), while adding extra incentive for players to perform at their highest every year to get the most money.

Teams get stuck with players who are unable to produce… which isn’t always the fault of the player… but no-one is going to walk away from millions of dollars which is guaranteed.
The Players Union would only agree with it if the waived player received the full salary.
But the benefits are numerous.
1. More players would be signed. Waiving an injured player creates a spot/contract for another player.
2. Incentive to play hard. Not many players would be happy at being waived just because they weren’t producing.
3. The owners still have to pay and keep within the cap restrictions but at least they will be getting more contributions for the money. Its not like teams would be dumping dead weights just to sign super stars because the cap would still restrict them.
4. Injuries wouldn’t become such a burden to a team.

The rich get richer, the poor get poorer. The rich teams can afford to waive a less productive player and pay for a replacement. But the poor teams will either suffer economically by using the exemption to replace a player, or suffer competitively relative to the richer teams if they can’t use the exemption for economic reasons. The Lakers would love this change – which can usually be taken as an indicator that it’s not a good idea!

The players would love the change if the waived players get paid full salary, since the affected player can then double dip. But I think the poorer or smaller market owners would vote it down. While it seems attractive from a fan point of view (we get rid of mistakes and get to make new ones) I think any change that would weaken the salary cap ultimately costs fans higher ticket prices and leads to less competitive parity in the league.

for owners who are interested in winning, not the bottom line, this provision would signing a guy like david lee or sessions to a modest contract without as much of the risk of being tied up in a bad contract because you couldn’t tell how good a player was going to be yet.

I think a bi-annual exemption makes some sense. But my issue as always been with the injury issue, not the performance issue. If a team signs a player to a big contract, who was just never was as good as the team thought (Larry Hughes or ZBO or Ben Wallace), then the team has to suck it up on the cap hit. But if a team’s player gets hurt, Knee Mac or Yao or Miles, then that really is a different situation and I think that is where cap relief should come in.

I think if a player misses X games to injury, then the team should be able to “pro-rate” the cap hit over 3 years. So say a player making $12M, misses 1 season, then the cap hit would be only be $4 million a season for the next three seasons . You could even discount further by assigning a % such as 80% cap hit for each injured season . Still affects your cap, but not as crushing and avoids the dead weight for something beyond a teams control. This would also distinguish ZBO from Miles or Stevie Franchise. Miles you would get cap relief, ZBO you just suck it up because you signed a bad contract. Players would be ok because they still get paid as teams are wiling to take on bigger contracts because the impact of the risk of injury is reduced.

Btw, the NBA should really get credit for implementing the rookie scale. It is a geat concept and you can see how both baseball (with the nationals first pick) and football (with the crabtree holdout) would really benefit from a similiar system. I think the scale really does balance the risk of bust to an owner and stil meaningfully rewards potential for a player.

A standardized provision in all contracts allowing termination of a contract with or without cause with approval of the league office — with teams allowed to “nuke” only 1 contract with these provisions every two seasons.

First, to Dave’s comment:

We are never, ever going to see elimination of guaranteed contracts in the NBA. The union would rather shut down the league forever than agree to that.

That might be the unions line and there would no doubt be a very long, very bitter strike if the NBA owners attempted to eliminate guaranteed contracts. However, the players union was essentially busted in the NFL — the current system is crazily skewed in favor of ownership. Forget about guaranteed contracts in that league. AND they have a hard caps set at a level at which EVERY owner is making money. Lots of money.

Can one argue that the owners of the NBA are unaware of this? Do you think Paul Allen won’t squeal?

I am pretty sure that the main line the league takes against the players will be institution of a hard cap, shortening of contract length, and a lessening of player share of total league revenue.

I argue that a BETTER system to return profitability to the league, for the vast, vast majority of players, would be for the two sides to come up with a small tweak of the current system enabling teams to burn one contract every two years. This would go a long ways towards balancing the books.

Zach Randolph’s contract was revealed to be excessive and he had shown himself to be a donkey? Contract terminated, he’s a UFA. Blazers are back towards the cap and ultimately have more money to spend on contracts of players who DO deserve the money.

This happens in the NFL all the time, without restriction. Do you think Michael Vick collected multi-millions when he was in prison?

The key is to make it possible for teams to save a LOT of money wiping out the deals of a very few players. And we know who they are.

To Dave’s idea:

I would like to see a bi-annual exemption put in force whereby a team could waive a player, still be responsible in full for paying his contract, but that contract would not count against the salary cap.

That might make sense on an intellectual level, but it is also irrelevant to what the coming war is going to be about, I think.

Such a proposal would actually be inflationary (it allows more teams to bid on free agents), it adds to league imbalance (the teams willing to write off a bad deal just to spend the same amount again are going to be the LAs and Chicagos and New Yorks and Torontos of the leangue). And it does nothing whatsoever to address the number one issue of the owners, which is the fact that 2/3 or 3/4 of them are losing money or damned near losing money.

The owners are going to go for really concrete things like a hard cap, shorter contracts, and a smaller share of pie for the players. It is all about money for them, not being able to spend MORE money to put 12 guys on the floor.

The key for the players is that they have to understand that burning the multi-million contracts of a few of the guys that give the league a bad name — let’s call them the Iversons and the Marburys — is a lot better than ALL the players having worse prospects because after losing millions in a long and costly strike, they’re making 3 points less of league revenue.

There are ways to make the current more economically feasible for the owners without having a long and bitter street fight about it.

There needs to be thinking outside the box.

READ:

“The key for the players is that they have to understand that burning the multi-million contracts of a few of the guys that give the league a bad name — let’s call them the Iversons and the Marburys — is a lot better than ALL the players having worse prospects because after losing millions in a long and costly strike, AFTER WHICH THE PLAYERS ARE SPLITTING 3 points less of TOTAL league revenue.”

Click the title for the full article, I’ll extract the money lines…

Collective Bargaining Wish List

by Andrew Feinstein, Denver Stiffs, Aug. 7, 2009

It’s gotten very little attention, but according to the Associated Press the NBA and the player’s union have already begun collective bargaining talks in advance of the current collective bargaining agreement (the CBA) which expires after the 2010-11 season. * * *

Now for the bad.

First off, the guaranteed contract in its present form must go. How many more Tim Thomas’s or Darius Miles’s or Erick Dampiers do we need to see to recognize that the guaranteed contract must be scrapped? The word on the street is that the owners will aggressively fight the union on it in this next go-around of negotiations. And they absolutely should. The Nuggets current situation with Kenyon Martin being owed $15.4 million and $16.5 million over the next two seasons is a textbook example of the guaranteed contract becoming an albatross for an entire organization. The Nuggets have an owner willing to lose money to bring Denver an NBA championship, a competent management team in place and a deep, talented roster that’s just a solid big man away from possibly winning that championship. And yet because of K-Mart’s deal, the Nuggets will be lucky to score a Jeff Foster-caliber center.

Like they do in the NFL, I’d like the NBA to move to a system where contracts are partially guaranteed and much of that guaranteed money is paid up front, giving players the incentive to play their hearts out and keep in shape when those non-guaranteed years kick in. For whatever reason, too many NBA contracts are backloaded for when players get older and less hungry. * * *

Secondly, trades need to be simplified. In order to make an NBA trade today, teams must swap salaries that are within 125% of each other plus $100,000. Throw in trade exceptions and non-simultaneous trades and completing an NBA trade can rival doing your taxes: it’s an overly complicated system that no one really understands. * * *

Thirdly, the luxury tax line needs to be raised. As a Nuggets fan I’m admittedly biased here, but it’s not fair for Stan Kroenke to be asked to lose triple what the Lakers lose to put a similar product on the floor. If a small market owner like Kroenke is willing to shell out as many salary dollars as a big market owner like Jerry Buss or Cuban, why is he getting penalized so much for it? As reported a few months back, Kroenke allegedly loses about $10 million a season before the Nuggets exceed the luxury tax line. As of today, Kroenke is on the hook to pay out $76 million in player salaries — or $6 million over the $70 million tax line which means another $6 million goes into the NBA’s coffers. So between the $10 million Kroenke allegedly loses plus the $12 million he’ll be paying out in salary/to the NBA, this could be a $22 million loss. Conversely, the Lakers don’t lose any pre-luxury tax line money…

Fourthly, the minimum age rule should mirror MLB’s. The one-and-done rule by which kids have to play at least one year of college basketball or enter the NBA after the age of 19 has backfired on the NCAA. It should really be called one-semester-and-done because that’s exactly what’s happening. What’s the point of having great coaches like Roy Williams or John Calipari or Ben Howland kill themselves to recruit and coach top prospects only to have those prospects jet off to the NBA after a semester on campus? Like baseball, I’d like to see the NBA scrap the age limit. If you’re ready to come into the NBA – a la LeBron James, Kobe Bryant, Kevin Garnett, Dwight Howard, and so on – then they should be allowed in right away. And for those who stay in college, they should stay at least three years or wait until they’re 21, as they do in Major League Baseball. * * *

The owners and GMs have done this to themselves. Leave the financial system the way it is, just operate your business more efficiently if you want to make money. Sports teams give Billionaires a thrill they can’t buy anywhere else, why do I care if they are making money or losing money? Oh wait, because interests from OKC could buy my team and move them….

The age limit has created an environment where freshmen put up crazy numbers against inferior talent and believe they are NBA ready, just because they can score 30. There HAS to be a better way to cultivate talent, and I don’t know that the NBADL is working towards that end.

read the Livin’ Large serial at Basketbawful (http://www.basketbawful.com).

It’s a true life adventure of the roommate of a Purdue baller named Matt Ten Dam in the mid 90’s in the Glenn Robinson era.

Then come back and make the case that Purdue University and this doofus were enriched and improved by Matt’s experience.

PS: If you have been following this series and haven’t figured out that Purdue is the university in question, which the author won’t reveal…now you know.