Fixing the NBAs Lack of Parity and Mismanaged Market Forces Pt1 (Updated 7/30)

How is it that in the NFL, each team's fans can begin the season with at least the hope of a superbowl winning season and in the NBA there are really only about ten teams that have the hope of winning a title? Why is that?

One reason is simply the effect any one player can have on the team's ability to win. The game has eleven players for each side compared to the NBAs five players. Having an elite running back can help a team win, but rarely can they win games by themselves when their opponent can simply load the box to reduce his effectiveness. Eventually, other players would have to produce in order for there to be success. In the NBA, however, one player can often take over a game single-handedly. That creates a competitive market for acquiring a player with that ability.

Which leads to another reason for the lack of parity; talent disparity. Despite the high number of college programs developing basketball players with hopes of making it to the NBA, only one or two per year at most are good enough to be elite players in the NBA. With thirty NBA teams, there simply aren't enough elite-level players to go around. That, of course, leads to bidding wars for their services.

A third reason for the dis-parity is the attempt to "cap" a player's salary. By artificially limiting the amount of money an elite player can make, a window is opened for teams to acquire multiple elite players and remain within a tolerable tax penalty. That is a loophole Miami has used to create their championship team. With two elite players and another All-Star player, they have a talent disparity that few teams can match. Granted, the players took less in order to play together, but that's simply because there was that artificial cap in place to prevent another team from offering an extortionate amount of money. Without that cap, teams would be forced to balance their bid for talent with the need for surrounding pieces. A dramatically different distribution of payroll would ensue. Teams with the elite level player would be forced to pay fair market value, meaning two or more times their current max contract levels. Average players would find their value drop precipitously as well. With dollars seeking to maximize the on-court talent level, the money would naturally more toward the players with more demonstrative talent. Even an elite player cannot consistently win without help, however. By forcing teams to balance their resources you can create sustainable parity.

Please note that this is not an attempt to remove the salary cap or tax threshold. It is an argument to remove the player's "max" contract, allowing them to eat-up a larger percentage of a team's salary cap, and forcing that team to make tougher choices with their remaining funds.

A fourth reason is a lack of compensation for departing players. This is a larger point, so I'll break it down into smaller chunks.

In the NFL they have several pieces in place to allow teams to keep talent affordably or let it be "purchased" away. The franchise tag, compensatory picks, and tender offers all work together to help teams retain assets in one form or another. Draft picks have become a currency in the NFL, allowing assets to be more liquid (change hands more freely). In the NBA, there are attempts at this, but they are inefficient to say the least. From the rookie contract to restricted free agency, to even the structuring of the D-League, the NBA is attempting to overcome a problem with brute force rather than using a counter force more efficiently.

Restricted Free Agency & Tender Offers-

I don't believe rookies should be compensated to the same level as elite players like the NFL had been doing until recently, so on that point I believe the NBA is correct. However, after the first two guaranteed years and a team-option third year, I believe the free market should be brought into play if the player and team haven't reached a long-term contract. In the current system, Restricted Free Agency comes into play in the fourth year, but it is lacking. Rather than a simple qualifying offer, the "rights-holding" team should be allowed to set a players' value on the market. For example, the Blazers should have been able to say Nic Batum is worth 4yr/36 mill or two top-ten draft picks. If a team wants Batum, they must pay Batum that contract (or better), and also compensate the Blazers with the picks for taking the talent that Portland had spent the time developing. The key here is that Portland would NOT have the ability to match an offer, simply set their highest price they'd be willing to pay to keep the talent. There would obviously need to be some kind of formula in place to equate contract to draft pick value. If Minnesota had seen Batum as the missing piece, they wouldn't have had a problem with the picks because they were in win-now mode. Portland would have lost Batum, but acquired two picks with the potential of accelerating their rebuild and retaining cap space for other possible moves to acquire more talent.

Franchise Tag-

The value an elite player has on any given franchise is enormous. As such, there should be appropriate barriers in place to ameliorate the dramatic swings in franchise value that could follow such a players departure.

The first limitation I'd put in place is that only the drafting team (or team that acquired the player's rights before the initial contract signing) can franchise the player, and only if the player has always been on the team (ie not traded and re-signed later). The value of the franchise player should rest with the team that initially developed that talent and likely needed the talent boost to be more competitive.

The second limitation I'd put in place is that there can only be one Franchise player under contract at one time. So, you can't put one player on a franchise contract one year and then do another player the next year.

The use of the Franchise Tag should be handled the same as RFA, with one change. In addition to the acquiring team matching the offer for the player and providing appropriate draft pick compensation, the acquiring team must also pay the losing franchise the amount of the contract offered as well. For example, if Cleveland was able to offer Lebron James a 5/150 mil contract or three top-5 picks, Miami would have had to pay the Cleveland franchise 150 mil, Lebron James 150 mil, and hand over 3 top-5 picks as well. The money received by the losing franchise would be used to offset the loss in franchise value due to the loss of the elite player.

UFA Sign & Trade vs Compensatory Picks-

This is one area where I agree with the NBA over the NFL. I believe the market for a player is truly established in the RFA or Franchise tag phase. If a player becomes UFA, it is up to them and their agent to find the best deal they can get. By allowing teams with cap space to facilitate these transactions and gain an asset in the process is the market at work.

That's enough for one day. Part 2 will consist of changes in the draft and revenue sharing.


I'd like to thank everyone that took the time to comment on part 1. You're feedback and discussion was very thought provoking. Before I begin adding yet more items to discuss, I'll review part 1 and refine/adjust a few things.

  1. My vision of parity has less to do with the playoffs than with the regular season. In my world of parity, teams are given the same resources (payroll limits) and access to the same pool of talent. Success is not guaranteed. The better managed and coached teams should consistently be better unless the competition improves or the management/coaching changes. That can result in the same teams reaching the playoffs year after year. I'm not against dynasties. Heck, I want one! I'm against "artificial" dynasties that occur because one team uses resources unavailable to the other 29 teams in order to acquire talent. When LA acquires Kareem for parts, or when LA acquired Shaq for parts, or when LA acquired Pau for an empty bag, or when LA acquired Howard for...oh that hasn't happened...yet.

  2. Hard cap vs. Soft cap. My first loyalty lies with a market value distribution of resources. All teams will be limited to the same resources to acquire talent. The goal is for management then is to find or create value where others haven't. I would be in favor of having one upper limit and one lower limit on payroll. This would encourage teams to get their good players under long-term contracts before they reach the open market or trade them for future assets before they lose leverage. The dissemination of talent is exactly what the league needs in order to create parity. This will open new cans of worms regarding guaranteed contracts, trade limitations, the ability to waive players, and I'm sure several other sacred cow subjects.

  3. Draft pick compensation. I've tried to brainstorm ways in which this could work to the level it does in the NFL, but I can't argue with the comments in part 1; after about pick 10 the chance of getting a high-level talent is rare. Without that added cost, my ideas about a Franchise Tag will need to be completely rethought. I still believe that teams should be compensated for losing an elite player, but what form that compensation takes and how it's balanced needs more attention.

I'll be back with part 2 in the coming days.

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