Monday, June 29, 2015
Free Agency’s Elephant in the Room
Over the course of the next few summers, the business of personnel and player contracts in the NBA will change inextricably.
Want your team to clean house and get rid of all but its top few players or most efficient contributors? It might not have a choice with the current collective bargaining agreement's shorter contracts.
Wish your team would splash the cash and shell out for a max contract or pay a couple more players eight-figure salaries annually? To become or remain competitive, there's no alternative.
If you follow the league daily, you know exactly why this is. If you don't, it's because a windfall of television money is coming to teams next summer, turning the already inexact science of player salaries and cap math on its side.
For the upcoming 2015-16 season, the salary cap will be about $67 million. With the new TV contracts starting next year, the 2016-17 cap estimate is about $91 million, after the players' union rejected a proposal from the league to "blend" the TV payouts and prevent the massive cap jump next summer. In 2017-18, the cap could soar above $100 million for the first time.
If you're looking for a historical precedent for such a giant jump, there's only one: A increase from about $16 million in 1994-95 to $23 million in 1995-96 following a lockout in summer 1995. Now, there are much more stringent rules on maximum salaries, the rookie scale and contract lengths.
For this summer and the free agency negotiation period beginning on Wednesday, it leaves some teams in an odd situation of having to begin rebuilds ahead of schedule and/or moving to clear cap space this summer in preparation for doling out several big contracts a year from now. Already, it looks like recent contenders like Portland and Indiana are starting up rebuilds.
At first glance, it might appear that the players going into free agency are victims of circumstance who might lose out on the huge post-2016 paydays. But, if they play their cards right, they could have an amazing amount of leverage in the near future.
Last season, Detroit big man Greg Monroe signed a one-year, $5.5 million qualifying offer after long-term contract talks broke down. That's definitely below his market value, but because of signing that one-year deal, he'll be an unrestricted free agent this week.
Monroe has his issues, namely defense, but he's still a mobile, young big with size that can finish, shoot about 50 percent and will put up about 15-10 every night for you. He's worth a pretty penny in this league, and someone with cap space will pay him handsomely if he wants it.
However, as it became clear during the winter and spring that the cap would be increasing by more than a third in 15-18 months' time, I kept asking myself one question on behalf of players who were restricted or unrestricted free agents: why in the world would you possibly lock yourself in for four (or five) years when so much money is going to be on the table the next year?
The only answer I could talk myself into was the sure future payday in case of injuries or a rapid loss of form. And if we're being honest, most rapid losses of form for max-level or near-max players in the NBA in their primes are going to be because of injuries. Fair enough.
You couldn't really fault someone like LaMarcus Aldridge from taking a four-year/$80 million deal from a team like the Lakers, Spurs or Mavericks. But in the case of Aldridge, even if he were to miss a big amount of next season with injury on a one-year deal, he'd already have built up enough of a reputation to probably garner max money again in 2016.
Besides, even though injuries are a part of the game and crucial ones happen every year, this isn't football, where a new player seems to drop out of the sport entirely every week.
A couple of great players, including the world's best, seem to have already grasped signing short-term contracts for this summer.
LeBron James has opted out of his contract for the second straight year, but all signs seem to point to him returning to Cleveland. In his situation, his possible one-year deal seems to be more for "front-office" leverage with personnel decisions than maximizing his salary, since his return to Cleveland initially had him become a free agent in summer 2016 regardless.
Jimmy Butler appears to be making his free agent decision more along the lines of what I think most players should do if they're out of contract this summer.
The NBA's Most Improved Player last season appears set to sign a short-term offer sheet with another team, possibly the Lakers, rather than re-sign with the Bulls long-term. He's a restricted free agent, so the Bulls can match whatever that offer sheet is, and RFA offer sheets have to be for three years (there can be a third-year opt-out). No matter who he plays for next year, he wants to maximize his future earnings under the NBA's mammoth-money era.
If anything, I feel like people are currently understating the impact the huge cap jump will have on the league. As you're probably well aware, the NBA's reported cap figure every season is a "soft" cap and not a "hard" cap like the NFL's.
As a result, due to 1st round rookie scale contracts, Bird exceptions, midlevel exceptions, luxury tax thresholds, and other CBA provisions, most teams in 2014-15 had aggregate salary figures of more than the $63 million cap. Those provisions that allow teams to go over the cap aren't disappearing next summer, meaning that many teams could be past $100 million in salary when the dust settles before the 2016-17 season.
In short, most teams are going to have $24 million more — and then some — to play with. You're going to see teams giving $10-14 million per year contracts out like candy and full max deals to guys that you never dreamed of being called max players. That's even accounting for the larger max contracts, which would range in value from $22.75 million to $31.85 million, depending on NBA experience.
Wouldn't you want to be a part of that spending spree if you had the chance?