Ownership to take a hard line on the next CBA

[Fafnir]

A hard-capped league full of teams with 1 or 2 stars surrounded by role players sounds pretty boring to me.  Certainly would make the regular season more interesting, though.  Most teams would finish with 35 to 45 wins.

I don't understand why several people are making this argument.  It's as if they expect there to be a hard cap, but with the same salaries as now.  A team isn't going to have to have KG, Paul Pierce, and a bunch of Scalabrines.  Rather, the salaries of all players except the truly elite are going to go down.  That's why you're hearing talk of players like Boozer, Amare, etc. being in the $8 million range, and it's why teams are trying to move contracts like Iguodala's and Monta Ellis'. 

If it's a $60 million hard cap, let's say, and you have two players earning $15 million each, that still leaves $30 million for the remaining 10 to 12 players.  With a more reasonable salary structure, that's not unworkable at all.

Unless the hard-cap was fixed at an artificially high point or the limit for max salaries went down, then of course the concentration of talent would be much more diluted and the ability of a particular team to accumulate talent severely limited. For example, would the Blazers be able to build a team the way they are building it? Of course not.

I strongly dislike the idea of a hard-cap in the NBA  devalues good drafting and limits the effectiveness of good management. There are better ways to achieve parity/control costs. More comprehensive revenue sharing and a progressive luxury tax, for example.

Yeah I think the biggest change should be the bright line luxury tax.

GMs are forced to throw away talent to shave away 1.5% of their payroll just to avoid the huge hit that being over the tax by $1.

[wdleehi]

A hard-capped league full of teams with 1 or 2 stars surrounded by role players sounds pretty boring to me.  Certainly would make the regular season more interesting, though.  Most teams would finish with 35 to 45 wins.

I don't understand why several people are making this argument.  It's as if they expect there to be a hard cap, but with the same salaries as now.  A team isn't going to have to have KG, Paul Pierce, and a bunch of Scalabrines.  Rather, the salaries of all players except the truly elite are going to go down.  That's why you're hearing talk of players like Boozer, Amare, etc. being in the $8 million range, and it's why teams are trying to move contracts like Iguodala's and Monta Ellis'. 

If it's a $60 million hard cap, let's say, and you have two players earning $15 million each, that still leaves $30 million for the remaining 10 to 12 players.  With a more reasonable salary structure, that's not unworkable at all.

Unless the hard-cap was fixed at an artificially high point or the limit for max salaries went down, then of course the concentration of talent would be much more diluted and the ability of a particular team to accumulate talent severely limited. For example, would the Blazers be able to build a team the way they are building it? Of course not.

I strongly dislike the idea of a hard-cap in the NBA  devalues good drafting and limits the effectiveness of good management. There are better ways to achieve parity/control costs. More comprehensive revenue sharing and a progressive luxury tax, for example.

Yes, they could. 


Outside of maybe Roy, who else is a max contract guy? 

[JSD]

Going from 57% to 45% is a pretty significant concession. 

Lockout storm clouds on the horizon?  Looks like it.

Let's hope this is negotiable (guessing it will be to an extent).

Yeah, maybe they start at 45% hoping to get to 50% - 52%.  It sounds like it's going to be messy, though.

Yeah I agree with Roy, it's like a car dealer offering a vehicle for $5700 and hoping to get $5000.

I really hope both sides can reach agreement sooner rather than later. Wyc sounded optimistic last night when Gorman probed him on the subject.

[Evantime34]

I think if there is a hard cap there also needs to be a hard floor increase. People say that competitive balance is out of wack because big market teams can pay more. While this is partly true I also feel that a lot of owners won't pay enough so that is part of the increasing gap.

If Stern is trying to change the money distribution so teams are more profitable a hard cap will only prevent profitable teams from spending more.

[JSD]

I don't like the idea of a hard cap at all. I think it would penalize the teams that are scouting and drafting well by not allowing them to hold onto their talent.

[GranTur]

Though it may lead to a lockout this is almost certainly for the best.

When many borderline role players are making over 3-4 million dollars per year on multi-year deals and half the franchises in the NBA are losing money, it's clear that something needs to change.

I think a max contract should be around $15 million a year and the MLE should be closer to $3.5 million.  The majority of players in the NBA should be making less than $5 million a year, and only true stars should be making more than $10 million.  Most deals should be shorter, too.  Too many franchises getting screwed over by GMs who are either stupid or too willing to let players and their agents have whatever they want.

It shouldn't be so difficult for a franchise to be stable and profitable that only the teams with a history of success and die hard fan bases can manage to stay afloat and not constantly be in salary shedding mode. I'd like to see the main concern of most teams be how to make the team better, not how to squeeze underneath the luxury tax.

This is very well said. I completely agree.

Some of the long-term contracts I see around the NBA make me vomit.

Contracts also guarantee way too much money right now, removing so much incentive for players in multi-year deals to give 100%.

[Fan from VT]

Ian Thomsen suggests that a "hard" salary cap is very likely:

Four team executives have told me they're anticipating a hard cap on payrolls, which will clamp down on player salaries and prevent big franchises like the Lakers, Knicks and Celtics from outspending teams from smaller markets.

A hard cap would transform the way teams are assembled. Look at the Lakers, whose payroll of $91.4 million has vaulted them a league-leading $33.7 million above the cap. Try this perspective: If the soft-cap system of today was instantly replaced by a hard cap, the Lakers would no longer be able to afford the salaries of Pau Gasol and Andrew Bynum, who are their second- and third-most-expensive players with current salaries of $16.5 million and $12.5 million, respectively. And even their disposal wouldn't be enough: The Lakers would need to slash another $4.8 million to climb under the hard cap. (Goodbye, Luke Walton.)

If, in fact, a hard cap is installed after next season, then it will likely be preceded by a transitional system over a short number of years that will enable contenders like the Lakers to keep the likes of Gasol and Bynum without destroying their roster. After all, it would be self-defeating for the NBA to instantly deconstruct the most popular -- and expensive -- payrolls. Maybe some kind of amnesty will enable a few salaries to be grandfathered in until those preexisting contracts expire.

No one knows for sure what kind of system will result from extended negotiations and a potential lockout of the players in July 2011. Some believe (as you'll see below) that the players will avoid a hard cap, or that other more creative solutions will be applied. But let me repeat this much: I asked executives from four teams what they think they'll be dealing with after next season, and all four predicted a hard cap.

"I really think worst case it will be a hard cap that gets phased in over three years," a GM said.

By "worst case," he's implying that the players shouldn't hope for anything better than a three-year transition. Another senior executive predicts an even more draconian transformation, especially if a failure of negotiations results in a lockout. "Our players don't save money," he said, and so he predicts that a few months without income will force the players to cave in and accept the owners' demands, including an instantaneous reduction in salaries similar to the harsh transformation of the NHL, which was able to get its players to concede to a 24 percent pay cut following the season-long lockout of 2004-05.

"If there's going to be a lockout," he said, "then there's a 99 percent chance there is going to be a hard cap."

Link

I don't like the idea of a hard cap at all. I think it would penalize the teams that are scouting and drafting well by not allowing them to hold onto their talent.

It would also penalize
1. owners that have plenty to spend and own a team as a hobby (cuban)

2. Teams that, you know, have strong fan bases and sell out tickets and want recycle that money into a better product. Why artificially reward teams that can't draw a crowd?

[JSD]

edit

[Fan from VT]

Deleted. Major Quote box problems.

[Fan from VT]

I don't like the idea of a hard cap at all. I think it would penalize the teams that are scouting and drafting well by not allowing them to hold onto their talent.

It would also penalize
1. owners that have plenty to spend and own a team as a hobby (cuban)

2. Teams that, you know, have strong fan bases and sell out tickets and want recycle that money into a better product. Why artificially reward teams that can't draw a crowd?

[JSD]

I don't like the idea of a hard cap at all. I think it would penalize the teams that are scouting and drafting well by not allowing them to hold onto their talent.

It would also penalize
1. owners that have plenty to spend and own a team as a hobby (cuban)

2. Teams that, you know, have strong fan bases and sell out tickets and want recycle that money into a better product. Why artificially reward teams that can't draw a crowd?

Yeah good points, I would be extremely disappointed if a hard cap is installed.

[dlpin]

Regarding teams losing money: keep in mind that we don't actually have the numbers at hand, and that info is relying on people who have a huge incentive to lie about revenues.

Also keep in mind that a basketball team losing money is not necessarily bad for the owner, as there are multiple ways to use depreciation and losses as tax write offs for other business. There are estimates out there that up to 10% of a franchise's value is the capitalized value of player contract depreciation. Something that doesn't show as a profit, but benefits owners immensely come tax time.

Think about it, if franchises were so incredibly unprofitable, why would they be increasing in value year after year? And, given the fact that franchises are increasing in value so fast, doesn't that make occasional annual losses a lot less significant?

[sk7326]

Though it may lead to a lockout this is almost certainly for the best.

When many borderline role players are making over 3-4 million dollars per year on multi-year deals and half the franchises in the NBA are losing money, it's clear that something needs to change.

I think a max contract should be around $15 million a year and the MLE should be closer to $3.5 million.  The majority of players in the NBA should be making less than $5 million a year, and only true stars should be making more than $10 million.  Most deals should be shorter, too.  Too many franchises getting screwed over by GMs who are either stupid or too willing to let players and their agents have whatever they want.

It shouldn't be so difficult for a franchise to be stable and profitable that only the teams with a history of success and die hard fan bases can manage to stay afloat and not constantly be in salary shedding mode. I'd like to see the main concern of most teams be how to make the team better, not how to squeeze underneath the luxury tax.

The teams are not squeezing under the tax because it is breaking their bottom line, they do it because they are cheap.  Teams that are in trouble with contracts are in trouble because they make bad decisions.  You want to innoculate them from making bad decisions?  Who cares what the players make ... if their salaries go down, NONE of the money will flow down to the fans.  If you think ticket prices are coming down you are amazingly naive.  The salary cap ultimately is just a wealth transfer from owners to players.  THe players are not paupers, but in the Dickensian plot, they are clearly the protagonists.  They are asking for the marginal product of their labor - they won't get it, but it's a reasonable request - basic economics. 

Really they need to GET RID of the maximum salary - because there is no way to differentiate between REALLY good players and just good ones.  The problem with the current salary structure is that Vince Carter and LeBron James are subject to the same salary scale.  Do you think LeBron making $30 million a year is unreasonable when he brings so much money to your franchise and makes your team a 50 win team by existing?  That would make franchise decisions legitimately interesting.