Owners' CBA proposal detailed: $45 million hard cap

[kozlodoev]

Let's face it. If anything is broken its the players union and player contracts. There's absolutely no reason that teams should be at the mercy of a Carmelo Anthony or a LeBron James who get whatever they want. In the end, they're not the ones who have a say in what goes on. They're simply performers, they're a product, they're employees. The people who cut their paychecks are and should be in charge.  

Personally, this statement sounds like some kind of communist/dictorial idealogy.

Practially, it is false.  The players, as you even admit, are a product/service.  Just because the owners have the money to finance the league doesn't make them in charge completely.  The owners can not just replace the players if they won't agree to the terms they wish to be enforced.  Nobody is going to want to watch a league full of guys they play with at the YMCA.  It is a partenership.  Sure, the owners could shut down for good, but some other group of rich peolple would just take over.  When their is product to be profitted from (the players), their will always be.

"Just because the owners have the money to finance the league doesn't make them in charge completely."

Or in other words, capital shouldn't exploit labor just because they can... Oh wait, who thought that again?

[MMacOH]

Hard cap is coming.....teams are losing money hand over fist (outside of about 8 teams).  The exact same thing happened in the NHL.  High salaries.  Slumping ticket sales.  Huge operating costs.  Costs need to be reigned in.

A long lockout is coming.  Just because the NBA playoff games are popular on TV does not mean the league overall is doing well financially.  Owners of the bad teams are losing too much money. 

And now, with this new found 'teaming up' idea players have, owners who want to spend money can't bring in the players they want.  Things are going to change and it is going to be painful.  Hopefully things will work out better in the end though.

The NHL is much better now than it was before their lockout....same should happen for the NBA

[dlpin]

First of all, the gains you speak of are not "real" gains unless the owners sell the franchise. It's not so simple as saying the value of the franchise went up so the teams are becoming profitable. There is cash flow involved and that's a more valuable component to owning a franchise than capital ppreciation.

Second of all, You assume I can provide evidence to the inner operations of an NBA franchise which I cannot. The NBA is not a publicly traded company so it's not as simple as looking up stats on yahoo finance or something like that. I'm simply saying that businesses do not make moves such as CBA negotiating for s and giggles. They are "obviously" doing it so that they can make more money. It doesn't take a genius to realize they are making this push to restructure their cost model because the current system is unfavorable.

Finally,you cannot simply depreciate salaries. It doesn't work like that. They are a real expense. A salary is not something that can be depreciated like any piece of equipment. It is a real expense that is not reduced in any way. I think you mean to say it's not a cash expense which doesn't really have any impact at all.

Actually, they are real. They are equity the owners can borrow against. They are real in the same sense that owning stock is real.


Second, the fact that they are doing it for more money doesn't mean they are actually losing money. Just because the owners want to lock out for more money doesn't mean that is a good call. The last NBA, NHL and MLB lockouts were terrible for each league.

Finally, yes you can simply depreciate contracts.
http://www.lrep.us/images/Tax_Legislation_Update-1104.pdf


So, again, either billionaires are idiots for trying so hard to buy franchises in a sport that is a money loser, or they are lying. And again, contracts are depreciable and provide a nice tax break.

[Roy H.]

So, again, either billionaires are idiots for trying so hard to buy franchises in a sport that is a money loser, or they are lying.

I think a lot of billionaires would buy teams even if they were money losers, for the prestige that goes along with it.  Obviously, those annual losses can't be too deep, and it's preferable if teams are turning a profit.  However, I think lots of owners see franchises as a toy to play with that brings them infinitely more recognition than they'd get in the financial world.

I mean, if sports were like most other businesses, the owners would be attempting to maximize profits, and we know that not all owners do that.

[Jeff]

I'm not sure I care who's "fault" it is, the reality is that the system is broken when Arenas gets $100 mil. with bad wheels

if you have to implement a set of rules that protects the owners from themselves, even at the cost of some "ripping the bandaid off" ouchy moments, well... I guess I'd have to say that I'm all for it

[dlpin]

I think a lot of billionaires would buy teams even if they were money losers, for the prestige that goes along with it.  Obviously, those annual losses can't be too deep, and it's preferable if teams are turning a profit.  However, I think lots of owners see franchises as a toy to play with that brings them infinitely more recognition than they'd get in the financial world.

I mean, if sports were like most other businesses, the owners would be attempting to maximize profits, and we know that not all owners do that.

But that then negates the money losing aspect of it. If the team loses money year after year, but there are still people willing to put more than enough money to cover those yearly losses in order to buy the team, then at the end of the day they are still making money.

[Roy H.]

I like the idea of being able to get out of mistakes.

When a team's payroll is $75 million -- $17 million above the "cap" -- it realistically means that you have to shave $35 million in payroll to make a run at an impact free agent.  For a lot of teams, that's a pipe dream.

However, when a team's payroll is $50 million, and the cap is $50 million, it doesn't take much to be able to be active in free agency.  That's especially true with partially guaranteed contracts.

I personally look forward to a hard cap.  It will make the offseason even more entertaining, and will make it a lot easier for well-run franchises to field competitive teams.

How great would it have been to be able to cut Mark Blount, and only carry half of his cap number?  Or to cut him outright under the amnesty rule? 

[Who]

I'd be interested in seeing the first three years of a contract fully guaranteed.

Then non-guaranteed over the next one or two years ... assuming the length of contracts are brought back to four and five years respectively.

Edit: Sorry, that should have been non-guaranteed or partially guaranteed over years 4 and 5.

[Jeff]

yeah, owners have the ability now to give players non-guaranteed contracts but because there's always some other owner willing to guarantee it, the player always gets a guaranteed deal

in a hard cap world, the owners would be forced to give non-guaranteed deals and in fact I think they are working on trying to make guaranteed deals limited to a few years with only non-guaranteed deals after that

we'll see how it goes I guess

[Roy H.]

I'd be interested in seeing the first three years of a contract fully guaranteed.

Then non-guaranteed over the next one or two years ... assuming the length of contracts are brought back to four and five years respectively.

In terms of flexibility, my preferred solution would be that only 50% of contracts in years 1 - 3 are guaranteed, and only 25% is guaranteed in years 4 and 5. 

I think this would allow teams to get out of mistakes quicker, and would make for some interesting trades (i.e., guys on big contracts in their 4th year would now have some value as they could be used to clear space, much like expiring contracts are now).

[JoT]

So if there is a hard cap that comes this year before the next season, what happens to the teams who have a player close to the cap or players past the cap? Do thy cut the players salaries? I'm starting to understand it a bit, but I'm not quite informed as many on here.

Also off topic a bit, but I realized just today while looking at highlights of Miami, they have many open and unused seats near the court. How come they can't give those tickets to charity and let some kids who love basketball, but can't even afford the nosebleeds go to see their favorite players?They don't have to give them free food or nothing but I wonder this with the Lakers also. Those empty seats could be used for fans who can't afford to go, but would love to go. I know many LA fans who can't even afford nosebleed seats, but know everything about the Lakers and are die hard fans.

[BballTim]

I like the idea of being able to get out of mistakes.

When a team's payroll is $75 million -- $17 million above the "cap" -- it realistically means that you have to shave $35 million in payroll to make a run at an impact free agent.  For a lot of teams, that's a pipe dream.

  Keep in mind that if the proposal went through the team would probably gain back that $17M from the rollbacks they wanted, and a new max contract would be about 25% less than it is now.

[Roy H.]

I like the idea of being able to get out of mistakes.

When a team's payroll is $75 million -- $17 million above the "cap" -- it realistically means that you have to shave $35 million in payroll to make a run at an impact free agent.  For a lot of teams, that's a pipe dream.

  Keep in mind that if the proposal went through the team would probably gain back that $17M from the rollbacks they wanted, and a new max contract would be about 25% less than it is now.

Yeah, I'm not arguing that.  I'm saying under the current system, getting out from long-term deals and competing when your baseline is way above the cap makes it much, much harder for most franchises to compete.  Under a hard cap, it would be easier to be flexible and to improve quickly.

[Who]

I'd be interested in seeing the first three years of a contract fully guaranteed.

Then non-guaranteed over the next one or two years ... assuming the length of contracts are brought back to four and five years respectively.

In terms of flexibility, my preferred solution would be that only 50% of contracts in years 1 - 3 are guaranteed, and only 25% is guaranteed in years 4 and 5. 

I think this would allow teams to get out of mistakes quicker, and would make for some interesting trades (i.e., guys on big contracts in their 4th year would now have some value as they could be used to clear space, much like expiring contracts are now).

I like seeing teams punished for their mistakes.

Holds them accountable for bad personnel decisions. I don't want to see them get bailed out too easily. 

There needs to be a little more flexibility than there is currently -- six years of Arenas is too long and hurtful -- but I don't want to see too much flexibility. I want to keep a large amount of accountability + medium to long term consequences of poor decisions there.

[BballTim]

I like the idea of being able to get out of mistakes.

When a team's payroll is $75 million -- $17 million above the "cap" -- it realistically means that you have to shave $35 million in payroll to make a run at an impact free agent.  For a lot of teams, that's a pipe dream.

  Keep in mind that if the proposal went through the team would probably gain back that $17M from the rollbacks they wanted, and a new max contract would be about 25% less than it is now.

Yeah, I'm not arguing that.  I'm saying under the current system, getting out from long-term deals and competing when your baseline is way above the cap makes it much, much harder for most franchises to compete.  Under a hard cap, it would be easier to be flexible and to improve quickly.

  An aside, but even though owners can roll back the money payed out in a current contract, I'd assume they wouldn't have the power to make them less guaranteed. Would you agree?