The NBA is in trouble. After the most successful NBA season ever, the NBA owners locked out the players, in which the outcome probably means next year is in jeopardy, and I don't mean the late night game show. The players have already agreed to give up millions, something around $900 million, and the owners are demanding an additional $800. So they seem to be at an impasse that is not likely to be resolved anytime this year. Recently someone asked me if I thought there was even going to be a season next year. I gave it some thought. I believe there is a 50% chance we will see a half a season, 35% no season at all or a 15% we will have the entire season.
Recently players and their selective agents have pushed for the union to decertify, which has led to the NBA owners making a preemptive move to sue the players over not negotiating in good faith. Frankly I thought that was exactly what the players were doing and that decertifying was the second best option to solving this crisis altogether.
The best move is one that came to me a few years ago. I believe that the owners are correct in that the current system is broken, however I disagree with their attempts to correct the problems that are at hand. Their solution is to create a hard Team Salary Cap. I believe that the real problem is the Team Salary Cap. The entire concept is wrong, and I think that the owners and the players that have agreed to it for years have been shooting themselves in the foot; or to put it another way, the owners and players are cutting off their noses to spite themselves.
The entire idea of limiting what the team can do to improve itself both competitively and financially by keeping that tension in balance as a means to satisfying your employees (the players) and keeping the teams financially in the profitable margins is backwards.
Having been a part of a union while working for a large company I have come across a couple of simple observations that seemed to be missing in the NBA conversation. Real workers in the real world are not paid for their "potential" but work they have already accomplished, the time they have invested into the company. So using this basic principal I will detail you exactly how the NBA should adjust their entire system. Rather than cap the team, they should cap the players based off their time in the league, with a couple of exceptions. This will allow teams to make the maneuvers that are necessary to make them profitable and competitive and limit the salaries in proportion to their experience verses a players potential.
For starters, NBA rookies should not be paid based off of where they are drafted. They are all rookies, regardless if they are the Number 1 Pick or the Last Pick in the second round, and the lottery picks should not be compensated for their "potential", they should be paid for their experience, just like everyone else in the real world turning in a resume for a job they would like to have.
Rookie Contracts If you are coming straight out of High School with no other experience you start off with a non-guaranteed contract of $500,000 each of the first four years in the league. Each year of college basketball nets a player an additional $500,000 per year, as does Olympic experience and professional experience in selected oversea leagues, with no one ever making more than a total of $4,000,000 as a rookie. This allows quality professionals who have stayed in Europe like Arvydas Sabonis to make the leap into the NBA, but this also pays everyone fairly for their "experience" or lack thereof.
No Experience $500.000 1 Year of College $1,000,000 2 Years of College $1,500,000 3 Years of College $2,000,000 4 Years of College $2,500,000
The Duration of the Rookie deals are four years in length, with each year being a non-guaranteed contract. This would mean a team can have a player for a year or two and decide that during the second or third year they don't want to have that player on their team. The team continues even at that point to hold on to the rights to that player unless they sell the rights, trade the rights or waive the rights to that player.
Arranging the Rookie Cap like this will encourage players who desire to be in the NBA to get additional experience before coming into the NBA because their pay will be larger each year of their first four.
Advantage here: OWNERS
Veterans Mid-Level Contract
After the completion of the Four Year Rookie Contract the players remain Restricted Free Agents, so that the Team is able to retain the player's services, however the pay scale goes up. Players with a minimum of four years in the league now get paid $3,000,000 to a maximum of $5,000,000 per year, whatever in between those numbers that is negotiated. The players have earned that money at that point. These contracts are guaranteed. These deals can be anywhere from 1-5 years. They can include non-trade clauses and whatever is freely negotiated between the two parties. The Second Contract follows the Rookie Contract; the players become unrestricted free agents. This now allows for them to sign with any club they want.
Advantage here: Draw
A Franchise Exception salary starts out at $12,000,000 guaranteed money. If the player plays in 50 or more regular season games they make an additional $1,000,000 for the year. If the team makes the playoffs they make an additional $1,000,000 per year. If that player has been with the club their entire career the get an additional $1,000,000 for the year (if they leave via trade, waive or free agency to another club, then they lose that $1,000,000). Each team is given three Franchise Exceptions which c allows for teams to pay a player more than the Veterans Mid-Level Contract. This exception does not count for players on Rookie Contracts, as they have not paid their NBA dues. This allows clubs the freedom to sign three star players like LeBron, Wade, Bosh or Kobe, Gasol, Bynum.
Teams are not forced to use their exceptions, so if Phoenix only wants to have Nash and a bunch of rookies, then they are free to do so, and their financial books will be fairly low. If a team wants to go all out, have three stars, and veterans with no rookies then they are free to do so. Teams are not bound by the salary cap any longer. If a team has three stars and wants another, either that player will have to forfeit the right to be paid like a star, or they will be forced to give one up in a trade. Teams can sell players, picks and maneuver however they see fit.
This would generate all kinds of rumors and speculation which generates more news and buzz for the NBA, which is always good for the league. If a team wants to upgrade it is simple to do so. The GM’s and teams will be at fault for giving their Franchise Player Exception to idots or players not worthy of the exception, not he players.
The Advantage: Both The great things about this is the flexibility this gives teams and players for the long haul, to build competitive and profitable teams, with veterans getting paid what they deserve, and this eliminates players and their agents from blackmailing teams into giving them huge deals they don’t deserve. No longer will the "Market" for a type of player dictate the value, or players potential which might or might not pan out dictate the negotiations, it will have already been decided.
Most teams will have 1-2 players signed to a Franchise Exception; have 7 other vets and 5 rookies which would bring the average team to a payroll of 61,500,000. This is right where the league wants to be their team cap anyway, but this allows teams to add another star if they want to go for glory, or cut one out if they want to save money. This also frees owners of deals that cripple teams.
Ones like the Darius Miles deal the Portland Trail Blazers had a few years ago, or the deal the Orlando Magic has with Hedo Turkoglu. Turkoglu would at the maximum be given $5,000,000 a year.
This would help balance out salaries across the board for everyone. Now of course there are current players who have signed deals that would be allowed to be grandfathered into the current deal. Kobe Bryant for instance makes around $24,000,000 a year and Lamar Odom’s contract is in between a Veterans Mid-Level Contract and a Franchise Exception, so in grandfathering those in Kobe's contract would count as a Franchise Exception where Lamar Odom's would not, it would be grandfathered in under the Mid-Level, just at a higher pay rate.
If the NBA did as I suggested the league would continue to grow finically even in an unstable world economy and the product on the floor would continue to mature as teams would finally be allowed to make moves to improve the quality of their team without the hindrances of a self-imposed "Team Cap".
In the end the players would vote this deal in because more teams would have the ability to sign more "Franchise Players" to nice size contracts throughout the league, because the salary cap would be gone, and lesser known but still useful veterans would get a minimum of 3 million and a max of 5 million. This would be great if you're Matt Barns (currently making 1.7 million).
The only ones who would not like this deal are the Kobe Bryant’s making 24 million and the future rookies coming into the league. The majority of the players would love this deal and the majority of the owners would as well as it sets everyone on equal footing. Players get paid at a controlled rate, and owners get more control/flexibility. Next year's season plays and the fans are happy. A win-win-win!