When friends argue, the resolution to the problem is usually swift as the issue is typically trivial in hindsight.
When millionaires and billionaires argue over how wealth within a $4 billion dollar company is distributed, those negotiations tend to take a little bit longer. In the case of the NBA lockout, it took more than 50 negotiating sessions before the players’ union and the owners agreed upon a deal on the 149th day of the work stoppage.
With the anticipation of marquee games being played on Christmas day, fans may forget why the league was locked out in the first place.
The NBA is a top-heavy league. The last five champions have spent deep into the luxury tax in exchange for their success (the Lakers twice, the Celtics, the Mavericks and the Spurs). According to commissioner David Stern, 22 of the 30 teams were bleeding in the red. Small market teams, besides Oklahoma City and San Antonio, didn’t have a chance to compete with the big markets as their stars continually jettisoned them for the bright lights of bigger cities. Stern wanted to create parity within the NBA.
Before we begin to celebrate the league’s tip-off on Christmas, let’s first dissect the reason why the first month and a half of the regular season was lost: the new collective bargaining agreement (CBA).
A week ago, ESPN’s Larry Coon reported on the differences between the tentative agreement in place and the old one that can be found here.
Here’s how the adjustments in the CBA will affect the team that had the most success under the previous agreement, the Los Angeles Lakers.
1.) The Amnesty Clause: “One player can be waived prior to the start of any season (only one player can be amnestied during the agreement, and contracts signed under the new CBA are not eligible). The salary of the waived player will not count toward the salary cap or luxury tax. Teams with cap room can submit competing offers to acquire an amnestied player (at a reduced rate) before he hits free agency and can sign with any team.” (via L. Coon)
My Take: This has been the most publicized of all the issues, and for good reason. It’s a game changer. It means teams can cut the contract of players who under-perform and/or management doesn’t feel the player’s role with the team justifies his contract any longer. The two names that many reporters and fans feel the Lakers should amnesty are Metta World Peace and Luke Walton. I don’t feel like either player deserves to be axed yet seeing as the heftier punishments on overspending teams don’t kick in until the 2012-2013 season (more on this later).
Plus, it’s too early to give up on Peace; and Walton’s potential retirement may lift his salary off Dr. Buss’ books anyways. It will be difficult for the Lakers to compete for the services of players who do get cut by their current teams (Vince Carter, Baron Davis, etc.) as teams with cap room get a crack at them first. However, the amnesty clause favors the Lakers and other big teams in the future. They could sign rental players for a championship run or two, afford to overpay them, then amnesty them after their role has been served.
2.) Minimum Salary: “Teams must spend at least 85 percent of the cap in 2011-12 and 2012-13, and at least 90 percent of the cap in later years of the agreement.”
My Take: The salary cap for the upcoming season is approximately $58 million, and the Lakers’ payroll was $91 million. I have a hunch spending won’t be a problem for the storied franchise. This issue is the equivalent to telling a CEO’s spoiled children that they can go Christmas shopping at the Apple Store but they have to spend at least $50. It’s a non-issue. On to the next one please.
Next Page: Luxury Tax, MLE and Trade Situations
3.) Luxury Tax: “Teams pay $1 for every $1 their salary is above the luxury-tax threshold in 2011-12 and 2012-13. Starting in 2012-13, teams pay an incremental tax that increases with every $5 million above the tax threshold ($1.50, $1.75, $2.50, $3.25, etc.). Teams that are repeat offenders (paying tax at least four out of the past five seasons) have a tax that is higher still — $1 more at each increment ($2.50, $2.75, $3.50, $4.25, etc.)”
Paying over $40 million in taxes is understandable when you’re raking in championships, but when Kobe Bryant and Pau Gasol’s performances decline at the tail ends of their expensive contracts, Dr. Buss won’t be laughing all the way to the bank anymore. This new wrinkle, coupled with the previous one, promotes teams under the cap to spend and for teams over the cap to shave salary. Stern hopes by balancing the teams’ spending, every team will have a fair shot at making a long playoff run.
Someone needs to tell the commissioner there’s a difference between spending to win and spending just for the sake of spending to reach the minimum salary, look no further than Rudy Gay’s contract.
4.) Mid-Level Exception: “For non-taxpaying teams, four years starting at $5 million (base salary grows by 3 percent annually beginning in 2013-14), with 4.5 percent raises. Taxpaying teams are limited to three years, a $3 million base salary (which grows by 3 percent annually beginning in 2013-14) and 4.5 percent raises. Teams with cap room (therefore losing their midl-evel exception) get a new mid-level that is for two years and starts at $2.5 million (growing 3 percent annually.)”
My take: Again, Stern and his goons are trying to restrict the rich from getting richer. For example, Shane Battier is now in the stage of his career when winning trumps riches. Instead of saying ‘forget the Grizzlies I’ll take the Lakers’ $5 million mid-level exception and a ring,’ he’ll have to leave an additional $2 million on the table. The Lakers have been extremely successful in the past at luring veterans to join their team with their mid-level exception. It will definitely become a harder sell for the Lakers’ brass to convince players to take less money and come to Los Angeles. But really, what’s sacrificing $2 million for a shot at playing at the Staples Center and living in the most beautiful city on the west coast?
5.) Trade Rules: “Taxpaying teams can acquire no more than 125 percent plus $100,000 of the salaries they trade away (same as 2005 CBA). Non-taxpaying teams (based on their post-trade salary level) can acquire up to the lesser of 150 percent plus $100,000, or 100 percent plus $5 million of the salaries they trade away. The cash a team pays or receives in trade is limited to $3 million annually.”
My take: Teams will now have more flexibility to trade. Thankfully the “Carmelo Rule,” which would’ve prevented a team from signing a player acquired to an extension in the final year of his deal, isn’t a part of these new trade rules. This means we’ll be seeing three more episodes of the Carmelo saga this season in Dwight Howard, Chris Paul and Deron Williams (all of whom have rejected a contract extension from their current teams).
This is good news for Laker fans, as it means the chances of one of those mega stars being traded just increased exponentially. As we’ve learned from the past two seasons, not signing a contract extension is an informal request for a trade. Memo to Mitch Kupchak: get on the phone with Otis Smith (Orlando’s general manager) and tell him he can have anybody he wants but the Black Mamba for Superman so the Lakers can maximize whatever is left of Bryant’s protracted prime.
6.) Length of the agreement: “Ten years, with a mutual opt-out (either side can opt out) in 2017.”
My take: Thank goodness I won’t have to write about this stuff for at least another six years.