NBA Salary Cap Part 2: Solution

This is Part II of a two-part series.  To read Part I, click here.

So now you know how the new CBA is hurting competitive balance in the NBA. The small market teams just can't hold on to their own stars that they've developed. But before we address the issue, let's examine what we want an idealized NBA to look like.
No league is more popular or more balanced than the NFL. Part of this is because teams have roster sizes of 53, compared to 15, and just intrinsic differences between the game of basketball and football. But a large portion of this parity is owed to the fact the NFL features a hard cap, while the NBA features a soft cap with a luxury tax. The NFL playoffs almost always features a last place team from a year ago, and turnover rate for playoff teams is almost half. Seemingly every team in the league has a shot (except the Jaguars, but I digress).

The New York Jets just traded their best defender, Darrelle Revis to Tampa Bay because he was too expensive during a rebuild. A New York team traded their best player. To Florida. Because he was making to much money. This would never happen in the NBA. But a hard cap does not discriminate, and roster management is determined by your savvy, not by the size of your check book. Small market teams like Green Bay have won a title recently and are always contending. The best franchises are competitive every year, even if they aren't quite a mortal lock to make the playoffs.

If a hard cap is out of the question, I think the NBA should scrap the max contract. But only scrap the max contract for teams trying to resign their own players, a la achieving full "Bird rights." This way Orlando can offer over 30 million dollars annually to keep their star center Dwight Howard, while Houston can only offer around 20. This also likely prevents the formation of super teams like the Heat's big three, as one of them would have to take a serious pay cut to fill out a roster. If Cleveland could offer LeBron 35 million a year while Miami could only offer 20, he might be less inclined to leave. It might not be all about the money for Lebron, who can make another 20 million a year off the court, but for guys like Carmelo, Chris Paul, Dwight Howard, it could be a huge incentive to resign.

You always hear the incumbent team can offer so much extra money, but that's deceptive. They can offer an extra year, but take that away (elite players will just get a max the next time around and make up the extra year) and the difference is a lot smaller. That, combined with favorable tax rates in states like Texas and Florida, can completely mitigate the difference.

Let's look at Dwight Howard. The contract he signed with the Rockets is worth about $88 million over four years with an early termination option (ETO) after three years. This means Howard can activate his ETO and just resign with the Rockets, assuming they still want him, and resign for more money. In fact, in three years Howard is eligible for his five year max deal that he passed up in Orlando. So yes, its a gamble that Howard will command that max contract three years down the road, but Dwight can still get max money even though he didn't re-up with the team that drafted and developed him. Does this seem like the new CBA is working?

Now in my ideal NBA, Houston can only offer four years (like in the real NBA), but Orlando could offer six. Or seven. Hell, they could offer eight. Orlando can offer whatever they want, since they have full Bird rights. They could offer 30 million a year, if they so chose. But the key here is only the max deal amount counts against the cap. So if Orlando wanted to offer 30 a year, it would only count against the cap as 22 a year.

Another issue is a free agent signing with a new team can obtain a max deal in three years, less than the length of max deal. The issue with the bird rights is they apply to non-max guys as well (see Jeremy Lin) as they allow a team to go past the cap to sign their own player. A player should have to ride out the full length of his contract before these full Bird rights activate.

With David Stern retiring soon and Adam Silver stepping in, a new CBA could be a perfect time to make major changes. But, does the NBA feel the need to make these changes during a new height of popularity? Only time will tell.


This is Part II of a two-part series.  To read Part I, click here.