NBA Salary Cap Part I: The Problem

This is Part I in a two-part series.  To read the conclusion, click here.

After amnestying former math major Metta World Peace, the only contract on the Lakers books for 2015 is Steve Nash. In today's NBA, cap space is sacred. GM's wheel and deal, trying to clear their books so they can offer another max contract.

To contend it used to be an NBA franchise had to get bad enough to get in the lottery, get lucky enough to win it, draft carefully for years, and develop their players. The San Antonio Spurs, Thunder, and recently the Indiana Pacers, are examples of this philosophy. But the Heat, Knicks, Lakers, Rockets, and KG era Celtics are examples of a new way to rebuild- to varying degrees of success. It used to be the best franchise were card counters, playing the odds to the best they can. Now it’s just about buying out the best hands.

Draft picks are no longer the most sacred asset for building a contender. There's been a paradigm shift. Now draft picks are levied to get precious cap space. The Knicks give away draft picks like candy. Yet the team has gone from a bottom feeder to top two in the East, while only hitting on one pick in the process- Iman Shumpert. The Rockets look to be in the middle of a similar situation, if you swap Carmelo Anthony for Dwight Howard and Shumpert for Chandler Parsons. Although the jury is still out on their latest picks, the least important vertex of the drafting-free agency-trading triangle has undoubtedly been drafting.

This is unfathomable in any other sport (except maybe for the Yankees). The same goes for the two time defending champion Heat. Although Dwayne Wade was home grown, LeBron James, Chris Bosh, and Ray Allen, were all free agent signings or sign and trades. The Heat's most important draft pick among building this dynasty (besides the ones they traded away) was Norris Cole. The Rockets will have two players making max money on their books who were both drafted and developed by smaller market teams.

Could This Ever Happen?

Now the Lakers are taking a similar gamble. They believe there is a chance they could sign Lebron, Melo, or both and are willing to sacrifice the entirety of the 2014 season to do so. Whether they have a chance at either is a topic for another column (spoiler alert: no).

The Nets are going for it. So much, in fact their salary commitments for next year exceeds $100 million, in a league where the cap is set under $60 million. Brooklyn won't be under the cap until the 2016-17 season, and it will be interesting to watch how newly acquired Paul Pierce and Kevin Garnett gel. Their owner is crazy rich, and teams like San Antonio, OKC, Indiana just can't go that deep into the luxury tax, as Brooklyn will be paying over 70 million dollars in luxury tax alone. The Nets total payroll obligations could touch $180 million. A team will be paying one hundred and eighty million dollars in a league where the cap is a third of that.

Although the goal of the new CBA was supposedly to help the balance of the NBA and prevent the big market teams from buying the best players, it seems to have done the opposite. It is certainly not impossible for small markets to win (as the Spurs just demonstrated), but their margin of error is a lot smaller. Even if a major market team has been plagued by bad drafting,it is easier for them to contend then their small market counter parts.

The result is major market teams are at a huge advantage. More troubling, small market teams are not keeping their home grown super stars. The luxury tax penalties are steep, but not steep enough to deter big markets for dipping into the tax to get another max guy. It's like an electric fence that hurts small market teams disproportionally when they try to run through it. 

The max contract is hurting the NBA. Or not. Ratings are up, and one of the best finals ever was played. The NBA has a real villain in the Miami Heat. Does David Stern or Adam Silver really want to change a winning formula?

This is Part I in a two-part series.  To read the conclusion, click here.