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.

Fans First?

The Kansas City Royals and the Houston Astros are two baseball teams with completely different strategies. While the Astros are on pace to have the worst record in baseball for the third straight season, the Royals are attempting to make the post-season for the first time since 1985. The Royals this year alone increased their pay roll from just above 60 million to closer to 80 million while the Astros decreased their payroll from an early season payroll to 26 million to closer to 15 million at season’s end as it has traded or released all but one of its players making more than one million dollars in salary.

Based on the numbers provided by Forbes the difference in operating income between the Astros and the Royals this year will be roughly 80 million dollars with the Astros making nearly 100 million and the Royals closer to 20. The Royals seemingly want to win now and rather make less money to make the fans happy in comparison to the Astros who seemingly want to make money now and promise to spend the money to win the in future. As a fan you obviously want your team to win as often as possible, but does an owner owe it to the fans to run the team like a fan or like a business?


This question is nearly impossible to answer and there is no better place to see how these differing strategies exist than in Los Angeles. Since Donald Sterling bought the Los Angeles Clippers in 1981, the Clippers have fewer playoff berths than the Los Angeles Lakers have NBA titles.


The Lakers were never afraid
 to pay stars like Magic Johnson
 and Kobe Bryant.

The Lakers pay the luxury tax almost every year; the Clippers have never paid once in franchise history. The Clippers actually got money from the luxury tax system every year. The Clippers became one of the NBA’s most profitable teams despite being a constant laughing stock of the league. In the eyes of Donald Sterling, if he was making money, which he obviously was in the Los Angeles TV market, then there was no need to spend excessive money on free agents.

The Lakers on the other hand were signing players to some of the largest contracts in NBA history as winning came first. Whether it was making Magic the first million dollar a year NBA player or making Shaq the richest free agent or in 2013-4 Kobe the second 30 million dollar a year man in the NBA, the Lakers have never been scared of spending money to remain a competitive team.

There is a reason why LA has a lot more Lakers fans then Clippers fans. It’s the same reason that the Clippers have a lot more fans now than they had 3 years ago before the Chris Paul trade. Fans love winning. Owners often value profits margins over winning percentage.

Do I blame Jim Crane, the Astros’ owner, for maximizing profits this year by putting a putrid baseball team on the field on a day-to-day basis? Absolutely not. The Astros are not close to being a playoff team and having one or two high priced veterans may have saved the Astros from having the worst record in baseball, but instead without them they got some of their younger players some extra playing time and better draft pick. 



At the same time if he was unwilling to spend to push the team over the hump much like David Glass was this off-season with the Royals it would be a completely different story. Sports ownership is a business and often fans forget that. As much as you want to blame Jim Crane for not spending on his team to make it competitive this year, he is truly committed to rebuilding the team. Fans should only blame the owner when they refuse to take the last step to go from perennial playoff team to contender or from fringe playoff team to full-blown playoff team as Donald Sterling has recently done with the Clippers by paying two guys (Chris Paul and Blake Griffin) maximum contracts for the first time in team history.

It is often hard to watch a team slash payroll when rebuilding all while still keeping ticket and concession prices up, but as long as the owner spends on the team to push them over the hump it is all we as fans can ask. We are still the fans and they still own the business.