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.

NBA Preview Three-Pointer

This is Part I in a two-part series previewing the National Basketball Association season on Sports Business Society's Tipoff Week.  Click here to read the conclusion.

1. Can We Expect Anything from This Rookie Class?

No. Well the possibility is highly unlikely. Victor Oladipo would be the obvious answer, but he might not even start on a team that seems to have already booked its return trip to the lottery. Anthony Bennett has the skillset to provide some entertainment but will unlikely find many minutes on a team that wants to make the playoffs and already has a solid frontcourt of Earl Clark, Tristan Thompson and Andrew Bynum.

Almost everywhere you look lottery picks from this summer’s draft are second on the depth chart Otto Porter’s behind Trevor Ariza, Kentavious Caldwell-Pope's behind behind Chauncey Billups and what Shabazz Muhammad lacks in commonsense he will also lack in minutes this year as he appears to have fallen to third at his position on Minnesota’s depth chart. At least the Bucks' Greek rookie can provide entertainment simply by people’s vain attempts to correctly pronounce his name. The one rookie who was likely going to get the best chance to put up numbers was Trey Burke, as the starting point guard for the Jazz, but now he’s out for a few months with a hand injury.

The two fleeting glimpses of hope for this rookie class are Cody Zeller and Ben McLemore. Zeller is slotted to start for Charlotte, although not too much should be expected from a production standpoint with The Black Hole (Al Jefferson) and Kemba taking most of the shots. McLemore should be somewhat of a focal point in Sacramento’s offense, the Kings’ unfortunate recent history of ruining players leaves me skeptical towards McLemore’s potential

2. Are There New Rivalries Brewing in the East?

As two of the league’s top teams, playing in the same division, the Bulls and Pacers will cross paths for what should be some hot-blooded affairs. The potential for bad blood between these two teams was escalated when Bulls star Derrick Rose overlooked the Pacers as a potential rival, stating that the Heat were the Bulls’ main concern in the Eastern Conference. The teams square off for the first time with a nationally televised game on November 6. This should set the tone for their next three games. The smart money is one at least one altercation this season. Rose’s comments won’t sit well with Indiana, and with the physical nature of their frontlines (Boozer, Hibbert, Noah, West), emotions could easily spill over.

Since LeBron first took his talents to South Beach, the Celtics and Heat have not liked each other one bit. It appears that KG and The Truth have taken this animosity with them to their new home in the Empire State. Most would assume that Brooklyn and their new starters would naturally most concern themselves with their crosstown rival. Up to this point, however, it appears that the Heat are on Brooklyn’s immediate radar. Heat players called for an apology from Garnett and Pierce over their treatment of Ray Allen, to which KG politely told LeBron to worry about his own team. The teams meet four times this season in games that appear to have a sudden extra meaning. The first of which comes opening week, November 1, on ESPN.            

Lastly, although not new, look for the Detroit-Cleveland rivalry to pick up for the first time since King James use to go at it with Rip Hamilton and the crew. Both teams seem poised for a run to end their postseason droughts and will likely fight each other for seeding at the bottom of the conference. If no extra-curricular activity arises from these two , at least their matchups will pin two of the league’s top up-and-coming PG’s against each other.

3. Sophomore Slump?

Although this rookie class lacks a certain oomph, last year’s showed some tremendous signs of promise. Damian Lillard, last year’s ROY, has all the makings of an NBA star. This year, his Blazers team brought in the help that D Lil. desperately needed. This help, should get Portland more wins, but look for Lillard’s production to drop with more offensive options and increase in viable backups at his position, C.J. McCollum and Mo Williams.

Harrison Barnes (aka The Black Falcon, aka HB-angout), had a coming out party during the Warriors’ playoff run last spring.  Two words will provide all the reason for his inevitable sophomore slump, Iguo Dala. Dub Nation's offseason acquisition will seriously reduce Barnes' minutes. 

The second year trio of Bradley Beal, Andre Drummond and Dion Waiters should carry the weight for 2012 draft class. All of whom are slotted to start and should see a quality amount of minutes based on a lack of depth for their teams at their respective positions. Of these three, look for Beal to have the most productive year, as he should be the secondary offensive option for the Wizards. No one else from this group will be asked to score at the same clip. 

This is Part I in a two-part series previewing the National Basketball Association season on Sports Business Society's Tipoff Week.  Click here to read the conclusion.

Bulls Expose Nets lack of shooting in Game 2

Gerald Wallace's shooting struggles have hurt the Nets

When the Miami Heat signed Lebron James and Chris Bosh in the Summer of 2010, they formed a "big 3" that consists of 3 superstar caliber players surrounded by a group of role players. The Nets pursued the same strategy this past offseason by re-signing Brook Lopez and Deron Williams to maximum salaries and trading for Joe Johnson, the third highest paid player in the league in terms of average salary. There are a few significant diferences between the roster construction of each franchise. First, the "big 3"of the Heat is much better than the "big 3" of the Nets. Furthermore, the Nets have two marginal players with big salaries, which limits their flexibility to make improvements. They signed Kris Humphries to a 2 year $24 million dollar deal this past offseason and he was relegated to the bench early in the season. His deal is only 2 years so it's not severely damaging. On the other hand, Gerald Wallace has a 4 year $40 million dollar deal and his contract and playing style could limit the Nets from becoming a legitimate contender in the next few seasons.

Modern NBA offenses are predicated on floor spacing and 3-point shooting. Being able to spread the floor with shooters is essential, particularly against stout defenses like the Bulls. The Nets starting lineup consists of three players who are non-threats from the 3-point line: Wallace, Reggie Evans, and Brook Lopez. Teams can get away with having a frontcourt player who likes to stay around the rim but it is hard to maintain a steady offense when a wing player is not a consistent shooter. The Bulls were aware of Wallace’s limited shooting ability (28.2% from 3PT this year per NBA.com) and they ignored him in order to concentrate on the Nets other threats like Deron Williams and Brook Lopez. 

In the video below, watch how Reggie Evans has no time to go up for a layup because Luol Deng has moved all the way from the corner to help on defense. Evans has no choice but to kick to Wallace in the corner, who can’t hit the wide open 3.

All game long the Bulls defenders were drifting away from the corners in order to defend the basket and the Nets could not make them pay. They tried playing Keith Bogans and Jerry Stackhouse (both of whom are better shooters than Wallace) but neither was able to fix the problem.

(Both videos from Synergy Sports)

The result was an 8-point win for Chicago that saw the Nets shooting 4-21 from the 3-point line. Because the Bulls crowded the paint so effectively, the Nets main scorers, Deron Williams and Joe Johnson, were unable to get to the rim and they combined to shoot 7-27.

Some may think that this analysis is an overreaction to one playoff loss. While it's true that the Nets won game 1 and generally had a successful offensive season, the Nets struggled against top defensive units all season long. For example, against Memphis, Miami, and Chicago (three of the top 7 defensive teams in terms of defensive efficiency per NBA.com) the Nets only averaged 83 PPG. That’s a pretty significant number considering Memphis, Miami, and Chicago combined, on average, to concede about 92 PPG during the regular season and the Nets averaged 97 PPG. It is evident that the Nets struggle against strong defenses and they will need to fix that problem to make a deep run in the playoffs.

Unfortunately for the Nets, their lack of flexibility will make it difficult for them to acquire quality role players in the upcoming offseason. It would be advisable for them to try to sign a relatively inexpensive 3-PT specialist in the free agency period. Randy Foye, Daniel Gibson, and Anthony Morrow are a few players who come to mind because none of them will command a salary that the Nets won’t be able to afford. Ironically, the Nets traded Morrow (who has the 11^th best 3-point percentage of all time per basketballreference.com) to acquire Joe Johnson. Forming a “big 3” will assuredly give a team star power, but doing so may make it necessary to sacrifice role players that play a key part in formulating a winning team.

LeBron: How Much is He Worth?

Apparently, Lebron James feels underpaid.

On February 1st, he said the following:

"I have not had a full max deal yet in my career — that's a story untold. I don't get (credit) for it. That doesn't matter to me; playing the game is what matters to me. Financially, I'll sacrifice for the team. It shows for some of the top guys, it isn't all about money. That's the genuine side of this, it's about winning. I understand that."

LeBron followed this statement by having arguably one of the greatest months in NBA history. LeBron scored 29.7 points per game on 64.1% shooting with 7.5 rebounds, 7.8 assists, 1.8 steals and 0.6 blocks per game as the Miami Heat went 13-0. LeBron’s month of February put him on pace to have his greatest season of his exceptional career. LeBron is on pace to join the exclusive club of Oscar Roberston, Larry Bird, and Michael Jordan by averaging 28 points, 8 rebounds, 7 assists per game for a whole season while shooting over 50% from the floor. LeBron, if he can continue his current pace, would be the first of the four to hit all of those marks while shooting over 55%.  LeBron is the ninth highest paid player in the NBA this year making $17.5 million, less than the maximum contract. Even if LeBron had signed for the maximum, he would be extremely underpaid. So what is LeBron really worth?

Even if LeBron were paid the highest amount allowed by the NBA, he would earn approximately an extra 1.8 million per year.  LeBron then would still only be the sixth highest paid player in the NBA, and LeBron is definitely better than the NBA’s sixth best player. LeBron is the best player in the NBA, and if he could be paid any amount, what would it be? To understand what LeBron is truly worth, you have to assume that basketball did not have a salary cap and were like baseball in that players could be paid as much as possible.

The first place to start is LeBron’s own comments on the situation. During the lockout of the  summer of 2011, LeBron stated it would take $50 million for a European team to sign him until the NBA resumed play. That estimate appears to be much closer to his actual worth than his current salary.

The best way to determine Lebron's worth is to determine what he is worth to the team in revenue, not just wins. The Miami Heat have sold out every home game since they signed LeBron. They went from fifteenth in the league attendance in the years before LeBron to being top five the past three years. The Cavaliers finished no worse than fifth in attendance the last five years LeBron played in Cleveland and have been nineteenth in the league the last two years of attendance.  LeBron fills the seats, yet he does not get paid for it. The Cavaliers have played three nationally televised games total the last two years while James' Miami Heat have played 52.

The amount of value LeBron James brings to the team goes beyond what he brings on the court.

The extra revenue he brings in terms of ticket sales, as well as the extra revenue that comes from the increased exposure for the Miami Heat brand is of a different magnitude than his salary. The Heat have a waiting list for corporate sponsors currently because of LeBron James. That doesn’t even account for the fact that LeBron’s Miami Heat jersey is currently the NBA's best selling and that the amount of extra Heat merchandise that is sold because of his presence on the team. Although it is impossible to articulate excactly what LeBron James means to his team, it is obviously more than what he just brings on the court.

Since LeBron’s comments about being underpaid, there have been numerous guesses on what he would be worth in an open market. Economists from the University of Oklahoma put the value of LeBron at $40-50 million per year. Bleacher Report’s Jared Wade in a February article put the guess at about $65 million per year. Further, ESPN's Bill Simmons postured that LeBron is worth $75 million per year. Regardless of what LeBron James would be worth in the open market, there is one thing everyone can agree upon:  LeBron James is definitely underpaid.