The shelf life of expiring contracts
Expiring contracts have taken on a life of their own -- especially this time of year
The appeal of expiring deals helps shape the trade-deadline marketplace
Raef LaFrentz has fallen off the radar as a player, but his contract is valuable
So I was on the phone with my 83-year-old godmother who lives in Wrigleyville, in a brownstone on Chicago's North Side, and in between chatter about her bunions and black-sheep Cousin Ernie, she comes at me with this: "You think the Bulls are going to make something happen at the trade deadline with Larry Hughes, Tyrus Thomas or Drew Gooden's $7.2 million expiring contract?''
Major League Baseball decades ago so popularized the term "player to be named later,'' it would crop up in Johnny Carson monologues. Pro sports' wheelers and dealers across the board made us familiar with the notion of future considerations. But it was the NBA, first in among the various leagues on the idea of a salary cap, that introduced the concept of "expiring contracts'' into our vernacular. To the point that an octogenarian widow whose tastes run to Jerry Vale and Dr. Phil just might, might, know something about it.
Expiring contracts are all the rage these days. Without them, we wouldn't have much of a clamor at the NBA trading deadline or much of an offseason at all. Every player eventually has an expiring contract but these things have taken on such lives of their own, if often doesn't seem that every expiring contract actually has a player attached.
"It's kind of interesting the way you're describing that,'' Bucks general manager John Hammond said Monday. "I've been in the NBA for almost 20 years and 'expiring contract' has always been part of the vernacular. But in today's age, it's kind of the whole economic landscape that now it's even become more common with the everyday sports fan. Because everyone's concerned about the dollar, and the dollars being spent by their teams.''
Hammond was one of several NBA GMs who took time, barely 72 hours before Thursday's 3 p.m. ET deadline, to talk about expiring contracts and how their appeal shapes not only the trade marketplace but also fans' relationships with teams, teams' relationships with their players and players' own internal voices.
Expiring contracts, first of all, are exactly what they sound like: a deal for a player's services that is about to lapse. Their value in a salary-capped sport is simple: When a player making $7 million a year comes to the end of his contract, that amount comes off his team's cap number. That can drop the club below the league's soft payroll limit ($58.68 million for this season), giving it flexibility to acquire other players in trade or free agency. Or better yet, in the NBA it can lessen or eliminates a team's luxury-tax obligation by moving it below or closer to the tax threshold ($71.15 million), which acts as a hard cap by imposing a dollar-for-dollar surcharge above that amount.
The early salivating over the 2010 free-agent class (which could include LeBron James, Dwyane Wade and Chris Bosh) is an obvious reason for teams to stash cash. Even more compelling, if not nearly as sexy, is the current economy, the pinch many owners have felt in their non-NBA investments and the chilly times anticipated for 2009-10 ticket sales and sponsorship renewals. It's not for nothing, for instance, that the NBA is about to borrow $175 million to assist 15 teams that are in need of a cash infusion, as the Sports Business Journal reported Monday.
In an industry in which only one of 30 organizations truly wins, 29 of them can hit summer feeling like they're wasting money. Especially when the ink turns red. To fans, freeing up $8 million of cap space to dangle in front of a free-agent shooting guard makes for great offseason speculation. To an owner, saving $16 million in pay and taxes when that $8 million man comes off his payroll is just good business. And if his GM acquired him for another guy owed $27 million for an additional three years, the move can be a no-brainer.
"What we're dealing with now, it's a little sign of the times,'' Mavericks president Donn Nelson said. "There's a little belt-tightening that's going on all over the country. People can relate to it. Around the water cooler or the breakfast table, your average fan is becoming more savvy.''
Here are a few finer points, then, to expiring contracts that the newly savvy might or might not know:
-- A player never is not a contract. But a contract sometimes is not much of a player.
In a perfect world, a team would round up the 12 players it felt were the most talented and productive available, and play each game as if it were its last with but one goal -- a championship -- and no awareness of future seasons or financial pressures. The NBA, alas, is anything but perfect.
"I was a coach for a lot of years, and some teams I was with, you basically coached the players who were assigned to you,'' Nelson said. "A coach knows players cost money, but if it's not coming out your back pocket, you're just going to coach the talent. From a management perspective, you don't really think of a player without attaching some dollar value there. The first things you have to be able to tell your owner is, 'This player is going to provide us X and he's going to cost us Y.' Talent has a price. It's just hard for me to separate it.''
Bottom line? The bottom line. Every team has two, three or four players near the end of its bench or 15-man roster who provide hardly any X at all, but every GM and owner knows precisely how much Y they cost. Those guys often are where the expiring contracts reside; lots of them sit behind their benches in suits. They're heroes on the balance sheet rather than in the box score.