CBA Primer: How next summer's agreement will reshape the NBA
The current collective bargaining agreement expires after the end of this season
A hard cap could wreak havoc on stacked teams, like the Lakers and Heat
Chris Paul's, Carmelo Anthony's options for leaving their teams may be limited
The promise of a new collective bargaining agreement hovers over each NBA city this season. Owners of small-market franchises look up and see the next CBA as a portent of hope that will enable them to turn a profit and compete for the championship.
But agents and team executives alike look up and see the makings of a storm that could wipe out next season entirely, if the owners choose to lock out the players in July. And no one is certain of the new financial rules that will be installed after this season, which makes long-term planning almost impossible. The horizon has been diminished because no one can see beyond this summer. No one can say what will happen.
Ted Leonsis, the new owner of the Washington Wizards, recently predicted that ongoing negotiations with the players will result in a hard cap on salaries. Commissioner David Stern responded by fining Leonsis $100,000 for breaking the owners' embargo on public comment about the next CBA. But while some scoffed, many agreed with Leonsis' analysis.
"The only realistic scenario I'm hearing is that we don't come in with a true hard cap," a well-connected GM told me this week. "Maybe we'll be looking at a salary structure similar to what we're working under, with fewer years [on the max contracts] and a little money taken away at the end of the day from the players. So salaries and years will be coming down, but the CBA as it is will remain somewhat intact. But a hard cap, I don't see how it can work."
How will the uncertainty of hope and fear influence this NBA season? The best way to get a grip on the future is to focus on a half-dozen players and groups who could be affected this season.
Let's say there will be a hard cap on salaries after this season. That means the league is probably going to have to break up the flagship rosters of the Los Angeles Lakers and the Miami Heat.
Fans are not going to be happy about this painful transition to a hard-cap system, but is there any other way? Let's say a lockout kills off part of next season, resulting in a moratorium to provide franchises with time to dump salaries and make moves to get under the cap for 2012-13. That extra year isn't going to help the Lakers -- in 2012-13 they are committed to pay a preposterous $92 million in player salaries, which puts them $36 million above the current soft-cap threshold. How could they fit themselves under the hard-ceiling cap and still hold on to Kobe Bryant (who is owed $28 million in 2012-13), Pau Gasol ($19 million), Andrew Bynum ($16 million on a team option) and Lamar Odom ($8 million on a partial guarantee)?
In that same season the Heat are scheduled to pay Dwyane Wade $17 million and LeBron James and Chris Bosh close to $18 million -- those three alone could launch Miami through the hard-cap ceiling, especially if the owners succeed in coercing the players to accept a smaller share of revenues. (Orlando could face a payroll of more than $75 million in player salaries that year, but so many of them are held at the team's option that the Magic could break up their roster naturally -- albeit prematurely.)
Are owners going to insist on a salary structure that ruins the two teams with the largest following? It might happen, because 22 franchises -- including the Celtics, whose expensive ties to Kevin Garnett and Ray Allen will have lapsed -- currently figure to be at $45 million or less for 2012-13. The majority of teams will be positioned to adapt to the new system, and they may force the Lakers and Heat to abide on the grounds of it being in the best long-term interests of the league.
Paul hinted this summer that he would be interested in moving out of New Orleans if the small-market Hornets don't have the finances to contend for a championship. He has since pulled back and recommitted (for the time being) to New Orleans.
What if a hard cap is installed after this season, along with an increase in revenue sharing from the large markets (as suggested by Stern last February)? Could Paul be convinced to stay in New Orleans if the Hornets have an equal opportunity to contend?
The two issues that owners want to address are red ink and competitive balance. More than half of the teams say they're losing money, a claim that is doubted raucously by the players' union; it's easier for the owners to prove that no team can afford to contend for the championship unless it is willing to pay a steep luxury tax.
But it wasn't always that way: The Spurs won all of their championships through 2007 while maintaining a tight payroll, and Hornets GM Dell Demps spent the last five years working in the Spurs' front office. A new CBA based in financial discipline should -- in theory -- help persuade stars like Chris Paul to remain in small markets like New Orleans.
Anthony wants to sign a three-year, $65 million extension under the current CBA. But he also wants to sign it with a team of his choosing -- and he wants Denver to trade him to that team so that he can play where he wants to play and earn the maximum benefits before the next CBA slams the door on the biggest, long-term contracts.
But here is something he must consider: One way for the owners to transition to a hard cap is to instantly slash player salaries. The example was established by the NHL, whose owners forced the players to swallow an instant 24 percent rollback in salaries following the lockout that killed off the 2004-05 season.
If the NBA owners were able to demand similar cuts, it would mean that a player who signed to make $10 million in 2012-13 would suddenly find that he is being paid $7.6 million instead.
What does this mean for 'Melo? If Anthony decides he'd prefer to sign with the Knicks as a free agent after this season -- and thus forego his ability to cash in on a lucrative extension under the current CBA -- he can rationalize his decision by conceding that the owners would never let him have all of that extension money anyway.
Leonsis has described the NHL's hard cap as a promising model for the NBA to follow. But the GM I spoke with recently is dubious that owners will be able to demand a salary rollback even after an extended lockout.
"If they're talking about slashing existing salaries, I don't think we'd play for two years," he said of the likelihood of a labor dispute without end. "I just don't see the players going for that at all."
New York has shrugged off its recent failure to recruit LeBron by promising to use its cap space next summer when Eddy Curry's contract expires -- with Anthony as the obvious target. But what if next summer never comes?
Teams can talk about having cap space under the current system. But there is no way of knowing whether that cap space will exist in the next CBA. What will be the rules for free agency in 2011 and beyond? Will the cap threshold be so low that not even Curry's expiring $11 million salary will create enough space to entice Anthony? How can you plan for the future when you don't know what the future will bring?
Teams may be looking to dump salary this season, but are there any teams still able to take on money? These giveaways have been going on for two years and the market is almost saturated.
Two teams that could be looking to take on salary are the Cavaliers and Raptors, who each received a $16 million trade exception from Miami in exchange for their participation in the sign-and-trade deals that sent James and Bosh to the Heat. Those exceptions enable Cleveland or Toronto to take on salary without having to send back talent in the trade. But neither Cleveland nor Toronto is going to take on a big contract unless it's a no-brainer move, because both of those wounded franchises must begin preparing for a long period of rebuilding under the next CBA.
Throughout the league there are dozens of "nobody" employees who are worried about their futures. These include scouts, training staff and numbers crunchers -- the people who do the real day-to-day work for NBA franchises -- and many of them have been told they won't be paid during a lockout; some won't even receive health benefits.
How shortsighted is this? The clueless franchises are going to lose their best people, while the smart teams who think in the long term are going to fill out their staffs simply by investing relatively little money in hiring the go-getters and Type-A personalities whose attention to detail makes the behind-the-scenes difference between winning and losing. The untold story of the anticipated lockout is that the smart teams will grow smarter, and the hopeless will settle more deeply into their relaxed states of incompetence.