Ball Don't Lie - NBA

Why proposed system changes won’t solve bad contracts

At every opportunity, NBA owners and negotiators, chiefly David Stern and Adam Silver, have argued that their proposed changes to the NBA's contract system will give the league more competitive balance. The idea, as far as their very basic explanations say, is that a league with a harsher luxury tax, a costly mid-level exception, and more barriers to sign-and-trade deals will keep large-market teams (primarily the Lakers and Heat, really) from out-spending small-market teams in a way that keeps the NBA in a state of competitive cryostasis. Never mind that the Knicks of the past decade set a record for money spent per win, or that the Spurs and Thunder have done just fine in markets that no other professional sports league will touch.

The trouble here, of course, is that we don't yet have any idea if the league's proposals will actually result in competitive balance -- all we really know is that players will make less money. So we must wonder if the results will look as intended, and that's exactly what Kevin Arnovitz did at TrueHoop on Friday. Here are his thoughts on the impact of shorter contracts:

[E]xecs' colossal mistakes will be trimmed in scale by about 20 percent and their medium-size stupid pills would be reduced by 35 to 40 percent. Curry would've merely been a 5-year, $50 million blunder, while Milwaukee would be on the hook for one year and $12 million less, assuming the Bucks would've opted to use the mid-level on [Drew] Gooden -- and that Gooden wouldn't have had suitor willing to pay him more. [...]

General managers would be inoculated from truly epic failures, but they'll also be filling more roster spots, more often in more feverish free agent markets. Execs will have more opportunities to make more mistakes of, albeit, slightly less detrimental consequences. That means bad judgment could potentially be compounded in an off-season when a league has dozens of more roster spots to fill with free agents.

On the flip side, shorter contracts would punish crafty executives capable of locking in talent to favorable long-term contracts. With more roster slots to fill more frequently, smart execs will have more shot attempts to work their magic. In 2002, Joe Dumars signed Chauncey Billups(notes) to a 6-year, $34 million deal, possibly the best mid-level deal in history. In today's NBA, Dumars would be denied full reward for his prescience. The jury is still out on Wes Matthews in Portland, but his $7.2 million contract in the final year of his 5-year deal might prove to be a bargain. Under the new system, the Trail Blazers wouldn't enjoy the benefits of Matthews' potentially cost-efficient services.

Kevin's argument is a simple one -- if contracts are shorter, bad contracts could become more plentiful but less individually painful to a team's ability to compete. Presumably, that trade-off would result in something like a net-negative (or at best neutral) outcome for poorly run teams. That's fine, but if the system also hurts the well-run teams then it might work too well.

On the other hand, it's possible that these new rules won't even make individual bad contracts easier to absorb. Currently, a bad contract is considered bad relative to the system; i.e. Eddy Curry's(notes) six-year, $60 millon deal wasn't bad just because he hasn't met those expectations, but because it wasn't terribly far off from the league maximum contract and gave the Knicks less flexibility to add new players. A similar contract given before the 1999 collective bargaining agreement, like Jim McIlvaine's 1996 deal with Seattle, didn't place league-mandated restrictions on the Sonics' ability to pay other players. It was a bad contract because McIlvaine wasn't worth that kind of money on the open market. To make another comparison, the deals given to Joe Johnson(notes) and Rudy Gay(notes) last summer were bad because All-Star-caliber players got paid like they were among the best handful of players in the league. In an open market, where someone like LeBron James(notes) would earn somewhere close to $30 million per season, giving Gay around $15 million per year looks pretty good. It's only within a constrained system that it looks problematic.

As such, amending the system only changes the parameters of what defines a bad contract -- it doesn't change the relative effect of a bad contract for a team, especially if the luxury tax becomes harsher. If superstars can only sign five-year contracts, then a five-year, $50 million contract for a less-than-stellar player like Curry doesn't become any less hurtful to a team's ability to compete. Similarly, Drew Gooden(notes) is a poor use of the mid-level exception no matter how much money he gets paid. Shorter, cheaper deals only help a franchise's bottom line, because they're paying less money. The league's proposal doesn't mark a fundamental shift in the way team's allocate salaries to specific kinds of players -- it's as if someone compressed the whole system instead.

No matter what collective bargaining agreement we end up with, there will still be guys paid like benchwarmers, role players, stars, and superstars. However, until the league starts mandating individual pay based on performance, the manner in which players are paid will be the choice of general managers. There will still be guys like Eddy Curry who get paid like stars when they don't deserve it. The league's proposed system changes effect the system of making money, not the product on the court.

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