NBA: It’s Time to Get Rid of Guaranteed and Maximum Contracts

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NBA: It’s Time to Get Rid of Guaranteed and Maximum Contracts
Jimmie Kaylor  
May 09, 2015






There used to be a time when NBA players rarely, if ever, mentioned the size of television markets as influential factors in choosing a new team in free agency. It used to be about finding the best team that offered the best contract — that is, if players even wanted to leave their current franchises. The idea of holding teams hostage by essentially refusing to a sign contract extension unless the player gets traded to a team of his choosing wasn’t even an option.

We used to see gutsy performances from the game’s biggest stars on a regular basis. In the 1984 NBA Playoffs, with dislocated middle fingers on both hands and a case of the flu, Bernard King of the New York Knicks dropped 44 points and grabbed 12 rebounds while leading the Knicks to a win over Isaiah Thomas and the Detroit Pistons. He went on to average 42.6 points per game in the series. Speaking of Thomas, who could ever forget his Game 6 performance in the 1988 NBA Finals? The gritty point guard scored 43 points, dished out eight assists, and came away with six steals, all with a severely sprained ankle.

Of course there is also Michael Jordan (pictured), who may be the most competitive professional athlete, regardless of sport, that the world has ever seen. In one of the most legendary performances in league history, by arguably the best player in league history, Jordan played through a severe case of the flu and led his Chicago Bulls to a victory over the Utah Jazz in a pivotal Game 5 of the 1997 NBA Finals.

With all due respect to the small handful of players in today’s NBA — LeBron James and Dirk Nowitzki come to mind — who would lay it all on the line for a win in the way King, Thomas, Jordan, and countless others did before them, today’s biggest superstars seem to be more concerned with signing huge endorsement deals, being on the cover of video games and magazines, and signing maximum-value contracts.




Elsa/Getty Images


Carmelo Anthony is an excellent example of what is wrong with today’s NBA. It’s hard to respect a guy who, just this past offseason, signed a five-year, $124 million maximum value contract — which, by the way, is fully guaranteed — felt healthy enough to play through the pain so he wouldn’t miss the 2015 All-Star game but then decided to shut it down for the remainder of the year after opting to have season-ending knee surgery.

How does a guy go from being healthy enough to play 30 minutes in a meaningless All-Star game to opting to have his season come to an end three days later due to a knee injury? It’s simple. He is guaranteed to make $124 million over the next five years, regardless of whether he plays another regular-season game over that five-year stretch.

If Anthony was the outlier, this wouldn’t be an issue. In fact, it’s the players who are willing to do anything for wins who are the outliers. If the best players in the game today didn’t have fully guaranteed contracts in their back pockets, would we see a better product as fans? Almost surely. If NBA contracts didn’t have a maximum value, thus letting players earn higher salaries as they perform better, would the NBA rank higher than fifth in popularity among professional sports leagues with adult sports fans in America? Most likely.

Let’s take a look at this from a financial perspective. If the NBA were to adopt a model that is similar to that of the NFL, players could receive a portion of their contract as guaranteed money, but the total value of their deal would not be capped. This would help protect teams from further Gilbert Arenas– or Rashard Lewis-types of situations while also appeasing guys like Kevin Durant who feel that they generate far more revenue for the league than they are allowed to be paid.

Professional basketball will likely never catch, or eclipse, professional football in terms of popularity in the United States. The NBA would, however, be taking a step in the right direction by doing away with guaranteed and maximum contracts and implementing a financial model that mimics that of the NFL.



bob
MY NOTE:  An absolutely MONSTROUS topic, and a quite complex one too.  I don' t know how someone cannot have an opinion about this.  The question isn't simply "it's not my job to worry about money, it's Danny's", it is whether or not having those type of contracts are what are needed for the sport and what will happen to the talent if the NBA stops offering them but they do offer them in Europe and a myriad of questions like those.  You can slice this issue up a number of ways, so have at it!



.

Bob,

I think that the max contracts are totally under the control of each and every team as a team just does not have to sign anyone to such contracts if they decide not to.

The 'guaranteed' contracts are not likely to go away. I would never imagine the Players Union ever changing over to the football mode of only guaranteeing only so much money and then being able to dump a player out without paying him the entire value of his signed contract.

Regarding your mention of NBA players possibly getting the same type of big money in Europe, I just don't see that happening. Guys like Datome may sign over there and make more than he makes in the States, but top stars will not make the same amount as they make here. Young guys maybe, older guys possibly, but stars no.

The idea is sound financially for the league's teams, but I just do not think that there would be ever enough of everything that the owners could use to sway the players to very accept this type of change. You can bet that the football union wishes that they had the NBA and MLB deals that hold the guarantees for the length of the contract.

I swear I didn't write that article...LOL.

but I sure as heck have been saying the NBA needs to adopt an NFL style hard salary cap.

getting the NBAPA to agree to it would require a huge raise in the MINIMUM team caps and also a raise back to near the 54% of total revenue to players , that was their before the last CBA.

I think the owners would be wise to give in to both and set the 2016-2017 hard cap at around $100M with a minimum of around $80M per team (or whatever the 54% of revenue comes up to).

lower the guaranteed money to no more than 4 years (team or player options after that).

If it's not broken, don't tinker with it.
The NBA is thriving.
The NBA recently reduced the length of contracts from 7 years to 5 for your own free agents and 4 if you sign another teams free agents. I do not expect them to go down again.
The NFL is the only major sport that has those type of non-guaranteed salaries. Why should the NBA follow suit?
The NFL is more popular then the NBA and that won't change whether they have non-guaranteed contracts or 10 year guaranteed contracts.
It's a bad comparison in many many ways to compare the NBA to the NFL.
Their structure, injuries and the amount of players are just so different.

The owners are the ones that want the hard cap. Of course, they want to maximize profits without having to get into bidding wars for free agents.
The players don't want a hard cap.
I think due to the huge upcoming TV contract for the NBA, the players will have more leverage then they had previously. Owners will be smart enough to keep the games going and to keep getting paid from the TV contract.

TJ,

some might say the various and confusing ways teams can go over the so-called cap today is broken.

I can understand a Laker fan not wanting things to change of course. Just like Yankee fans enjoy the pleasure of seeing their team pay twice as much in salary's and other teams.

but I at least feel the game, the owners and the players could all be winners with a hard cap. and the fans would be too, well at least in my opinion.

I think its a pipe dream however, for many of the reasons you pointed out.

kdp59 wrote:TJ,

some might say the various and confusing ways teams can go over the so-called cap today is broken.

I can understand a Laker fan not wanting things to change of course. Just like Yankee fans enjoy the pleasure of seeing their team pay twice as much in salary's and other teams.

but I at least feel the game, the owners and the players could all be winners with a hard cap. and the fans would be too, well at least in my opinion.

I think its a pipe dream however, for many of the reasons you pointed out.

Yankees fans enjoy their team being able to spending more than most teams.
Do Yankees fans enjoy seeing their team stuck on horrible contracts to A-Rod, Sabathia, Teixeira, etc? No.
The soft salary cap makes little difference to the high revenue teams right now.
The Lakers spending is now under control and they were under the cap last summer and will be this summer.
I just don't see how a hard cap benefits the fans or players.
It often has the opposite effect.
Boston could be hurt by a salary cap in the next few years.
They have so many players on rookie scale contracts.
Don't you want them to be able to pay their own young players market value instead of losing them due to a having a hard cap? That just happened with the Cowboys. They had to choose between Irvin and Murray. They knew they couldn't keep both because of the hard cap.
I still don't see the benefit to having a hard cap.
It's not like the Knicks and the Lakers are spending crazy like the Yankees and Dodgers.
In fact, both the Knicks and Lakers will be so far under the cap this summer and the Lakers again next summer when Kobe's contract is over.

I believe that, once the rules are set, it's not my job, and Danny should worry about it.  But, in terms of setting the rules, these are two biggies.  Practically anything that will make fat cats more hungry is okay in my book.  In every sport, I see nothing more stupid about a multi-year contract that is absurd because the player will never last that long.  Who benefits in the long run?  The player, who also benefits in the short run.  Oh yeah, and the real insect, the player's agent.

Frankly, I'd love a hard cap, and I definitely don't believe any decisions about a hard cap should be based on which team(s) that will help and which team(s) it will hurt.  The inequities between small market teams and big market teams are unfair.

Sam

Sam,

How are the inequities unfair in the NBA?
All of the lower revenue teams are still able to compete for and sign free agents unlike in MLB where many teams can't compete with the Dodgers and Yankees in their spending.

I believe a hard cap will only hurt some small market teams or teams who are trying to re-sign their own players such as Golden State. If GS couldn't go over the cap, even if it was $80m, they wouldn't be able to re-sign Dramond Green this summer.

I suspect Boston in a year or two or three or four will also wasn't to re-sign their own free agents who are coming off of rookie contracts. Small market teams like Minnesota and Milwaukee will probably be in the same situation in a couple of years.

TJ,

I believe the inequities in revenue-generating ability are unfair to the smaller market teams.  If some rich big market team chooses to go over the threshhold, they are likely to have more capital with which to do so.  As I said earlier, I don't care about which teams are helped or hurt by a hard cap.  I just believe it would be more equitable.  Perhaps the upcoming largesse will change my mind, but I doubt it.

Sam