The paydays many players collected on the open market this summer creates a new NBA financial world to acclimate to
POSTED: Jul 11, 2016 2:51 PM ET
Big man Timofey Mozgov was one of the first players to agree to a deal in free agency this summer.
In This Week's Morning Tip:
Trepidation Follows Mozgov.
That is not the name of a new indie band. It is the current emotional state of the NBA's fan base, and not a few of its teams, after a week of seemingly insane contracts to marginal talent, the formation of another super team -- this one in Golden State -- and the resulting belief that the league will be wholly uncompetitive in the near future, leading to a likely opt-out of the current Collective Bargaining Agreement by December and a potential lockout next summer.
It is not Timofey Mozgov's fault that the Los Angeles Lakers offered him, a player who barely got off the bench during the Cleveland Cavaliers' run to a 2016 Finals victory, $64 million over four years. But Mozgov is the poster child for this Summer of Spending because his was among the first deals done, in the first minutes of July 1.
The first of a new thing is always a shock to the system. The first time you saw Michael Jackson moonwalk, you literally did not know how to process it. What did he just do? What was that? And so it was with Mozgov's contract and all that followed.
There's the reported $153 million the Memphis Grizzlies agreed to with incumbent point guard Mike Conley, who's never made an All-Star team. The Grizzles also reportedly gave $94 million to Chandler Parsons, a frequently-injured player who's had microfracture surgery on a knee already, when he signed last week. There's the reported $94 million that Harrison Barnes -- who petered out in The Finals against Cleveland, to the tune of 5 of 32 shooting the last three games -- got from the Dallas Mavericks when he signed.
The Houston Rockets reportedly gave $20 million a year to Ryan Anderson, a good stretch four who's also battled injuries the last few years, when he officially signed Saturday. And there's the reported $75 million deal Portland Trail Blazers guard Allen Crabbe, an up and coming small forward who started eight games last season, got from the Brooklyn Nets (which the Blazers matched Sunday).
And on and on.
And there was Kevin Durant, leaving a wildly successful franchise in Oklahoma City for an even more successful one in Golden State -- a team that's coming off back-to-back Finals appearances, including a title in 2015, and that already has three All-Stars. The rules put in place after the 2011 lockout -- severe "repeater" taxes against teams that consistently exceeded the luxury-tax threshold, limits on sign-and-trade deals, shortening of contracts, enhanced revenue sharing -- all of that was supposed to keep good teams from hoarding good players, spread talent around the league and, as Commissioner Adam Silver has said in the past, preserve as much competitive balance as possible.
GameTime: Kevin Durant
Vince Cellini and Dennis Scott discuss Kevin Durant signing with the Golden State Warriors.
Counselor, I offer you Exhibit A: the Warriors.
Silver walked back some of the competitive balance argument at his news conference during The 2016 Finals, saying it was unlikely that the NBA would ever achieve "NFL-style" parity. But a lot of teams are even more nervous about their ability to compete going forward.
"The league is going to have to weigh in on this, because Adam's going to have some pretty upset owners at the Board of Governors," one team executive said over the weekend. "It's like, wait a second. This isn't supposed to happen."
This New NBA, then, will take some time to get used to.
It will require an entire recalibration of what the idea of "value" and "worth" means. We all know many of the newly signed, compared with the old system, are overpaid; when Ian Mahinmi's reported deal in Washington next season is worth more than what reigning Kia MVP Stephen Curry will make, you need a new abacus. But it's silly to compare Mahinmi's contract with Michael Jordan's; the cap is $94 million this year; in Jordan's last season with the Bulls, 1997-98, the cap was $26.9 million. Those are completely different financial worlds.
Durant Breaking The News
Kevin Durant speaks with the media about how he came about his decision to join the Warriors as a free agent.
The new NBA world will require memorizing and internalizing the following sentence: a player's contract, going forward, is not an accurate measure of his worth to his team.
Say it again.
A player's contract, going forward, is not an accurate measure of his worth to his team.
But, still. There may well be a slowing in the increase in the cap in years to come, but there are still significant issues to plow through.
Another team executive, while "happy to see the player rewarded with their share of the money" from the new TV deals, said on Friday that "we have to look at some ways to tweak the system so that all the teams can compete fairly, because that has contributed to this revenue growth."
There are a lot of ideas on how to do that, but nothing approaching consensus at present.
Durant On Criticism For Joining Warriors
Kevin Durant speaks with the media about the criticism he has received following the announcement that he was joining the Warriors.
There is, for example, surely an argument to be made against doing away with the max contract, designed to keep the salaries of the game's best players in check. However, that has also led to an unintended consequence: the best players, knowing they can't get what they're truly worth on the open market, instead are increasingly coming together to form super teams, like we now see in Golden State.
It's only a matter of time, for example, before the Boston Celtics find another star or two to go with newly signed Al Horford. A player who might otherwise seek out whatever he can get wherever he can get it will likely settle for a chance to win, which will lead to ancillary non-playing income like bigger shoe deals, multi-platform communications opportunities, and the like. Which is the exact opposite of creating the unicorn-like "competitive balance" the league insists is possible.
A Durant or a LeBron James in a real open market? Goodness, the possibilities.
Consider the Lakers, who, in spite of their history as one of the two most successful teams in league history -- and, without question, the most glamorous team in league history -- have not been able to land a free agent of significance in almost a decade, in large part because Los Angeles is as limited as every other team in what it can offer.
Horford Ready For New Transition
Al Horford of the Boston Celtics talks about transitioning to his new team.
But imagine an NBA with no max salary. Is there any doubt that the Buss family would whip out its still-quite substantial checkbook and outbid every other team for a superstar or two (or three) -- the way the New York Knicks tried to rebuild all at once by signing Allan Houston, Larry Johnson and Chris Childs in the summer of 1996 -- two years before the max salary was pushed for by owners and implemented after the 1998 lockout.
Wait, you might say. How is that fair to teams like the Minnesota Timberwolves, who are building slowly and patiently through the Draft, with young players, and astute trades, like getting Andrew Wiggins from Cleveland in the Kevin Love deal?
Bulletin: life remains not fair.
A team spending $50 million or $60 million or $75 million for one year for one player would necessarily upset the whole idea of a salary cap on teams, of course -- unless the union was willing to accept a fracturing of its middle class financially, or the league accepting that its players get a much larger share of BRI in the next CBA. Neither is likely.
The league is going to have to weigh in on this, because Adam [Silver]'s going to have some pretty upset owners at the Board of Governors. It's like, wait a second. This isn't supposed to happen.
– Anonymous NBA team executive.
But if the max contract mechanism remains, what to do about it? The problem is not necessarily the idea itself; it's the proliferation of max deals around the league.
Even before this month's bonanza, one team executive said there were more than 30 players on max contracts throughout the league -- a league that has, at best, a dozen guys who can truly be considered max talents. (My definition: an elite player at his position, "elite" being defined as one of the top two or three, who not only dominates nearly every night, but also can contribute ancillary revenue to a franchise by being the catalyst who sells tickets and/or merchandise.) Over the last decade, money has created opportunity for the good to very good to be paid great.
"Elton Brand was the best player on the Clippers," the executive said. "And when he became free (in 2008), he expected to be paid like a max player. He wasn't a max player."
There has been some talk of looking at something similar to the "franchise player" tag used in various forms by the NFL since 1993. The franchise tag gives a player a one-year contract at the average of what the top five paid players at his position are paid as of April of the upcoming season, or 120 percent of his previous salary, whichever is greater. If the franchise tag is "exclusive," the player can't negotiate with any other team as long as he's tagged. If it's the "non-exclusive" version, the player can negotiate with other teams, but a team that signs him would have to give his former team two first-round Draft picks as compensation.
Behind The Scenes: Durant's Arrival
Kevin Durant arrives in the Bay Area and partakes in an interview on the way to the Warriors' announcement of his signing.
A franchise tag, the argument goes, would level the playing field. A team in a small market would not be going against a higher-revenue producing franchise.
"It's the ability to maintain your franchise-type player, so if and when you have that player, you're not at the mercy of market rating," another executive said. "A franchise player tag would be effective for any market, big or small."
There is, also, the possibility that we're all wildly overreacting.
The union's decision not to accept the "smoothing" proposal made by the league led to a one-off -- a flooding of the market with a chunk of the $24 billion from the new television deals with ABC/ESPN and Turner Sports (which runs NBA.com). That meant that 20 teams, suddenly, had max cap space. If the TV money had come into the system over a two- or three-year period, rather than all at once, the Warriors almost certainly wouldn't have had enough cap space to sign Durant. And because the jump in the cap from last year was so high, the accompanying luxury tax threshold is even higher -- making it more unlikely to scare a team that doesn't want to pay luxury tax into not offering a max deal.
That was one of a half-dozen events that created the perfect storm which enabled the Warriors to get Durant. So many things came to fruition at the same time:
• Durant was an unrestricted free agent, in the one summer in which Golden State suddenly had the money to add a max player without having to sacrifice more than one key rotation player (it turned out to be Andrew Bogut, who was traded to Dallas), and could add such a player without becoming a luxury tax payer.
• Oklahoma City blew a 3-1 Western Conference finals lead to the Warriors, becoming just the 10th team in league history to lose a 3-1 playoff series lead. If the Thunder had beaten Golden State and then won The Finals, I doubt we'd be having this conversation today.
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• Cleveland came back from a 3-1 Finals deficit to beat the Warriors, becoming the first team in NBA history to overcome a 3-1 Finals deficit. The player Durant was recruited to replace, Harrison Barnes, had a horrible series. No one has specifically copped to this, but I think it was much easier for Durant to come to a Warriors team that wasn't a two-time NBA champion than one that just lost in The Finals.
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• Draymond Green didn't get suspended for a game against the Thunder, after he kicked Steven Adams in the groin in Game 3. He did get suspended for a game in The Finals, after he hit LeBron James in the groin. If the reverse happens in either circumstance, the Thunder probably wins the West, or the Warriors probably win The Finals. And in either instance, Durant probably doesn't leave Oklahoma City.
• Curry got hurt in the first round of the playoffs against Houston, and while he returned and had some stellar moments -- including his 40-point explosion against Portland in his first game back -- he was not quite his MVP self, which helped give LeBron and Company the opening it needed as the Finals went on.
• Curry outperforming his four-year, $44 million extension he got in 2012-- a contract that is, simply, the most valuable in the history of sports. For $11 million a year, the Warriors got a two-time MVP, one ring and another Finals title, from a player who has created untold millions in ancillary dollars for his franchise through his competency, joy and personality. And, as the always perceptive Tim Kawakami pointed out, the Warriors' franchise player making so little for so long allowed them to be able to easily extend Klay Thompson and Green in successive years without hesitation.
Durant aside, all the hand-wringing about super teams, an uncompetitive season next year and the lack of parity in the league is a concept I've argued ad nauseum over the years is built on sand.
Yes, OKC lost Durant. But Memphis -- hardly one of the league's top revenue-producing franchises -- not only got its first significant free agent in its history by signing Parsons, but reached an agreement with Conley to a five-year deal worth an NBA record $153 million. Those signings came on top of Memphis giving Marc Gasol $110 million last season, and signing highly regarded Miami assistant David Fizdale as coach last month.
Memphis is as close to a real-world exercise in small-market franchise management as there is. Oklahoma City is smaller than Memphis, but the Thunder had the luxury of having two franchise players on its roster in Durant and Russell Westbrook for the last several seasons.
The Spurs play in a small market, but San Antonio is an anomaly. The Spurs had one of the 10 best players in the NBA history, Tim Duncan, play there, and stay there, for almost two decades. (Duncan announced his retirement in typical Duncan fashion on Monday.) All of the success the Spurs have rightly been credited for -- their organization, their selflessness, their ability to surround their franchise player with great talent -- starts and ends with the uniqueness and greatness of Duncan. Period.
Memphis has had lots of very good players come through town, including Gasol and Conley. But no one would argue that either is a transcendent, all-time talent.
Memphis is one of the league's smallest markets -- among the league's U.S. cities, only New Orleans is smaller in Nielsen's Designated Market Area size, 51st to Memphis' 50th. It was not one of the 15 NBA markets (out of 50 U.S. cities) ranked last year as one of the best cities in which to live by Business Insider.
Yet owner Robert Pera went all in -- not just to keep Conley, but to get Parsons.
People in the city take pride in the Grizzlies. There isn't as much to do in Memphis as there is in Miami. The team means a lot locally. The Grizzlies traded for Gasol and Zach Randolph. They had never gotten a top tier free agent to sign there since moving from Vancouver. The fact that Parsons signed there, and agreed quickly, validates many people who work and have worked in the organization for many years. And it energizes the fan base.
All of those factors were crucial for the Grizzlies. It's not likely they'd ever get a Durant or a Curry to look their way in free agency. But they got someone. And if Parsons can stay healthy, the Grizz will roll out Gasol, Conley and Parsons for the next few years. They won't be the favorites in the West, but with those players and Fizdale, at least they'll have a puncher's chance.
"There are a lot of other executives who are looking for the checkmate and one move," one Memphian said. "It's hard. Bobby Myers pulled it off. But everybody can't do it."
Going forward, Memphis can compete.
Even without Duncan, going forward, San Antonio can compete. There are All-Stars in Kawhi Leonard and LaMarcus Aldridge, and its new collection of role players: Kyle Anderson and Jonathan Simmons and first-round pick Dejounte Murray. (The New Orleans Pelicans did not do much in free agency, though they added a good promising piece in the Draft in Buddy Hield, and they'll have to be more aggressive and successful in the next couple of years if they're to keep Anthony Davis from looking around at potential landing spots.)
Who knows what will happen? There are still fewer big men who impact games than smaller ones, so bigs are still incredibly valuable, even in the era of small ball and stretch fours and playmaking fives. Maybe teams looking to stay competitive will be counterintuitive, grab as many bigs as they can and go back to playing inside-out bully ball.
Golden State looks to be a prohibitive favorite next season, at least in the west. But the Warriors just finished a 73-9 season, but still didn't win the title. The Precogs worked great in "Minority Report" ... for a while. The future is always murkier to predict accurately than we all believe.
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