With all of the discussion going on about the negotiations between the NBA and
the Players' Association, I thought I'd throw my two cents in. So, here goes...
The Salary Cap:
Currently, the NBA uses a system which states that no teams' payroll
may exceed the figure arrived at by computing 53% of league revenues,
and dividing by the number of teams. Currently, this figure comes out
to about $16 million (could someone provide the exact figure?)
However, the NBA and the Players' Association instituted several
exceptions to the cap which have been gleefully exploited by teams in
an attempt to improve themselves--the result being that 26 of the 27
franchises are "over the cap"--meaning they have payrolls in excess of
Problems with the current cap:
The salary cap, as it is implemented, has several problems (not
including the objections currently being presented by the NBA Players'
association.) First, it is exceedingly complex. Very few people
understand the cap fully; none, it seems, posts to r.s.b.p. :(
Meaningful discussion of trades between the fans on this net is
impossible, as the majority of the trades run afoul of the cap. This
brings up the second problem--the cap inhibits trades. It is difficult
for a team to improve itself when it can't make a trade because someone
is a "base year" player, or when a team has to accept an unwanted stiff
in a trade to "match salaries". Thirdly, it is regressive. Cleveland
and Portland have the highest payrolls--around $23 million, $7 million
over, while Dallas and Minnesota have two of the lowest. However,
the T'wolves and the Mavericks are no more free to make player
transactions than the Cavs or Blazers are.
The Players' Association has cited many of the above objections, and
includes a few others as well. One is an issue of fairness, as the cap
in many instances prevents a player from negotiating the best deal he
can get. Another objection is that the cap was agreed to when the
league was in dire financial straits. Now that the league is healthy,
the union argues, the cap is no longer needed. (I will ignore the
issue of whether the cap is legal or not, other than to comment that it
would be illegal if imposed unilaterally, but it seems to be legal if
agreed to at the trade table. The NBAPA has accepted it in at least
two previous negotiating sessions.)
The league's position:
The main pro-cap argument advanced by the NBA is that it helps to insure
competitive parity in the league--that it prevents a team in a big
market from "buying a championship"--spending so much money to acquire
talent that the small-market teams cannot compete, and are forced to
play at a decided disadvantage. On one level it has worked--no team
has been able to "buy a title", and no team has been forced to cut its
payroll in order to stay afloat. (In baseball, on the other hand, both
the Padres and the Pirates have had to sell off talent to balance the
books, and many suggest that Blue Jays two World Series titles were the
direct result of signing lots of free agents.) On the other hand, the
NBA has not experienced what could be called parity, with a handful of
teams dominating the leauge throughout the 80s and 90s. (Baseball has
shared its World Series titles much more evenly). Another argument is
that the NBA views the cap as a way to keep costs down, and limiting
payroll will keep the league in excellent financial shape. Maybe so,
but individual teams have been quite happy to exceed the cap when they
think it will benefit them, the health of the league be damned.
Obviously, maintaining the status quo is a bad idea--both because the
cap as currently structured is a confusing mess, and because the union
will not accept this. On the other hand, abandoning the cap altogether
is probably a bad idea as well--I think that baseball-style free agency
would not be beneficial for the league. Thus, I propose the following,
which attempts to address all these points. It is (fairly) simple, it
does not restrict trades, it does not restrict the signing of rookies,
and it only kicks in when one or more teams are in financial difficulty.
The proposal is:
1) No team may enter into or renegotiate a contract with a player which
would cause the team's totayl payroll (for players only) to exceed
the greatest of the following:
a) The highest value of that teams payroll, measured at the end of
each business day, with no trades or other transactions in
progress, attained in the current year.
(Year is defined as the perioud of July 1 to June 30).
b) The highest value of that team's payroll, measured at the end of
each business day, with no trades or other transactions in
progress, attained in the previous year, times 1.05
c) The total payroll of the team with the LOWEST payroll in the
league, times 1.5
2) The following are exceptions to (1). A team may enter into a
contract with a player without regard to any salary cap or payroll
a) The player is a rookie selected by the team in the most recent
draft, and has not previously signed a contract with any team.
b) The player has just finished a previous contract with the team,
which terminated within a year before the signing of the new
contract and without the player being under contract for any
other team in the interem, AMD of the previous contract was NOT
terminated by invocation of any escape clause, AND if the player
did NOT became a free agent due to the the team releasing him or
placing him on waivers.
3) Trades and other forms of inter-team compensation may be made
freely, and without regard to any salary cap or payroll limitations.
4) For all accounting purposes, a player's salary shall be determined
by dividing the total value of the contract by the length in years.
For contracts with option clauses, the value of each possible
option is computed, and the greatest value is used.
5) No players' compensation may include other benefits such as
current or future stakes in team ownership, "lines of credit"
based on the payment of this or any other current or future
contract with team, or any payment for any services rendered other
than the playing of basketball.
6) No team may attempt to enter into any contract which circumvents or
attempts to circumvent the provisions of this agreement. The
commissioner will have the power to void such contracts and penalize
teams which attempt them. Any disputes regarding this clause will
be resolved through impartial, binding arbitration.
7) The provisions of this agreement will not serve to invalidate any
contract negotiated and/or signed before this agreement goes into
Basically what this says is the following: A team may not sign or renegotiate
a player if the contract puts the team over the HIGHEST of the following:
The highest salary previously attained by the team that year; the highest salary
attained by that team in the previous year, plus 5%, or 1.5 times the value of
the LOWEST payroll in the league. The effect of this is that while the league
is healthy, there is effectively no salary cap, so long as teams remain equal.
However, one team cannot go on a huge spending *** and double its payroll
overnight. Also, if a team is forced to cut its payroll due to financial
problems, then a cap is imposed. No team will ever be forced to reduce its
salary, and salaries can grow at 5% per year in the presense of a cap.
Part 2 provides the exceptions of signing your own free agent, and signing
your draft choices--these are exempt from the cap. Also, the "opt out"
loophole is closed.
Part 3 emphasizes that trades may be carried out without regard to the cap.
Part 4 simply discusses how salaries are computed for cap purposes--I chose this
way because it is straightforward and fair.
Part 5 bans such things as the "line of credit" offered to Anfernee Hardaway,
the "personal services" contract that a football team tried to use to dodge
the cap, or any other ways of circumventing the cap.
Part 6 is the Chris Dudley clause. :)
Part 7 is your standard grandfather clause.
Any comments? Questions?