42 Seconds: Add One Cap, Remove Another

Published: September 29, 2011

In recent days, the focus of many articles, if not the no-go-tiations themselves, has been the imposition of a real salary cap and changes to the revenue sharing model, Previously, there seemed to be many issues on the table, such as the BRI split, all getting about equal play with revenue sharing getting few mentions.

A team-by-team salary cap is an issue vociferously opposed by the NBPA. Why this is, I’m not sure. If they were worried about the growth of the cap, it can be BRI, with the salary on the books acting as a floor. As long as the total amount of spending on player salary is relatively unchanged from today’s level and can grow as BRI does, a team-by-team cap should not be so bad in itself.

Also, salary caps typically come with salary floors. That is a concession the owners should make, but it’s basically meaningless.

For the moment, let’s assume that a real cap isn’t implemented, however. Instead, we assume the current system will be modified. One obvious modification aside from setting the tax line and `cap’ at particular numbers, the tax rate is the easiest thing to tinker with to induce cap-like effects. Where to set the line is another issue that I won’t get into here. It affects both situations discussed, so it doesn’t help draw a contrast.

One proposal that came out for revenue sharing was to share revenue generated from adjustments in players’ salary, BRI split, and tax money. In short, save money across the board, and some teams will share something less than that savings.

Taking this along with the Stern’s comment that revenue sharing will triple (at least is implied or stated . . . I can’t remember), we can assume the tax rate will increase from 1:1 to at least 3:1. I see 3 as the smallest factor, considering that revenue sharing in a passive manner is already occurring in some ways, such as the national TV money, for instance. If that money isn’t tripled and the scope of revenue sharing was meant in the larger sense, the 3 must increase. It could drop, but I see it either increasing, or becoming progressive: 2:1 for the first few dollars over, then 3:1, then 4:1, etc. I see this new system being simpler, not more complex, so I don’t expect to see pi:1, and the like.

Regardless of the cap type or level, either could have `an inconvenience level’ above which it’s harder to sign free agents, harder to make trades etc. With Bird rights and cap exceptions on the chopping block or plastic surgery table, this onion gets us crying quite quickly.

The idea of modifying the current system with a huge tax rate is a way to get buy-in from tax dynasty teams with respect to revenue sharing, as they can effectively opt out by controlling salary. If one is only worried about the bottom line for their team, they may buy into this.

If they are interested in growing the NBA, however, this may not help the issues besetting non-tax-paying teams and their title dreams, or, more importantly, their fans’ title dreams. This method would be more expensive for the `givers’, but they get players for their trouble. That fact should tell you why they want it. They see value in being able to outspend others. This is the very reason a real cap is getting a push, and the more it’s resisted, the more credence the cap gets as a part of the solution to the NBA’s woes.

While we are discussing imposing a salary cap, let’s talk about eliminating another: the max deal. This is a limit on an individual player’s salary, indexed by career length.

In the presence of a real cap, the max deal has no place.

In fact, I would argue that the max deal is the single biggest factor tax-dynasty in which we toil.

The max deal makes it possible to get great players at a discount. As the case of Miami last summer shows, an even greater discount can be achieved. If the best player in the NBA (whoever it is) is paid fairly, they would be paid significantly more than a max deal, or, more appropriately, more than a player not quite making the max.

Eliminating the max deal gives a natural economic incentive against stacking teams with top players, at least in the presence of a real cap at the team level. Eliminating the discount means teams that offer players a large deal then have less to offer other players. This already happens for some teams, but for others, the rule doesn’t apply as they have tremendous resources. Max players can get the same pay anywhere, so the discriminator between jobs boils down to other issues: market size, weather, teammates, etc. These things are clearly concentrated in a few areas, further cementing the tax dynasty.

Thus, a secondary effect of the max deal has been the inflated salaries in the NBA’s affluent middle class. These deals draw the most ire from fans, and I’m assuming the feeling is shared by the owners. The current salary system masks overpaid players as a cap issue, but it isn’t; it’s the built in bargains that are doing this. The money saved on the max deal, relatively speaking, is then spend on the next best player, and so on. This eventually tilts the market.

Additionally, the other source of discounted talent is the draft. These discounts are designed to most often favor the teams that need help. When the top draft picks are collected by tax dynasty teams in response to the win-now needs of the other teams, the balance is also upset. This, however, can’t really be fixed by changing rookie contracts or by limiting trades. Eliminating the desperation of the teams outside the tax dynasty is a potential benefit of eliminating the max deal, as well.

In the end, it’s about talent per team; ergo, evening out the talent per dollar and dollars per team are imperatives.


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