What the proposed CBA means to the Hornets and Chris Paul

Published: November 14, 2011

ESPN has obtained a copy of the seven page offer that the players plan on discussing, and possibly voting on, at some point today. It might be pointless to break down this current proposal, as speculation continues to grow that the players will turn down this latest offer and push for decertification, but what else do we have to do at Hornets24/7? Should we just move on to covering the D-League and analyze the selection of Jamaal Tinsley as the first pick of the draft. I say no. I say we wait until the season is officially canceled before we get that desperate. For now we hold out hope and take a look at how a deal like this would effect our Hornets.

1. Salary Cap

In the first two years of the proposed CBA, the salary cap and tax levels would be “no less than their 2010-11 levels.” This means that there would likely be a salary cap set for a little over 58 million, with a luxury tax line drawn right around the 70 million dollar mark. Currently the Hornets have 6 players on the books for just over 42 million, which brings us to the new salary cap exceptions.

The Hornets would be in position to use the non-taxpayer exception, which starts at five million dollars annually and increases 3 percent in years three and four. This means that the Hornets can make either a 3 year/15.15  or a 4 year/20.4 million dollar offer to another teams free agent if and when this offseason begins. This will be a significantly higher offer than taxpaying teams like the Lakers will be able to make under the new proposal. Taxpaying teams will only be able to offer 3 years at just over 9.2 million. Taxpayers will also be restricted from using the bi-annual exception, while a non-tax paying team like the Hornets could give a 2 yr/4 million dollar deal to a Willie Green type of veteran.

2. Tax System

The first two years of this proposed deal will have the same tax system that the past deal had; a $1 for $1 penalty for teams over the tax. In year three, however, the penalties grow exponentially in such a manner that it would be hard to envision many teams exceeding the tax thresh hold in the manner that they have done in recent years. Being 10 million dollars over the tax line in this deal would mean having to cut a $25 million check and only one team has written a check that large in the history of the NBA (the 2007 Knicks that went 33-49).

There is also a tax penalty accelerator for teams that go over the tax year after year, which is something that could also help competitive balance. Any team that goes over the luxury tax four times over a span of five years will have a dollar increase added to whichever bracket they are in. So, if the Heatles decide to stay together and pursue those seven championships Lebron talked about, they will have to pay a fortune to do so. Even if they fill out their roster with marginal talent in 2014-15, they will be looking at a 40-50 million dollar luxury tax payment if they still have those three stars on their roster.

Overall, these harsher tax penalties would aid in creating more competitive balance, but by no means is it a perfect system. The Lakers new TV deal will still allow them to cut a sunbstantial check every year, and the Knicks, Mavs, etc. will likely do the same. The hope is that because of new additions in revenue sharing and bulkier rebate checks, the smaller market teams will have the resources to exceed the tax line as well when it is good business to do so and/or for the “right” players. Whatever that means.

3. The CP3 Rules

Let’s stop kidding ourselves. All we really want to know, and have ever wanted to know with this new deal is whether or not it will help us keep CP3. No doubt this new deal helps the Hornets secure ownership, as the new system helps ensure that this will be a financially viable business if run with even moderate efficiency. But how excited will we all be about a new owner if CP3 bolts and we are looking at the 2005-06 Hornets all over again?

Well, one option off the table for CP3 is the extend and trade (otherwise known as the Carmelo Rule). The Hornets will not be able to extend CP3 and trade him to a team during the season. A team could, however, acquire CP3 and extend him themselves, but they would have to wait until six months after acquiring him to do so. Therefore, if a team acquires CP3 prior to December 29th, they will be able to give him his maximum amount of money (opts in on June 30th, signs extension).

This could be a nice little game of chicken between Hornets management and CP3, should Paul’s camp ask for a trade. The Hornets can offer CP3 an extension the second that this whole mess is over for around 6 years/127 million (including the opt-in year). If CP3 chooses to opt-out in the summer and sign with a new team, he would be looking at a maximum of four years and right around 75-80 million. The Hornets would also have the option to do a sign and trade at that point (since it is allowed under the first two years of the proposed deal) and give CP3 a five year deal worth right around 105 million before shipping him off elsewhere.

Bottom line is that this new deal would give the Hornets quite a bit of leverage in negotiations with Paul, but at the end of the day, Chris Paul is not going to be a guy held hostage by money. Yes, he could be giving up two years and nearly fifty million dollars if he chooses to call the Hornets bluff and not sign an extension, but I highly doubt that will stop him if he sees a destination that will help him achieve his dream of multiple titles.

What this new CBA would do, in effect, is speed up the clock for the Hornets with regard to the Chris Paul situation. For Paul to get his maximum money and for a team trading for him to get him locked in for the full six years, the deal would have to go down before the new year. Last year, the Denver Nuggets had until late February to play chicken with both Melo and the Knicks, and got the best return possible because of it. The Hornets would not have the same luxury. They will, effectively, have to choose their course of action by December 29th because the trade offers will get progressively worse once the team trading for Paul loses the ability to extend him for the full six years.

Or perhaps this whole mess ends with the players agreeing to a deal today and CP3 agreeing to remain a Hornet for the next six years late on this month. After all that we have suffered through with this lockout, is that really too much to ask?


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