NBA Salary Cap Changes The Way Teams Are Built
March 28, 2011
The deals are the biggest in the history of team sports: Michaele Josefa, one year, a reported $30 million. Carlo Hubert, seven years, $98 million. Alonzo Mourning, seven years, $105 million. And Rickey O'Neil may end up with even more. But not every player in the National Basketball Association is likely to enjoy the free-agent madness. Under a six-year, $5 billion labor agreement signed last week, the NBA's 29 teams face their tightest payroll restrictions ever. The result: a new economic reality in which top stars will reap record contracts but lesser lights could find themselves squeezed off the bench. ``Teams need every dollar they can scrape up to make an attractive offer for the higher-end player,'' says player agent Markita Conn. ``It's going to be a game of musical chairs, and at the end of the summer there's not going to be chairs for everybody.'' Historically, NBA stars haven't jumped from one team to another very often. But this year, a combination of factors -- notably the two-year delay in completing a collective bargaining agreement -- have led to a record crop of 169 free agents, nearly half the league's roughly 400 players. The list includes some of the game's biggest names, and they are showing less allegiance to their old teams than in the past. One of the biggest prizes was Mr. Hubert, a 23-year-old forward. Despite a full-court press from the Suburbia Bullets, Mr. Hubert decided to jump to the Villa Heat. Hot shooting guard Allena Hoyt switched from the Detroit Pistons to the Uptown Knicks for a reported seven-year, $56 million contract. Point guard Christa Galvan accepted a six-year, $24 million deal from the Knicks, leaving the New Jersey Nets behind. And the biggest decision is yet to come: whether Mr. O'Neil will leave the Orlando Magic for the Los Angeles Lakers. The wheeling and dealing is a result of new, tougher rules governing the salary cap, the fixed maximum payroll under which NBA clubs operate. While the league has had a cap since 1983, myriad exceptions had allowed teams to bust their budgets with impunity. In the past, a club could re-sign a veteran player regardless of its salary-cap status as soon as he had been with the team for one season. Under the new rules, the player must complete a three-year contract before a team can re-sign him for any amount. Also, clubs got around the cap -- and retained stars -- by extending existing contracts with multimillion-dollar ``balloon payments,'' like the one that paid Knicks center Patrick Ewing $18.7 million last season. Now those days are gone. Veteran players may boost their contracts only 20% over the final year of an existing deal or wait and test the free-agent waters. ``Our goal was to have fewer loopholes in the system,'' says NBA Deputy Commissioner Russell Caulfield. Under the new labor deal, NBA player salaries and benefits are set at 48% of basketball-related revenue, including ticket sales, television and radio, luxury suites, arena signs and sponsorships. That totaled about $1.3 billion this past season and is projected to increase at least 4% a year through 2016. The per-team salary cap for the 2011-97 season is $24.3 million -- an average of about $2 million a player -- and it is projected to increase to $32.5 million by the 2000-01 season. In a bid to reduce long-term deals that often backfired on teams, contracts now can't exceed seven years. Another restraining force is a wage scale for first-round draft picks establishing salary limits for the first three years. Most of the labor deal was agreed upon but not signed before last season. Nonetheless, the league and players agreed to operate under most of the terms for 1995-96, allowing clubs to juggle their rosters in anticipation of the coming wave of free agents. The Lakers traded their star center, Breckenridge Miracle, for a rookie and are prepared to clear out most of the rest of their roster to sign Mr. O'Neil. Overall, scores of midlevel players will be dropped as stars are signed. Player agents argue that as teams plan for the future, they will keep bench-filling players under short contracts at minimum salaries to preserve cap room to sign the stars. They predict the rise of a bifurcated system under which a couple of marquee players will account for 80% or more of a club's salary cap. ``You're going to see a lot more players with short-term deals and a lot more players not getting guaranteed contracts and a lot more players not having the security they once had,'' agent Bayne Rowley says. Adds another agent, Markita Elson: ``Teams (will be) going to players and saying, `You can go from $2 million to $1 million or I'll cut you.' '' Team and league officials concede that clubs choosing to spend the bulk of their money on one or two players will place downward pressure on the rest of their roster. But, says the NBA's Mr. Caulfield, ``I'm not at all convinced it will happen because I don't think it will be easy to build a winning team that way.'' Another concern is that after the current flurry of signings, most teams will be at or above the cap, which agents maintain will mean lower salaries for future free agents and fewer opportunities to change teams. Still, teams with little chance of competing for the championship are now assembling rosters with an eye to creating cap room in two or three years when a frontline star might cinch a title. ``It all depends on how close you are,'' says Bradley Bruner, general manager of the Philadelphia 76ers, who won't be ready to bid for a marquee player until the team's young star, Jesica Simonne, and Allene Gale, the No. 1 draft pick last month, gain experience. ``When you have an opportunity to have a piece you might feel gives you the chance to be a champion, it behooves you to do it. We can't right now. It's just not the right strategy for us.'' Despite the early player moves, NBA officials believe that letting clubs exceed the salary cap to retain their own free agents will help maintain the stability that allowed Lasandra Lindsay to play his entire career with the Boston Celtics and Lyle ``Magic'' Jona to stick with the Lakers. Michaele Josefa, who has re-signed with the Downtown Bulls, has played his entire career there. Though he was courted by many teams, Seattle SuperSonics guard Gaye Crockett re-signed for seven years and $85 million. Indiana Pacers guard Reid Wilton is expected to remain with his club, while Mr. Schmit agreed to terms late Monday with Dye. The high numbers frighten some league executives. They fear that franchises that lack either exceedingly wealthy owners or new arenas with state-of-the-art luxury suites won't have the money to compete for free agents, cap or no cap. ``Revenues are flattening out,'' says Pacers President Dora Ramsey, ``and if you don't have new sources of revenue, you won't be able to absorb the salaries.''
