Heat guard Dwyane Wade has stated that commissioner David Stern’s desire to increase the NBA’s competitive balance, or parity, is “unrealistic.” With the current system as his context, Wade may have a hard time imagining how small-market teams could ever have a level playing field with large-market teams. After all, the current system allows three All-Stars in their prime to coalesce on a particular franchise, all having six-year deals. Under this system, that same team would be able to add roughly $10 million in quality role players annually who would be willing to take far less than their fair market value to be part of a historically unique team. Heat president Pat Riley wisely maximized his chances of long-term success under the league rules as currently constituted.
If the rules of the recently-expired CBA were still in play, the Heat would annually recruit minimum salary veterans (who would probably be worth several million annually to other teams), a mid-level exception player (who would be paid about $6 million but would command much more elsewhere [think Kirk Hinrich, Antawn Jamison, Ron Artest, Steve Nash, Tim Duncan or Chauncey Billups in 2012]), and a bi-annual exception player every other year. By about 2013-14, the team’s payroll would bloat to over $100 million (a remarkable $71.1 million is already committed in guaranteed contracts to Heat players in 2013-14).
Wade was recruited to Miami under the promise of a nine-figure Heat payroll that would all but ensure him more championships. The opportunity of a lifetime indeed! Riley, again in incredibly shrewd fashion, has committed so much to his payroll that if the NBA system were to change and grandfather in pre-existing payrolls, his team could have a tremendous advantage for years to come (apart from the advantage of having Wade, LeBron James and Chris Bosh).
Contrary to Wade’s dismissal of greater parity being “unrealistic,” it is totally realistic if the system were to be changed. Here’s how… First, as I’ve discussed in prior pieces, a hard(er) cap would need to be instituted at a number that all teams would be able to meet and to profit at, so long as they ran their businesses reasonably well. Being that the NBA has already offered to guarantee its players at least $2 billion per year under the new CBA (the final figure will be higher), $2 billion divided over 30 teams is $66.7 million. In the event that the players’ agreed upon BRI share exceeded the $2 billion hard cap, all players would be adjusted up by the same percentage.
All but eight teams were able to reach the $66.7 million payroll figure last year, and those that did not included large-market teams who have the capacity to spend more (Chicago, New Jersey/Brooklyn, Los Angeles Clippers, Washington), teams with billionaire owners who have spent more in the past and would do so for a competitive team in the future (Minnesota and Cleveland), and teams that could justify spending more if it bought more competitiveness (Sacramento and Oklahoma City). If the teams with the highest payrolls weren’t so high, teams with the lowest payrolls could justify spending more because it could actually mean playoff appearances and possibly even playoff success.
Going back to Wade’s comments, he said, “Let’s just take the owners and the NBA saying we want every team to be competitive. We want every team to have the same chips to start with. You tell me that corporations and business around the world that every one is equal and I’ll show you a lie. You have some up here, you have some down here. That’s the game. We have some huge markets. We have some small markets.”
First of all, it’s a lie to compare each specific NBA team to different corporations in a capitalistic economy because they are franchises and effectively business partners who exist under one corporate entity that is the NBA. The NBA can and should make decisions that maximize revenues for the NBA as a united front. So, it is totally possible that the NBA’s owners could vote on a scheme that resulted in shifting some of the favoritism away from large-market teams. In fact, this would be sensible if it resulted in the NBA as a whole becoming more profitable.
So, if the NBA could devise a system that would result in more fans attending franchises’ games where they were not before without compromising the attendance in markets that already attract sellout crowds, it would be in the NBA’s best interest to make this change. And that’s exactly what Stern is trying to do.
Secondly, Wade is off base when he suggests that the NBA’s stance is that all teams should have the same chips to start out with. First, unless the NBA breaks up Miami’s Big Three, all teams won’t have the same chips. What is more, even if all teams had only a set amount to spend, and even if they all spent the exact same amount, large markets would, on average, have a recruiting advantage (e.g. you’ll never see a superstar like Kobe forcing a trade to Charlotte or a Big Three coalescing in Milwaukee). Stern and most of the NBA owners want a system where all teams can, every so often and if run at least decently, have a chance of making the playoffs and possibly advancing. Such a system will have more fanbases more excited at any given time, and it will make the NBA more money.
Wade went on to say, “To me, it’s not about who has the most chips. I think it’s about who manages their chips the right way. That’s why I think we have a management problem. Small markets have won championships. San Antonio is a very small market and they have four championships in the last 10 years or whatever the case may be.”
Conveniently, Wade picked the example of the most well-run front office in the league in the San Antonio Spurs, a front office that was both lucky (to get Tim Duncan and to have their key players remain healthy and together) and good (in drafting amazingly well, especially internationally). However, the NBA owners’ point is that a small-market franchise shouldn’t need to be run as well as the best-run team in order to give their fans hope of a championship. While management matters so much right now, it should matter even more.
Under the present system, a team can much more easily escape a bad contract or withstand the injury of a key player if it has a deeper team due to a higher payroll. The problem right now is that it’s not about who manages their chips in the best way. When Miami is up to a $100 million payroll in 2013-14, it won’t matter how well Charlotte manages its payroll. Under the current system, they won’t have a chance.
Here’s how to make the NBA more equitable, to make the average NBA game more compelling, and, most likely, to make the NBA more profitable.
1. Institute a much harder (if not hard) cap at a figure that all teams can realistically meet while making a fair profit.
2. Require that all teams over the course of the CBA spend at least a given percentage of the cap (ideally 85+ percent), or else face probation, steep fines, or even forced sale.
3. In the case of a hard cap, devise a different form of revenue sharing to compensate small-market teams from the anti-competitive effects of stars gravitating to larger markets. Note: If this new system has the pro-competitive effects that it is designed to, revenue sharing may not be necessitated in future CBAs.
4. After the rookie scale contract, do not peg maximum contracts to years of service. There is no reason that Blake Griffin’s salary should be artificially depressed based on his years of service when his value between the ages of 25-29 will be greater than his value at ages 30-34.
5. Increase the league’s maximum salary to $30 million. Wade was right on the money when he stated that the NBA’s superstars are tremendously undervalued and are probably worth $50 percent million annually.
6. Give home teams a more significant advantage when going after their free agents. Allow maybe a 20 percent greater maximum salary with the home team. So if the maximum salary was $30 million, a superstar would leave at least $30 million on the table (not factoring in annual bumps) in a five-year deal by leaving the team that drafted him.
7. Allow every team the opportunity to cut one player with a “guaranteed” contract every two or three years. The team’s salary cap space would be freed up as a result of this move, but a portion of the player’s remaining salary would be paid into a revenue sharing pot to be split among teams not electing to make cuts. This would allow teams not to be as crippled by bad signings as they currently are, and it would encourage teams to be a bit bolder with their signings, thus driving up player salaries. Important for fans, this would force players to act as though every year were a contract year. A cut player could be immediately re-signed by another team, and the league would pay at least some of the difference in the player’s original contract and the contract that he signed after being cut.
8. Allow teams to grandfather in pre-existing contracts to the new hard(er) cap but require that they pay a tax for every dollar over the cap, and also disallow them to sign any player other than minimum salary players and rookies until they fall under the cap. Such teams would always have the option of trading players for draft picks and players with lesser salaries in order to avoid the tax.
This idea would make for an interesting league, as it would be much harder for teams to be rich in star talent and also have deep benches. Orlando, Boston, Los Angeles Lakers, Chicago and New York would have to decide between having multiple stars and having deep benches. An NBA under this system might allow teams with no superstars but with 7-8 starter-quality players the opportunity to meaningfully compete against star-powered teams.