On the latest edition of the HoopsHype podcast, host Michael Scotto is joined by NBA salary cap guru Larry Coon. The two discussed which teams could be the most active this summer in the free agency and sign-and-trade market, future CBA changes, expansion, and Sports Business Classroom in Las Vegas.
This episode is brought to you by Sports Business Classroom. If you’re looking to jump-start your career in the business of basketball, you can sign up for classes from August 9-14. Learn from the experts on topics including the salary cap, scouting, analytics, media, and broadcasting. Use promo code “HOOPSHYPE” to get $200 off.
For more interviews with players, coaches, and media members, be sure to like and subscribe to the HoopsHype podcast on Spotify, Apple Podcasts, and anywhere else you listen to podcasts. Listen to the podcast above or check out some snippets of the conversation in a transcribed version below.
:45 Sports Business Classroom at Las Vegas Summer League August 9-14 and how people can sign up
Coon: Sports Business Classroom is a week-long immersive experience inside the Las Vegas Summer League coming up August 9-14. If you’re interested in working in sports, there’s no better environment to learn from and network. The entire league is there. We’re bringing the best of the NBA into Sports Business Classroom right in the arena to speak and teach.
We have a great curriculum for people looking for jobs in sports covering the salary cap, scouting, analytics, basketball operations, media, and broadcast work. You want to go scout a game with an NBA scout? We’re putting you in the seats next to scouts. We give you podcast and broadcast opportunities.
It’s networking with the people who are there from the league. I always say it’s not a matter of who you know. It’s a matter of who knows you. The NBA GMs and everyone in their front offices knows who we are, know the quality of the students we get, and they come to us looking for people when they’re looking to hire. If you’re interested in breaking into the league and a job in sports, you’re going to want to check us out, including after-event support.
We have a portal that you can think of as LinkedIn for basketball. People literally check our site when they’re looking for talent. We have three majors. One of them is the salary cap, one of them is scouting video and analytics, and the other is media and broadcasting.
If you’re interested, go to our website sportsbusinessclassroom.com. You can see testimonial success stories and see more about the program. Our regular registration closes this weekend, on July 31. Register before the end of July because after that, it’s late registration, and I can’t guarantee a spot, and prices go up anyway. Because you’re listening here, when you register, enter in the comments section the code HOOPSHYPE, and I’ll give you $200 off the program.
6:28 From a salary cap perspective, what teams are you looking for to be most active, shedding salary or use cap space to absorb contracts in the draft and free agency?
Coon: Teams like New York, San Antonio, to a lesser extent Dallas. Toronto could be interesting because they’re probably ready to move on from Kyle Lowry. Miami, I’d say, is interesting. Not that they have cap room, but they’re in one of those unique situations where they could go either way and clear the books, and they can be a team with enough cap room to make some noise, or if they pick up the options on Goran Dragic and Andre Iguodala, they could stay a cap team, which means they’ll be spending exceptions. They’ll have one or both of those contracts to be able to grease the skids on some trades. Looking at this trade that just happened with New Orleans, they’re clearly positioning themselves to start making a move or two.
Scotto: Regarding New Orleans, the scuttlebutt, as they say, had been Lowry potentially going there and to get him around $30 million. With that in mind, he’s their top guy, and there’s been a rumor out there about Lonzo Ball and a potential sign-and-trade with Malcolm Brogdon. It seemed to me that was more of a fallback option for Lowry. It looks like they’re trying to clear that cap space. Some people are thinking they maybe did it to match Lonzo, but Ball wasn’t getting $30 million. Read between the lines there a little bit.
9:25 Will the sign-and-trade market in free agency be active this summer?
Coon: The sign-and-trade really works differently now than it used to work before. Previously, a team could get the biggest deal possible from his own team of five years, and eight percent raises or whatever the highest raises were at the time. Now, the player can only get the kind of contract of five percent raises and four years that he could get by signing with that team directly. It means that if the player can sign with another team directly, he’s just going to go ahead and sign there. There’s no sweetener to get him to sign with his old team for the purpose of a sign-and-trade.
A sign-and-trade is only useful now when a player wants to go to a team that doesn’t have the cap room to sign him directly… The rule of thumb is when the cap room goes down, sign-and-trades go up because that’s the mechanism for getting moves done. With fewer teams with a lot of cap room now, I’d expect to see more teams trying to get their work done through sign-and-trades because the players who might be looking to change teams, like Dennis Schroder, would be one example, he’s apparently looking for a lot of money. A team that wants him and may be willing to meet his asking price may not have the cap room to be able to sign him, which means they’re looking at making a deal (sign-and-trade).
11:30 Any other specific players who could benefit from a sign-and-trade given their current situation?
Coon: I think Schroder is a prime example. I think Lonzo might be another one. The other thing you have to look at is who’s restricted because for a restricted free agent, the home team has the right to match any contract offer. In order to actually change teams, sometimes it’s necessary for the restricted free agent to convince the home team to do a sign-and-trade to put you somewhere else.
The other thing you look at is any free agents who’d be making a lot of money. Chris Paul would be an economical example there. His contract is so huge. If he opts out and he didn’t opt out just to re-sign with Phoenix to get more years, then that’s probably what’s going to happen. If he decided he wanted to go someplace else, his contract is enormous, and he’s not opting out of the kind of money that he’s going to be making next year to go play someplace for the mid-level exception. He’d be looking at sign-and-trade options in that scenario.
13:25 Are there things in the current CBA that are problematic or things you think could be improved?
Coon: I don’t like how they did the restricted free agent match period. They took half a step in the right direction by making it so that a restricted free agent could get an offer sheet during the moratorium. But, the home team doesn’t have to match the offer sheet until after the moratorium ends. There’s no reason for a team to give another team more time to match. They want to give them as little time as possible.
I understand why they did the super-max extension, but it generally ended up with a lot of teams being hurt and a lot of players being moved around. It was supposed to keep players in place… The first deal I think was DeMarcus Cousins being moved from Sacramento to New Orleans because they didn’t want to be in a position where they had to pay the super-max. In general, anytime where it’s a reaction to something that happened, and clearly, it was a reaction to Kevin Durant moving from Oklahoma City to Golden State. When you do things as a singular reaction to a singular event, typically that reaction is a bad reaction. I think that’s what happened here.
You can say there’s no real point in the July moratorium and even no reason for free agency to open when it does, for that matter. I could see the free agency period opening up closer to the draft or even before the draft.
18:24 What about veteran extension limitations?
Scotto: One thing our HoopsHype salary cap expert Yossi Gozlan asked was the conversation about veteran extension limitations because teams are basically limited to giving veterans a raise of 120 percent. For some teams with veterans on team-friendly deals, it can hurt them from locking up their main players with free agency coming up. Look at the Bulls with Zach LaVine. They can only give him $105 million over four years unless they do a renegotiation or a contract extension. Yet, he’s eligible for a max extension in the 2022 offseason. Do you think they’d ever change the rule so that type of player can become extension eligible earlier?
Coon: That’s one of the rules I don’t like. My opinion is the whole point of extensions is you want to lock up a player before he becomes a free agent… My opinion is I don’t see a difference in a normal year between June 30th and July 1st. Something you can do on July 1st, you should be able to do on June 30th before the season ends and he becomes a free agent… My opinion has always been that if a player and a team want to lock up, they should be able to do anything before free agency that they’re going to be able to do after free agency because what does a couple of days matter?
20:53 What kind of rule changes do you expect potentially in the next CBA?
Coon: I’d love to see some of the things we just talked about fixed. Extensions. I’d love to see them fixed. I’d love to see something happen with the super-max where it doesn’t hurt the small market teams as much as it does. I’d love to see restricted free agency be a little bit better. For the most part, the CBA has been getting progressively better over time… Right now, the system is set up to have teams cheat. We saw that a couple of years ago where they opened up free agency on July 1st, and within the first half-hour everybody was spoken for. How does that happen? It’s because everybody has been talking to everybody, even when they’re not supposed to.
23:30 Do you think the NBA would ever eliminate a max contract for a player?
Coon: No. I understand some of the arguments, but it serves multiple purposes. On one hand, you don’t want LeBron James and Stephen Curry getting market value because what’s their market value? $100 million in a purely open market? Then, everybody else would be making the minimum on that team. That’s just how it would work. The problem is, the players overall, collectively every player in the league, gets about 50 percent of the revenue that comes in. If LeBron and Steph get more, then league-wide, everybody is going to get less… This whole system is an agreement between the league and the players. They all agreed on this because the players also have two interests. First, they wanted to protect that lower class. They wanted it so that if you have extraordinary talent and you do the work to make the NBA, you should be able to earn a good amount of money while you’re there. Second, ensuring that the guys who are starter-level talent aren’t pushed down into much lower salaries just because you have to give all the money to the richest players.
25:30 Would the NBA make any luxury tax changes in the new CBA?
Coon: They did a few things. It used to be $1 for $1. Now, it starts a $1.50 per $1. It goes up faster and adds up to much more money. They put runs in there where every $5 million, the rate gets higher. They added the repeater tax, which makes it worse. They also put system changes in. If you spend too much, then your exceptions get smaller, and you can’t get a guy in a sign-and-trade. Now, it really has helped to control spending. It’s also a form of revenue sharing where the richer teams are helping to subsidize the poorer teams.
27:03 What do you think NBA expansion could do to the salary cap down the line?
Coon: I think it’s pretty inevitable that there’s going to be expansion at some point, and we could see a 32-team league. There are certainly cities like Seattle ready to host an NBA franchise again. I was thinking expansion might’ve even been on the table this past year because of Covid. If you collected a couple of expansion fees, you put a lot of money into the league in a year when revenues were so far down… Eventually, you’re increasing the revenue that comes in with ticket sales, local cable revenue, everything around the game… The flipside of that coin is that you’re now splitting the profits more ways and your revenue sharing differently.
When the bottom line goes up, the salary cap also goes up. We’d see an increase in the cap just by the virtue of that. Plus, there would be more jobs in the league.
Scotto: I always thought Las Vegas would be an ideal place for a new NBA franchise. You touched on Seattle as well. Certainly, there’s been chatter about trying to bring a team back there.
Coon: The league was nervous for a while about the whole gambling connection, but clearly, the leagues are working this out. Hockey is here. We have the NFL there. I think the NBA is more comfortable with the idea certainly. I don’t see Las Vegas as being an impediment anymore.
You can follow Michael Scotto on Twitter: @MikeAScotto