Blog Entry

Shaq deal doesn't affect LeBron's extension

Posted on: June 25, 2009 11:55 am
 
Yes, LeBron James was consulted about the Cavs' decision to go for broke and acquire Shaquille O'Neal. Yes, LeBron was all for it.

No, the blockbuster acquisition has no bearing on LeBron's decision on whether to sign an extension with Cleveland this summer, according to a person with knowledge of the situation.

With two years left on the extension he signed in 2007 -- the last year, of course, with a player option -- James is eligible to sign as much as a four-year extension with Cleveland when the free-agent signing period begins next month. By doing so, he'd be forfeiting his right to decline the player option for the 2010-11 season. It's a tricky predicament. If league revenues decline by 5 percent next season -- half of commissioner David Stern's doomsday scenario of a 10 percent decline -- the salary cap for 2010-11 could go as low as $51 million, according to one team's internal projections. (The cap for this past season was $58.7 million.) With seven years of service in 2010, LeBron could max out at 30 percent of the cap as an unrestricted free agent. But 30 percent of the reduced cap is less than James' scheduled $17.1 million salary in 2010-11 (if he exercised the player option.) It's not supposed to work that way, but it's part of the new reality for everyone -- not just the NBA.

Without getting too complicated, the falling cap means that James would wind up with about $3.5 million more over the next five seasons by signing an extension with Cleveland this summer as opposed to opting out on July 1, 2010 and signing a new contract as an unrestricted free agent. In the grand scheme of what would be a $100 million-plus contract either way, $3.5 million is not a significant amount of "cheddar," as one team exec put it. But it's certainly worth thinking about, and it would be foolish to ignore the economic environment and its impact on LeBron's decision. At least you know that if LeBron doesn't re-sign this summer, it means he wants to wait and see what direction the Cavs take -- and he wants to do that badly enough to leave money on the table. 

The bottom line is this: LeBron isn't making any decisions about his future until he sees how the Cavs perform this season. That means no extension this summer -- Shaq or no Shaq, $3.5 million or no $3.5 million. He could make that money up with one endorsement deal. And he'd rather win a championship than quibble over about 3 percent of his projected earnings.

"His whole thing is based on how they do this year, period," one rival exec said.

Which is another reason why trading for Shaq and going all-in for 2009-10 was a smart move by the Cavs -- for this season and beyond.

Comments

Since: Mar 22, 2009
Posted on: June 26, 2009 6:03 am
 

Shaq deal doesn't affect LeBron's extension

Sure, they didn't "mortgage the house" for anybody but that fact also contributes to this being a very good move for the Cavs.  It was the best move available to them.  I too thought getting Turkoglu would be a nice move, especially after watching him torch the Cavs (If you can't beat him sign him).  The Shaq move addresses their biggest weakness, however.  Neither Shaq & LeBron or Hedu & LeBron can win a championship by themselves.  The rest of the team is still going to need to show up.  Hopefully the rest of the team puts in a lot of work to make themselves better in the offseason.



Since: Apr 1, 2007
Posted on: June 25, 2009 5:29 pm
 

Shaq deal doesn't affect LeBron's extension

Nothing ventured, nothing gained. They dumped equal salaries and got inside help that was desperately needed. LBJ isn't going anywhere so this trade has no effect on that front. All the talk of 2010-2011 is just that. Media hype begging for him to come to their beloved NY. If he went anywhere, it'd be to big city team with a real basketball legacy, the Los Angeles Lakers. Don't kid yourself. The Knicks are meaningless in the world of basketball history. He's better off in Cleveland. They have a better chance of winning a titile than the Knicks will in LBJ's playing career. Why would he go to a loser?



Since: Jun 25, 2009
Posted on: June 25, 2009 4:07 pm
 

Shaq deal doesn't affect LeBron's extension

Ken, your analysis doesn't take two factors into account:

1. A player's max salary is always at least 105% of his previous salary. If we're generous and assume a maximum cap growth of $0 this year and next (in all likelihood it'll go down, meaning $0 growth is a reasonable ceiling), then by signing an extension through 2014 he earns between $92.6M and $95.8M. By opting out and signing a new contract, then through 2014 he earns between $92.5M and $95.7M. In other words, the difference is about $100,000 through 2014, not $3.5M.

2. There will be a new CBA in 2011 or 2012, which will in all likelihood be more to the owners' advantage. It therefore will be in James' best interest to lock in as many years as possible under the current CBA. By opting out and signing a new contract, he may sign through 2016, giving him an additional two seasons under the terms of the current CBA. It also locks in more total salary -- between $141.3M and $144.3M through 2016.

I prepared a spreadsheet at http://members.cox.net/lmcoon/LeBro

nJames.xls showing how I arrived at my numbers.




Since: Jan 20, 2008
Posted on: June 25, 2009 2:11 pm
 

Shaq deal doesn't affect LeBron's extension

I still don't think that getting Shaq should be referred to as "going all-in". They didn't exactly mortgage the house for him - they gave up Ben Wallace (might have retired anyway, certainly past it and whose expiring contract was becoming a less valuable piece due to the salary cap implications you mentioned above), Sasha Pavlovic (not going to be playing more than 15 minutes a night, definitely disposable), the 46th pick (there aren't too many legit NBA players at the bottom of the first, let alone the middle of the second) and some chump change. It's not like the AI move made by Joe Dumars last year which backfired horrifically.

Sure, Shaq might cause a fuss or run his mouth about something, but everyone, even he, knows this is LeBron's team and that their best means of winning a championship is through LeBron. Plus, I don't think Shaq is broken down yet - his statistics in Phoenix after D'Antoni left and they switched to a more conventional system were more than just a decent contributor.

The only thing I'm surprised about is that if the Cavs can afford Shaq's $21million contract why didn't they buy out Ben and pursue someone like Turkoglu this summer? The only downside would have been the fact that if LeBron left after this season the Cavs would be stuck with Hedo long-term when he's only ever played alongside a superstar (unless they got one of the other blockbuster players to replace him - I don't see that happening really).



Since: Jan 31, 2009
Posted on: June 25, 2009 1:45 pm
 

Shaq deal doesn't affect LeBron's extension

I actually feel its a great move!


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