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Blog Entry

Hard cap could mean hard times for small markets

Posted on: July 4, 2011 12:05 pm
Edited on: July 5, 2011 9:37 am
 
Posted by Royce Young



NBA owners want a hard cap. It's probably one of the three biggest reasons we're stuck in a lockout right now. Owners want a hard cap, or at least one they're trying to disguise by calling it a "flex cap," and the union has basically said they will never, ever accept a hard cap.

And when the hard cap topic is brought up, people always wonder how a $55 million hard cap would affect a team like the Miami Heat. Between Dwyane Wade, LeBron James and Chris Bosh, those three soak up about $47 million on the Heat payroll. And that's just for 2011-12. In 2013-14, that number will be about $58 million, so even the suggested $62 million "flex cap" the league talked about would leave the Heat only $4 million to fill out their roster.

The super-together, we're-a-real-team Mavericks? Yeah, their total payroll added up to nearly $90 million last season, third highest in the league. That's about $30 million over the current salary cap but because it's a soft cap, it was fine. (Fine in the sense it didn't break any rules, but still, pretty outrageous.)

The feeling though with this hard-cap business is how much it'll affect teams like the Lakers, Heat, Bulls and Knicks. Now their greatest assets -- money and market -- don't mean as much because in a hard-cap system, signing multiple big contract stars just isn't an option. Victory for the small markets, right?

I'm not so sure about that.

I wonder about a team like the Oklahoma City Thunder, one of the smallest-market teams in the league. The feeling is that a hard cap would help smaller markets compete because talent would get distributed a bit more evenly throughout the league. With teams unable to pay a bunch of guys on the roster $15 million or go $30 million over the cap line, either players would have to take a serious pay cut or go somewhere else.

Except in the case of the Thunder, a straight hard cap would destroy them.

Kevin Durant just signed a five-year extension that will pay him around $16 million a year. Russell Westbrook, an All-Star point guard at the age of 22, is eligible for an extension and would probably have it if there weren't a lockout. He's probably a max player or close to it. So that would be another major mark on the cap for the Thunder. Then the other guys -- Serge Ibaka, James Harden, Eric Maynor -- are all eligible for extensions next summer.

If the league has a stiff cap of even $60 million, how can the Thunder dream of re-signing these guys and keeping the core intact?

Answer: They can't.

That has been Thunder GM Sam Presti's plan since Day 1, though. He wanted to draft a bunch of young guys and let them grow together. Let them progress, develop and become a team all together. And when they did, lock them all up long-term and have yourself a contender for the next decade. It has worked. The Thunder just went to the Western Conference finals with one of the youngest teams in the league and should be in the mix for at least the next five.

Unless of course they have to let a couple of their big pieces walk.

Last season the cap was set at $58.04 million and the Thunder were one of only five teams under that number. While a lot of smaller markets prefer not to bust into luxury tax territory, most likely OKC would be there after those key pieces were extended. So while they're under now, that probably wouldn't be the case in the future.

Reality is, a hard cap might have more of an affect on the little guys, which is who the league wants you to think it desperately wants to protect. But basically, with a hard salary cap system, building through the draft and letting a core grow together is no longer the way to go. Put together a roster with five good players that need extensions and you're out of room after three. Maybe you can get four, but how do you add another nine guys to fill out a 13-man roster?

What we might see is the Maverick Plan instituted as the way to win in the NBA. Now again, they totaled nearly $90 million, but I just mean the idea. Grab one star player and fill in the rest with a couple rookie-level contracts and a bunch of aging veterans willing to take $5 million or less. The Mavs had one star and everyone praised them for it. But in a hard-cap world, that might be best philosophy.

Because a team of Durant, Westbrook, Harden and Ibaka probably can't exist just as one of LeBron, Wade and Bosh can't. Doesn't exactly seem right, does it? The idea is a hard cap would help restore some competitive balance and the bigger markets wouldn't be able to just dwarf the small ones by going $30 million over the cap like the Mavericks did. The Thunder would never do that.

At the same time, while the playing field might be leveled in terms of payroll, it could come at the cost of breaking up the band and redefining how a small-market team must build.

Every team that's using the draft to build -- which is the sound and socially blessed way to structure a team -- would have to reconsider. The Cavaliers might've just committed 80 percent of their future cap to Kyrie Irving and Tristan Thompson if those two pan out. Same for the Jazz with Enes Kanter and Alec Burks. The future for those teams might be just enjoying the four years you get with them on their rookie contracts and then choose one to keep. I don't really think that's what the NBA has in mind, but that's going to be what happens. Small markets probably will take the brunt of a hard cap much harder than the big ones. Or at least the good small-market franchises that understand how to build.

Who knows what the NBA landscape will look like when the dust clears in this lockout mess. The players have taken a hard line on a hard cap and supposedly will refuse to back down. The owners though are committed in their efforts to get one. Yeah, it'll reduce salaries. Maybe the system will stay the same but just instead of Harden getting a $10 million-a-year extension, he would get $6 million. That's possible.

But this is the NBA and just because a new salary system is in place doesn't mean the league doesn't have impulsive general managers that are ready to snatch away a player like Harden and give him that $10 million a year simply because they know the Thunder can't go that high. That'll be the world teams operate in. One where the Thunder Way is no longer the blueprint for small-market building success.

Maybe the players have a point, huh?
Comments

Since: Jun 30, 2011
Posted on: July 5, 2011 4:16 pm
 

Hard cap could mean hard times for small markets

Clear writing, no evidence.  The point of a hard cap is that ALL TEAMS have the same amount of money to spend on players.  Sure, bigger market teams, as well as owners who don't mind losing money, will build nicer arenas, or have cushier locker rooms.  But if the hard cap is 60 million, then it is 60 million - in Oklahoma, in Dallas, in Boston, and in Miami.  Imagine what a true hard cap would have done to the Heat this year - they might literally have had to play the big three 40 minutes a night because they didn't HAVE subs.  Not didn't have quality subs they trusted, but instead only had enough left-over salary to pay 5 more players.  The article's writer just doesn't seem to get the concept of a hard cap.



Since: Jun 25, 2009
Posted on: July 5, 2011 3:53 pm
 

Hard cap could mean hard times for small markets

I don't think this is a good argument. Maybe this would hurt OKC in the short term because of the contracts they have issued recently, but a hard cap would help most small market teams. Also, in the future, keeping the great players a small market team has drafted won't be all that more difficult than it is now because overall the hard cap will reduce salaries by limiting total amount of money that is available to the players in the NBA. If the Jazz can't afford re-sign Enes Kanter and Alec Burks in four years for $15 million each because of the hard cap, then neither can any other team in the league. A hard cap will result in a much more even distribution of talent throughout the league, and therefore will also result in a much more competetive league from top to bottom. A more competetive leage is a more interesting league because by comparison watching the same 4-6 teams on ESPN and TNT is pretty boring. Lets face it, interest level in the NBA is really the main issue in this lockout



Since: Jun 10, 2010
Posted on: July 5, 2011 3:45 pm
 

Hard cap could mean hard times for small markets

Rubbish! What Young really is saying is that some small market teams, like OKC, Memphis, and Portland, will be hurt by a hard cap just as much as big market teams because the talent pool will be spread around. It is not about small market versus big market, it is about how much an owner is willing to spend (or in the case of many frachises, how much an owner is willing to lose) in order to field a competitive team. But as the Knicks have shown us, you can spend a lot of money and still be bad. What a hard cap will do is ensure that the smart front offices, who make the most of their salary limitations, will be able to most consistently field the best teams. I have a feeling OKC will be just fine!



Since: Apr 2, 2011
Posted on: July 5, 2011 3:12 pm
 

Hard cap could mean hard times for small markets

ballhog.



Since: Mar 6, 2007
Posted on: July 5, 2011 2:32 pm
 

Hard cap could mean hard times for small markets

I find the article not using much evidence to support it's theory. The article just theorizes that small market teams other than the Thunder (who would be hurt now) would be hurt by hard caps in the future. Sorry but that's probably wrong. Look at the NFL to start. Teams can build through the draft and keep their major players throughout the years. The only issue is they can't keep every single piece but that's small and big markets alike. A guy or two might leave in free agency here or there but that's the same with every team and it completely levels the playing field. The Colts have done pretty well over the years and have been able to keep major pieces. The Bucs are a team who built through the draft and if they want, they will have major pieces like Freeman and Williams for years to come but will lose role players but that's what the draft or free agency is for. You just plug someone else back in. The NHL has had similar success for small markets with Pittsburgh and Tampa just recently.
The writer writes this article as if salaries will stay exactly the same. You have to take into consideration that guys that were drafted this year or will be free agents, under a hard cap, would be making considerably less than they would under the current system making it possible for a team like the Thunder to keep a lot of the smaller pieces. You can't tell me that the Hornets are going to be hurt by a hard cap more than the Heat can you? If you can, then I'd really like to know how.



Since: Nov 15, 2006
Posted on: July 5, 2011 2:31 pm
 

Hard cap could mean hard times for small markets

Excellent response!!  I was still finishing mine while you were posting yours.  Had a seen this, I might have kept mine off.  I like the fact that you are offering solutions but it sounds too close to the MLB Luxury tax idea.  And the MLB Luxury tax has not helped with competitive balance or restricting the Yankees from taking all the talent.  Your solution also penalizes teams that lose players mid-season due to injury.  Additionally there is no reason for a great team like the Lakers or Heat to tank in the beginning of the season to lower their "Tier Status", grab the players they need to avoid too stiff a penalty, then make the playoffs by seasons end.  

I think your understanding of the recent MIA "super team" is misinformed.  It was not MIA that looked to form these, but the players -- Wade, Bosh, LeBron.  Paul, Howard, and Anthony also openly discussed the same thing.  Again, the players were choosing this, not the cities.  Both groups were choosing the place based on a city's ability to pay.  Your system may discourage them from doing it in MIA or NYC, but not Charlotte or MIL.  So how does that help with the stability of the league or the creation of "super teams"?  It doesn't.

And your statement that "The huge home crowds they draw because of it will pay teams like Cleveland to remain competitive and profitable" comes with the HUGE assumption that the Cavs will stay in CLE while these "super teams" are dominating.  How does that maintain competitive balance?!  And other than the Clippers, teams are not looking at a "chance at breaking even" -- they want to win.  If Cleveland gets another superstar, there is zero incentive in your system for them to stay in CLE.  The player will leave and the team will get money.  In the meantime, the fan is long gone.

Good ideas.  Just need a lot more work.



Since: Oct 18, 2008
Posted on: July 5, 2011 2:29 pm
 

Hard cap could mean hard times for small markets

This may have already been said but with a hard cap salaries will come down allowing small market teams like OKC to keep all of their players. Star players will be more likely to sign with a small market team because the large market teams will not be able to offer more money to every player. I think a hard cap will save the league.



Since: Nov 15, 2006
Posted on: July 5, 2011 2:07 pm
 

Hard cap could mean hard times for small markets

This post/article is completely devoid of any research.  Hard cap will hurt the small teams.  Hard cap will have more of an affect on the little guy.  Payrolls will suffer and players will not be able to return.  blah, blah, blah.... These are the same arguments used by the NFLPA back in 1987.  Only here our "reporter" tries to resurrect them... but again, devoid of research.  

The article makes no comparisons to leagues with a hard cap.  Mr. Young fails to recognize that without a cap the NBA has had 4 teams move in the last 10 years.  Compare that to 4 in the past 25 with the NFL (since the institution of the salary cap in 1987).  This is expected to get worse in the NBA based on poor fan support and lack of revenues. 

The NBA is considering downsizing by potentially eliminating 2 (or more) teams to help maintain current revenues.  The NFL model post-1987 hard cap institution has seen the league increase in size from 28 to 32 teams.  Additionally rosters have increased.  As a point of example, the 1987 Browns had a roster of 51 players and in 2010 it was 65 players.  That is an increase of 652 players or an increase of 45.6% of additional players receiving paychecks.  Why didn't you address this problem in your article??

Mr. Young fails to recognize that despite the scare of "hard caps will hurt the little guy the most", NFL players across the board saw dramatic increases in salaries, more players are playing... yet he fails to explain to us why this would be different if the NBA did the same.  ??

The NBA has been dominated by large market teams such as Boston and Los Angeles for most of its career.  Of the 64 championships, two teams (Boston and LA) combine for 33 or just over half of all championships ever played!  Split them up and they each account for 25%.  In the MLB, the New York Yankees also account for 25% of all championships won.  Compare that with the NFL, where the Pittsburgh Steelers (notice not NY, LA, MIA or HOU) have the most championships at 7 or just 15% of all Super Bowls ever played.  

In the NFL players and organizations must choose what is more important, a championship or retaining star players -- but you cannot have both.  There are only "super teams" in the NFL if players (Randy Moss, for instance) make a decision of ring over dollars, where T.O. was in Buffalo taking the dollars over the ring.  What was the incentive for LeBron to stay in Cleveland if he can get both elsewhere?  And, Mr. Young, how does such a situation help with the stability of the NBA?  

Who honestly believes that Antonio Gates, Payton Manning, Larry Fitzgerald, Calvin Johnson, Adrian Peterson, or Chris Johnson would be playing for their respective small market teams if there was not a salary cap??  Has the hard cap hurt their production as a player?  How about their ability to market themselves?  Or how about their salary?  Has attendance gone up with Peyton Manning staying in IND?  Without Fitzgerald, anyone think ARI would have made it to and almost won the Super Bowl?  Do you think the new QB in MIN and TEN think that they are in a good or bad situation with the backfield they recently inherited?  

The biggest argument you have is that teams have overspent (i.e., LA, MIA, OKC, DAL) and you want to justify those current rosters.  This is analogous to everyone sitting in the back of a boat and the boat is starting to sink.  The simple solution is a reorganization of people in the boat to properly stay afloat.  Your complaining about seating assignments is trumped by a sinking boat.  Yes, there will need to be changes in the NBA.  Yes that will most likely result in reorganization -- it has to!  Just like my example, no one is getting kicked out of the boat and not all passengers get reorganized.  But everyone still has a seat.  In the NBA everyone still has a job.  

Additionally those of us who are fans of the game have noticed a complete erosion of product over the years as players coast, not only in the regular season (which has been torturous to watch), but also in the playoffs.  Poor LeBron can't beat certain players so he decides to join them.  Why did you leave arguments of the current lack of competitive balance up in this article?!  Probably because, just like any of my other points, none of these situations lend any credence to the article.  The minute Mr. Young would try to site examples, the examples themself would prove him false or (worse) ignorant.

Bottom line is this entire article is the author's opinion.  Mr. Young is entitled to it just as any other half drunk in a bar after hours spouting off.  But put it online as a paid employee of CBSSports.com, and spouting off becomes inappropriate!  All of us reading this expect you to back up that opinion.  Where you can, give facts that are backed up by the associated HTML link where you got the information.  If you cannot provide facts with backup, give similar plausible scenarios so your opinion then becomes plausible.  

But this?!  This is just opinion, and a poorly informed opinion at that.

 



Since: Sep 15, 2006
Posted on: July 5, 2011 2:03 pm
 

Hard cap could mean hard times for small markets

Perhaps the NBA should view the salary cap issue differently.  The cap was supposedly instituted from keeping the haves from using all their cash to snatch up the best players, leaving the have nots screwed.  This can be accomplished differently.  Divide the NBA into 3 groups, or success tiers, based on their records from the previous season.  The eight teams in the top success tier from the 2010-11 season would be: Chicago, San Antonio, Miami, Dallas, LA Lakers, Boston, Oklahoma City, and Orlando.  The mid range success tier teams:  Denver, Portland, Memphis, New Orleans, Houston, Atlanta, New York and Philadelphia.  The bottom tier is the remaining 14 teams. 

In my system, the salary cap is $60 million.  Teams may exceed that amount, as they currently do, however  there would be a penalty fee of $1 for every $1 they are over the cap.  So if Dallas has committed $90 million in salary, they would pay the NBA a $30 million penalty fee for being over. 

The top 8 success tier teams would pay a $3 transaction fee for every $1 spent in free agency money, regardless of their salary cap total.  The mid 8 success tier teams would pay a $1 to $1 transaction fee for each free agent signing.  So, if Chicago wanted to sign Nene for $8 million a season, they would pay the NBA $24 million in a transaction fee.  If a second tier team like New York signed Nene at the same amount, they would only pay an $8 million transaction fee.  If Nene is sign for 4 years at this total, the transaction fee would be paid for each year that Chicago or New York remained in the first or second tiers.  If their tier goes up or down, the transaction fee would move up or down as well. 

Teams may resign their own free agent players with no transaction fees, but will be responsible for any salary cap penalties they may incur in doing so, based on the success tier status.

Third tier teams do not face any penalties or transaction fees.  They may spend over the $60 million cap without penalty.  They may sign free agents without a transaction fee. Finally, all of the penalty and transaction fees are dispersed evenly to the NBA teams losing money.  

In order to achieve some sort of parity in the NBA, small market teams have to have a fair means to level the playing field.  There has to be a system in place to that will give small market teams a fairer chance to hold onto their key drawing cards, while still allowing the player the choice of going elsewhere if he chooses.  The success tier system, gives small market teams a fair chance at attracting free agents, since they can exceed the cap without penalty.  The top tier teams may still sign big name players, but when they do, it will cost them and will help teams on unstable financial footing to become closer to turning a profit. 

If a team like Miami wants to collect superstars, it is going to cost them dearly.  The huge home crowds they draw because of it will pay teams like Cleveland to remain competitive and profitable.  At the end of the day, the only thing that matters to greedy NBA owners is that they are making a profit.  For them, winning is nice, but it is simply a means to making more cash.  My system is unique, but it does help level the playing field and the players should go for it, as it does not limit their earning potential.  The owners will go for it, because the block of the 14 bottom tier owners, and the 22 teams losing money, now will have a chance at breaking even, not to mention a reall chance at leveling the playing field with the haves of the league.



Since: Aug 8, 2008
Posted on: July 5, 2011 1:57 pm
 

Hard cap could mean hard times for small markets

I agree with a few other posters. The thing the media seems to ignore (as well as the players) is that you don't have to try to fill out a roster with $4M. You just don't pay three guys $54M. If you look at salary trends, I have a gut feeling that the variance between the rich and the basketball-poor is getting wider and wider. Star players will have to live with making $15M instead of $20M per year. If star players don't like that, how about this for an idea: Reduce rosters to 7 and keep the same cap. It would never work, but there would be more money for the stars to horde if the cap stayed the same. Heck, they could pay me the league minimum and I would be more than happy to fill out a roster spot, keep my mouth shut and even do the waterboy duties.


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