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?

Since: Sep 15, 2006
Posted on: July 5, 2011 11:14 am

Hard cap could mean hard times for small markets

I see everyone else has already jumped on the bandwagon, but to reiterate, this is a poorly posited argument. The argument is really, "teams may have to change the way they build," but Royce Young has inexplicably tried to translate that into, "small market teams will be hurt more by a hard cap." That's just plainly not true, and it's not well supported by the post.

First off, contract sizes and lengths will change. The Andre Iguodalas of the world won't be making $80 million-plus on max contracts anymore. We'll see player salaries shrink as all teams (not just those in small or large markets) adjust to new, stiffer cap figures. That alone will help teams keep a core together.

More importantly, let's take a cue from the NFL, where building through the draft is vital--major trades are rare, and free agent profligacy is much less ubiquitous than in the NBA (for reasons why free agency is often the wrong answer in football, see: Snyder, Dan). Teams build through the draft and are forced to find value in later rounds and through undrafted free agents, and also have incentive to identify talented young players and lock them into longer-term contracts before their value peaks. Sometimes, teams are forced to make a tough decision about a particular free agent. Rarely does that cripple a team, unless they've mismanaged the cap so badly as to restrict their options.

A bigger problem is that last year, a fifth of the teams in the league (six overall) won fewer than three out of every ten games they played. Most of the realistic NBA title hopefuls are the same year after year (Celtics, Lakers, Spurs) or are easily identifiable at the beginning of the season (Heat). The fact that the Mavs bucked that trend this year doesn't disprove the disparity in the league.

A hard salary cap will allow teams that draft well, build with a team identity in mind, and do a good job assessing undervalued talent to rise to the top. Yes, it may mean that the Thunder have some tough decisions to make, just like a lot of other teams. But to use the Thunder as an example of why every small-market team will be disproportionately hurt by a hard cap for the duration of the labor deal is just asinine. In reality, we'll see a more even distribution of talent throughout the league. That should be good for everyone, particularly the fans. 

Since: Sep 5, 2006
Posted on: July 5, 2011 11:09 am

Hard cap could mean hard times for small markets

The Miami Heat have already proven the author right on this one.  Once you get to the point where players are no longer operating out of personal gain/greed in salary, the only reasons to pick a team are endorsement opportunities (giving NY, LA, and Chicago unfair advantages), or to join up with other stars in the location of your choice (which is going to to give Miami and MAYBE Atlanta) an edge.  Lets call those preferred markets.

If Lebron James could have gotten a $25 million per year contract to stay in Cleveland, he would have never "taken his talents to South Beach".  But if the difference between the small market (Cleveland) offer is (for instance) $18 million per season verus a $16 million per season in a preferred market, there decision is far more favorable for the "preferred" market. 

The league cannot put a cap on endorsement money, so the smaller the team salary, the more important endorsement money becomes.  If you are making $10 million per season, getting $2 million in endorsements means A LOT more than if you were making $18 million (or the $25 million I proposed earlier).

Besides, the average team losing money is losing $15 million per season.  That is just a sign that their markets do not support basketball. There is no shame in that - its just mathematics.  Shut those teams down and/or convert those teams to NBDL teams and let the rest of us get on with life.

Since: Nov 28, 2006
Posted on: July 5, 2011 11:09 am

Hard cap could mean hard times for small markets

I do not care enough about the NBA anymore to read all of the article or posts, but OKC had enough money and little worries when they relocated from the 15th largest TV market when they moved from Seattle so who cares?  What next? Clay, Clay and his merry band of midwest Einsteins should be smart enough to figure out how to keep a quality product on the court.  If you want to have a team in your market you best have the financial means to put a product on the court

Since: Oct 23, 2006
Posted on: July 5, 2011 11:06 am

Hard cap could mean hard times for small markets

This article is beyond flawed.  It uses an example that makes no sense with OKC.    Unless, those OKC free agents have the ability to go elsewhere unfairly, the Thunder have no inherent disadvantage.  OKC could easily be LA, Chicago, or Boston in this simple math argument.  Any market size would face the same problem with a HARD CAP.  It has no bearing on the market size.  New York might have a billion to spend, but unless they are under the cap they would be stuck like any other team.

Since: Aug 18, 2006
Posted on: July 5, 2011 11:06 am

Hard cap could mean hard times for small markets

Is this guy just another idiot that writes for CBS or what? The overpaid fucking pro athletes get paid less. It the whole point of the hard cap. Paying players less. And it should happen.

Since: Jan 14, 2009
Posted on: July 5, 2011 10:46 am

Hard cap could mean hard times for small markets

This makes no sense.  Does he not realize contract size will be adjusted if there is a cap.  Teams aren't going to keep giving out "cap-free contracts" in a cap world. 

Since: Oct 11, 2008
Posted on: July 5, 2011 10:38 am

Hard cap could mean hard times for small markets

Barkley thinks this article is 'turible.......just turible'.

Since: Oct 5, 2006
Posted on: July 5, 2011 10:32 am

Hard cap could mean hard times for small markets

Royce Young's dipshitness continues. Sure, it would hurt the Thunder, but it hurts all the other good teams, so really it doesn't hurt them? Royce, this will help Cleveland, Sacramento, Charolotte, New Orleans, Orlando, Denver, etc.

Since: Dec 10, 2006
Posted on: July 5, 2011 10:31 am

Hard cap could mean hard times for small markets

The cap is working well in the NHL. I love that a non playoff team can contend the next year or a cup winner may end up out of the playoffs a year or two later. And yes success depends on smart decisions. Those that do dumb things with their money still end up losing. And the option is NOT there for any team to "buy" a championship by spending triple what other teams pay. You have a budget and you must make good decisions to put together a contender. This is how all leagues should work. It would stop the nonsense of all superstars wanting to play for 5-6 teams while 25 teams build from the scrap heap.

I think too that the pay scale in the NHL is about where it should be in the NBA. The elite players make 8, 9 or 10 million per year and the pay scale moves down from there. No athlete should be making 115 million over 5 years. If the superstars made 10 million, seat prices could be halved and families could afford to go to games again. Not happening I know but this would be the right way to go.

Since: Dec 26, 2006
Posted on: July 5, 2011 9:33 am

(Regradless of Market Size)

What a horrible article: poorly constructed and difficult to assess exactly how the conclusion makes any sense.  Every team (regardless of market size) has already committed long-term big dollar value contracts to a few players.  The balance of the hard cap will be spent to fill out the roster (regardless of market size).  The teams with the most dollars committed to the fewest players will find it harder to fill out the roster with complimentary players (regardless of market size).   

The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or