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 7, 2006
Posted on: July 4, 2011 10:01 pm

Hard cap could mean hard times for small markets

Umm, no, the smaller market teams won't lose players any more than large market teams.  The players will just have to sign for less, since everyone will have to spend the same amount of money.  It's just reality that not every player deserves tons of money.

Since: Aug 1, 2009
Posted on: July 4, 2011 9:50 pm

Hard cap could mean hard times for small markets

So how come the NFL has been so damn successful under a hard cap? I'm pretty sure even though they are in a CBA dispute as well I haven't heard anything about changing that aspect.

All that would happen is the max offers wouldn't be as high as they are now, then once everyones salary conforms to the cap it would be better off for competition. You could still have a "Big 3" but it wouldn't be in your best interests at all. Salaries then wouldn't be dictated by market "value" at that point, but how good you are as a player, which is how it should be. The handful of superstars make the most, and everyone else makes less in varying degrees. And if the players don't want to take a pay cut then they don't have to play basketball, go find a real job! I will bet my life some very good players would step up and fill your overpaid void.

This is all an excuse to keep the players pay at or higher then it is. When a vast majority of the teams are losing money it's because support is low and salaries are too high. The problem has never been the GM's fault for signing players to bloated salaries, it's always been the soft caps fault, because there will always be markets that can afford to overpay for slightly above average talent. And what are the small markets to do then? How can you stay competitive without spending way too much money in the NBA today? answer is you can't. You see how this all stems from the non exsistent salary cap? In a Hard cap teams can still overpay, but it'd be MUCH more crippling than right now, which would cause teams to not be as frivolent with their money, causing overpaying to dimish drastically.

Sure some may find me too sympathetic to the owners, but they OWN the team. Could I go to the CEO of the company I work for and demand my salary terms even though he's losing money or else I'm not going to work? I'd get my A** fired on the spot and they'd replace me. Same thing if I owned a company and I was losing money, and some jerk said that to me.

Since: Jul 20, 2010
Posted on: July 4, 2011 8:01 pm

Asinine & facile article

For an article that is supposed to be discussing how the hard cap could mean hard times for small markets it seems to focus inordinately on the Thunder. Cavs and Jazz get a token mention in what is otherwise an article void of examples.
From what I could see there was nothing written that was specific to small markets. All of the issues identified would apply equally to large markets.
This articles micro focus is as frustrating as it is misguided. The league is trying to make all teams more competitive in the longer term. Yes, there is likely to be winners and losers as each team is idiosyncratic and at a different point in the cycle. That, however, should never be the reason for not implementing change.
It seems to me that Royce is a Thunder fan and is frightened that his team will get broken up... Don't worry Royce, the Thunder won't be alone in that.

Since: May 29, 2010
Posted on: July 4, 2011 7:34 pm

Hard cap could mean hard times for small markets

Stop comparing the NFL to the NBA.  Vast majority of NFL contracts are not guaranteed.  If a team needs to clear cap space to make a personnel move, they can simply tear up contracts and waive players.  Guaranteed contracts are not going anywhere in the NBA.  I love all the people screaming for a hard cap because it will bring parity.  Obviously didn't watch the NBA in the 80's and 90's when there was a hard cap and absolutely ZERO parity.  In the 80's and 90's if your team struck out in the draft, which happens about 75% of the time, then you were consigned to irrelevance because teams could not make personnel moves because the cap was so restrictive.  More parity now in the NBA then there ever has been-people keep missing that point.  There is parity because teams can make personnel moves.

Since: Apr 12, 2011
Posted on: July 4, 2011 7:31 pm

Hard cap could mean hard times for small markets

I think it's about time the economy impacts the primadona athletes.   9% unemployment for the rest of us.  How about we contract the league by 9%.  Put in a hard cap that doesn't allow for the 15+M contracts. Let's see the owners and players go without pay for a year or more.   Sounds like a nice dose of reality for all these rich clowns.   I hope they stay locked out for at least a full season.  College basketball is far more enjoyable anyway.   Enjoy your lockout boys.... it's going to be a long one.

Since: Jun 8, 2011
Posted on: July 4, 2011 7:24 pm

Hard cap could mean hard times for small markets

Plain stupid argument.  Doesn't this idiot realize that in a hard cap environment,
the same predicament affects all teams the same way?  ( Lousy question, he obviously
does not realize it. )

Do I have to explain it?  

Under a hard cap, the Serge Ibaka, Eric Maynor and James Harden are less
likely to leave OKC.  The big market teams can't steal them because,
guess what?!  They all have the same cap room.  

One thing a lot of people ignore is that, these teams don't willingly overpay
the players.  For the most part, a lot of small market teams are forced to
offer big contracts for risk of losing a star in their team to the bigger
markets that have better financial resources.  You lose your star, you
lose your fans, you lose profit.

With a 55M cap, a typical team might sign a top 20 all-star player
at 15-20M, a supporting all-star at 10-15M, maybe 3-5 solid players at 5-8M
and then the role players.


Since: Dec 9, 2010
Posted on: July 4, 2011 6:37 pm

Hard cap could mean hard times for small markets

You don't have a point at all. Your using existing player salaries and a future salary cap number.  The situation wouldn't work that way.  Guaranteed max contracts would decline, and players would make less money if there were a hard cap.  These rediculous 20 million a season numbers would have to disappear.  The NFL has a hard cap and it works great for spreading the talent around, and they play with 55 players on a team, not 15.  

Since: Dec 8, 2006
Posted on: July 4, 2011 5:47 pm

Hard cap could mean hard times for small markets

How about keeping the current cap rules but put in that a max contract be no more than 25% of the salary cap number per year. And only the 1st 3 years of a contract are guaranteed. So teams can get out of contracts that players arent living up to. Max length of a contract be 5 years with a franchise tag so teams just cant lose a player for nothine see Cleveland. None of this will happen but each side will have to give up something because i agree with the owners that things cant go on the way they have been.

Since: Jul 26, 2008
Posted on: July 4, 2011 4:41 pm

Hard cap could mean hard times for small markets

Royce Young, you my friend are an idiot. This is an article that should not have been written. You do all of that stupid math at the beginning and come up with dumb scenarios, and you forget that this is about PLAYERS TAKING PAY CUTS. Those stars won't make that percentage of the cap in a new CBA. Those bench/role players won't make the percentage towards the cap they made under the PRIOR CBA. The league wants all of the numbers across the board in salary to be chopped. So, Royce, since we're doing hypothetical scenarios, if Lebron signed a MAX deal under a proposed new CBA, and the older CBA had superstars at about 30% of the cap, do the math on a 20% on a hard cap of say 60 million. The league doesn't want the Max to be 15 million first year, ballooning to 23+ in the final half of the deal.

At the end you say "reduce salaries". Pretty cut and dried to me Royce. Reduced salaries will fit under a new hard cap. It's the whole point. They will grandfather in the old contracts and they will figure out how those grandfathered will affect the new CBA and what options teams have. Keep your hypothesis. You have no idea. What law degree do you have? Some of us fans have a better understanding of the concept.

Since: Jan 15, 2007
Posted on: July 4, 2011 3:30 pm

Hard cap could mean hard times for small markets

This doesn't make sense. If even the "small" market teams are going to be over the cap then either the cap is too low, or they getting paid too much. I also do not see how 2 players (Irving and Thompson for the Cavs) represent a possible 80% of their future cap. If it is around 60 million then they are going to pay each of these guys over 25 million a year!? If that is the case I hope it goes T$#@ up the NBA folds.

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