Tuesday 12 December 2017 / 04:18 AM

THE STRANGE BUSINESS QUIRK IMPACTING FREE AGENCY

The Context

Considering the NBA is an association and sports business running such a tight ship from top to bottom, the impact of this caveat becomes even more strange. The off-season was thrown into disarray this time last year, as the cap spike loaded every team with max-level slots.

This was unprecedented — the outcome of an injection of cash that had just come in from the historic broadcast deal — and all of a sudden competing teams that would usually have minimal space were in the running for the top tier of free agents without manoeuvring their roster. It was the final straw that allowed the 73-9 Warriors to add former MVP Kevin Durant.

Teams approached the new-found space ruthlessly and spent with reckless abandon, sometimes frivolously — take in the ridiculous contracts doled out to Mahimni, Mozgov, Deng and Noah as evidence.

Some clubs’ space was a simple ‘use it or lose it’ situation, the pending extensions or free agency of their bigger name players looming large: Portland, who unveiled two of their own inexplicably rich contracts for Evan Turner and Allan Crabbe, are prime examples of said situation. Other teams had little regard for the future. The league landscape was so green that the cap surge was sure to continue.

This was the new market, and the extraordinary numbers that shocked pundits were simply reflective of the environment. These deals wouldn’t seem half as lucrative as the years progressed and what seemed like ludicrous amounts now are the byproduct of the old paradigm influencing current thinking. They were oh-so-wrong.

The Outcome

The salary cap in 2015-16 was $70 million. That shot up to $94.14 million the following season, representing a rise of an unbelievable $24 million (the first time in league history it had risen by more than $8 million), opening up the aforementioned max slot for each team, even those who were capped out at the conclusion of the 2015-16 season. The craziness of the 2016 off-season ensued, with the anticipation of the continued raise: the cap was originally projected as high as $108 million.

By the time free agency rolled around in July of this year, the league was stopped in its tracked as the figure fell far short of the projections — $99 million.

Naturally, this set off wide-spread pandemonium, leaving teams scrambling to produce room to re-sign their own free agents, let alone chase others. Those who spent exuberantly really felt the pinch, and the price for dumping albatross contracts rose accordingly, now requiring either a prospect on a coveted (cheap) rookie deal or a first-round pick, evidenced best in the Lakers clearing their books of Mozgov by throwing in former 2nd overall pick D’Angelo Russell as a sweetener.

Turns out, the space gifted to teams last year was a one-time gift, not a continued occurrence for them to depend on each season. And now that assumption, which was so far from the truth, has forced the clubs to revel in their own negligence and stifled a player market which believed they were in for a similar treatment as those who hit free agency the year before.

The Problem

Which begs the question — why did the final salary cap figure fall so short of the original projection? It boils down to a combination of factors, the largest contributor being the unexpectedly shorter duration of the NBA post-season.

Yes, the Warriors and Cavaliers sweeping their way through their respective conferences resulted in a lower salary cap. The league sees less revenue as a smaller number of games are played across the playoffs, and with an unusually high amount of sweeps occurring last season, the revenue coming in was far less than expected.

It seems genuinely baffling that a league operating with so many fixed outcomes would allow one of the deciding factors, and such an impactful component as the salary cap figure, to be determined by a fluctuating figure that if it comes in short, as it did, would have an immediate and devastating impact league-wide.

The Fix

Truthfully, this situation should have been avoided by working around such an abrupt and dramatic rise in the cap. The league flirted with cap smoothing, a concept immediately dismissed by the Players Association, as they approached what became the free agent bonanza. The money was available, the players knew they could strongarm the league into making the money accessible, and from there were simply not settling for anything but the maximum amount, and immediately.

That ideology was shortsighted, only favouring those who hit the market at the right time. Those players waiting in the wings, this season, and for at least the following few, have already missed the boat. This hurts the mid-tier players most: Take George Hill, who turned down a $75 million extension with strict belief he will command more on the open market, only to have the offers dry up and finish with a three-year, $57 million deal. Still rich, but far below original expectations.

The option not explored, raising the contracts as per percentage of the overall salary cap, would have worked best for both sides — allowing the playing group to reap rewards of the revenue boom whilst allowing teams the sanity of avoiding a situation like last off-season. It would have prevented the Warriors effortlessly opening up max space to court KD, lending itself better to parity and probably circumventing the lopsided playoffs that led to the money drying up in the first place.

On top of that, it’s surprising the league is willing to accept revenue from the playoffs on a per game basis. Negotiating a fixed price for broadcast rights makes more sense here, ensuring the incoming cash doesn’t fluctuate based on whether or not a pair of teams are dominant. Ratings came in as high as ever, yet the league saw a drop-off in revenue because there was less games. Strange.

Regardless, this is an intriguing piece of sports business that has a transferable impact, quickly moving from the front office of the league into the management of the teams, and as we saw most with the ‘superteam’ Warriors, influencing the result of the NBA championship. With very little changing in way of the NBA hierarchy, it will be noteworthy to keep track of whether this trend continues, but either way, it will be an ongoing major contributor to the makeup of the NBA landscape.

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About the author

Brayden Issa

Brayden is a Sydney-based sports management student and sports fanatic, specialising in rugby league, basketball, football and cricket. He is concerned with everything related to professional sports performance and management.

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