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CBA Primer: Hard cap hardly worth mentioning

CBA Primer: Hard cap hardly worth mentioning
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This is Part V in a series of posts discussing issues of the NBA’s Collective Bargaining Agreement. Part I of this series discussed why there will be a lockout and Part II looked at the possibility of contracting teams. Part III was on age limits and Part IV on the D-League.

If there is one thing NBA Commissioner David Stern has been tasked with doing in the current Collective Bargaining Agreement (CBA) negotiations, it is cut costs. Despite record high revenues, many teams in the league claim an inability to continue with the current system. Stern claims that the Association needs to reduce player salaries by 1/3rd for the league to become profitable.

The nuclear solution being tossed out by the owners is simple: a hard salary cap similar to what the NFL employs.

For many reasons, the Players Union will fight to the death (also known as, “decertification”) to prevent this from happening. Under the system that is now in place, the NBA has a salary cap framework that really is easy to circumvent for teams that desire to spend more. To illustrate that point, all but six teams (including the Thunder who are exactly at the threshold) currently surpass the imposed salary cap limit. Putting it into solid numbers, the NBA teams are collectively paying members of the union $287.4 million more than would be allowed if the cap were restrictive. Make that salary cap a valid barrier, instead of a line in the sand, and the league is about half way to cutting the costs they desire.

With the Union’s role being to increase their member’s share of the pot, one can understand why this is unacceptable to them. Their first, and strongest, argument is simply that it is not the NBPA’s objective or best interest to save the owners from themselves. While Stern and his staff toss out figures showing financial data rigged to look like massive losses, the players simply have to say they do not care. If owners are truly offering contracts that they cannot afford, it should not be the players to say, “You’re paying us too much,” it should be team management making that call and reacting appropriately.

The Hornets may not have an owner, but they still have blank checks.

Instead, the owners have acted in complete opposition to their stance. Even the New Orleans Hornets, who certainly are struggling financially and whose ownership was absorbed by the other 29 teams, are taking on salary to make a playoff push. This past Summer, with a global recession at an apex and the NBA big wigs forecasting massive losses, the league raised the salary cap. Then, in free agency, the team’s holding Bird Rights to second tier stars like Joe Johnson were offering the maximum contracts allowed fully aware that if they did not, other teams would be happy to outbid them.

[pullquote]Putting it into solid numbers, the NBA teams are collectively paying members of the union $287.4 million more than would be allowed if the cap were restrictive.[/pullquote]

The official stance by the owners will insist this is exactly why a hard cap is necessary. Due to the highly competitive nature of the game, teams feel the necessity of making decisions that are not based on the bottom line. They would rather lose money than games.

Is that really a bad thing? If one believes the dire statements of league management, sure. However, the NBA is not General Motors arguing with the Union of Auto Workers that they cannot be competitive. Professional basketball in this country is a monopoly, the revenues are growing exponentially, and even if both of those things were not true, most of the owners in the league certainly are not running these teams with the intent of becoming rich on the profits the sport brings.

As such, the idea of a hard cap is merely a bluff. If the team owners really believed that they needed to spend less, 80% of the league would not be taking advantage of the soft cap’s loopholes so eagerly. The hard cap would be far too restrictive and the league would become stagnant. A team that felt it was “one player” from becoming a championship contender (something that describes all but the most hopeless franchises) would be unable to make anything happen. Plus, the dirty little secret of the NBA is that a good deal of the interest in the league is player movement. The trade deadline, free agency period, and draft make up more of the discussion about the league than what actually happens on the floor. Add in that transitioning from a soft to hard cap would be a logistical nightmare without the elimination of guaranteed contracts (a non-starter in discussions with the union), and it does not take a Sam Presti-level genius to figure out that this is not happening.

Regardless of what the changes are to the CBA, it's a safe bet that this guy will keep playing chess while every other GM plays checkers.

But what if it did? Theoretically, it should help the Oklahoma City Thunder. The idea of a hard cap is supposed to create parity and allow small market teams (of which OKC is the smallest) to compete fiscally with teams located in the major metropolises. With Thunder management already thriving at building a team while behaving as if the salary cap threshold were solid, one would think that Sam Presti would continue making smart decision that continued to make the team here great.

On the other hand, it could be a massive setback. The Thunder have been able to make those highly praised roster moves because they have been one of the few teams that had the salary cap flexibility. When all thirty teams are forced to be a conscious, the competitive advantage is gone. Plus, a lot of the maneuverings have been with long term knowledge that eventually, those loopholes to surpass the cap would be necessary to keep the nucleus of the team together. If the team locks up Russell Westbrook to a large extension, already has Kevin Durant and Kendrick Perkins taking up a big chunk of the rest, and then cannot surpass the threshold to re-sign Serge Ibaka and James Harden, suddenly the benefits of a hard cap are outweighed by the costs.

In addition, it would cripple the team’s chances in free agency. When all teams are limited to being able to offer the same amount, the fringe benefits are more valued by the players. Already, being in the spot light of a place like New York appeals to players who become celebrities as a result of their association with the Association. Choosing to take a lower key approach and focus simply on basketball in a small market like Oklahoma City has to either come from a rare personality trait (which the Thunder have been very lucky to find, thus far) or supplemented with extra money (typically a player’s highest priority). A hard cap, quite simply, de-levels the playing field for the small markets in that regard.

If you missed any of the previous installments: