“The NBA is a league of players” has never rung truer than it does today. Superstars team up, take their destiny into their own hands, and switch teams as they please, for whatever reason they see fit.
This became possible, in part, thanks to shorter contracts. Players will sign shorter-term deals with Player Options (PO) or Early Termination Options (ETO) that allow them to leave their teams in a few years, simply by deciding not to sign up for the final year of their original consent.
Kawhi Leonard signed a three-year contract with the Clippers worth $103 million, and the third year is a work order, allowing him to retire when the time is right. The NBA has different Years of Service (YOS) maximum contract eligibility, which means that Leonard, who just completed his tenth NBA season by the time he can retire, will be eligible for the 10+ YOS max, from a value of 35% of salary. cap.
(Players can earn 25% of the cap up to and including their sixth season. They can earn 30% of the cap between 7 and 9 YOS, and of course 35% with 10+ YOS.)
Leonard, at that time, will be 30 and may consider re-signing for the long term at that time, given that there is no new eligibility level to achieve, as well as the cause it to age.
Herein lies the problem for NBA teams and the tiered max system.
Players with 10 years of experience or more are not going to improve. Most are approaching their 30s by the time they’re a decade deep, so allowing 35% of the cap is effectively murder on teams unless the player is such a generational talent and one of the most talented players. most obvious in the league. like LeBron James, Giannis Antetokounmpo or James Harden.
Look no further than Russell Westbrook. The 11-year-old veteran is bought this summer after Oklahoma City traded Paul George to the Clippers, suggesting they will enter a full rebuild. Westbook still has four years left on his contract, worth more than $171 million, and he’s turning 31 a month into the season. Despite averaging a triple-double in three straight seasons and winning MVP just two years ago, trading interest in Westbrook is very limited.
It doesn’t make sense to have a compensation system in place that rewards physical declines. The NBA’s early years are, with a few exceptions, mostly in the same range of years, around 26-27 to 32-33. As such, it would make sense for players (and teams) to maximize their earning potential during their most productive years, not during their declining years, as this often turns their contracts into albatrosses for their teams. Westbrook is on that path now, and Chris Paul has been there for a few years with Houston. In a few years, Damian Lillard will follow this same path.
Let’s look at ways to fix this problem.
For example, is there any merit in simply reversing the maximum cap percentage 7-9 and 10+ YOS to avoid these contracts? Would it allow players in their primes (7-9 years old) to earn 35% of the cap, while former core players (10+) fall back to 30%, solve the problem of older players signing winning contracts often on their production?
Players are currently signing short-term deals to match the maximum cap percentage of 35%. Would players be more motivated to accept long-term offers during their 7-9 years, knowing that they will be paid more, at 35%, during their prime years?
The raw concept of flipping the maximum percentages has potential. Except there is a problem.
The cap increases every year, and in some years it takes significant bumps. This means that a long-term deal at 35% of the cap could end up being worse than a long-term deal at 30% of the cap, since only the first year of the contract is calculated as the 35% year. .
Let’s take an example.
A player entering his 8th season signs a 7-9 YOS max contract worth 35% of the cap, which (in this example) is $100 million. This means that the player signs for exactly $35 million in the first year of his contract.
(For the sake of clarity, assume that all contracts signed in this example are four-year contracts.)
Now comes the augmentations, and here we have to remember a few things:
A player can receive an 8% increase by re-signing with his team, and 5% by signing with a new team. However, the increases come solely from the player’s first-year salary on his new contract. Thus, the player signing for 35 million dollars will see his contract increase by 2.8 million dollars per year (increase of 8%) or 1.75 million dollars (increase of 5%) per year.
The player will thus earn 151.2 million dollars (re-signing) or 147 million dollars (new team) over the duration of this maximum contract of four years.
But if the salary cap exploded by $20 million the following year, to a total of $120 million, a player signing a four-year contract for 30% of the cap would be looking at either $155.52 million (re- signature), or $151.2 million. (new team) under the exact same frame of increases. This means that a player with a 30% deal would win more than a player with a 35% deal, which negates the concept.
So, what if instead of increasing, the 35% maximum becomes a locked concept?
Regardless of the cap increase, players contracted to 35% or less will (in this scenario) still receive 35% of the cap, making their contracts dynamic and flexible. For 25% and 30% players, the current rules would apply and their contracts not flexible.
This way, players have the opportunity to earn money during their prime years and will therefore have more incentive to sign for the full five years, rather than four, to extend that window of expanded earning potential.
(There will be some risk to players if the cap goes down, but given the financial health of the NBA, that seems unlikely. Nonetheless, it’s worth noting.)
For the teams, they will be able to work permanently knowing that 35% of the ceiling is spoken. This will reduce their cap space during their star’s early years, but could save them money when the player gets older and enters free agency where they can sign a 10+ YOS max contract.
Or, to make it even more attractive to the Players Union (NBPA), which will negotiate these changes in a new CBA, the league could offer to lower the 10+ YOS max to 25%, increasing the 7-9 YOS max to a whopping 40%.
40% of the cap is a lot of money for a player. But paying a star 40% of the cap during their prime years must be better than paying them 35% after their peak.
Now, that could become an issue after 2022, where the league is expected to allow high school players to enter the draft. In such an ecosystem, players with 10 years of experience will be closer to 28 than past 30, which means that teams will be able to sign players at their peak for just 25% of the cap, which is quite unreasonable fact.
A high school senior can effectively enter the league at the same time as a college senior, varying up to 5-6 years, but starting at the same salary levels. This will always prove problematic when creating a unique compensation system.
One solution that would help teams, but which the NBPA would retaliate against, is to make the max contract a more fluid concept than it already is by incentivizing it all the way and breaking it down into multiple percentage levels so that there is a max contract for the Al-Farouq Aminu of the world, as well as the Giannis Antetokounmpo.
Tiers can include things like Statistical Production, Matches Started, Minutes, Individual and Team Honors, with percentages broken down into numerous maximum offers. It would entirely eliminate contracts like the ones awarded in 2016 to fringe players in rotations, not to mention Terry Rozier’s deal this summer, but it would severely test what constitutes a free market, which the NBPA would be against from day one.
Other solutions could include:
– Make the 35% maximum contract count as 25-30% of the actual salary cap so that a team doesn’t get handcuffed.
– Removed cap raises on more than 10 max YOS deals, so the cap reached by the player is the same for the entire contract.
– Allow teams a once-a-decade amnesty to extend a player’s contract by 10+ YOS max, while remaining on the roster and active, up to a 10-year period instead of the four or five years of origin, thus reducing the ceiling struck in two.
As we now see, every action has a reaction. Solutions that work for everyone are nearly impossible to find. But one thing remains true: the current 35% cap is a salary cap killer, and it doesn’t make sense to pay players in their 30s at the end of the $40 million mark. You could say that teams should just stop doing it, but given that players are mostly productive in the first two years of such a contract, teams are ready to roll the dice and hope the player grows old graciously. Finding common ground on this is challenging, but extremely necessary if the league wants teams to remain relevant and competitive over a longer period of time.