What is Holding the NBA Back?

That damn salary cap.

What is it?

The salary cap is essentially a budget for teams, with a floor and a ceiling on what they can spend. Last season, it was set at about $94 million, and the luxury tax limit was about $113 million. This season, the cap is at about $99 million with the same luxury tax limit. The reason the luxury tax is in place is to allow teams to go above the cap limit if they’re resigning their own players. Thus, a player could sign for five years instead of four if they choose to remain with their respective team when they enter free agency.

The NBA salary cap is not a hard cap; it is a soft cap. This means that there are many regulations within the cap, such as max contracts, mid-level exceptions, trade exceptions, restricted free agents and veteran’s minimum contracts. All of these elements contribute to the salary cap. But do we need one?

Why do we have a salary cap?

The main reason the cap is in place is to prevent teams from becoming too dominant—to avoid a situation where a team signs all the best players. Another idea behind the salary cap is that it can breed competition among all 32 teams; that each year, all 32 teams will have an equal shot at winning a championship. However, we know that is far from how it actually works.

Is the salary cap useful?

The idea of even competition among all, or most, teams is clearly a farce. Take a look at the 2008 Celtics, where they signed Ray Allen, Paul Pierce, and Kevin Garnett. Or the 2011 Miami Heat, where LeBron James and Chris Bosh joined forces with Dwyane Wade. Or, more recently, look at the 2016 Golden State Warriors, when Kevin Durant joined a powerhouse built by Steph Curry, Klay Thompson, and Draymond Green. A salary cap is very easy to work around, as these three examples over the last 10 years have demonstrated.

Let’s look at the competition element of the salary cap. Has this helped teams like the Orlando Magic, the Sacramento Kings or the Phoenix Suns? Despite the cap, they continue to suffer in part because they are small market teams, which indirectly encourages tanking since the idea of “stacking” is hard to emulate if your team is not in a big market like New York, Boston, Miami, Los Angeles or San Francisco.

What are the problems?

The soft cap in and of itself is a problem. At a minimum, the NBA should move to a hard cap, and eliminate max contracts, mid-level exceptions, restricted free agents and veteran’s minimum. A hard cap makes more sense and is far less restrictive for those who believe the idea of a salary cap is a good idea.

Pop the Top 

Due to the spike in the salary cap from the new TV deals the NBA has signed, lowly players are getting far too much money. Andre Roberson signed a 3-year, $30 million contract. His career stats are 5 points and 4 rebounds per game. John Leuer signed a 4-year, $42 million contract. His career stats are 7 points and 4 rebounds per game. Other examples of bad contracts due to the spike in cap are Brandon Knight (3 years, $44 million), Joakim Noah (4 years, $73 million), Allen Crabbe (4 years, $75 million), Chandler Parsons (4 years, $94 million) and Timofey Mozgov (4 years, $64 million) to name just a few.

Most of these guys aren’t great. Even though the rising cap means more money for everyone, the max contract still prevents superstars from earning the amount they are truly worth. LeBron James is getting paid $31 million this season, which makes him the highest paid NBA player on a per-year basis. However, is he really worth just over $30 million per year? Some would say his worth is $50 million, or even $100 million per season. From a business standpoint, LeBron James might be worth $500 million, based on the ticket sales he generates as well as the league-wide attention he brings to the Cavaliers.

Another example is Kevin Durant. Although many can (and should) argue that his move to the Warriors was “spineless” or “weak,” he had every right to do it. But, as the second-best player in the NBA, many of his fans feel he should make more than $30 million per year. The idea that as a team’s salary cap rises, the more “star-level” players they can sign is true. At the same time, it also means that the “fringe-level” players get significant pay raises, canceling out the idea of a super team.

End Tanking

Getting rid of salary caps would also help end tanking. Teams like the Sacramento Kings would be more willing to try and sign a superstar in free agency—and if they have a higher bid, they could grab him with no restrictions.

The cap has a lot of indirect effects on tanking, which doesn’t really work. The best example of this is the Philadelphia Sixers. They have “trusted the process” and have come out with Joel Embiid, Ben Simmons, Jahlil Okafor, Nerlens Noel, Dario Saric and Markelle Fultz. Okafor was a bust, Noel was ineffective, and we have yet to see how Fultz plays out. Saric has some potential, Embiid is a great talent but hasn’t proven he can stay healthy, and Simmons also has a lot of potential. And, after five years of being dreadful, the Sixers stand at 15-18 and 10th in the Eastern Conference.

Teams that have miserably failed at tanking and got zero to two franchise players are the Orlando Magic, Sacramento Kings, Phoenix Suns, Denver Nuggets and Dallas Mavericks.

Of course, the salary cap is one of the many reasons why teams tank. Eliminating it is, therefore, necessary to strengthen teams.

Promote Free Competition 

People say they don’t like super teams. But think about it: would you rather have 4-8 super teams and 4-8 lousy teams, or have it like it is now, where the Golden State Warriors are the heavy favorites to win the NBA Finals for the next 3-5 years, with very little competition, unless another super team formed, which will be challenging due to cap restrictions.

Comparison to the MLB

If teams want to spend, let them—it works in the MLB where they have no salary cap. The idea of the competition aspect of keeping teams all on a level playing field with a cap does not work in practice. While baseball has more random variables than basketball which determine the outcome of the game, not having a salary cap really hasn’t hurt the MLB’s competitive nature. The last five MLB World Series winners are as follows: Houston Astros, Chicago Cubs, Kansas City Royals, San Francisco Giants and the Boston Red Sox. No repeats.

Clayton Kershaw is on a 7-year contract for $215 million. Miguel Cabrera is on an 8-year contract for $248 million. Albert Pujols is on a 10-year contract for $240 million. The list goes on and on. Think the contracts are too long? That’s the organization’s problem, not the MLB’s, as they correctly assess. If your team wants to invest long-term in a player, that’s their prerogative. Monitoring teams’ spending is somewhat pointless. If management only cares about profits and shows an unwillingness to spend money to win, then the fans should take that upon themselves to protest management and demand results.

Scrap the Cap

The MLB does not have a cap, accountants don’t have a max contract, investment bankers don’t have a mid-level exception, and lawyers don’t have a veteran’s minimum. Sports is just like any other entity and should be treated as such. The idea of socialist-type structure in sports sounds good in theory, yet in practice does not work and only brings unnecessary obstacles.

 

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