Time to Get Rid of Restricted FA?

[gswhoops]

Appreciate the discussion on this. I think I'm convinced that scrapping RFA entirely is an overreaction; but I do think that (1) getting rid of BYC and (2) tweaking the qualifying offer to make it a meaningful deterrent rather than a rote operational decision would go a long way.

[JasonStern]

I feel like these conversations come up every off-season.

The populous (no forum is ever going to completely agree) is:

1. RFA is fine. 29 teams can bid on the player. If there was no bidding option, that would be bad. But, that would also just be the rookie contract with team options. Teams scout talent for years. And if they hit, they should hopefully be able to keep them. Or make a trade and recover some of the sunken cost. Players can decline the RFA and become unrestricted free agents. They literally opt into it.

2. Hard cap. One franchise player you can pay whatever that doesn't count towards the cap. If he is traded, whatever salary he is given counts towards the receiving team's hard cap. Gives teams more of an ability to retain talent while preventing super-rich owners from just buying a team. If this sounds like the NFL, yes. This is where that came from. And the NFL is killing it.

3. The "how do we make the Lakers better?" rule. Teams should be able to fund the state taxes of their players without it affecting the salary cap. That way, states like Florida and Texas don't have an unfair advantage when it comes to players' take home salary. You can see my bias on this topic, as I named it the "how do we make the Lakers better?" rule. But you have Blazers and Kings and tons of other franchises going, "Yeah! State tax is what's killing our playoff hopes!"

[jbk1234]

The reality is teams are pretty generous with extensions now. There's usually some debate around a players value if they make it RFA.

[BK_2020]

I feel like these conversations come up every off-season.

The populous (no forum is ever going to completely agree) is:

1. RFA is fine. 29 teams can bid on the player. If there was no bidding option, that would be bad. But, that would also just be the rookie contract with team options. Teams scout talent for years. And if they hit, they should hopefully be able to keep them. Or make a trade and recover some of the sunken cost. Players can decline the RFA and become unrestricted free agents. They literally opt into it.

2. Hard cap. One franchise player you can pay whatever that doesn't count towards the cap. If he is traded, whatever salary he is given counts towards the receiving team's hard cap. Gives teams more of an ability to retain talent while preventing super-rich owners from just buying a team. If this sounds like the NFL, yes. This is where that came from. And the NFL is killing it.

3. The "how do we make the Lakers better?" rule. Teams should be able to fund the state taxes of their players without it affecting the salary cap. That way, states like Florida and Texas don't have an unfair advantage when it comes to players' take home salary. You can see my bias on this topic, as I named it the "how do we make the Lakers better?" rule. But you have Blazers and Kings and tons of other franchises going, "Yeah! State tax is what's killing our playoff hopes!"

NBA shouldn't balance state income tax advance while leaving other advantages untouched. Why shouldn't Miami get a -15% South Beach debuff to the salary cap to put them on an equal footing with Milwaukee? Or maybe Toronto should get a +25% Canada buff.

[One_and_Done]

This is a take that I've been thinking about for a while, with the Giddey/Kuminga situations and now Cam Thomas chirping at Zach Lowe for reporting a lack of interest in him, I thought it might be the time to raise it for discussion.

It feels like restricted FA is no longer being used for its intended purpose - making sure that teams can keep the guys they really want to - and is more of a cudgel to force good, but not critical, players to accept less than what they could get on the open market as UFAs. Most teams lock up their "core" guys via extensions long before they reach free agency. Accordingly most high-level player movement now happens via trade rather than free agency. Which in a lot of ways is a win-win: players get more money guaranteed sooner, and teams get something back for players instead of letting them go for nothing.

So then the FA market ends up being less "superstars" and more "good but flawed/limited/underdeveloped" players. Teams are more and more using their cap space to pursue uneven trades for assets and/or be tax/apron-driven third wheels in other teams' deals. Even more and more FAs are changing teams via S&Ts rather than outsight signings.

All that means that the core idea of RFA being "fair" to players is flawed. They can't go out and "prove" their worth on the open market because there's no cap space and no market for them. They also can't go out and choose a better situation to "prove" their worth because their original team can and is incentivized to match a below market deal, even if they don't intend to give them a real chance to be a featured guy.

TLDR: the fundamental assumptions of restricted FA are no longer accurate and the league should get rid of it.

Thoughts? If this is too far the other idea I had was keeping RFA but putting real teeth into the qualifying offer, something like 150% of the full MLE (which would be $21.1M this year) and imposing a cap hold for that amount while it's outstanding, so teams have to actually think about whether to offer a QO rather than just doing it reflexively.

The point of the CBA should be to create the best product for the league. The league belongs to the owners of the 30 teams. If restricted free agency didn't exist, most small markets franchises would be doomed. We saw that in the pre-99 CBA, where the league was rapidly becoming unworkable. We saw Shaq sign a rookie deal with a 4 year opt out, knowing he would try to leave to LA if he could. We saw Chris Webber sign a 13 year deal, with a 1 year opt out, which let him change teams immediately.

Restricted free agency is vital, both to the people who own the league and to small market fans. Why should they agree to change it?

The problem guys like Kuminga and Cam Thomas and Giddey are having is that they're just not very good, not that restricted free agency is chaining them to their teams. I wouldn't want any of those 3 players on my team. If they were good, a team would make an offer, and the other team would match.

Even if restricted free agency was unduly hurting them though, I'd say too bad for them. It's the price of having a system that works. They can just take the QO and leave next year (assuming anyone even wants them).

[bgrep14]

This is a take that I've been thinking about for a while, with the Giddey/Kuminga situations and now Cam Thomas chirping at Zach Lowe for reporting a lack of interest in him, I thought it might be the time to raise it for discussion.

It feels like restricted FA is no longer being used for its intended purpose - making sure that teams can keep the guys they really want to - and is more of a cudgel to force good, but not critical, players to accept less than what they could get on the open market as UFAs. Most teams lock up their "core" guys via extensions long before they reach free agency. Accordingly most high-level player movement now happens via trade rather than free agency. Which in a lot of ways is a win-win: players get more money guaranteed sooner, and teams get something back for players instead of letting them go for nothing.

So then the FA market ends up being less "superstars" and more "good but flawed/limited/underdeveloped" players. Teams are more and more using their cap space to pursue uneven trades for assets and/or be tax/apron-driven third wheels in other teams' deals. Even more and more FAs are changing teams via S&Ts rather than outsight signings.

All that means that the core idea of RFA being "fair" to players is flawed. They can't go out and "prove" their worth on the open market because there's no cap space and no market for them. They also can't go out and choose a better situation to "prove" their worth because their original team can and is incentivized to match a below market deal, even if they don't intend to give them a real chance to be a featured guy.

TLDR: the fundamental assumptions of restricted FA are no longer accurate and the league should get rid of it.

Thoughts? If this is too far the other idea I had was keeping RFA but putting real teeth into the qualifying offer, something like 150% of the full MLE (which would be $21.1M this year) and imposing a cap hold for that amount while it's outstanding, so teams have to actually think about whether to offer a QO rather than just doing it reflexively.

Restricted FA is doing its job and going to set appropriate prices for FAs. Market is going to completely reset over the next two years and players are going to start getting their true worth.

[meekrab]

I think OP is overreacting in a year when no team has capspace. Last year IQ got a bigger contract than expected because there were team(s) w/ capspace (orlando).

Without RFA small market teams will be forced to overpay undeserving rookie players on their extensions, and max player may bail much sooner.

Pretty much, this is a bad year to be a restricted free agent, sucks for Giddey and Kuminga. The league will move on.

[WarFan]

Now that new CBA rules have shrunk the waiting time for home teams to decide to match offers for their RFAs, I don’t think there is as much of penalty for other bidders to make offers on RFA’s and get their cap space frozen. I don’t mind agents being able to go out into the market and find the best deal, and the original team still gets to decide whether to match.

I also think the lack of cap space this year is likely temporary. If teams discover they can use their cap space to nab decent rotation players on valuable, under-market contracts, whether to keep or trade them, you will see teams saving their space for that strategy.

One problem here is that teams still have to actually create the cap space before having a player sign an offer sheet. It would help if the cap moves needed to create the cap space were allowed to be reversible and/or made contingent on the offer sheet not being matched. That way the offering team would be less afraid to make an offer that might be matched.

[oldncreaky]

I feel like these conversations come up every off-season.

The populous (no forum is ever going to completely agree) is:

1. RFA is fine. 29 teams can bid on the player. If there was no bidding option, that would be bad. But, that would also just be the rookie contract with team options. Teams scout talent for years. And if they hit, they should hopefully be able to keep them. Or make a trade and recover some of the sunken cost. Players can decline the RFA and become unrestricted free agents. They literally opt into it.

2. Hard cap. One franchise player you can pay whatever that doesn't count towards the cap. If he is traded, whatever salary he is given counts towards the receiving team's hard cap. Gives teams more of an ability to retain talent while preventing super-rich owners from just buying a team. If this sounds like the NFL, yes. This is where that came from. And the NFL is killing it.

3. The "how do we make the Lakers better?" rule. Teams should be able to fund the state taxes of their players without it affecting the salary cap. That way, states like Florida and Texas don't have an unfair advantage when it comes to players' take home salary. You can see my bias on this topic, as I named it the "how do we make the Lakers better?" rule. But you have Blazers and Kings and tons of other franchises going, "Yeah! State tax is what's killing our playoff hopes!"

NBA shouldn't balance state income tax advance while leaving other advantages untouched. Why shouldn't Miami get a -15% South Beach debuff to the salary cap to put them on an equal footing with Milwaukee? Or maybe Toronto should get a +25% Canada buff.

Almost every NBA player pays some California tax, it is just based on how many games they play in the state (for/against the 4 teams in the state). Same for NY and a bunch of other states. Not a lot of rhyme or reason to it.

I think it makes a lot of sense to express salaries in terms of after-tax net, and have the salary cap managed to that net number.

[BK_2020]

I feel like these conversations come up every off-season.

The populous (no forum is ever going to completely agree) is:

1. RFA is fine. 29 teams can bid on the player. If there was no bidding option, that would be bad. But, that would also just be the rookie contract with team options. Teams scout talent for years. And if they hit, they should hopefully be able to keep them. Or make a trade and recover some of the sunken cost. Players can decline the RFA and become unrestricted free agents. They literally opt into it.

2. Hard cap. One franchise player you can pay whatever that doesn't count towards the cap. If he is traded, whatever salary he is given counts towards the receiving team's hard cap. Gives teams more of an ability to retain talent while preventing super-rich owners from just buying a team. If this sounds like the NFL, yes. This is where that came from. And the NFL is killing it.

3. The "how do we make the Lakers better?" rule. Teams should be able to fund the state taxes of their players without it affecting the salary cap. That way, states like Florida and Texas don't have an unfair advantage when it comes to players' take home salary. You can see my bias on this topic, as I named it the "how do we make the Lakers better?" rule. But you have Blazers and Kings and tons of other franchises going, "Yeah! State tax is what's killing our playoff hopes!"

NBA shouldn't balance state income tax advance while leaving other advantages untouched. Why shouldn't Miami get a -15% South Beach debuff to the salary cap to put them on an equal footing with Milwaukee? Or maybe Toronto should get a +25% Canada buff.

Almost every NBA player pays some California tax, it is just based on how many games they play in the state (for/against the 4 teams in the state). Same for NY and a bunch of other states. Not a lot of rhyme or reason to it.

I think it makes a lot of sense to express salaries in terms of after-tax net, and have the salary cap managed to that net number.

What if an NBA player earns $30 million but spends $28 million to start a business?
What if a Knicks or a Nets player lives in Hoboken and commutes to work, avoiding the NYC income tax?
Should an NBA player's salary cap hit be affected if that player sets up an FSA and reduces his income tax liability?
What if an NBA player contributes the maximum to an IRA? does that increase the after tax salary and the salary cap hit?

[oldncreaky]

NBA shouldn't balance state income tax advance while leaving other advantages untouched. Why shouldn't Miami get a -15% South Beach debuff to the salary cap to put them on an equal footing with Milwaukee? Or maybe Toronto should get a +25% Canada buff.

Almost every NBA player pays some California tax, it is just based on how many games they play in the state (for/against the 4 teams in the state). Same for NY and a bunch of other states. Not a lot of rhyme or reason to it.

I think it makes a lot of sense to express salaries in terms of after-tax net, and have the salary cap managed to that net number.

What if an NBA player earns $30 million but spends $28 million to start a business?
What if a Knicks or a Nets player lives in Hoboken and commutes to work, avoiding the NYC income tax?
Should an NBA player's salary cap hit be affected if that player sets up an FSA and reduces his income tax liability?
What if an NBA player contributes the maximum to an IRA? does that increase the after tax salary and the salary cap hit?

I think you are overthinking it. What a player does with his after-tax income, or what he does to earn income above his NBA salary, does not matter.

It should be fairly easy to calculate NBA Salary less federal/state/local taxes before any other sources, deductions or credits. They literally have just 30 jurisdictions to keep track of. Heck, this is just mimicking what large companies do for executives who move around for their job (or at least that is how it was 20-30 years ago)

[BK_2020]

Almost every NBA player pays some California tax, it is just based on how many games they play in the state (for/against the 4 teams in the state). Same for NY and a bunch of other states. Not a lot of rhyme or reason to it.

I think it makes a lot of sense to express salaries in terms of after-tax net, and have the salary cap managed to that net number.

What if an NBA player earns $30 million but spends $28 million to start a business?
What if a Knicks or a Nets player lives in Hoboken and commutes to work, avoiding the NYC income tax?
Should an NBA player's salary cap hit be affected if that player sets up an FSA and reduces his income tax liability?
What if an NBA player contributes the maximum to an IRA? does that increase the after tax salary and the salary cap hit?

I think you are overthinking it. What a player does with his after-tax income, or what he does to earn income above his NBA salary, does not matter.

It should be fairly easy to calculate NBA Salary less federal/state/local taxes before any other sources, deductions or credits. They literally have just 30 jurisdictions to keep track of. Heck, this is just mimicking what large companies do for executives who move around for their job (or at least that is how it was 20-30 years ago)

Should the NBA also provide cost of living adjustments so player salary is higher in places like NYC and LA? That's what large employers do. Do NBA teams adjust for property tax? There's no sense to start arbitrarily adjusting for some things but not for others.

In any case, state income tax talk always seemed like a solution in search of a problem as there's no proof that state income tax drives FA movement. NBA teams that had the most success in attracting star FA are almost all in high tax states: LAL, LAC, Nets, GSW, and Boston. Myles Turner went from a low tax state to a high tax state. I can't think of a single FA signing that we can point to as dictated primarily by income tax concerns. If Miami had the same tax rate as Sacramento, it won't suddenly be struggling to compete with Sacremento for free agents.

[CS707]

These guys are still unsigned because they overestimated their market, not because RFA is holding them hostage. All it would take is one team valuing them over what the current team is willing to pay and they would be moving on. GMs plan for this months if not years in advance. If one of these capped out teams thought Kuminga, etc. was worth a high dollar contract, they would have made preemptive moves to set themselves up to make the offer.

[xdrta+]

These guys are still unsigned because they overestimated their market, not because RFA is holding them hostage. All it would take is one team valuing them over what the current team is willing to pay and they would be moving on. GMs plan for this months if not years in advance. If one of these capped out teams thought Kuminga, etc. was worth a high dollar contract, they would have made preemptive moves to set themselves up to make the offer.

How did they overestimate their market? They didn't choose to be RFAs, the teams made that decision. It's not like they're turning down offers right and left.

[CS707]

These guys are still unsigned because they overestimated their market, not because RFA is holding them hostage. All it would take is one team valuing them over what the current team is willing to pay and they would be moving on. GMs plan for this months if not years in advance. If one of these capped out teams thought Kuminga, etc. was worth a high dollar contract, they would have made preemptive moves to set themselves up to make the offer.

How did they overestimate their market? They didn't choose to be RFAs, the teams made that decision. It's not like they're turning down offers right and left.

Kuminga did in fact choose it by virtue of turning down the previously offered extension but that point aside, I’m not sure what you’re saying here. They are unsigned because teams don’t value them as high as they value themselves. The RFA designation doesn’t have anything to do with what someone is willing to pay.

[jbk1234]

These guys are still unsigned because they overestimated their market, not because RFA is holding them hostage. All it would take is one team valuing them over what the current team is willing to pay and they would be moving on. GMs plan for this months if not years in advance. If one of these capped out teams thought Kuminga, etc. was worth a high dollar contract, they would have made preemptive moves to set themselves up to make the offer.

How did they overestimate their market? They didn't choose to be RFAs, the teams made that decision. It's not like they're turning down offers right and left.

I assume all three had extension discussions with the teams they're on. Kuminga reported turned down a 5-year, $150M offer. I'm skeptical he would've gotten that this summer if he was unrestricted.

Cam Thomas is the exact type of undersized 2 guard teams are giving away this summer.

Giddey can't shoot or defend. How much money is a team going to commit to a player with those flaws?

[Snakebites]

It feels like restricted FA is no longer being used for its intended purpose - making sure that teams can keep the guys they really want to

It’s still doing what it’s supposed to do. The guys worth spending to keep are signing extensions early and not hitting RFA, but the presence of the RFA is preventing them from hitting the open market, which many of them might opt to do if their was a UFA opportunity waiting for them.

It’s still a necessary safety net if their goal is to allow teams that aren’t major markets to build via the draft.

We’re seeing Cam Thomas, Josh Giddey, and Jonathan Kuminga deal with these issues for 2 reasons:

1) Lack of cap space limits their leverage
2) These guys simply aren’t that good- they represent player archetypes that are less relevant than they once were. Analytics are not kind to any of them.

[brackdan70]

I don’t see any of the statements in the OP being true. The guys you mentioned are holding out for more than they are worth. I think RFA is an important toll to maintain some competitive balance so small market teams can keep their best young players.
What are some examples of guys not getting what they are worth?

[raleigh]

To me, the bigger nuisance is how long restricted free agency drags on. Eventually, most of these guys get paid but it seems unnecessarily drawn out.

The idea that a qualifying offer would need to meet some higher threshold than a one-year deal could help.

[the_process]

Nothing is stopping these guys from taking their QO and becoming UFA next year, is there?