Hard Cap

[giberish]

I'm a fan of this. I think with the way the nba has been trending recently a Hard cap is the only way to make it even and fair for all teams. Right now only a few teams will be competitive and rest are left in the dust. All these star players all want to play with each other now. In the past they were rivals. They wanted to get their own championships. Ever since the celtics put together a big three the rest of the players wanted the same thing.

Now we see teams like the heat with 3 of the top 6 players on one team and way over the cap to make the rest of the roster. In a few years the heat will have three players under contract and still be over the cap.
There is no chance now for other teams to compete in signing and keeping players. Melo is a great example. He wanted to play with another star (amare). so he did. Now you get rumors that cp3 or howard want to play with 2 other stars. Their teams don't have a chance to keep them.

This hard cap will force players to stay with their teams because other teams won't have the ability to sign them and go over the cap. I say make it even so the nba can survive. A whole league of competitive, any team can be great, basketball is the way to go. Not I just drafted the best player since MJ and because he wants to play with other super players I won't be able to keep him past his second contract.

The Heat may have ended up a bit over the cap this year, but they are still under the luxury tax and nowhere near the highest payroll in the league. The idea that Miami's payroll is something other teams couldn't match is dead wrong, Cleveland last year had a far, far higher payroll (they may still have a higher payroll). Every team in the league could easily match Miami's payroll and make money if it brought a 55+ win team and a couple rounds of home playoff games. Most of the league could match it and make money on a lottery team. A hard cap wouldn't have any effect on the Heat. The soft cap actually helps teams build around existing star players.

Right now star players have extra 'power' mostly because they are guaranteed to be underpaid due to maximum contract values. If a team clears out all of their salaries and starts with a blank slate (as Miami essentially did) they get much better value filling up to the salary cap with a few stars and then min salary players around them then with a bunch of moderate contract free agents. Star players also know this and know they have a better chance at a title paired with some other elite players then on teams with large payrolls filled up with Mo Williams, Antwan Jamison, Gilbert Arenas, Hedo Turkalu, etc.

The only way to get around this is with franchise tags (or something similar). I personally think it's a bad idea. Already star players have no choice as to where they play for the first half of their career. Should that be changed so they have no choice where to play for their entire careers? Force a player to try and drag up a poorly run team their whole career? Have a star make money for a lothsome owner that they hate their entire career? As it is now, if those issues (or others) are important enough players can choose to take less money in exchange for freedom. I think that's a reasonable comprimise.

[Sharcm1]

It's not the heat's salary this year that is so bad. It's the salary in a few years when they are at 70 something million and have 6 players under contract. That happens in the 13/14 and 14/15 seasons. then in the 15/16 season they are at 65 million and only have 3 people under contract. That is the problem.

[giberish]

Last year Cleveland had a $84.9M payroll. With modest revenue growth/inflation that's at least equivalent to $90M for the 2016 season. Orlando's over $89M this year, the Lakers are over $90M. Complaining that Miami might end up with one of the higher payrolls in the league just seem to be sour grapes.

$65M for three elite players + $25M for the rest of the team (say 5 more rotation players at $4M/yr and 5-6 scrubs for minimum salaries) is a better playoff team than Cleveland had last year or Orlando this year (baring some major injury issue). This shows how maximum salary limits give elite players extra power in determining who's good and who isn't, as they're guaranteed to be underpaid.

One interesting option would be a combination of a hard cap (something high, at least the luxury tax level from this year), strong revenue sharing (so every team could afford to spend at least near the cap), and no maximum salary limits. Would an elite player take a $15-20M/yr deal to have good teamates, or would they take $40M/yr becuase they could get it? If stars are willing to take much less money, they could build 'superteams'. Otherwise you'd get teams with an elite player + filler vs. teams with several good but not elite players which would be highly competative (although ratings suggest that casual fans prefer having a few top teams over extreme parity).

[DBoys]

You had a long reply with a lot of issues, so I'll just pop your reply on here and then insert my answers in bold to make it easier.

Thanks for your response, but your solutions don't seem to work.

I think they work perfectly.

The problem is, you're assuming scenarios that (a) have no planning leading up to them, (b) where the lack of a plan creates an impossibility, and (c) despite no planning and no common sense by the team, you still want every team and every player to be able to do EVERYTHING.

But that's not real life.

First, whatever system there is, teams will plan ahead from year to year. Second, no matter the system, teams have to make choices and sometimes decide which player they want to keep, rather than sign them all. That's true now, with no hard cap. So when you say a hard cap fails because a team can't do it all, then there is NO system that will work. Teams will always have to make choices and prioritize one player over another, and they've never been able to pay the max to every player on the roster, it's never been financially feasible.

1. In #1, let's say the hard cap is 50 million and I'm capped out. My player, who has been with the team for five years, made 5 million (reducing my cap to 45 million) but is asking for 10 million in free agency. You are saying that I would have to rid myself of five million in salary befor I could sign that player, right?

Yes you would.

But if you're an NBA GM, would you paint yourself into that corner? Nope, when you had a priority player, you'd see that coming and set aside the needed cap space for resigning him when the time comes.

The NFL has two forms of franchise tag and teams can franchise a player for up to three years. That's how they keep their players. NFL teams also have much more flexibility because the rosters are so large.

Yes. the NFL has those mechanisms.

But they do NOT allow a team to exceed the cap. If you franchise a player, the resulting salary must still fit below the cap. So NFL teams plan in advance to have the needed room, for the players they've prioritized.

A true hard cap for the NBA would work the same way where every salary would count and the team would have to stay under the limit at all times no matter what. Keep in mind they wouldn't have to create a hard cap, but that's how it would work if they did.

In #2, the cap is 50 million and I'm right at 50 million. I won the lottery and have the #1 overall pick. The rookie scale for that pick starts at 5 million. Do I have to release players in order to sign the player I've drafted?

Yep.

So if you're the GM, what would you do? You'd plan ahead and keep from being in that box.

In #3 the cap holds are irrelevant. I'm at 50 million with only 7 players. Cap holds would put me over the cap. So do I have to release one or more players to get down to 50 million to cover the assumed cap holds for all of my empty roster spots?

Obviously you don't understand cap holds. With cap hold rules under a hard cap, it would limit what you could commit in future years before you ever got there. You could never sign those future contracts in the first place, if they'd force you into an over-the-cap situation for the future.

For example, if next year the cap will be $50M and every minimum is $1M, I have to stop handing out future contracts when my cap holds for non-committed slots plus my future commitments together total $50M.

Of course I might want to leave myself extra room for the salary for my draft pick, especially if it might be a high one.

It's simply planning. Anyone qualified to be an NBA GM wouldn't have a problem with it.

As for competition with FIBA, the reason players come here is that the money is better. Period. In Europe the players get a free apartment, a free car, and can stay off the IRS radar if they have good tax advice (such as by establishing residence in one of the known tax havens, like the channel islands). The food is better and the girls are just as pretty. You play half as many games and there is considerably less travel, so you have more free time and your career can be longer. When a FIBA team is offering, say, 80% of what an NBA team is offering, FIBA begins to look pretty good.

In theory, yes.

But Europe's not the haven you seem to think it is. Read Sham's excellent piece on what it's really like to play there. Right now, the NBA is light years ahead of the pay and conditions in Europe.

I'm not saying some players might not go there at some point, but that's not any different of a threat than is already there. And it wouldn't be the hard cap at all, but rather salaries in general, that could make it a place some might favor.

As I said earlier, the stars will always get paid. That's 2-3 guys per team, at most. The others will take substantial cuts from what they are making now, making Europe more attractive.

As for revenue sharing, I'll believe it when I see it. The revenue sharing provisions have been the the NFL constitution forever. The NBA teams would have to devise something fair and then rewrite the NBA constitution, and the big market teams won't like it one bit.

The NBA already has a form of revenue sharing. That's what the luxury tax is. The NBA just uses a different name and makes it voluntary.

Let me remind you again. My answers are just one opinion, and each of these issues you raise could be handled in other ways as well.

[DBoys]

As for how to implement a hard cap, there would be as many ways to do it as there are imaginations. But the idea that they COULDN'T find something that could work merely means you aren't trying.

For example, here's one method.

2011-12 ... Hard cap is $90M (or some number a bit higher than any team has committed)
2012-13 ... Hard cap is $80M
2013-14 ... Hard cap is $70M
2014-15 ... Hard cap is $65M
2015-16 ... Hard cap is $60M
2016-17 ... Hard cap is $55M

Here's another method:

2011-12 ... Hard cap is $65M ...all existing contracts are cut in half and the team has the one-time option to renegotiate any contract upward if they have the cap room (or some number a bit higher than any team has committed)
2012-13 ... Hard cap is $65M
2013-14 ... Hard cap is $70M
2014-15 ... Hard cap is $70M
2015-16 ... Hard cap is $75M
2016-17 ... Hard cap is $75M

Here's another method

2011-12 ... Hard cap is $70M ... all max contracts are automatically lowered by 25% ...all other existing contracts must be kept as is if a team wants to keep that contract, but any contract can be terminated at no cost to the team on a now-or-never basis ... all players released in this manner become right of first refusal to existing team but the match period is 48 hours if they sign elsewhere
2012-13 ... Hard cap is $70M
2013-14 ... Hard cap is $70M
2014-15 ... Hard cap is $70M
2015-16 ... Hard cap is $70M
2016-17 ... Hard cap is $70M

Here's another method

2011-12 ... Hard cap is $70M ... keep any existing contracts you want, as long as you have cap room, and everyone else is released as a free agent available to the highest bidder (including the old team)
2012-13 ... Hard cap is $70M
2013-14 ... Hard cap is $70M
2014-15 ... Hard cap is $70M
2015-16 ... Hard cap is $70M
2016-17 ... Hard cap is $70M

Here's another method

2011-12 ... Hard cap is $70M ... all players are free agents and there's a talent draft to spread out the top 120 players, 4 to a team (snake-draft order, with worst team getting its choice of draft position, 2nd worst next, and so on), with a pre-set 3-year contract based on draft slot ...everyone else is a free agent with a max salary less than the preset salary for #120 and a 2-year deal or less
2012-13 ... Hard cap is $70M
2013-14 ... Hard cap is $70M
2014-15 ... Hard cap is $70M
2015-16 ... Hard cap is $70M
2016-17 ... Hard cap is $70M

Here's another method ...same as the last one, except each team can keep one "franchise player" with his existing contract, if they wish ...if you keep a franchise player, you also suffer a commensurate loss of a pick in the draft based on a ranking of all the players by an expert panel or some other method

[Warspite]

A hard cap is pretty easy to do when you put a Max deal at 7-9mil and you make min salaries exempt. You can even make rookie deals exempt from the hard cap. Lets not forget that the hard cap works in the NFL because of there huge growth in the sport. If the NBA could see NFL type growth the hard cap wouldn't be a big deal.

I would imagine that because of a huge transition from the old to the new system that your going to see a front loaded cap. If the revenues can increase over time they can cut into the declining cap number. the pay cuts will come from future Max contracts, the elimination of exceptions and a reduction in rookie salaries. I would bet Stern goes back to the old play book and offers a pay raise to min salaries. Make the Min salary 2 mil and make it exempt from the hard cap (1.5 mill is currently exempt from the lux tax)

[DBoys]

A hard cap is pretty easy to do when you put a Max deal at 7-9mil and you make min salaries exempt. You can even make rookie deals exempt from the hard cap.

In other words, a hard cap is easier to do if it's not a hard cap, but rather a soft cap (which by definition is, a cap that allows specified exceptions to it).

However, our discussion here is about an actual hard cap. Right?

It's still doable. It just forces choices and the strict planning that goes with them.

But we shouldn't lose sight of the fact that almost every team operates on some sort of a budget already. The difference would be that with a hard cap, the league would be the one deciding that budget number for everyone, it would be the same budget number for every team, and they would be strictly enforcing it at all times with no exceptions (if it's a true hard cap, like the NFL has).

[Three34]

If revenue sharing is the problem, why do we want a hard cap again?

[DBoys]

If revenue sharing is the problem, why do we want a hard cap again?

The rationale for a hard cap is to enable increased competitive parity. Enhanced revenue sharing would probably be a needed mechanism to allow every team to work from the same budget, but without a much harder cap (or an absolute hard cap), revenue sharing alone probably wouldn't be a mechanism to balance the talent across the league.

For owners with hundreds of millions invested, it's not going to work if you always start the year with maybe 25% or less of the teams with a chance of winning a title this year, or sometime very soon. No one wants to be the Washington Generals.

How a hard cap would do it, is it would have every team with the same amount of talent, on paper. Then the games are played to see which set of $50M players outplays the others and wins the title. And if every team has the same payroll, then (using a 50M cap just for an example) do you offer Lebron 35M and complement him with the merry minimums? (And if you're Lebron, do you turn it down for a team that has more money to spend on others?) Do you go for a team with 8 players making 4-6M each before you fill out the end of the roster? Do you have a couple of 10M guys, 4-5 at 4M-5M each, and then some minimums? 2-3 teams with stacked rosters, at the expense of the rest of the league, would be a thing of the past, and the titles might truly turn on which team can pluck great play from the middle and back of their payroll at a huge discount.

As far as revenue sharing, it's a completely different issue from a hard cap and I don't see how it couldn't be implemented apart from a CBA and regardless of whatever cap system might be created. Revenue sharing could simply be a redistribution of national TV revenue, for example, and I'm not sure the players have a dog in that hunt (although I suspect they'd try to assert one). Only when the sharing is tied directly to player payroll (as with the luxury tax) does it become a topic for player-owner debate. But if they landed a hard cap, they would certainly have to have some way to ensure that the franchises in smaller markets could afford to pay that same capped payroll as an LA or NY or Chicago and still be financially viable at the end of the day.

[Three34]

How can they have 30 teams then lobby for competitive parity? There's 30 teams. You're not getting competitive parity. Good teams become good teams almost always because of the draft. A hard cap doesn't change that.

[DBoys]

How can they have 30 teams then lobby for competitive parity? There's 30 teams. You're not getting competitive parity. Good teams become good teams almost always because of the draft. A hard cap doesn't change that.

"You're not getting competitive parity."

If you're talking about any specific season, yes at the end there will always be winners and losers. You won't get a league with everyone at 41-41 because someone will emerge with a better mix and better play. And that's how you want it.

But with a hard cap combined with shorter contracts, whether you're up or down, it's not nearly as permanent as the current system. The current NBA model gives us a few teams with a legit chance, and the rest are just the cannon fodder with some of those having no chance for the next 5 years or longer no matter what they do once the talent becomes concentrated in a few teams to the exclusion of the others.

About the draft. Notice that if you have a hard cap, the draft loses its ability to impact a franchise for a generation. That's because in most cases, it's not the draft itself that creates a great team but rather the ability to keep the same star forever and try to surround him with an increasing payroll of talent. Few of the league's dominant players win titles in their first few years. It's the performance under that next contract.

But with a hard cap, the situation changes. Shorter contracts change things as well.

If you've ever played fantasy sports, look at it from that perspective. In a 30-team league where the players are divided by a draft, the team with the #1 player doesn't get another pick until #60. That levels the playing field, and in a fantasy league everyone truly has a chance to win when the season begins.

Giving everyone the same payroll limit will tend to create a similar effect as that snake draft, in the spread of talent. Combine that with shorter contracts where the deck gets reshuffled frequently, and every team will have opportunity. If you can only lock up a player for 3 seasons, then if he's better than his contract, someone else will get him the next time, or you will have to give him a big raise to keep him and then lop talent from the bottom of your roster. It will balance itself.

Of course, it works the other way as well. Say you signed Lebron for every cent possible (we'll call it $35M) and then when his contract runs out, he leaves. You now have $35M to spend in a different manner ...and maybe you sign two $17.5M players instead. With short contracts, everyone becomes a free agent more often and it rebalances talent to the market on an ongoing basis.

There will still be value in the draft. It will offer the teams who weren't as good last season, to get some talent at a discount price. But it will last only as long as the length of a rookie contract, after which the discount ends and it's market value that has to be paid.

[Three34]

About the draft. Notice that if you have a hard cap, the draft loses its ability to impact a franchise for a generation.

Why's that good? Why would we mitigate the careers of greats like Tim Duncan by greatly hampering the chances of surrounding him with enough talent to do anything?

[DBoys]

It depends on your vision for what a league is there to accomplish. Is it a showcase for an individual player, and a system designed to reward the franchise lucky enough to get him with a generation of titles just because they won the lottery? If so, you keep things in place, except you add a franchise tag and keep a Lebron from ever leaving.

On the other hand, if the league is designed to showcase the world's best 450 players, and provide a stage for them to compete on a level playing field, then a hard cap is your answer. Some might say that there will be great players that emerge no matter what you do, as long as you have a place for competition, and therefore the best thing you can do is to keep the opportunity equal and let the results not the league figure out who wins a title or two and who doesn't.

[Curmudgeon]

Until the NBA clears out owners like Sterling and imposes a franchise tag on coaches there will never be parity in the NBA. It's an illusion. A hard cap penalizes the well-run franchises to benefit idiots. What right do bozos like Sterling have to a monopolistic system that keeps them highly profitable?

Most fans watch games on TV. Who can afford to go to the games unless you are Jack Nicholson or Jay-Z? Let poorly-run franchises fold and let their fans watch other games on TV. And if some guy wants to locate a franchise in Podunk, he should be a billionaire who can absorb the losses. Why should the players and fans subsidize franchises that are losing money because they are either poorly run or the market is too small?

[Bluewhale]

Until the NBA clears out owners like Sterling and imposes a franchise tag on coaches there will never be parity in the NBA. It's an illusion. A hard cap penalizes the well-run franchises to benefit idiots. What right do bozos like Sterling have to a monopolistic system that keeps them highly profitable?

Just a random thought. To give the "franchise tag" power to Sterling, allowing him to lock Black Griffin almost FOREVER is a crime.

[Nanogeek]

How can they have 30 teams then lobby for competitive parity? There's 30 teams. You're not getting competitive parity. Good teams become good teams almost always because of the draft. A hard cap doesn't change that.

You're missing the point. They aren't trying to force competitive parity from day 1 but give teams an equal chance to compete with other teams regardless of location. Absolute parity is impossible since there are numerous factors external to the NBA that impact player decisions including state tax rates, impact on endorsement deals, city lifestyle, etc. But a hard cap at least put teams on a level playing field in terms of what resources they can bring to bear on the payroll side. It doesn't guarantee parity but it at least makes things more fair.

[Curmudgeon]

The hard cap doesn't make things "fair" at all. It just ties the same millstone around the neck of every franchise. The Lakers will still be a championship contender. The Clippers will let their good young players go elsewhere and will continue to be futile. The fans won't pay any less for tickets.

But the owners' profits will go up and the players will make less. That's what the hard cap is all about. It has nothing to do with parity, and if you think it does, you've been duped.

Look at the so called "hard cap" in football. Has it made the Bengals better? What about the Raiders? Why do the Patriots, Ravens and Jets go to the playoffs every year? The teams that win in the NFL are the ones with good quarterbacks, that's all. What the hard cap does is make it impossible for a wealthy owner in a small market to lure away one of the premier quarterbacks by paying more than anyone else. That results in less parity, not more.

[Three34]

I would like to know why it's a bad thing that the best run teams win.

[giberish]

A hard cap, if used in combination with eliminating the max salary concept, would make it easier for the best run teams to win. Teams that used their payroll wisely would win, and teams that spent stupidly would lose. I personally don't see the need to reduce contract lengths (at least below current limits). Poorly run teams will give out contracts that are cripplingly long and be hurt by this, well run teams won't.

Right now there is a huge advantage to having elite players, as the max salary limitation guarantees that they'll be underpaid relative to their on-court value. It doesn't take any kind of competance to know that these players are valuable to a team. These players are generally acquired in the draft by a combination of tanking and luck - not by being a well-run team. Reducing maximum contract levels and/or adding franchise tags will only make this worse and further reward front-office incompetance.

There is also a significant advantage to being able to spend well into the luxury tax. This has something to do with how well teams generate revenue, but more to do with market size (the Knicks don't have to be well run to make a lot more money than the Grizz) and/or having a multi-billiionaire owner run the team as a hobby.

A high enough hard cap wouldn't particularly reduce total player salaries, it's just that most people pushing for a hard cap (particularly owners) want it at or near the current soft cap. Put a hard cap 10% above the current luxury tax line and eliminate the luxury tax and player salaries likely stay near the same. Teams that have to cut salaries to get under the cap roughly balance teams that spend move due to the lack of a luxury tax.

I feel that a luxury tax, perhaps graduated with a double luxury tax above ~$80M or so and some extra penalties for repeatedly spending huge $$ is better than a hard cap, but that doesn't mean that a well-implemented hard cap wouldn't put more of a premium on being a well-run team while not decreasing player salaries.

[Three34]

A hard cap, if used in combination with eliminating the max salary concept, would make it easier for the best run teams to win. Teams that used their payroll wisely would win, and teams that spent stupidly would lose.

That's how it already is, so what are we solving? If anything, what we're doing there is further reducing the margin of error, the size of which is a key sticking point anyway.