Bobcats Cap affecting future

[JMAC3]

http://hoopshype.com/salaries/charlotte.htm

As it stands right now the Bobcats have a salary of a little over 47 million on the books for next season. This is quite a bit lower then our 2011 season ending 64 million. This means at the very least the Bobcats are free to spend up 17 million dollars in free agency. Now we can assume about a million will go to Dante Cunningham through his qualifying offer. Also we will pay 5 million or so to our rookies this season. This leaves us with a surplus of 11 million dollars to spend in free agency depending on if the team is serious about trying to sign Kwame Brown back. Many fans think we should not spend this money and sit in the gutter for this year and be a top three pick in next years draft while letting our younger guys get a ton of playing time. This is an option.

After next season our salary cap will decrease even more with Boris Contract and Najeras contract coming off the books as well. This will be another guaranteed 13 million to come off the books. I am going to assume that both Carroll and Diop will exercise their player options because neither will see half that amount of money in a new contract if they do not. Also the Team will exercise Hendersons team option most likely and then you have the qualifying offers to DJA and White. If they both accept the qualifying offers then our salary cap will be in the ballpark of about 39 million which will be another 8 million dollars in free agency available. Which most likely 4 million will go to the top 5 draft pick we will select. Leaving them about 4 million, but DJA may opt out and want a bigger contract that is when will decide if Kemba is the point guard of future or if he is better suited super sub off bench.

The following year is when the bobcats will have some serious cap space when Maggette, Carroll, and Diop will all come off the books in the amount of a little under 22 million dollars. The only guaranteed money we will owe will be Tyrus with his 8.6 million and we will be able to extend the qualifying offer to Hendo at this point depending on how he develops and amount of playing time we will most likely be forced to sign him to a new deal at this point. Lets say we do not sign any outside players in the years before we will only have TT, Hendo, DJA, Kemba, Bizzy, and our top 3 pick in last years draft on the books prior to the draft. We can assume that this would be in the range of 30 million dollars with the new contracts given to Hendo and DJA.

The point I am making is that the Bobcats could be in the financial state after the 2012-2013 season of having a payroll of 30 million dollars. With a roster that could include DJA, Hendo, Kemba, Quincy Miller, Bizzy, TT, and another top 10 pick most likely a Post player. If the team wanted to return the cap to what it was at midseason this year it would have 30 million dollars to spend on free agents in the offseason. This scenario is off a bit because we will have to fill out our roster with players for depth, but we would already have our young core. Granted we would need to save money for future contracts due to the fact we would have so many good young players on Rookie contracts.

This is just a look at what our cap space will look like over the next 3 years or so given we do not make any huge changes. The decision is do we want to slowly burn through that cap space signing guys like Kwame, Hawes, Sam Young type players or do we want to save that cap space and have money to sign our young players when their contracts are up and still have enough money to go and sign another Franchise Player after the 2013 season. All this changes if the CBA has a hard cap involved at 45 million, but either way you have to think we are set up nicely for the future.

If we were to pursue a serious Free agent target this off season you would have to consider throwing 8 million of that 11 million in cap space towards Marc Gasol and using the remaining amount to fill out the roster. You could set up so his contract did not really see the benefits until after 2013 season when that 22 million is off the books. This is just an option and I do not see Memphis being able to offer him the same jumps in salary from year to year due to the increasing contracts of Gay, Randolph and Conley.

This would give the bobcats a roster after 2013 something like this....
DJA- Kemba
Hendo-Kemba
Quincy Miller
Biyombo-TT-Sullinger type player
Gasol-Biyombo

and another draft pick on its way most likely a SG.
Quincy Miller would be our star and we would have plenty of options around him.

[fatlever]

its hard to really get excited about future salary cap scenarios when we have no clue what the new CBA will look like.

i guess compared to many teams we are in a good place now. so thats a positive.

[Jaruff]

its hard to really get excited about future salary cap scenarios when we have no clue what the new CBA will look like.

i guess compared to many teams we are in a good place now. so thats a positive.

Yea, we're in a good position.

If that 45m hard cap happens (which it won't), we'll be ~two million shy. If it's a 50-60m hard cap, we're good to go.

[captaincrunk]

its hard to really get excited about future salary cap scenarios when we have no clue what the new CBA will look like.

i guess compared to many teams we are in a good place now. so thats a positive.

Yea, we're in a good position.

If that 45m hard cap happens (which it won't), we'll be ~two million shy. If it's a 50-60m hard cap, we're good to go.

I'd be happy going to war with this team as composed, plus around 15 million in spending from the loss of Diop and Diaw's contracts.

[bobcats3wallace]

What do we all think that the final salary cap figure will be in the new CBA? Do we think it will be soft or hard?

My opinion, it will be a hard cap but the owners will not be able to force 45 million on the players. I think they will settle in that 50-55 million range, which as said before, would still be good for the Bobcats. Extremely good, in fact. What a hard cap would do is finally make it an even playing field. Teams like the Heat and Knicks would not be able to sign another star, and would have very little room to even fill out there teams. For the Heat there 3 stars would take up 47 million next season with that number growing up to 65 million if all three pick up there options. So if the cap is sitting at 50 million or even 55 million they WILL have to trade a star. They are in a terrible position going forward. The same can go for many of the top teams, they are going to have to get rid of a key player in the new agreement. That means for us there should be good quality players out there and it means that we will be in a great position with the cap number we have. Next year we would stand at 47 million and the year after at 29 million plus the rookie's numbers. We will be one of the very few teams that would be below that projected cap if it is in fact 45 in that 2012/2013 season. Bottom line, I think I would rather be in the position we are in now than say the position the Knicks are in with Amare and Melo. Hell, even MIami may not ever get the chance to compete for a championship with all 3 in tact. Another question is going to be how the league will phase in this hard cap system, that would also have a big impact on our economic future. Certainly though, we are in one of the better positions in the league.

[captaincrunk]

http://sports.yahoo.com/nba/blog/ball_d ... ng-content

I thought the owners were lying. This just makes me more suspicious.

[ohara]

We have no idea yet about the CBA in the future, but I have to feel that the Bobcats are in a pretty good situation. We divested of some big contracts, have some expiring deals coming up, and a good bit of exciting young players who are on Rookie Contracts, or will be. A hard cop in the low to mid 50's will actually benefit us greatly I think. We will have the cap space to go after a big name in the next year or so, while so many others will be totally screwed because of their existing huge contracts on the books. I think the days of seeing Miami and Boston put together a Big 3 may be over. NY may or may not be able to add a 3rd to Amare and Carmelo. And if they do allow each team to "cut" one big contract off their books, there may be a few really good players who end up being cut merely because the team has no other option. Not everyone has a Diop contract where a less than avg player ended up with an above avg contract which handcuffs the team. So if the Owners being tight with the wallet benefits the Bobcats in the end, then I am all for it.

[Kembastockton]

I think you guys are forgetting that along with that small hard cap the owners have asked the players to take a 33% paycut. Therefore one is not likely to happen without the other. Whatever our salary situation looks like now would be decreased by 33%.

[JMAC3]

Here is what I think that needs to happen. The players need to wake up and realize that they are overpayed. These guys are the richest people in sports and the sport itself is losing money. I think they should split all the players into tiers by the amount of money they are making. The highest tier players should get the most pay cut which will be in the 33% area. The more u move down the tiers the lower the pay cut is this way guys that making only 1 million wont be hurt as bad. If you look at a guy like Rashard Lewis who is making over 20 million, which we all now is not deserved, he can afford to make only 14 million. I think that a flat rate is just not going to cut it. The only problem with this system is that some teams will be forced to cut more money then others and in the end it will not be equal. In the system with everyone taking 33% pay cut then every team will be treated the same because everyones payroll will be cut a total of 33% rather then in the tier system.

[Paydro70]

I think you guys are forgetting that along with that small hard cap the owners have asked the players to take a 33% paycut. Therefore one is not likely to happen without the other. Whatever our salary situation looks like now would be decreased by 33%.

Exactly... and so would every other team's. The Heat wouldn't be screwed by a hard cap, the big 3 would all take a pay cut and so the franchise would be able to spend on other players in much the same way. There's not going to be any sort of weird progressive cut scheme like JMAC3 is suggesting. Perhaps the maximum contract (which is a portion of league revenues) could come down, but that isn't really at issue in the negotiations, and regardless isn't going to change anything that's already on the books.

The Bobcats are the same place they've been... capped out with a bad team. We have one more year to go, but summer of 2012 we're going to finally approach freedom and can try to sign a star. A hard cap obviously would help in doing that, because (as the major downside of hard caps) teams are constantly forced to let players walk because they can't afford them. I don't think there's any question that we ought to try to suck this year, though...

[Bassman]

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/A-tutorial-on-how-NBA-owners-legally-cook-the-bo?urn=nba-wp5834#remaining-content

I thought the owners were lying. This just makes me more suspicious.

Amazing coincidence how similar this article is to another column just published, which I commented on in the "lockout" thread. This is not "cooking the books"...what garbage. If anyone else here owns a business or works as a senior manager, you can understand the importance of these accounting practices to asset valuation and finances. I'm not out to gut the players, but I can't stand it when reporters or bloggers regurgitate information they know nothing about.

[esoteric001]

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/A-tutorial-on-how-NBA-owners-legally-cook-the-bo?urn=nba-wp5834#remaining-content

I thought the owners were lying. This just makes me more suspicious.

Amazing coincidence how similar this article is to another column just published, which I commented on in the "lockout" thread. This is not "cooking the books"...what garbage. If anyone else here owns a business or works as a senior manager, you can understand the importance of these accounting practices to asset valuation and finances. I'm not out to gut the players, but I can't stand it when reporters or bloggers regurgitate information they know nothing about.

Agreed, but it is still disingenuous to claim you are in the poor house when the loss is predicated on devaluating an intangible 'asset' like player salaries because your roster is allegedly worth less year to year.

[e4Nf6]

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/A-tutorial-on-how-NBA-owners-legally-cook-the-bo?urn=nba-wp5834#remaining-content

I thought the owners were lying. This just makes me more suspicious.

Amazing coincidence how similar this article is to another column just published, which I commented on in the "lockout" thread. This is not "cooking the books"...what garbage. If anyone else here owns a business or works as a senior manager, you can understand the importance of these accounting practices to asset valuation and finances. I'm not out to gut the players, but I can't stand it when reporters or bloggers regurgitate information they know nothing about.

Wow...

Do you honestly believe that for tax purposes the players should be seen as an "asset" that depreciates and not employees. And even if they were how in the hell did, say, Derrick Rose or Kevin Durant depreciate as an asset in the last 2-3 years? Shouldn't I then be able to write off the depreciation of the guy I pay to mow my lawn or the guy who comes to fix my air conditioning?

The point of the article is that the NBA has been saying that 22 teams are losing money when that is a flat out lie.

[Bassman]

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/A-tutorial-on-how-NBA-owners-legally-cook-the-bo?urn=nba-wp5834#remaining-content

I thought the owners were lying. This just makes me more suspicious.

Amazing coincidence how similar this article is to another column just published, which I commented on in the "lockout" thread. This is not "cooking the books"...what garbage. If anyone else here owns a business or works as a senior manager, you can understand the importance of these accounting practices to asset valuation and finances. I'm not out to gut the players, but I can't stand it when reporters or bloggers regurgitate information they know nothing about.

Wow...

Do you honestly believe that for tax purposes the players should be seen as an "asset" that depreciates and not employees. And even if they were how in the hell did, say, Derrick Rose or Kevin Durant depreciate as an asset in the last 2-3 years? Shouldn't I then be able to write off the depreciation of the guy I pay to mow my lawn or the guy who comes to fix my air conditioning?

The point of the article is that the NBA has been saying that 22 teams are losing money when that is a flat out lie.

No, it's not the players...it's the value of the franchise, and the write down of debt that is normal with any business. Jeez...take a course. The losses are not a lie. When it is more advantageous to not play a season versus playing one because you lose LESS money by NOT playing, that is the acid test.

[e4Nf6]

No, it's not the players...it's the value of the franchise, and the write down of debt that is normal with any business. Jeez...take a course. The losses are not a lie. When it is more advantageous to not play a season versus playing one because you lose LESS money by NOT playing, that is the acid test.

Except they CAN write off depreciation of players, as can any professional sports team apparently.

http://deadspin.com/5816870/

Bear with me now. The RDA dates back to 1959, and was maybe Bill Veeck's biggest hustle in a long lifetime of hustles. Veeck argued to the IRS that professional athletes, once they've been paid for, "waste away" like livestock. Therefore a sports team's roster, like a farmer's cattle or an office copy machine or a new Volvo, is a depreciable asset.

Writing off the price of acquisition is just one of many many tax tricks that are dubious IMO, but is standard accounting practice. I'm not arguing they broke tax law, I'm arguing that 22 teams didn't really spend more than they earned last year. And so it's not accurate to say they "lost money"

[ohara]

Well I dont think any of us have seen the books on any team. So I dont think we know who is telling the truth. It really comes down to who you believe, or want to believe. It's the good old struggle between Owners and Unions that is always filled with crying, lies and bull$hit. Dealing with this much money, and with talented well versed power brokers on each side, I find it hard to believe either side could possibly be telling the truth. But the greed from both sides will eventually lead this lockout to end, and we will once again have basketball. I dont really care which side "wins" this battle - just count the millions of $ you have and give me back my game!

[captaincrunk]

Well I dont think any of us have seen the books on any team.

Well we've seen the 05-06 Nets book, and I think the 08-09 NOLA books, to some extent or another. And what the players have said makes sense. They are held as depreciating assets (which is hilarious when you think of rookies) and as a result much of the "loss", while economically relevant (though not in this case, in this case it is actually not the case that the value of a roster deteriorates inherently), isn't really part of accounting. So while they show the loss of depreciating roster value (which isn't actually depreciating, that's not how rosters work), they don't show the corresponding tax consequences. Those tax breaks are directly correspondent to the claimed "loss" and are meant to offset it.

Think of a car, for example. They say you drive it off the lot and lose up to 30% of the value. That's depreciation. We pay taxes on our homes based on their value. When the value of the home goes down, we have the right to call that a loss. In addition, our taxes will go down to both reflect that (taxing the value, not what you paid) and to assist us in our loss of funds.

What the owners have done is essentially this. They don't report the tax breaks as income because they aren't required to, and they shouldn't be. They do report the claimed depreciation (which isn't true at all), as they are legally required to do so. What this results in is a huge swing of several million dollars in the books.

The reason this is relevant is because they're paying less in taxes for a roster that isn't inherently losing value.

[captaincrunk]

No, it's not the players...it's the value of the franchise, and the write down of debt that is normal with any business. Jeez...take a course. The losses are not a lie. When it is more advantageous to not play a season versus playing one because you lose LESS money by NOT playing, that is the acid test.

I've taken courses. I was an economics major for the first three years. It isn't more advantageous to avoid this season in the short term. They will lose more money this year than they did last year in all liklihood. But doing so would gain them a more favorable financial position for the future.

EDIT: I'd also like to point out that the above post was full of metaphor and analogy and is not meant to educate anyone seriously about finance or accounting.

EDIT2:

Here is what I think that needs to happen. The players need to wake up and realize that they are overpayed.

They are underpaid, if you value labor by the marginal gains. LeBron James, for example, has probably made for the league and the owners of his club far more than he was ever paid. Kobe too, and Yao, etc.

These guys are the richest people in sports

Baseball players, sports team owners, etc.

and the sport itself is losing money.

Not in any real sense.

I think they should split all the players into tiers by the amount of money they are making. The highest tier players should get the most pay cut which will be in the 33% area.

This will hurt the Bobcats, as attracting free agents would be more difficult due to the difficulty in offering them high contracts.

[Elden Payton]

^^^^^
Excellent post Crunk.

Agreed a year or three of losing games & dollars will be offset by contending longterm.

Also if we draft Harrison Barnes.....Jersey $$$$$$$$$

[Jaruff]

^^^^^
Excellent post Crunk.

Agreed a year or three of losing games & dollars will be offset by contending longterm.

Also if we draft Harrison Barnes.....Jersey $$$$$$$$$

With our luck, Barnes would be May 2.0.