A sports league, by nature, is a capitalist ecosystem. When you tinker with its free market you get oddities in the system. That’s what we are seeing this NBA off-season—teams struggling with the balance of paying players appropriately and competing under the current collective bargaining agreement.
The CBA, adopted in 2011, is a system set up under the rouse of competitive balance. Small-market owners said at the time they needed more revenue. Big-market owners like the Buss family understandably declared they didn’t want to share their local revenue with the competition. So the players’ cap went from 57 percent of basketball revenue to 50 percent to make up the difference.
Once again the players got killed in CBA negotiations, but the small-market owners—for what they gained in straight earning power—didn’t get their wish of competitive balance.
The one concession players won is the stipulation that owners would have to spend at least 90 percent of the cap. This was put in place so franchises can’t just stockpile money from national TV partners and advertisers without trying to field a good product.
The issue with this is that it hampers teams from making decisions on who deserves to be paid what. Now run-of-the-mill players who don’t move the needle get paid because teams are forced to spend to the cap floor and are usually paid a premium by small-market teams who have to over-spend to get players to come. Jodie Meeks, for example, just got three years and $19 million to most likely not start for the Detroit Pistons this coming season.
Meanwhile, on the other end of the spectrum, the salary ceiling stifles the earning power of players who are worth much more to a team than the max, like LeBron James. So those players are forced to exercise that power in other ways. Instead of fiscal wage their leverage becomes factors like lifestyle, off-court business ventures and marketing opportunities. Advantage: big markets.
(LeBron, of course, did sign with a small market this off-season, but only because it’s spitting distance from his birthplace. But neither he nor his agent were taking any other small-market meetings.)
Oklahoma City is the best example of a small-market team punished by the current CBA’s realities. After already losing a star in James Harden because they refused to pay the luxury tax, this off-season they lost a role player in Thabo Sefolosha because he was priced out of their grasp, going to the Atlanta Hawks for three years and $12 million.
GM Sam Presti tried to augment his team in the free-agent market place, but wasn’t able to land coveted target Pau Gasol. The Spaniard decided to head to a big market in Chicago over Oklahoma City even though the windy city did not offer considerably more money or a better title shot.
Now OKC’s stars have even more leverage over management as rumours start to circulate about how Kevin Durant and Russell Westbrook are planning to head home to the greater D.C. area and Los Angeles, respectively, when their contracts are up in a couple of years. And the Thunder start acting in fear of losing the talent they drafted and groomed. These are the harsh realities the small-market teams were no longer supposed to face.
Competitively the league has never been balanced. Outside of San Antonio, big markets like L.A., Boston, Chicago and Miami have monopolized the Larry O’Brien trophies.
Even big-market teams like the Knicks and Nets have struggled historically as much as anybody. The difference is the franchises on either side of the Brooklyn Bridge always have light at the end of the tunnel with the knowledge they can live with luxury-tax penalties and the hope they can spend their way out of a great on-court depression.
For the litany of small-market teams who’ve never tasted the success of winning, the chance appears fleeting because the battle of attracting stars remains so uphill.
The present example of this conundrum is Phoenix. After maneuvering to clear cap space they struck out on free-agent targets James and Carmelo Anthony without even the privilege of a meeting. Now, they face the restricted free agency of their own guard, Eric Bledsoe. Refusing a four-year, $48-million offer from the team, Bledsoe instead wants five years at the max—a steep price to pay for a guy who hasn’t started for a full year and hasn’t made an all-star team.
But then again, if you’re Suns GM Ryan McDonough what choice do you have? Pay Bledsoe and it’s a potentially bad contract that doesn’t make you a title contender. Refrain and you have little shot at getting back to your 48-win level that wasn’t good enough to make the playoffs in the West.
Every year we say this is going to be the year owners learn from their mistakes. Why don’t they? Not because they aren’t smart. These are capitalists who have made millions with ingenuity in the business sector. It’s because unlike the free market of the business world they are operating in a system that is set up for two thirds of them to fail.