Tag: Jerry Reinsdorf

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The Inbounds: How to avoid the luxury tax and influence the playoffs, a Chicago Bulls story


Welcome to The Inbounds, touching on a big idea of the day. It could be news, it could be history, it could be a tangent, it could be love. OK, it’s probably not love. Enjoy.

There’s something obscenely obvious in the fact that we, the media (but not really because most NBA media think Bird rights have something to do with trash talk about a three-point shot), the basketball twitter intelligentsia, fans,  whoever rail on the Chicago Bulls for doing precisely what we rail on other teams for not doing.

They don’t overspend. They don’t overpay for a non-contender, and they work diligently to get the best deal possible in every negotiation. Those are all good things, right? We acknowledge that the concept of overpaying is inherently bad? You can’t say the Miami Heat overpay for anyone, it’s not just that they win but the production they get from any given player relative to their position and standing is worth the investment made. The Spurs have made a killing off of getting their top guys to buy in to the point they actually take paycuts and then getting value guys on value deals to plug in around them. These values are good. You can argue the opposite, that if your owner is willing to swallow that luxury tax, the money doesn’t matter, at least not to fans, but it’s difficult to say that avoiding overspending is bad.

And yet it’s pretty conclusive that everyone finds the way the Bulls do business… distasteful.

And I’m not talking recently. Not like Jerry Reinsdorf just walked in off the dot-com craze. The man’s been cracking walnuts since Jordan. Let me re-emphasize this. We’re talking about a guy who busted spherical objects regarding the greatest player of all time, in his prime, his All-Defense perfect sidekick and arguably the greatest coach of all time, just to save a few bucks.

This is not some small-market, struggling franchise we’re talking about. Reinsdorf’s not selling his car(s) to pay his mortgage (since, you know, real estate is his bag, that would be especially shocking).  The Bulls have consistently been in the top five for attendance regardless of how good they’ve been, and in the top three for profit according to Forbes for several years. They make money hand over horns. It’s a major-market team with a cool color scheme who happens to be identified with the greatest player of all time. So yeah, they do pretty well. But that hasn’t stopped them from making fiscal responsibility their No. 1 priority at all times.

And we’re seeing it today. From Tom Thibodeau’s contract to whether to match Omer Asik, to all of a sudden, yes, signing Marquis Teague, there’s always something the Bulls are doing to scratch out a few more dollars. What’s up with Teague, you ask? Take it away, Mark Deeks:

Nevertheless, however small the 2012/13 saving will be in the context of overall payroll expenditure, it seems to have been deemed sufficient. As mentioned above, the Bulls are over the luxury tax as of today. They have $71,837,061 committed to only 11 players, not including Nate Robinson, nor Teague. They’ve never been above it before, and they surely don’t intend to be above it this time – it doesn’t take a great deal of foresight to see the Bulls trading Rip Hamilton at the deadline, with enough cash to offset his remaining salary, at a time that Derrick Rose is able to play again, and after Rip has (theoretically) rebuilt his value as a player. This is pretty much guaranteed to happen. And it will be much easier to achieve the less they sign Teague for. The cheaper he comes, the more dead weight salary Chicago can take back for Rip, the easier he’ll be to deal.

via ShamSports.com: NBA News That Doesn’t Really Matter: Marquis Teague is still unsigned, and you’re probably not going to like why.

So to make sure the have room to ditch Rip Hamilton in order to avoid the luxury tax, they’re working down the total amount of Marquis Teague’s rookie contract.

It’s here that we have to address the Boozer issue. The Bulls do in fact employ Carlos Boozer on a pre-2012 max contract. So you can say that they a. committed to a max deal for a free agent in order to contend b. overpaid for a player and continue to do so and c. have not amnestied him to get under the tax, despite two opportunities to do so. But you have to understand, when Boozer was given that contract, it was market value. It wasn’t a great deal, but it also wasn’t a disaster. It will look worse as time goes on because of the new CBA, and there’s no way to spin it was a good deal, but it was also not a bad deal. (It did, however, almost immediately morph into a bad deal. So there’s that.)

And the discussion of amnestying Boozer loses the point a little bit. If you’re trying to avoid the luxury tax, you want to save money, right? Well, even if you amnesty Boozer, and someone takes some portion of his deal on the amnesty waiver (which someone would), the Bulls are still paying for the remainder of that contract, plus the money to bring in players to replace him. Off the league’s books isn’t off Chicago. What’s the point in amnestying Boozer to save money when amnestying him if you wind up spending in total what you’d spend in the luxury tax anyway, paying him off and then replacing him?

(It should be noted the one huge counter to all this, the relative ease to which Derrick Rose was signed to his extension, only re-enforces the point. It’s not that the Bulls don’t spend the money on what they should, it’s that they tend to carry any opportunity to squeeze blood from stone to the furthest possible moment and then go on with it. Rose’s structure was determined by the CBA and there was little to carp on, hence why the deal got done smoothly. They’re still a team with a high payroll, just one that constantly is working to scrape the crust off the top.)

The Bulls are a classic example of what we expect from big-market owners. We expect them to break the bank to build a winner, to use the resources at their disposal to abuse the inherent advantages and develop a contender. The Bulls have instead tried to develop a contender with considerate, you can even say frugal spending, and have done a pretty decent job at it. But they’re judged on a big-market curve and it’s there that they fail.

Which is not to say that I’m advocating in favor of the Chicago Way, here. (They put one of your guys in the hospital, you trade Kyle Korver to the morgue!) The fans and city have provided them with one of the most successful franchises in sports. They’re asking for the team not to waste Derrick Rose’s career, to pay what they need to to contend, to not use circumstance (Rose’s injury, the new CBA, age, health, etc.) to justify spending cuts, which is a classic Bulls move. That’s pretty reasonable. Bulls fans wouldn’t be upset if the team was bad and they cut spending. They’d be happy. Fans want cheap losers to allow for improvements to make expensive winners.

The fact may be that despite all the punitive efforts of the new CBA, the new NBA model may dictate that for big-market franchises to compete at the level to which they have become accustomed to, they’re going to have to time when they want to bite that bullet. And Reinsdorf has repeatedly dangled that carrot. Somewhere, someday down the line, he may pay that luxury tax. But until then, he’s going to keep maneuvering to suck the most money out of late-first-round rookies, swapping out bench units when they become available to reach market value, tip-toeing around paying a top-three coach in the league what he’s worth, and making mountains of cash off the process.

It’s infuriating. It’s genius. It’s frustrating. It’s sustainable. It’s a bad way to run a team. It’s a great way to run a business. And they’ll still manage to succeed enough to put the criticism at bay when the ball is tipped. Thank God for Derrick Rose.

Bulls owner was willing to go into luxury tax to get Pau Gasol… generous bajillionaire he is

Los Angeles Lakers v Phoenix Suns

So that Pau-Gasol-to-Chicago rumor before the dealing fell apart pretty quick because, to be honest, the idea of anyone saying “Heck yeah, we want Carlos Boozer!” right now is like the joke in a trailer for one of those teen romcoms. You know it’s coming and though it is technically humorous, it’s not actually funny. But ESPN.com’s Marc Stein reported Friday that the Bulls were so serious about it, they were willing to give the most serious commitment their organization can. It was willing to go into the luxury tax.


From ESPN.com:

Chicago’s talks with the Los Angeles Lakers regarding Pau Gasol before the trade deadline never got too far, largely because the Lakers had no interest in taking back Carlos Boozer … and because the Bulls weren’t about to find a third team willing to join the talks to absorb the three years and $47 million remaining on Boozer’s deal to help Chicago get the Spaniard.

File this away, though.

Sources with knowledge of Chicago’s thinking told ESPN.com that Bulls chairman Jerry Reinsdorf was prepared last week to go into the luxury tax if necessary if a legit trade scenario involving Gasol had materialized.

via Weekend Dime — Scouts on Lakers, Knicks and more – ESPN.

For those that don’t know, this is a really big deal. Despite consistently being one of the most profitable teams as the owner of Jordan’s former and Rose’s current club in a large market, Reinsdorf basically acts like paying the tax is pulling teeth. So maybe, if things went really well, he’d consider paying the tax if he were to get one of the top five big men in the NBA. That’s just swell. Reinsdorf has been pushing the “maybe I’ll pay the tax!” line for a while. This is from November:

Chicago Bulls Chairman Jerry Reinsdorf on Wednesday reiterated through a team spokesman that he would give strong consideration to incurring the luxury tax if the player acquisition gave the team a reasonable chance to win a championship.

That answer is similar in sentiment to Reinsdorf’s response on the subject from a 2009 interview. However, with a more punitive luxury tax poised to take effect in 2013-14 of the pending 10-year collective bargaining agreement, as well as increased revenue sharing, the question applied anew.

via Reinsdorf: Luxury tax won’t preclude Bulls’ bid for key addition – Chicago Tribune.

This actually may show more about the Bulls’ realization regarding Boozer than anything. With Rose’s extension kicking into high gear next season and with the luxury tax rates set to raise to painful levels in two seasons, the Bulls are probably starting to understand that giving Boozer his huge deal may have been, oh, what’s the word, a complete and total disaster.

Which is a bit of an exaggeration. Look, Tom Thibodeau has found a way to make Boozer a competent member of an elite defense. Boozer’s ability to hit the mid-range jumper is something the Bulls have needed for years and that Joakim Noah will probably never have consistently. Is he overpaid? Sure. But in a few years, Kobe Bryant will be, too. These are pretty standard problems. At least Reinsdorf is saying that if the team is good enough and worthy of the investment he’ll make it, even if that belies the obscene amount of money he makes off the team anyway.

And if you think no one will take Boozer, I would ask that you look around the league and witness the kind of deals which have been moved over the past three seasons. There’s always a sucker out there somewhere.

Jerry Reinsdorf says the Bulls will pay to win. We’ll see.

Chicago Bulls v Miami Heat - Game Four

If you want the model of how to win without spending like Mark Cuban, you look at the Bulls. Even during the Jordan era owner Jerry Reinsdorf was a guy who won as cheaply as he could. He does not like to pay the luxury tax.

Right now, the Bulls are doing that again — they made the Eastern Conference finals last season with a $55 million payroll. But that is about to change. Once they give Derrick Rose his max deal that means in two years they will have more than $57 million tied up in a core or Rose, Carlos Boozer, Luol Deng and Joakim Noah. That’s the year the luxury tax starts to get more punitive with higher rates.

Reinsdorf told the Chicago Tribune he would spend to win.

Chicago Bulls Chairman Jerry Reinsdorf on Wednesday reiterated through a team spokesman that he would give strong consideration to incurring the luxury tax if the player acquisition gave the team a reasonable chance to win a championship.

That answer is similar in sentiment to Reinsdorf’s response on the subject from a 2009 interview. However, with a more punitive luxury tax poised to take effect in 2013-14 of the pending 10-year collective bargaining agreement, as well as increased revenue sharing, the question applied anew.

He might go a little over the tax, but not a lot. That despite how much money the Bulls rake in (although Reinsdorf is now going to have to pay more of that out in revenue sharing).

If the Bulls are going to win a ring, GM Gar Forman is going to have to be smart and find a few deals out there.

New “Derrick Rose Rule” will make a few rookies rich(er)

Miami Heat v Chicago Bulls - Game Five

Players on their rookie deals remain one of the great values to owners — they get players who often can contribute a lot but at a fraction of the salary of a veteran who does the same thing. Those rookie deals remain untouched in the new collective bargaining agreement.

Except for one change — if you are an elite player you can make more in your second deal than your peers. And by “elite” we mean Derrick Rose.

Let us explain. Part of the new labor deal will allow rookies getting their second contract — which starts with their fifth season — to earn the new max of up to 30 percent of the salary cap (up from 25 percent). To qualify for the bump all they need to do is win an MVP award, get voted into the All-Star Game as a starter two times or twice in their first four seasons or get named to any level of the All-NBA teams in those four seasons, Tom Ziller points out at SBN.

The difference is about $3 million more a season.

To the joy of Jerry Reinsdorf, only Rose qualifies right now, Ziller reports.

However, if Russell Westbrook makes an All-NBA team this season he can as well (he will be offered a max extension by the Thunder on Dec. 9 and this super-max possibility will likely be written into the deal — which if he reaches it means he will make more than Kevin Durant). Kevin Love would need to win the MVP to qualify, Ziller says.

So, call this the Derrick Rose rule. But it is fair to pay guys who are franchise cornerstones a little more.

Bulls owner predicts four championships for Derrick Rose

derrick Rose bulls

No pressure Derrick.

It’s just that the owner of the Bulls Jerry Reinsdorf — who paragraphs before admitted he thought they might win one title with Michael Jordan back in the day — told the Chicago Sun Times you could win four.

‘‘If you don’t see something special in Derrick Rose, then you’re blind,’’ Reinsdorf said. ‘‘We have an outstanding coach, an outstanding bunch of players, the team is deep, and if we stay healthy, we have an awfully good chance of winning at least four championships.’’

Rose is a special talent. The kind of guy you build a franchise around. And the Bulls have done a good job of that with Joakim Noah, Carlos Boozer and a host of quality role players. Just need somebody at the two.

But four titles? So, Kobe Bryant/Tim Duncan of the last decade levels? It’s good to have lofty goals and another to publically pressure a young player 22-year-old with said goals. Maybe you meant to sound confident, but it comes off as a prediction. Ron Powlus would like to have a word with you.