Forbes: Salary caps help make rich owners richer, poor poorer

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As we watch NBA owners and the Players Association play a game of chicken with our favorite sport, here comes a very interesting article out of Forbes (via Hardball Talk).

Part of that CBA debate will be about the salary cap — keep the soft cap with exceptions that exists now or move to a more NHL/NFL style hard cap. Some owners favor the hard cap as a way to control costs.

But smaller market owners hurt themselves with a cap and the current revenue sharing system, says Matt Ozanian of Forbes (who writes about all league finances for the magazine).

Tying team payrolls to league-wide revenue (currently about 50% of total revenue goes towards player compensation and benefits in each of four leagues) has served to make high-revenue teams enormously profitable and low-revenue teams unprofitable, or marginally so, relative to their rivals. The growing distortion in profitability has resulted in a bigger gap in team values…

The NBA had total operating income of $234 million during the 2008-09 season (our 2010 valuations and profits will be published in February). But three teams (Los Angeles Lakers, Chicago Bulls, Detroit Pistons) accounted for 64% of the league’s profits and 12 teams lost money. So billionaire Michael Ilitch is reportedly pondering buying the Pistons for some $400 million while Michael Jordan snapped up the money-losing Charlotte Bobcats for just $175 million in March.

The conventional wisdom is that salary caps benefit poorer teams. But in reality they benefit richer teams more. The owners know this, of course. Which is why the real bare knuckles fighting in the current collective bargaining negotiations in these three sports is among owners.

As we have said before, if you’re serious about bringing more parity to the NBA — and we’re not sure that you really can in basketball where one player can so dominate the course of a game, nor are we convinced that parity is good for the NBA in the way it has been for the NFL — than the real issue is revenue sharing by the owners. David Stern has said the owners are seriously discussing it and that “more robust” revenue sharing is on a parallel track with the Collective Bargaining Agreement.

But if it is on a true parallel track, then those discussions are stalled because of disagreements about how and how much money should be shared. A parallel track would mean they are talking but nowhere near a consensus.

Still, the thought of a bunch of very rich Republican owners in a room crying out for a more socialist system always amuses me.

Report: Spurs hearing out Kawhi Leonard trade offers, including from Lakers

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The Spurs shot down Kawhi Leonard trade offers before the trade deadline. They brushed off Leonard trade offers earlier this offseason.

Then, the already strained situation got even worse.

Leonard put out word he wanted to leave San Antonio, ideally for the Lakers. He met with Gregg Popovich this week in San Diego, reportedly directly telling the president-coach he wants out.

What are the Spurs doing now?

Chris Mannix of Yahoo Sports:

The Lakers are in that mix.

The Spurs can try to mend their relationship with Leonard. They could even use a super-max contract – projected to be worth $219 million over five years – to aid that process. They don’t have to trade him.

But the clock is ticking toward tonight’s draft, teams using their cap space in other ways and Leonard’s 2019 free agency.

San Antonio has no choice but to get more aggressive in handling Leonard’s future. This is a small step in that direction.

Report: Nets to buy out Dwight Howard

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The Magic, Lakers, Rockets, Hawks and Hornets all grew tired of Dwight Howard.

The Nets did it in record time.

After acquiring Howard in a trade from Charlotte yesterday, Brooklyn is moving toward shedding him.

Shams Charania of Yahoo Sports:

In the trade, the Nets dumped Timofey Mozgov‘s $16.72 million salary for 2019-20. Now, they could get a reduction on Howard’s $23,819,725 expiring contract. Brooklyn is doing a great job of unloading bad money.

Next year, the Nets will have their own first-round pick for the first time in six years. Though he has declined considerably from his Hall of Fame peak, Howard can still play some. Brooklyn didn’t need him interfering with its tanking and culture.

Instead, the Nets can focus on developing Jarrett Allen and losing enough to secure the best draft position possible.

It’ll be interesting to see how much Howard surrenders and where he goes. Again, he can still play. But the league is moving away from traditional centers, and he’s high maintenance.

Report: Cavaliers not planning to trade Kevin Love, no matter what LeBron James does

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The Cavaliers spent considerable time bemoaning a Kevin Love trade last summer falling through.

Will they deal him this offseason?

The No. 8 pick and Love are Cleveland’s best assets for upgrading their roster around LeBron James. If LeBron leaves, moving Love could jumpstart a rebuild.

But apparently the Cavs are now projecting attachment to Love, either way.

Dave McMenamin of ESPN:

The Cavaliers are not actively shopping All-Star forward Kevin Love heading into Thursday’s NBA draft, multiple sources told ESPN on Wednesday. Furthermore, regardless of what decision LeBron James makes about his future in Cleveland, the Cavs have interest in keeping Love next season, sources said.

File this under what else are they supposed to say? Even if the Cavaliers want to trade Love, insisting they won’t maximizes his trade value, forcing other teams to offer enough to pry him away.

But I also believe this accurately reflects the Cavs’ plans.

They just seem so determined to compete if LeBron leaves, and Love is their only other star. Love proved himself worthy of being the best player on a good team with the Timberwolves. (They were playoff quality when he played. They just completely fell apart whenever he sat.) In Cleveland, Love has fluctuated in his ability to bend his game around LeBron. If LeBron leaves, that’d no longer be a problem.

But Love will turn 30 before the season. He has declined out of his athletic peak, and I’d bet against him ever nearing his Minnesota levels again. And the other Cavs stink. It’s hard to see a LeBron-less Cavaliers team, even with Love, competing for the playoffs.

If LeBron stays, keeping Love makes some sense. With his $24,119,025 salary for next season and $25,595,700 player option for the following year, he probably doesn’t hold elite trade value. He doesn’t match up well with the Warriors, but good players who do come at a major cost.

Report: Lakers call meeting to warn employees about tampering

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Magic Johnson got the Lakers fined for tampering while still holding a ceremonial title. Once he actually took over the front office, he really got to work tampering. He got warned for blinking at Paul George on national television. Then – due to general manager Rob Pelinka’s communication with George’s agent and Johnson’s previous warning – the Lakers received one of the largest fines in NBA history. Johnson himself got the Lakers fined for praising Bucks star Giannis Antetokounmpo. The league investigated and cleared assistant coach Brian Shaw for tampering with George.

NBA commissioner Adam Silver has said the Lakers’ previous transgressions have put them under tighter scrutiny.

The Lakers just want this to end.

Ramona Shelburne of ESPN:

Lakers co-owner and governor Jeanie Buss called the meeting, which was led by president of basketball operations Magic Johnson.

Sources said Johnson and Lakers general manager Rob Pelinka spoke to a large group of team employees, warning them about tampering.

Other employees received written notices on the matter that referenced possible termination as punishment for anyone who does not adhere to NBA rules.

Tampering often takes much more benign forms than a president or general manager recruiting a star player before free agency. It could be an offhand comment by a coach, an overzealous ticket pitch or a speculative article on the team website.

If Johnson’s and Pelinka’s tampering increases the Lakers’ odds of landing a star, that’s just the cost of doing business. If a lower-level staffer tampers, that’s an avoidable mistake.

Really, it’s comical this meeting is even newsworthy, and that’s a product of the Lakers’ previous violations.

But, as they pursue stars, they don’t want to chance the league imposing any additional restrictions.

So, the Lakers, in some ways are right back where they started.