In 2016, new national TV contracts pushed the NBA’s salary cap from $70 million to $94.143 million – a larger jump than over the entire previous decade. Free agents cashed in majorly that summer.
But now, the cap is leveling off. It went up to just $99.093 million last year and is projected to reach only $101 million this year and $108 million next year. With so many lucrative long-term 2016 contracts still on the books, free agents the following few years haven’t gotten and won’t get comparable compensation.
The problem was predictable, and the NBA proposed a solution at the time – cap smoothing.
Players get 49%-51% of Basketball Related Income (BRI) each year, the precise amount determined by formula. The salary cap is set so teams’ payrolls collectively reach that range. (There are procedures if teams fall short or pay too much.)
With cap smoothing, the NBA would have set an artificially lower cap for 2016-17. Players would have gotten less than 49%-51% of BRI in salary, but presumably, the league would have distributed the difference to players after-the-fact. That way, all players – not just 2016 free agents – would cash in.
But the players union rejected the plan.
NBA commissioner Adam Silver has looked back longingly, wishing the union approved. National Basketball Players Association executive director Michele Roberts, um, has not.
Roberts, in a Q&A with Paul Flannery of SB Nation:
When the salary explosion happened and you rejected the smoothing idea that the NBA proposed, has anything that has happened in the last few years caused you to reconsider that stance?
No, in fact it’s completely confirmed the correctness of that position. I delight and the players delight in reading about some of these contracts because they know they absolutely deserve it.
There was going to be no smoothing of the owners’ profits at all. They were going to enjoy real money that reflected where we were financially as a game. Why in the world would players pretend that the game was not making as much money and therefore have smaller contracts?
It was an absurd suggestion, I thought personally. But what we did to make sure it wasn’t just Michele’s instinct was hire two separate economists to tell us whether this was something that was going to be of value to our players in the long run.
Independent of each other and not knowing what either of us felt, they both came almost saying, “Are you kidding? Why would you do this?”
I don’t have any regrets at all. I don’t think a single player does either.
Not a single owner came up to me and suggested that they thought we should do this. The league did. But I didn’t see any chorus of support from any of the owners. I thought it was a disgraceful request.
It’s impossible to evaluate whether Roberts was right without knowing the particulars of the NBA’s smoothing plan. That has not leaked.
She implies the league proposed artificially lowering the cap (which, again, is determined by formula based on revenue) for the first year or two of the new national TV deals without offering the players something in return. I find that hard to believe. At minimum, it seems likely the NBA would have distributed the rest of the 49%-51% of BRI to players not earned in traditional salary.
Not that that would have been enough for the players to favor cap smoothing.
Players’ salaries are sometimes based on their previous salaries under cap rules. If only a portion of players’ NBA-provided income was considered official salary, that could have debilitating long-term effects.
Perhaps, the NBA could have accounted for that. But it seems there was little negotiating here. The league made a proposal, and the union rejected it.
I’m not sure which side benefited, and evaluating that becomes even more difficult when dividing the sides into competing interests.
For argument’s sake, let’s say rejecting cap smoothing led to more money for players. That largely went to 2016 free agents. What about all the players still under contract that summer? They didn’t get to reap the rewards.
What’s a better measure – the amount of money players collectively gained by rejecting cap smoothing or the percentage of players who earned more money by rejecting cap smoothing? There’s no easy answer.
And there’s more than just money at stake. Most significantly, a lack of cap smoothing allowed the Warriors to sign Kevin Durant. How many players prefer that never would have been possible?
I’m just not as convinced as Roberts rejecting cap smoothing was the right call. At minimum, negotiating a cap-smoothing compromise could have worked.
Many players already under contract in the summer of 2016 have been waiting their turn for a huge payday. But wait until many of them find out their windfall wasn’t just delayed. It’s not coming. Then, some of Roberts’ constituents might question her insistence that rejecting cap smoothing was correct.