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The True Cost of Guaranteed Contracts in the NBA

Would there be greater parity in the NBA if contracts, like those in the NFL, were not fully guaranteed?

Tommy Beer

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It’s been quite an eventful offseason for the National Football League. America’s most popular sport has captivated the interest of its fans even during the many months when their teams never step foot on the field.

Much of this offseason’s intrigue has centered on a dynamic free agency period, which has increased in intensity as a result of so many of the league’s star players being released from their current contracts. NFL teams can simply and easily part ways with virtually any player if they so choose. If they feel a player is no longer worthy of his contract (be it big or small) for whatever reason (performance on the field or attitude issues in the locker room), the lack of guaranteed contracts in the NFL allows general managers to pink slip even the highest paid players. If the team’s management feels it is in the best interest of the organization to cut loose a productive, but overpaid player, they have that option.

Much like the NBA, the NFL has a salary cap. However, unlike the NBA (or MLB and NHL, for that matter), NFL contracts are not fully guaranteed upon inception.

In the NBA and MLB, a player’s full contract is guaranteed for its entire duration the moment the deal is signed. This is not the case in the NFL. When an NFL player signs a contract, only a portion of the pay is guaranteed.

This results in far less guaranteed money being awarded to football players. In fact, no contract in NFL history has ever included more than $60 million in guaranteed money.

In contrast, there are often multiple NBA deals signed each July that guarantee basketball players in excess of $60 million. And it’s not just the elite superstars who sign deals worth more than even $100 million in guaranteed funds. For instance, the Atlanta Hawks inked Joe Johnson to a six-year, $119 million deal in 2010.

So, to put that in context, Johnson’s deal included more guaranteed money than Tom Brady and Calvin “Megatron” Johnson’s most recent contracts combined.

In July of 2008, the Washington Wizards signed Gilbert Arenas to a deal worth $111 million. Arenas collected every penny of the cool $111 million, despite the fact that he suffered multiple serious knee injuries during the infancy of the deal and was suspended for the majority of the 2009-10 season after he pleaded guilty to the felony of carrying an unlicensed pistol into the Wizards locker room.

In the five seasons immediately following the re-signing of Arenas to that huge contract, the Wizards won fewer than 30 games for every season, finishing a combined 117-277 (.296 winning percentage) from 2008 through 2013, never once even sniffing the playoffs. NBA organizations can be crippled by one mistake, as the cap ramifications are debilitating over the entire life of the contract.

Eventually, the Wizards traded Arenas to the Orlando Magic, but were forced to take back Rashard Lewis’ bloated contract (Lewis had signed a mind-boggling six-year, $118 million deal back in 2007).

Had Arenas played in the NFL, his team would have been able to escape from under the weight of that contract with relative ease.
Within the last month, NFL superstars Darrelle Revis, DeMarcus Ware, DeSean Jackson, Julius Peppers and Steve Smith were just a few of the top-tier players released by their respective teams.

Teams did not have to ride out these contracts. They didn’t have to trade them for other players being paid a similar salary. They were simply released. General managers decided that their cap space would be better spent elsewhere, so these former franchise cornerstones were sent packing.

It is astounding to think about how much more active and interesting the NBA offseason would be if teams could release players in a similar fashion.

Of the four major American sports, the NFL is considered to have the most parity from year-to-year. Instances of teams jumping from worst-to-first are far more common place in NFL. One of the primary reasons for football’s parity is because teams are not forced to keep paying for a mistake made years ago. The punitive penalty of a contract mistake does not linger nearly as long as it does in other sports.

If an NFL team signs a player to a five-year contract, but feels he is not worth the money he is set to earn in the final three years of the deal, they can cut him after that second season. Or if a player suffers a serious injury, the team can easily get out from contractual obligations. NFL teams and players also have the option of restructuring contracts, which is prohibited in the NBA.

The National Basketball Player’s Association would surely never allow the league to completely restructure the salary system to match the NFL, but it is fascinating to consider how much it would change the sport.

If NBA teams could cut players in the middle of their contract – and not owe the balance of the money to the player and have that money count against the cap – the NBA would be a far different place. If teams weren’t so harshly penalized by albatross contracts that can sink an organization, they would be able to bounce back and return to form far quicker.

Consider the New York Knicks’ current situation. There is a great deal of hope in New York right now because Phil Jackson has been hired to clean up James Dolan’s mess. Knicks fans are optimistic that Jackson will deliver on his promise of returning the Knicks to respectability.

However, Jackson has his hands tied for his full first year on job. Regardless of any move Jackson makes this offseason, New York will be way over the cap during the 2014-15 campaign.

Amar’e Stoudemire will earn $23.4 million next season. Tyson Chandler will take home $14.6 million. Andrea Bargnani will pocket $12 million in 2014-15. Despite disappointing play, on top of a drug suspension and knee surgery just days after re-signing with the Knicks, J.R. Smith has two years and $12.3 million left on his deal.

It is essentially impossible for Jackson to get under the cap prior to July of 2015. As a result, he will have to wait roughly 16 months before he can make a splash and actually put his imprint on his new franchise. He is being taxed for other people’s mistakes.

The Knicks will likely have to sit through a disastrous repeat of the terribly disappointing 2013-14 season next year. In addition, Carmelo Anthony has to decide this summer if he is content to essentially sacrifice a year of his prime in order to wait until July of 2015, when Jackson will finally have an opportunity to be active in free agency and possibly add another superstar to the roster.

What if Jackson could come in and clean house right away?

One thing is certain; the NBA landscape would look far different if salaries weren’t fully guaranteed upon signing.

Tommy Beer is a Senior NBA Analyst and the Fantasy Sports Editor of Basketball Insiders, having covered the NBA for the last nine seasons.

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NBA AM: Is It Smart To Bet On Yourself In This Market?

Many extension-eligible players opted to bet on themselves and a questionable free agent marketplace next summer.

Steve Kyler

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No Big Surprises On Draft Extensions

The big news yesterday wasn’t a new extension for a 2014 first round draft pick, it was the news that the San Antonio Spurs reached a three-year, $72 million extension with veteran LaMarcus Aldridge.

The news was surprising for a couple of reasons. The biggest being the Spurs had shopped Aldridge in trade scenarios this offseason under the idea that he was a problematic fit for the Spurs.

Ultimately, Aldridge and the Spurs ended up in the same place on his deal. The Spurs were not going to be big free agent players and locking Aldridge in now gives them some security as well as trade leverage later. In Aldridge’s case, his camp saw the marketplace this past summer and all of the mouths that need to be fed in July and realized he wasn’t likely getting more money on the open market come free agency.

One of the things the Spurs found out was that trading a player with a player option is not an easy task as teams that would give up value want to know what comes next, either way. Over the past few years, player options have become almost toxic in trade, mainly because there are two classes of trade partners, one that wants the ending contract and a player for a stretch run in the postseason and teams that want the player for next season. The options make valuing the player sticky at best.

In doing a deal for Aldridge, the Spurs basically lock him into their roster for this season but give themselves a trade chip next summer, if they need it. This was smart for both sides. The Spurs locked in the player and the trade asset, Aldridge locked in money he likely wouldn’t have gotten in the open market.

For those players drafted in the first round of the 2014 NBA Draft, yesterday closed the window on the “Early Extension Period.” While there were talks all the way to the wire on several players, the bulk of the deals that didn’t get done didn’t get close enough to seal the deal.

The Boston Celtics and Marcus Smart frequently talked about an extension, and his camp labeled the talks as getting “close” but ultimately, future luxury tax concerns killed a possible deal before the extension deadline, meaning Smart will hit free agency in July.

The Celtics will have a couple of months to see if Smart continues to evolve before they have to make decisions, and they now know what a deal would take for Smart to sign outright. Given the Celtics tax concerns, there is a window for a team with cap space to poach him in July if they come with the right kind of offer sheet. While the Celtics can obtain the right to match Smart with a $6.53 million qualifying offer, the tax issues won’t go away without a cap dump of a trade. Equally, the Celtics roster is loaded with point guards, so the C’s have the luxury of seeing what unfolds in the next three months before the February 8 trade deadline.

The Orlando Magic and their pair of 2014 draftees, Aaron Gordon and Elfird Payton, talked about extensions, mostly out of courtesy. The Magic would have done deals if it favored the team, but the new front office in Orlando has been open and honest that they are still very much in evaluation mode on the roster and were not going to pay a premium at this point.

The Magic’s reluctance to do a deal wasn’t about valuing either player as both are said to have been very good so far, this preseason. The Magic don’t have a clear-cut direction yet and inking a long-term deal with either would have been counter to their goal of flexibility. Equally, the Magic also know that both players are unlikely to get huge free agent offers unless they blossom this season, which would make matching an easier decision after seeing how they play this season.

Neither player entered the process expecting to reach a deal, so there is no ill-will about not getting an extension. Both players have said publicly and privately they knew they had to earn their next deal and came into camp with that mindset.

The Utah Jazz and guard Rodney Hood engaged on an extension most of the summer. The Jazz are very committed to Hood, but would not commit to a deal at this point for a bunch of reasons, the biggest being they don’t really know what the team is yet. Hood is going to get a big opportunity this year, and the Jazz want to see if he can handle the increased load and stay healthy. Injuries have ravaged the Jazz lately, and they were reluctant to lock in a big number to a player that hasn’t been durable.

Of the bunch, Hood is the most likely to get a deal without the restricted free agent offer sheet process next summer—the Jazz may simply pony up and pay him if he can fill the void they hope he can for the team.

The Milwaukee Bucks and injured forward Jabari Parker did talk about an extension despite him having torn his ACL for the second time. The Bucks looked at the idea of locking Parker in at a value, but ultimately, neither side got close enough for it to be realistic. Parker is expected to return to action sometime in February, meaning he may log enough games for a big deal in July to be realistic, especially if the Bucks are as good as they project to be this year and land home court in the postseason.

The big hurdle for all of the players that did not get an extension is that the free agent marketplace in July does not project to be as robust as it was even last year. A number of agents urged their clients to take the security of money on the table this summer, and many players opted to bet on themselves, which always sounds like a great idea until the reality of restricted free agency sets in.

Nerlens Noel and JaMychal Green were both causalities of a shrinking marketplace this past summer. It will be interesting to see if some of the players that got close this week get less in the open market in July.

More Twitter: Make sure you are following all of our guys on Twitter to ensure you are getting the very latest from our team: @stevekylerNBA, @MikeAScotto, @LangGreene, @EricPincus, @joelbrigham, @TommyBeer, @MokeHamilton@jblancartenba, @Ben_Dowsett, @SpinDavies, @BuddyGrizzard, @JamesB_NBA, @DennisChambers_ and @Ben__Nadeau.

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NBA PM: Hornets Rookies May Become Key Contributors

Some key injuries may force Charlotte’s rookies into becoming effective role players earlier than expected, writes James Blancarte.

James Blancarte

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As the NBA finally gets underway tomorrow evening, the 2017 rookie draft class will get their first taste of regular season action. Teams reliant on young rookie talent might produce an exciting brand of basketball but that rarely translates into a winning formula. Having rookies play a key role for a team hoping to make the playoffs can be a risky endeavor.

Out West, the Los Angeles Lakers are relying on both Lonzo Ball as well as Kyle Kuzma, who may have worked his way into the rotation with his surprising preseason play. However, the Lakers are, at this point, not realistic contenders in the competitive Western Conference. In the East, the Philadelphia 76ers have more realistic playoff hopes. The team is relying on this year’s top overall draft pick, Markelle Fultz, and 2016’s top pick, Ben Simmons, for meaningful production. Although Simmons has been in the league for over a year, he is still classified as a rookie for this season since he didn’t play last season.

The Charlotte Hornets are looking to return to the playoffs after narrowly missing the cut this past season. The team will likely feature not one, but two true rookies as a part of their regular rotation. Like the Lakers, the Hornets feature a highly touted rookie with the talent and poise to contribute right away in Malik Monk. The team also features Dwayne Bacon, a rookie that has flashed scoring potential as well as maturity — key attributes that will allow him to quickly contribute to the team.

Both players will be given the opportunity to contribute as a result of the unfortunate and untimely injury to forward Nicolas Batum. Batum tore a ligament in his left elbow in an October 4 preseason game against the Detroit Pistons. Initial speculation was that the injury would require surgery. However, it was announced on October 10 that surgery would not be necessary, and that he is projected to return in six to eight weeks. Assuming that there are no setbacks in Batum’s recovery, the Hornets will be looking to replace his perimeter scoring, playmaking abilities and perimeter defense. Enter Monk and Bacon.

Monk and Bacon have both shown the ability to score the ball, which is not exactly a common trait in Hornets rookies. Bacon, the 40th pick in the 2017 NBA draft, has made it a point to look for his shot from the outside, averaging 7.8 three-point shots per game while knocking down 33.3 percent of his attempts. As Bacon gains more experience, he presumably will learn how to get cleaner looks at the basket within the flow of the team’s offense. Doing so should help him increase his shooting percentage from beyond the arc, which would turn him into an even more effective contributor for Charlotte.

Bacon spoke to reporters after a recent preseason game against the Boston Celtics. Bacon was placed in the starting lineup and went 4-4 from three-point range in 34 minutes of action.

When asked what are some of the things he wanted to work on, Bacon focused on one end of the court in particular.

“Definitely defense. I’m trying to perfect the defensive side, I want to be one of the best two-way players to ever play the game,” Bacon stated. “I feel like I got the offensive side so just keep getting better on defense, I’ll be fine.”

Lack of consistency and defense are key factors that prevent many rookies from playing and being successful on winning teams right away. Based on Bacon’s size (6-foot-6, 221 pounds with a long wingspan) and physicality, he has the physical tools necessary to play passable defense. Combine that with his ability to score (he led the team in scoring in three of its five preseason games) and the unfortunate injury to Batum, it’s apparent that Bacon will get an opportunity to make the rotation and contribute.

Reliable two-way players on the wing are crucially important, but are not always readily available and are even less common on cheap contracts. The Los Angeles Clippers went through the entire Chris Paul/Blake Griffin era swapping small forwards on a nearly annual basis, struggling to find this kind of contribution from the wing. With little cap flexibility, the Clippers were unable to acquire a forward that could effectively and consistently play both end of the court, which caused issues over the years. As a second round pick, Bacon is set to make $815,615 in his first year. If Bacon is able to contribute at even a league average level, that will be a major boost for the shorthanded Hornets. Bacon is smart to focus on improving as a defender as Steve Clifford is a defensive-minded coach who will leave talented players on the bench if they aren’t making a positive impact on the defensive end of the court.

In fact, Clifford offered some strong simultaneous praise and criticism of Monk when it came to his scoring and defense.

“He can score, he can score, he can score [speaking of Monk],” Clifford stated. “I think his defense will come because he’s willing, he’s a good guy. I think that being a good player is very important to him.”

It’s apparent in Clifford’s comment that he values scoring, but that defense is also extremely important and essential to any player that wants to be a “good player.”

“He knows and understands that the way he has played in the past [in college], he can’t play in this league if he wants to be a good player,” Clifford said about Monk. “The big thing is, I told him, when people say, ‘he’s a talented offensive player’ that is a lot different than somebody saying, ‘he’s a talented NBA player.’”

Point guard Michael Carter-Williams also suffered an injury (bone bruise in his left knee), which received less attention than Batum’s injury. While Carter-Williams is not the same caliber of player as Batum, the Hornets are alarmingly thing at backup point guard. Without Carter-Williams, the team was going to lean on Batum to act as a playmaker more than he has in the past, which would have, at least in part, addressed the lack of an established backup point guard. But with Batum sidelined, Coach Clifford has given Monk time at the point guard position. If Monk proves capable of playing both guard positions and playing alongside Walker, that could go a long way towards mitigating the loss of Batum and Carter-Williams. It’s not reasonable to expect Monk (or Bacon) to produce as consistently as a seasoned veteran, but having them contribute at a league average level would constitute a big win for a Charlotte team with serious playoff aspirations.

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Teams Refuse To Back Down To Stacked Warriors

Golden State got better over the summer, but that didn’t stop others from trying to stop them from repeating as champions

Spencer Davies

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Opening week is finally upon us.

Appropriately enough, the new-look Cleveland Cavaliers and Boston Celtics will kick off the 2017-18 NBA season tomorrow night, as will the defending champion Golden State Warriors when they host the improved Houston Rockets.

The clear-cut favorites to win the league title are the ones who have done so two out of the past three years, and rightfully so. Warriors general manager Bob Myers has done a masterful job of assembling a juggernaut. They’ve kept their insanely talented core intact and—aside from Ian Clark and Matt Barnes—haven’t lost any of their key bench pieces to free agency.

In fact, Golden State has added to that dangerous second unit. Jordan Bell was bought from the Chicago Bulls and will bring another Draymond Green-esque impact almost immediately. Nick Young and Omri Casspi were brought in to fill the void of backup wings, which is an improvement at the position anyway. With the same roster as last year and better reserves to give the starters a breather, there’s no reason Steve Kerr and company can’t repeat if they stay healthy.

Knowing what the Warriors are capable of and how well they are set up to truly be a dynasty, there are some league executives out there who are hesitant to make significant moves that could potentially flop against such a powerhouse.

ESPN’s Zach Lowe reported back in middle June that select teams don’t want to risk a big play because of it. What that basically translates into is: We’re throwing in the white towel until that ball club disbands.

But luckily for fans and for parity’s sake, there was a handful of general managers that refused to take that path. Just looking down the list in the Western Conference, there were organizations that swung for the fences this summer.

The aforementioned Rockets are one of them.Daryl Morey pieced together multiple trades to allow him to land Chris Paul to play next to James Harden and form a dynamic backcourt tandem. Houston also signed a pair of veteran two-way players in Luc Mbah a Moute and P.J. Tucker to provide depth and defense.

What about the Oklahoma City Thunder? Just when we thought Russell Westbrook’s MVP season was enough to maybe build off, the unthinkable happened. Sam Presti unloaded Victor Oladipo and Domantas Sabonis to Indiana after just one season with the team to add All-Star forward Paul George, who is in a contract year.

That blockbuster move was followed up with another two months later, as Presti decided to deal fan favorite Enes Kanter and Doug McDermott to the Knicks in exchange for Carmelo Anthony. The creation of a Westbrook-George-Anthony big three forms an elite trio that is determined to prove championship worthiness.

Top tier Eastern Conference counterparts did their due diligence as well. The Cavaliers and Celtics are essentially rivals and became trade partners in an attempt to re-tool their respective rosters, in addition to gaining important pieces outside of that.

Boston inked Gordon Hayward to a maximum contract to create a bolstered starting unit alongside Isaiah Thomas, Avery Bradley, and Al Horford until madness happened.

Firstly, Bradley got moved in a swap with the Detroit Pistons for Marcus Morris to address the hole at power forward. After that—with reports of Kyrie Irving’s unhappiness in Cleveland swirling around the basketball universe—Celtics general manager Danny Ainge acted immediately and swung a deal for the All-Star point guard in exchange for his All-Star point guard, a vital member of his team in Jae Crowder and the coveted Brooklyn Nets first-round pick.

It’s almost a brand new squad, but Brad Stevens has a versatile group to work with to try and finally dethrone the conference champions of the last three years.

As for the East’s cream of the crop, the Cavaliers moves are well known because wherever LeBron James goes the spotlight follows. Thomas and Crowder were huge gets for first-time general manager Koby Altman, especially after the outside growing doubt in the franchise’s front office. The rookie executive was also instrumental in signing Derrick Rose, Jeff Green, and Dwyane Wade to veteran minimum contracts.

Rose and Green have plenty of motivation because their critics think they’re washed up, meaning Tyronn Lue won’t have to give them a reason to play their hearts out. Wade simply made the decision to come to Cleveland because he can play with his best friend and potentially add to his collection of championship rings.

Ante Zizic, Cedi Osman, and Jose Calderon are also now a part of the roster that all-of-a-sudden is now deep at almost every position. It’s a new flavor for a team that may have only one year left to compete for a title with James’ pending free agency next summer.

Those four teams feel great about their chances to get in the way of the Warriors. It doesn’t stop there though. The West in general loaded up.

The Minnesota Timberwolves executed the first big move of the year when they traded for Jimmy Butler. The Denver Nuggets signed Paul Millsap to provide leadership and a veteran voice in a young locker room full of talent. The San Antonio Spurs lost Jonathan Simmons but brought in a very capable Rudy Gay under-the-radar as Kawhi Leonard’s backup.

Nobody expected the league to completely fold and hand Golden State another championship, but it was surprising (and relieving) to see so many teams have the fortitude to pull off the moves that they did. There was definitely risk involved for some of them, however, one thing is for certain.

The Warriors will not have a cakewalk to the NBA Finals. They will have to go through a rigorous set of teams in the West throughout the regular season and the playoffs.

If any team is up to the task, it’s Golden State. But we’ll see how it plays out starting about 24 hours from now.

See you at tip-off.

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