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The Unintended Consequences of the 2011 CBA

The owners fought for and won major system changes in the 2011 collective bargaining agreement, but not all of these have operated as intended.

Nate Duncan

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The 2011 NBA lockout was universally hailed as an unmitigated win for the owners. They forced significant concessions from the players, reducing their percentage of Basketball Related Income from 57 percent to 50 while winning on so-called system issues as well. The players received almost no concessions in exchange. The system changes the owners fought so hard for were theoretically designed to level the competitive playing field between big and small markets while allowing teams to keep their superstars.

The only certain thing in such complex negotiations is that some unintended consequences will arise. Even the best of forecasters with carte blanche to design a system may struggle to anticipate the effects or regulation. When such regulations are the result of compromise or negotiation, they grow even more unpredictable. As a result, the 2011 CBA has resulted in some trends that may well have surprised its framers.

Small Market Teams are Less Competitive

The previous CBA featured a luxury tax* in which teams were taxed at $1 for each dollar of salary above the tax threshold. One of the key “system issues” the owners fought for in the name of competitive balance was to increase the luxury tax to far more punitive levels. Teams now must pay a minimum of $1.50 per $1 in salary over the tax, and that increases with each $5 million dollar increment, to $1.75, $2.50, $3.25, and then an additional 50 cents per $5 million after that. Teams that have paid the luxury tax four of the past five seasons add another $1 for each tax bracket, the dreaded “repeater tax.”

*Simply called the “tax” in the actual CBA.

The ostensible purpose of the more punitive tax was to preserve competitive balance by preventing large market teams from spending so much more than small market teams. However, the consequence of the more punitive luxury tax has instead been to widen the gulf between small and large markets, because under the heightened tax only the large market teams can afford to do so. Even worse, the inability or unwillingness to pay the tax has already hurt the title chances for some small market teams.

It was the case under the previous regime that the Knicks paid far more in luxury tax than any other team, with the Lakers also in the top four. But more important than that was the fact that nearly every team paid the tax at one point or another when they thought it was necessary to contend. Taxpayers included small market teams such as the Jermaine O’Neal-era Pacers, the Dwight Howard-era Magic, the early 2000s Kings, the Jazz in 2009-10 and 2010-11, the Timberwolves in their conference finals season of 2003-04, the Cavaliers in the later LeBron James era, the Spurs at various times, and many others. Only the Bobcats, Bulls, Warriors, Hornets, Sonics/Thunder, and Wizards did not pay the tax under the previous CBAs.

Why such an egalitarian distribution of taxpayers? Teams could actually afford to do it when contention warranted, or at least looked like it might. Meanwhile, under the previous two CBAs, the only contender that really hurt its chance at a title though active salary-reducing moves was Phoenix.*

*The Nash/Stoudemire era was the best of times and the blurst of times for Suns fans. Some of the moves: Did not match Atlanta’s five-year, $67 million offer for Joe Johnson (though they did get Boris Diaw and two first-rounders for him); traded Rajon Rondo to Boston to get Brian Grant off the books; traded two first-rounders, one of which became Serge Ibaka, to Seattle to get Kurt Thomas off the books; sold Rudy Fernandez to Portland for $3 million.

Contrast that distribution to the last two years. The only teams that have or will pay the tax so far are the Celtics, Nets, Bulls, Lakers, Clippers, HEAT and Knicks. Aside from the mid-market HEAT, who have a unique mindset with Mickey Arison’s ownership and their three superstars, all of these teams are in big markets.

But even more notable than who has paid the tax is who has not. Three teams that have made the conference finals in the last two seasons have made blatant tax-avoiding moves.* While the Grizzlies’ trades of Marreese Speights and Rudy Gay a year ago were not fatal to contention, the Thunder and Pacers have really hurt their title chances. The Thunder traded James Harden to Houston for players who have not even begun to match his production. Meanwhile, the Pacers dumped longer-term salary by trading Gerald Green, Miles Plumlee and a first-rounder for Luis Scola to offset Paul George’s maximum extension and the coming extension for Lance Stephenson. Those trades may be the two worst of the last two seasons. Both teams have also resisted using their mid-level exceptions, or using other trade assets to add talent despite clear areas for potential upgrades.

*It is an open question whether small-market teams cannot afford to pay the luxury tax, or simply are using the more punitive tax as an excuse. Either way, the fact remains they are not doing it so far.

In past years, those teams might have been willing to suck it up and pay the tax to maximize their title odds. Now, only the large-market teams do that.*

*Even the HEAT decided to save cash through the amnesty of Mike Miller, a player who was very important in spots to their two title runs and absolutely would have helped this year.

Superstars Are More Likely to Leave as Free Agents

Another big priority for the owners was to help teams keep superstars like LeBron James, Chris Bosh and Carmelo Anthony rather than allowing them to so easily leave for greener pastures. Class of 2003 draftees James, Bosh and Dwyane Wade all negotiated Early Termination Options (ETOs) into their rookie contract extensions. Owners like the Cavaliers’ Dan Gilbert apparently believed that seven years of team control for rookies was insufficient, so the owners negotiated for a number of key changes:

  • Maximum rookie extensions now must be at least four years, exclusive of any option years.
  • ETOs are only allowed on five-year contracts, and can only lop one year off the contract.
  • The amount a player could receive in a sign-and-trade was limited to what he could receive as a straight free agent signing with another team, namely four-year contracts with 4.5 percent annual raises rather than five-year contracts with 7.5 percent annual raises if he stayed home.
  • To avoid what happened with Carmelo Anthony’s 2011 trade from the Nuggets to the Knicks, contract extensions within six months of a trade are limited to three seasons (including the current season) with 4.5 percent annual raises rather than four seasons with 7.5 percent annual raises.

Unfortunately for the owners, they also decided to limit contract extensions in an effort to save them from themselves. Under the previous CBA, teams gave out ludicrous eight-figure per year extensions to veteran players like Richard Hamilton and Stephen Jackson long before they were due to become free agents. In an effort to curb this, the new CBA limited any extensions for veterans (i.e., players not coming off rookie contracts) to four years, including the current season. Because the “current season” in this instance continues until June 30, the longest extension that can ever be given before a player becomes a free agent is three years.

As a result, it makes almost no sense for any decent player who is not coming off a rookie contract to extend before becoming a free agent, because the player can receive a five-year new contract from his current team.* Even if he signs elsewhere, he can still get a four-year contract with another team rather than only three years had he extended.

*A player who has been in the league eight years, including the last four with the same team, can also get a no-trade clause if he becomes a free agent and re-signs a new contract with his prior team. This is not possible with an extension.

Thus, much of the work the owners did to deter free agents from leaving was undone by taking the best method for retaining players–preventing them from becoming free agents in the first place–out of the owners’ hands. To date, only Andrew Bogut and Kobe Bryant (who was encouraged by the Over-36 rule) have signed veteran extensions in the nearly three seasons of the new CBA.

Consider the case of Dwight Howard. Had the Lakers been able to offer him a four- or even three-year maximum extension upon his arrival in Los Angeles in the summer of 2012, he very well might have taken it, especially considering he was recovering from major back surgery at the time and the Lakers appeared to have assembled a superteam. Instead, due to the limitations on extensions he was essentially forced to wait and become a free agent, the Lakers imploded, and Howard left for Houston.

Mediocre Teams Cannot Get Anything For Their Stars

Now, consider the fact that shorter contract lengths and extensions mean that all players, including superstars, are going to be free agents more often. Moreover, players are generally closer to becoming free agents than they were under the previous regime. Unfortunately for mediocre teams with superstars, this means both that they are more likely to lose such players in free agency and that they cannot get as much for them in trade even if they are sure to leave.

Consider the case of the Timberwolves and Kevin Love, who can be a free agent in the summer of 2015. Even if they come to the realization that he is likely to leave, Minnesota cannot expect much return because a potential trade partner has no guarantee he will stay either. It still makes sense for Love to become a free agent rather than extend, and only the best teams can be confident that a player like Love would choose to re-sign. Even that can go awry, as we saw with the Lakers and Howard. In past years, a small-market team with a ton of assets like the Jazz could offer picks or young players to the Wolves after working out an extension with a player like Love. Now, they would be fools to trade much for him knowing he will be a free agent.

Trading Season is Much More Boring

All of the above factors combine to make trades a lot less interesting than in past years. In addition to the disincentive to trade or trade for superstars, the new CBA restricts cash payments in trades to only $3 million per season rather than $3 million per transaction, while the punitive luxury tax makes cost-controlled first-round picks too valuable to trade for a mere rental of a free agent-to-be. This year’s trade deadline proved this to be the case. Not a single first-round pick changed hands, and no stars did either.

Nate Duncan is an NBA analyst and attorney. He writes regular features for Basketball Insiders and chats weekly at 11 Eastern on Tuesdays.

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2018 NBA Draft Diary

NBA Daily: The Winners Of The NBA Draft

Simon Hannig breaks down the winners from Thursday’s 2018 NBA Draft.

Simon Hannig

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The 2018 NBA Draft has come and gone, and although many teams have improved coming out of this loaded draft, five teams seemed to have walked away as the biggest winners.

The Phoenix Suns Got Their Guy

The Suns made a couple of splashes in the draft, selecting DeAndre Ayton with the first overall pick.

The Suns then drafted Zhaire Smith, but later traded his rights to the Philadelphia 76ers for Mikal Bridges.

In the second round of the draft, Phoenix selected Frenchman Elie Okobo and George King from Colorado, each of whom should be able to contribute right away. Ayton should be the starting center come opening night and Bridges could also start for the team immediately. If not, Bridges will be a valuable weapon coming off the bench for a team who is trying to win games and get back into the playoffs.

Does Mo Bamba Have The (Orlando) Magic?

The Orlando Magic got a stud in Mo Bamba, whom they surprisingly selected with the sixth overall pick in the draft. They later drafted Melvin Frazier in the second round. It was a bit surprising that the Tulane product lasted that long, but the Magic benefitted.

Orlando got a player who can contribute right away and could compete for a starting job. Frazier is a great rebounder and defender and could change the team’s defense all by himself. The club now has two young core pieces they can build around in Jonathan Isaac and Bamba and a young contributor in Frazier.

Although the team’s offense will likely be work in progress, they can be very scary on the defensive end.

Now, we’ll all wait to see if Bamba, the New York product, can carry the Magic back to respectability.

Atlanta Hawks Will Let It Fly

Despite the Hawks trading Luka Doncic, the Hawk drafted players that can help and contribute right away, plus Quavo from the Migos got his wish of Trae Young being selected.

With their second first round pick, the Hawks took sharpshooter Kevin Huerter from Maryland and they took Omari Spellman from Villanova with their third pick in the first round. The Hawks are starting to build themselves like the Warriors, getting sharpshooters in Young and Huerter. It is no surprise they are doing this as their current general manager, Travis Schlenk, worked with the Golden State Warriors before taking the job with the Hawks.

They have the core for their future and I am really excited to see what Young can do in the NBA.

The Rich Got Richer In Boston

The Celtics once again got a steal in Robert Williams from Texas A&M. They get another athletic big man who plays great defense and rebounds the ball very well. I am pretty surprised he fell this far.

He is another rim protector the Celtics can use. He averaged 2.5 blocks per game in college. He will also provide second chance opportunities for the team. Williams averaged 3.0 offensive rebounds per game in college. He is just a monster on the defensive end of the floor and on the boards.

He would have been a lottery pick in last years draft, but he decided to stay in school another year, and I am sure the Celtics are happy about that.

Luka Doncic Found A Good Home

The Mavericks have the best young backcourt duo in the NBA now in Dennis Smith Jr. and Luka Doncic. They also drafted Jalen Brunson from Villanova, acquired Ray Spalding from Louisville in a trade with the Sixers and drafted Kostas Antetokounmpo, Giannis’ younger brother, in the second round. I love the Mavs’ backcourt a lot.

It is going to be very scary in a couple of years. It will take time and patience to develop them, but it will be worth it. This is going to be a dynamic duo for years to come for the Mavs. The Mavs have set themselves up not only for the future, but also to compete and to try to get into the playoffs. It also depends if they can bring in a max player in free agency, but I love the core the Mavs are building.

The Mavs should be a better defensive team next season, and will be a better offensive team next season with the weapons they have added to the team.

The Mavs are the clear cut winners of the 2018 NBA Draft.

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2018 NBA Draft Diary

NBA Draft Night Trades

David Yapkowitz breaks down the trades that took place during the 2018 NBA Draft.

David Yapkowitz

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Another NBA Draft has come and gone. With rumors swirling all week about possible pick/player movement, the night remained relatively uneventful. There were a few trades that occurred, however. Here’s a quick breakdown of the movement that happened on draft night.

1. Atlanta Hawks/Dallas Mavericks

The Hawks and Mavericks completed the first trade of the night early on in the draft. Leading up to the draft, there were questions about how high Luka Doncic was going to be drafted. It was widely assumed that he wouldn’t slip past Dallas at No. 5. The Mavericks weren’t going to take that chance as the Hawks drafted Doncic with the intention of trading him to Dallas for Trae Young.

Both teams ultimately get what they need. It’s been reported that the Hawks might move on from Dennis Schroder this summer and they’ll need a point guard to replace him. Young is an explosive scorer who will fit in nicely with Atlanta’s rebuild. He can score from anywhere on the court and he’s a great playmaker as well.

For the Mavericks, they get a guy to add to their own young core with Dennis Smith Jr. and Harrison Barnes. Doncic has the size to play next to Smith in the backcourt. He’s quite possibly the best playmaker in the draft with a solid offensive game as well.

2. Charlotte Hornets/Los Angeles Clippers

The Hornets and Clippers consummated the second move the night by swapping their own draft picks. The Hornets took Shai Gilgeous-Alexander with the 11th pick and then immediately traded him to the Clippers for Miles Bridges, whom Los Angeles selected at No. 12.

For the Hornets, they get a guy who can play both forward positions. Bridges is more of a small forward but in small ball lineups, he can slide over to the four. Offensively he is at his best when he puts the ball on the floor and attacks the rim. He’s a decent shooter too.

The Clippers get a point guard who was rumored to climbing up many draft boards as the night approached. Gilgeous-Alexander is a solid pick for them provided both Patrick Beverly and Milos Teodosic’ injury history. He can also play off the ball if need be. He’s got the physical tools to be a very good defender at the NBA level. It’s not at all far-fetched to imagine him as the future long-term starting point guard for the Clippers.

The Hornets also got two future second-round picks from the Clippers.

3. Philadelphia 76ers/Phoenix Suns

The Sixers and the Suns had the next move of draft night, also swapping their picks. The Sixers selected hometown hero Mikal Bridges with the No. 10 pick and later traded him to the Suns for the No. 16 pick, Zhaire Smith.

Bridges made a lot of sense for the Sixers. Not only is he a local guy, but his mother works for the team as well. He was a talented player who fit their team. He gave a post-draft press conference raving about being a Sixer all the while he had been traded already. But such is life in the NBA. Instead, Phoenix gets a guy that’s ready to contribute in the NBA right away. He’s the prototypical 3&D type guy.

For the Sixers, Zhaire Smith is another guy who was steadily climbing the boards in the days leading up to the draft. He’s a very athletic prospect with good defensive instincts. He probably won’t play much right away, but he does have the potential to end up being one of the better rotation players in this draft.

The Sixers also get a 2021 first-round pick from the Suns via the Miami Heat. It’s highly likely this ends up being a lottery pick and thus giving the Sixers the chance to add a high-end talent to an already potent group.

4. Second-Round moves

There are a few second-round moves that were made as well.

For one, the Hawks selected Devonte Graham with the 34th pick and traded him to the Hornets for two future second-round picks. Graham is another NBA ready guy who can come in and immediately contend for backup point guard minutes behind Kemba Walker.

The Sixers were involved in another deal sending the No. 38 pick Khyri Thomas to the Detroit Pistons for two future second-round picks. Thomas is a player that many projected to go in the first round. For a team that didn’t have a first-round pick coming into the night, the Pistons essentially picked one up. It’s possible he turns out better than Detroit’s most recent first-rounders Henry Ellenson and Luke Kennard.

The Sacramento Kings drafted Gary Trent Jr. with the 37th pick only to trade him to the Portland Trail Blazers for two future second-round picks. Trent was one of the better shooters in the draft and that’s what he projects to the be in the NBA. He’s probably a few years away from earning a spot in the rotation but he was also a possible first-round pick. He’s more NBA ready than Anfernee Simons who the Blazers took in the first-round.

The Orlando Magic and Denver Nuggets swapped second-round picks with the Magic sending the No. 41 pick Jarred Vanderbilt to the Nuggets for the No. 43 pick Justin Jackson and a future second-round pick. Vanderbilt is a project in every sense of the word. He’s extremely raw and probably needed more time in college. But he’s got long-term potential and could pay off in the future. Jackson, on the other hand, was possibly a first-round talent had he entered the draft last year. He’s going to have to make the roster but could be a 3&D guy.

In the final move of the night, the Hornets traded the No. 45 pick Hamidou Diallo to the Oklahoma City Thunder. Diallo is a guy that had he come out last year, probably would’ve been a first-round guy. In any case, he is also very raw and will need seasoning in the G-League. He’s got all the physical tools and skill to be a good rotation NBA player.

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2018 NBA Draft Diary

#28 – Jacob Evans – Golden State Warriors

Jesse Blancarte

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With the 28th overall pick, the Golden State Warriors selected Cincinnati Junior Jacob Evans.

Evans represents a solid pick for nearly any NBA team. Evans fits in the mold of a potential 3-and-D role player. Evans improved in his time at Cincinnati, culminating in his junior year, where he scored 13 points and 4.7 rebounds per game. Evans spent three seasons at Cincinnati and rounded himself into a versatile two-way player who can bring a lot of value at the NBA level.

Evans is a very cognitive player, especially on the defensive end. He has a better grasp of his limitations than most players at this stage of their respective careers and is able to maximize his individual defensive ability within a team concept. Evans generally makes the right rotations, double-teams at the right times and funnels his opponents to where his teammates are when he cannot contain the ball-handler on his own. With the right coaching, he could become a valuable defensive wing in an NBA rotation sooner than some anticipate.

Additionally, Evans is more than just a shooter. He led his team in assists last season and has some skill as a playmaker. Evans will be more of a shooter and finisher in the NBA, but the ability to make the right pass, swing the ball when he isn’t open and take the ball off the dribble when necessary make him an intriguing prospect. This is especially true when you consider how valuable a player like Khris Middleton has become over the years, adding layers to his 3-and-D skill set each season.

The Warriors aren’t in need of an influx of talent but are happy to add Evans regardless.

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