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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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Payton Blocking Out Trade Talk, Believes Magic Will Turn It Around

Spencer Davies sits down with Elfrid Payton to discuss his fourth year, trade rumors and a trying season for Orlando in a Basketball Insiders exclusive.

Spencer Davies

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It’s hard for a team to look for positives when it’s living in the basement.

The Orlando Magic have had a rough go of it this year. They’re 13-32 at the bottom of the Eastern Conference, they’ve have had a ton of setbacks, and they currently rank 29th in the NBA in defensive rating.

There is a bright spot hidden in there, though, and head coach Frank Vogel sees it growing as the season progresses.

“We’re frustrated with our record, but we’re encouraged with the development we’ve had with our young players,” Vogel said before Thursday’s game in Cleveland. “Aaron Gordon, Mario [Hezonja], and [Elfrid Payton] have all had strong individual seasons and continue to get better. All those guys are improving individually and at some point, it’s gonna lead to more Ws.”

While Gordon stands out more to some than the others because of his star appeal, Payton is right up there with him as far as making the next step goes.

“Elfrid’s shooting the ball better from the perimeter and at the rim,” Vogel said. “He’s worked on his left hand. He’s worked on his floaters. Shooting 52 percent from the field and that’s pretty darn good for a point guard, and the 39 percent from the three as well.”

Those are your more traditional statistics that don’t address the leap he’s taken in efficiency. Sure, Payton’s scoring the same amount of points per game, but it’s the way he’s been getting that’s been most noticeable.

According to Basketball-Reference and NBA.com, he’s making nearly 70 percent of his tries between 0-3 feet and ranks third among point guards in restricted field goal percentage (min. four attempts).

But Payton doesn’t like to evaluate himself using numbers, so he doesn’t know how to feel about how he’s played for Orlando this year.

“It’s tough to say because I like to measure my success by winning and we haven’t been doing that,” Payton told Basketball Insiders. “So tough to say.”

He’s not kidding. Since starting out the season 8-4, the Magic have taken a hard fall, only winning five games since November 10. In this stretch, there have been three hefty losing streaks—two 9-game slides and most recently a 7-game skid.

“Not to make excuses—we had a lot of injuries,” Payton told Basketball Insiders of what happened. “Haven’t really been playing with the group of guys that we started the season with, so kinda derailed us a little bit.”

As the losses pile up, so does the chatter. Indicated by multiple recent reports, Orlando has made it clear that many players on the roster are available on the trade block. Evan Fournier, Mario Hezonja, and Payton were recently brought up as names who could possibly on the move if the right deal presents itself.

When asked about the rumblings, Vogel claimed he doesn’t have a message for his guys.

“They understand it’s part of the business,” he said. “Just focus on playing the game.”

Like his coach, Payton doesn’t have a reaction to the noise.

“I don’t get caught up into the things like that,” Payton told Basketball Insiders. “Today I’m an Orlando Magic. I play for the Orlando Magic and I’m gonna give them 100 percent of me. I’m somebody that likes to finish what I started, so I definitely would like to see this through and try to turn this organization around.”

So who does he see on this team that can help jump-start the process in flipping the script?

“Everybody,” Payton told Basketball Insiders. “I like Vuc. I like AG. Evan [Fournier] is somebody who can fill it up. T Ross is somebody who can fill it up when healthy. I think we have a lot of talent on this team. Even the rookies—Wes [Iwundu] plays well for us in stretches. Jon [Isaac] when he was playing he’d do well.

“You could see the potential there. So I think we have a lot of weapons on this team. I’m very confident in the group we have here. I think we have a lot of talent, we just have to do it.”

Saying you’re going to right the ship is one thing. Actually doing it is a whole other challenge. With where the Magic sit in the standings currently, their work is cut out for them. That being said, Payton isn’t giving up.

In fact, he’s still got his eyes on making it to the postseason, and it starts with him.

“Definitely trying to get a run going,” Payton told Basketball Insiders. “Make a playoff push. It’s definitely not out of sight right now, especially with the way the East is. We win a few games and we right back in the thick of things.

“Do whatever I can to help us to get more wins, man. I think that’s what it all boils down to. I figure if I’m playing well, that means we’re winning for the most part.”

Defense matters the most, and it’s something Payton and his group know they need to get better at if they have a chance to play past mid-April.

“Just be tied in together a little bit more,” Payton told Basketball Insiders. “I think sometimes we have too many breakdowns on the backside. So just being more in-tune with each other.”

One thing is for sure—Orlando is going through this difficult time as a team, but refuses to fold. Payton says Vogel has constantly stayed in their ears with uplifting advice.

“Keep fighting,” Payton told Basketball Insiders of his words. “Don’t feel sorry for yourself. No one’s gonna feel sorry for you, so just keep fighting.”

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NBA Daily: Three Teams Treading Water In The West

While the Clippers have surged into the playoff picture, the Blazers, Nuggets and Pelicans are barely staying afloat out West.

Buddy Grizzard

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While the L.A. Clippers have surged into the Western Conference playoff picture on the crest of a six-game win streak, the Trail Blazers, Nuggets and Pelicans are stumbling toward the All-Star break with records around .500 over their last 10 games.

All four teams are within a game of each other and hovering around the playoff cut line. For teams that are treading water, the second half of the season will be a struggle for consistency in a brutal playoff race that promises to leave a good team on the outside looking in.

Although Richard Jefferson is winding down a storied career and barely playing for the Nuggets, he often takes the role of elder statesman in media scrums. After the Nuggets became the latest victim of the red-hot Clippers Wednesday, Jefferson said they should not be underestimated.

“They’ve been a playoff team for many, many years,” said Jefferson. “They’ve dealt with some injuries but, for the most part, I think they’re going to be in the hunt for the playoffs just like we are.”

Jefferson was also asked about the Nuggets’ late-game execution and pointed to the team’s overall youth with major addition Paul Millsap missing extended time due to injury.

“We’re getting to a spot of being a little bit more consistent in those moments,” said Jefferson. “But ultimately, I think guys are still learning. Most of the guys that are in these positions are in these positions for the first time. I think we’ll continue getting better as the season goes on.”

Meanwhile, the Pelicans experienced its own setback Wednesday in a loss to an Atlanta Hawks team that’s tied for the second-worst record in the league. For now, the Pelicans hold the seventh seed. It will be up to the continuing evolution of the Anthony Davis-DeMarcus Cousins pairing to keep New Orleans trending in the right direction.

“For us, we’re two guys who can shoot the ball, handle it, pass,” said Davis after the loss in Atlanta. “We’ve got a lot of guys around us who are capable of making plays. I think we compliment each other. There’s still some stuff we still want to get better at as a unit.”

Davis went into further detail about what makes the rare pairing of two elite big men work.

“Cuz is always spacing the floor,” said Davis. “One guy’s inside, the other one’s outside. We set screens for each other, throw lobs for each other. So it’s tough for bigs to try to play that. When we set a pin-down for myself or DeMarcus, most four or fives are not used to that.”

Davis came into the game with 30 or more points in three straight games and seven of the previous 10—he’s been on a massive roll. However, that streak came to an end as Davis hit only two of eight shots for eight points. Hawks rookie John Collins scored 18 while dealing with the issues Davis described.

“You’ve got A.D. on the one hand and then you’ve got Boogie on the other hand,” said Collins. “[They’re] some of the best bigs in the league, very skilled guys, obviously a handful to deal with.”

Hawks shooting guard Kent Bazemore led Atlanta with 20 points and hit the final shot in the waning moments to secure the victory. Bazemore is a player the Pelicans could conceivably pursue at the trade deadline to address wing issues.

Meanwhile, the Trail Blazers are dealing with questions of whether a team built around Damian Lillard and C.J. McCollum can become competitive with the West’s upper echelon. Marc Stein of the New York Times went so far as to predict that Portland’s backcourt could be broken up this year.

“No one’s suggesting it’ll happen before the Feb. 8 trade deadline,” Stein wrote. “But Portland’s latest so-so season threatens to be the impetus that finally pushes the longtime Blazers owner Paul Allen in a new direction.”

This is the time of year when NBA teams take stock and have to decide if they are properly constructed or need to look at changes. With the Pelicans, Trail Blazers and Nuggets barely keeping pace in the playoff race, few other teams will be more heavily scrutinized — internally as well as externally — as the trade deadline approaches.

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NBA Daily: Things To Watch Heading Into Trade Season

Two of our experts identify four teams and four players to keep an eye on during trade season.

Basketball Insiders

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With memories of DeMarcus Cousins being told that he was traded to the New Orleans Pelicans during his postgame availability at last season’s All-Star game, the NBA moved the trade deadline up.

This season, the deadline falls on February 8, and all there has been a lot of discussion leading into next month’s deadline.

We asked Moke Hamilton and Lang Greene to weigh in on some items to keep an eye on over the next three weeks.

Nikola Mirotic and Derrick Favors

This year’s trade deadline will probably lack big names getting moved, but teams such as the Philadelphia 76ers, New York Knicks and Denver Nuggets are within sniffing distance of a playoff berth for the first time in years. It will be interesting to see if their respective front offices swing for the fences to achieve the goal.

There are three ways to improve a roster or prepare for the future in the NBA. The methods are free agency, trade and the annual draft. Trade deadline deals are risky. There are a lot of deals each season which involve players on the verge of hitting the free agent market. Teams acquiring these take the risk that they’re only “renting” those guys until the season concludes.

At the end of the day, though, the two biggest names we may see moved are Nikola Mirotic and Derrick Favors.

Mirotic has been plagued by inconsistency throughout his career, but the fourth-year forward is by far having his best season as a professional despite his minutes remaining flat. On a per 36 minute basis, Mirotic is averaging 25.1 points and 9.9 rebounds.

Mirotic and teammate Bobby Portis made headlines before the season for their fight, which led plenty of missed time for the forward. Mirotic’s name has been mentioned on the block ever since this incident, but it’s clear the Bulls have integrated him back into their rotation fully. Still, the team is believed to simply be waiting for the right time and trade partner and that Mirotic’s days in Chicago are numbered.

According to the Chicago Tribune, the Bulls plan to be patient in fielding calls for Mirotic, while the player has deflected all talks to his representatives.

“I didn’t talk to [the Bulls’ front office recently],” he said. “Probably my agents are talking, so I don’t know so far what’s going on, but I know my name is going to be out there. I’m doing my job, and I’m sure they’re doing their job, and we’re both going to do what’s best for the team.”

Mirotic has a no-trade clause built into his contract and would have to waive it prior to completing any deal, unless the Bulls were to guarantee the team option on the final year of his contract for 2018-19. Don’t count on that, though.

With respect to Favors, he battled injuries the past two seasons but has remained relatively healthy to begin this campaign. The forward is shooting a career high from the field, but according to the Salt Lake Tribune, the Utah Jazz have dangled him in trade talks since the beginning of the season.

Favors was one of the central parts of the Deron Williams trade years ago, but could be expendable because of the emergence of center Rudy Gobert in the Jazz’s frontcourt. The forward is on the books for $12.5 million this season and was most recently linked to the aforementioned Mirotic in trade talks between Utah and Chicago.

– Lang Greene

DeAndre Jordan and Paul George

Heading into deadline season, there’s not much out there to suggest that we’ll see any superstar-caliber players moved. With the likes of Paul George, Jimmy Butler, Chris Paul and Kyrie Irving among the players that switched teams over the summer, it seems that most NBA teams that have difference-makers on their rosters are in construction mode—they’re trying to compete with the Cavs or the Warriors.

The two superstar players who merit some discussion, though, are DeMarcus Cousins and DeAndre Jordan.

With respect to Jordan, the Clippers find themselves in a very peculiar situation. With Chris Paul having defected to the Houston Rockets, it’s easy to conclude that the Clippers are no longer a true contender. Still, they’ve played so well over the past few weeks (including scoring a victory over Paul and his Rockets) that it seems a difficult proposition to proactively pull the plug.

Still, though, as written in this past Sunday’s column, it’s time for the Clippers to trade Jordan, mainly because a team that is heading toward a rebuild can’t afford to lose a player of his caliber for nothing, and that’s quite possible unless the Clippers fork over a max contract to Jordan this summer. The proposition wouldn’t be wise, particularly because it could cost the Clippers a first round pick in one of the upcoming drafts.

He’s definitely a player that should be watched.

Paul George, on the other hand, doesn’t appear likely to be headed out of Oklahoma City. The team is reportedly committed to keeping him for the duration of the season, with the hope being that the Thunder will get their act together and win a round or two in the playoffs. With the team still hovering around .500, it seems a long shot.

There are some, however, that believe that the Thunder should at least see what might be available to them in exchange for George, especially with the team trading Victor Oladipo and Domantas Sabonis for him. That’s especially true with Oladipo closing in on what certainly appears to be his first All-Star selection.

– Moke Hamilton

Dallas Mavericks Are Open For Business

The Dallas Mavericks are in a clear rebuild and the prospect of making the playoffs is more dream than reality this season, but the team does have some things going for it.

The Mavs have roughly $13 million in cap space, which puts them in a prime spot to acquire talent at the deadline without giving up any of their players in return. In fact, Mark Cuban went on the record and said exactly that.

“I would say we are looking to use our cap space actively,” Cuban told the Dallas Morning News earlier this week. “We will take back salary to get picks or guys we think can play.”

The Mavericks have the second-lowest payroll in the league, but Cuban has been known to spend money to acquire relevant talent. The team hasn’t had much success in in attracting free agents in recent years, and with the Hall of Fame career of Dirk Nowitzki coming to an end, the team is undoubtedly looking to retool.

– Lang Greene

Cavs and Lakers Each Likely To Do Something

It’s a poorly kept secret that the Los Angeles Lakers have had their sights set on acquiring a superstar or two this coming summer. With Paul George, DeMarcus Cousins and LeBron James among those who could hit the market in July, the Lakers have quite a bit of incentive to try to rid themselves of the contracts of Luol Deng and Jordan Clarkson.

Where things get interesting for the Lakers is with the emergence of several of their young players this season. Brandon Ingram, Julius Randle, Kyle Kuzma and to a lesser extent Josh Hart have each given the team impressive minutes this season. If the Lakers feel they have a real shot at signing James and, say, DeMarcus Cousins, it may be enough for them to package Deng and/or Clarkson with one of their promising young players and perhaps a future draft pick.

It’s certainly something I’d keep my eyes on.

And speaking of future draft picks, with the Cavs not taking their standing in the Eastern Conference for granted, one can only wonder the extent to which the Nets’ first round pick this coming season is burning a hole in their pockets. Aside from the Nets pick, though, the Cavs do own their own first round pick, which could be enough for them to pry the likes of a player like Mirotic or Favors from their current team.

There has also been some conjecture revolving around the availability of Tristan Thompson, with one interesting scenario having the Cavs and Clippers at least contemplating a trade involving Thompson and Jordan.

The Cavs and Lakers each have too much at stake to not do something.

– Moke Hamilton

Only 21 Days To Go…

With the trade deadline exactly three weeks from today, talks will certainly heat up.

For now, though, the Mavs, Cavs and Lakers appear to be the teams most involved in conversations, with Nikola Mirotic, Derrick Favors and DeAndre Jordan among those most likely to be dealt.

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