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NBA AM: Don’t Bank On Contract Extensions

The current Collective Bargaining Agreements makes extending an existing contract bad business for stars at the top of their game… The NBA can’t take away the fan vote for All-Stars.

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The Problem With Extensions:  Unless you are a NBA player on your rookie scale contract or a player that’s not going to command top dollar, agreeing to a contract extension while you are in the prime of your career making less than maximum money is bad business. As much as fans want to see closure on their favorite players, the truth is that signing a contract extension is often the worst deal a player can make.

Take New York’s Carmelo Anthony for example, or insert Miami’s LeBron James or Dwyane Wade if it makes you feel better. The way the Collective Bargaining Agreement works is that in an extension you can never have a combination of existing years and new contract years equaling a number greater than four. So for all three guys, while they can opt for free agency in July, they all have one more year at their discretion on their deals. So even though they can be free agents, they have one more year. Equally, this year counts too, so for the sake of discussion all three have two on their deal. The most either could add by way of an extension in two more years. If they wait and opt for free agency in July they can come away with new five year deals from their existing team.

»In Related: The Salary Cap Position Of Every Team In The NBA.

It’s not hard math. Two contracts years now or four contracts years in July. Almost no one takes the deal now, because the guaranteed salary is so much greater in just a few months.

This is undoubtedly going to cause problems for the Knicks and to a lesser extent the HEAT. None of these guys are inking extensions, which means in theory each could walk away and leave their respective franchises with nothing.

As the trade deadline approaches each team is going to have to come to grips with their own demons about what could happen this summer. The HEAT feel extremely confident that all of their guys are staying where they are. The Knicks on the other hand have more to be concerned about, given the dysfunction and frustrations that are boiling over in the Big Apple.

The Sacramento Kings have a similar situation brewing with Rudy Gay. He too can opt for free agency, and while it’s unlikely anyone pays Gay a single season salary equal to the $19.31 million he can opt in for in Sacramento next season, would he be open to leaving $19 million on the table in exchange for a four year $40-$45 million deal somewhere else? The Kings will have to come to grips with that scenario before the trade deadline or they could lose him for nothing in return too.

The Boston Celtics are reported to have offered Rajon Rondo a new contract, in an attempt to lock him in and end some of the speculation, but as Celtic’s president of basketball operations Danny Ainge told 98.5 The Sports Hub’s Toucher & Rich, the way the rules work its smarter for Rondo to hit free agency than sign an extension.

“We did talk to Rondo about extending him,” Ainge said. “But that’s all part of the negotiation that will happen again this summer and most likely the summer after. I don’t know [if he will sign an extension], time will tell.”

“In the Collective Bargaining Agreement, there are limits on what can and can’t be done. Really it’s not that Rondo doesn’t want to accept an extension, but it’s just not financially smart for him to accept it right now,” said Ainge. “We didn’t think he would [sign], but we did tried.”

»In Related: The Celtics Need A Decision On Rondo.

Ainge isn’t the only GM to have broached this concept with a soon-to-be free agent. The Chicago Bulls are reported to have tried to strong-arm Luol Deng into an extension before they ultimately traded him to Cleveland.

It’s very likely that as the February 20 trade deadline gets closer that teams with players holding options for free agency ask those players to opt-in before they make their decisions on whether to entertain trades involving those players.

But given how the contract system is constructed the best scenario for almost all of them is to wait until July and opt-out, if only to insure they get the highest possible dollar and the longest possible contract.

So when you wonder why a player doesn’t just sign an extension now. It’s likely because its bad business for them to leave money and years on the table and that’s exactly what they’d have to do to remove the uncertainty.

» From the In Case You Missed It Files — Tommy Beer wonders if it’s time to trade Carmelo Anthony?… Jabari Davis gives you the Six Things You Need To Know About The Lakers… Moke Hamilton dropped his first NBA Power Rankings for Basketball Insiders, did you miss it?

The No-Win Scenario:  With the 2014 NBA All-Star starters announced last night. There was no shortage of outrage and commentary about the ten players selected as starters.

In case you missed it, none of the Rockets stars were named starters, and Rockets GM Daryl Morey took to twitter to express his disgust:

Let’s face it, there is no way that the NBA can have fans vote and the outcome be fair or balanced. It cannot happen without diluting the number or the value of the participants. We have seen this in other sports where the fan vote is only a percentage of how a player gets in and the number of votes cast ends up being much lower.

AllStar2014_StartersIf the NBA takes the power of selecting the starters out of the fans hands, it will dilute the impact the process has. Why vote, if your vote can’t swing the process?

Fan voting is big business for the NBA. It’s an interactive process that puts a brand marketer in the face of millions of fanatic and emotional transactions. It’s a huge branding tool and the NBA makes a tremendous amount of money selling it. Let us not forget that the NBA All-Star Game is 100 percent about making and generating revenue and tying sponsors to the biggest names in the game.

None of that might make sense to players who have bonus money tied to the process, or smaller fan-base teams that feel snubbed, but the truth of the matter is the system is not designed to anoint starter status to the most deserving or even the most qualified. The system is designed to anoint the biggest stars, and that’s determined by popular appeal. Small market players will get penalized. Players that are not house hold names will get overlooked despite how they play, because the system is designed to appeal to the widest range of consumers.

Add in the push that individual teams make on game night on through their own broadcasts and you get an unfair and unbalanced result.

»In Related: Who Got Snubbed By The Fan Vote?

That’s how it has to be to create the hype and traffic that All-Star balloting generates.

The outcome may not sit well with some, but the truth of the matter is there is no other exhibition contest in sports that draws as much chatter, media impressions and discussions as the NBA All-Star Game, and that’s exactly what the NBA wants.

Taking the vote of out the fans hands would only diminish that and that is not going to change any time soon.

So while you may disagree with who was named a starter and why, the truth of the matter is that the fans get to pick and that means logic almost never applies to the selection.

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Steve Kyler is the Editor and Publisher of Basketball Insiders and has covered the NBA and basketball for the last 17 seasons.

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