Oh, the pride and joy of the lazy blogger, a column to respond to. Anyway, Bill Simmons, always worth reading, provides one of the best columns he has written in a while about the NBA and the state of the league. The Collective Bargaining Agreement (CBA), which governs the working arrangement between the league and the players’ union, expires July 1, 2011, and the league is ready to throw down. Of course David Stern has already fired the first salvos talking about how the league lost $400 million, and the according proposal changes the basic way salaries are structured. Now, the way things work, long term contracts ARE an issue. Players are paid fixed dollars while the salary cap is determined by percentage of income (basically) – in other words a contract can be locked in at a fixed wage, but the underlying budget is dynamic. Thus, idiotic teams who paid some players too much money are left holding the bag when the revenue side comes up short. Giant sunk costs become a monster. As Simmons puts it:
They arrived at this specific point after salaries ballooned over the past 15 years — not for superstars, but for complementary players who don’t sell tickets, can’t carry a franchise, and, in a worst-case scenario, operate as a sunk cost. These players get overpaid for one reason: Most teams throw money around like drunken sailors at a strip joint. When David Stern says, “We’re losing $400 million this season,” he really means, “We stupidly kept overpaying guys who weren’t worth it, and then the economy turned, and now we’re screwed.”
So it is hard to sympathize with the owners here. Now, anecdotally, it seems to me that fans usually will go after the players because after all – basketball is a sport, and the players are paid well – they should be grateful. However, it was not their fault the owners were stupid and paying non-revenue generators eight figure salaries. That said – the current NBA IS broken, in several ways:
- The salary cap forces teams to plan to be “under the cap” in given years – essentially tanking seasons promising fans a rainbow – in 2010 or 2011. Part of it is dumb ex-jocks being in management – but a lot of it systemic.
- The draft and lottery system. In the NBA, one player can win a title – so teams who are bad line up to try to maximize their chances of winning the lottery … and we get a lot of non-competition
- Players are not paid according to their marginal product – many are wildly overpaid, many are underpaid
- Few teams feel an obligation to win over fans. The league only cares about corporate sponsors and television.
The league’s initial counter is to reduce contract length and raise the age limit – yet neither of those things cut to the core of how the league can really optimize itself. I am not sure what all fans want from a league – but I know what I want:
- Management to have a chance to build a good team. Opportunities should be maximized. This does not mean eliminating guaranteed contracts, but management should be allowed to be rewarded for being smart.
- Players should be paid their worth. Guys who make the most money for their teams ought to be compensated as such
- The fans should be encouraged to follow the league, not discouraged.
So what would a radical solution to improve the league be from a CBA sort of perspective? First of all, in a perfect world, there’d be no salary cap. Salary caps do not ensure fairness, it is just a wealth transfer. However, the ship has sailed there, so if a cap is required, it should be hard – it is easy to explain to fans. The percentage split between the sides … who cares? Also the luxury tax would no longer be necessary. So we assume a hard cap – now what?
- Eliminate Individual Salary Limits: The problem with the existing structure is not LeBron James’ salary, it’s Samuel Dalembert’s. The maximum salary makes it impossible to differentiate between the very good and truly great players, the players who are needle movers both on the court and at the cash register. This also lets teams structure their rosters entirely in a way they want.
- Reduce the Draft to 10 Picks: Now THIS is how you eliminate tanking. We know that you are most likely to get a true impact player in the high lottery (LeBron, Jordan, Magic, Shaq etc). So really the players who you want to allocate to bad teams should actually only be fairly small. So how about only 10 picks – and the non-playoff teams have an equal shot at the ten slots. This would eliminate tanking – there is no advantage. Also, this maximizes flexibility as teams have more latitude with identifying rookie talent. There would be the customary roster limits – but good teams would not be forced to carry guys they don’t intend to play (more on this in the next bullet) and bad teams can get good even quicker with the freedom to take a youth movement.
- The Sloppy Seconds Draft: This is the other aspect of the radicalized draft to prevent teams from burying talent, and another way for management to be smart. Basically, every team that signs a rookie and the rookie gets in fewer than 800 minutes over his first two seasons (40 games x 20 minutes seems like a reasonable expectation) – the player is exposed to the sloppy seconds draft (or perhaps something less vulgar). This is like a Rule V baseball draft, where a team can draft one of these players, but must carry them on the 15 man roster the whole season.
Obviously this will not prevent a league from hijacking Seattle’s basketball team – but it might give teams and players the tools to make a better league in the long run.